Washington, D.C., May 25, 2006–
The Board of Directors of the International Finance Corporation (IFC), the World Bank Group’s private sector arm, approved today a $30 million grant to the Investment Climate Facility for Africa. The facility is a new public-private partnership for improving the continent's investment climate. IFC will also contribute expertise to the facility, based on 50 years of experience investing in the private sector in developing countries.
According to the World Bank and IFC’s most recent Doing Business report, African businesses face the world’s highest levels of regulatory obstacles to entrepreneurs. Africa has also been the world’s slowest region to reform its investment climate. Major reforms are needed to establish the conditions necessary for growth.
“Entrepreneurs, especially small businesses, are the engine for growth and job creation,” said Paul Wolfowitz, President of the World Bank Group. “Now that Africa is on the path of macroeconomic stability, significant reforms in the business-enabling environment are needed to unlock investment and productivity growth,” he added.
The Investment Climate Facility for Africa is an independent trust with strong African representation on its Board of Trustees. It provides a mechanism through which the private sector, donors, and African governments and institutions can support Africa's vision for sustainable growth and development.
The objectives of the Investment Climate Facility for Africa are to:
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Build the environment for investment climate reform
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Encourage, develop, and work with coalitions for investment climate reform.
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Get the investment climate right.
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Support governments in creating a legal, regulatory, and administrative environment that encourages businesses at all levels to invest, grow, and create jobs.
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Enhance Africa’s business climate image.
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Improve Africa's image as an investment destination through a coordinated effort to publicize improvements in the investment climate.
Progress will be tracked in terms of performance against a set of indicators, including increases in productive investment; firm start-ups; jobs created; levels of trade and production; and, above all, increased economic growth.
“Improving the investment climate is one of IFC’s strategic priorities for Africa,” said Lars Thunell, IFC's Executive Vice President. “We plan to contribute to the Investment Climate Facility not only through a financial contribution but also by leveraging IFC’s client and partner network and facilitating active private sector participation in the reform process," he added.
The Investment Climate Facility for Africa aims to reduce investment climate constraints across Africa by working in eight priority areas:
1. Property rights
2. Taxation and customs
3. Infrastructure facilitation
4. Competition
5. Business registration and red tape
6. Financial markets
7. Labor markets
8. Corruption and crime
Currently, IFC supports investment climate reform in Africa through the business enabling environment program of the Private Enterprise Partnership for Africa (PEP-Africa) and through the Foreign Investment Advisory Service's Africa program. PEP Africa and FIAS are providing support to the Investment Climate Facility for Africa in designing and implementing reform priorities.
About the Investment Climate Facility for Africa (ICF):
ICF is a public-private partnership established as an independent trust with a seven-year lifespan, headquartered in Johannesburg, South Africa. The co-chairmen are Benjamin Mkapa (former President of Tanzania) and Niall FitzGerald (Chairman of Reuters), and the Board of Trustees includes prominent businessmen and political figures from Africa and beyond. ICF will work closely with the African Development Bank and has been endorsed by the Report of the Commission for Africa (2005), the G8 at Gleneagles in July 2005, and NEPAD. Three multinational firms, Shell, Unilever, and Anglo American, have also contributed financial resources. Discussions are underway with other African and international firms to build on this endeavor. The initial fundraising target for the facility is $100 to 120 million. For more information, visit:
www.investmentclimatefacility.org
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About the International Finance Corporation (IFC):
IFC is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies. The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
