Supporting Enterprise, Building Economies
The private sector has a critical role to play in the development of infrastructure—which in turn improves the enabling environment for business, creating a virtuous cycle. In Kenya, World Bank institutions have worked together under the MFD approach to provide $90 million since 2013 to kickstart PPP programs under the Infrastructure Finance/PPP Project (IFPPP). Efforts have resulted in a new PPP law, stronger government capacity to manage PPPs, and a solid pipeline of projects in roads, health, and water and sanitation to advance Kenya’s social and economic goals. IFPPP is expected to mobilize $1.25 billion in private capital, and as of April 2023 has already mobilized about $899 million. In addition to the work under IFPPP, the government of Kenya and IFC signed agreements for advisory services for PPPs in the water and housing sectors in 2022.
In Cameroon, MIGA collaborated with IFC and IBRD on the Nachtigal Hydropower Plant with the aim to deliver power sufficient for 453,000 customers, while avoiding emissions of 41 million tons of carbon dioxide equivalent over the next 40 years. MIGA provided $187.9 million in guarantees for up to 15 years against breach of contract to EDF International, the French power developer and operator, and to STOA, a French infrastructure investment vehicle active primarily in Africa. This guarantee complemented payment and loan guarantees from the IBRD, and investment, loan and risk management swaps by IFC. The Nachtigal Hydropower Project is a 420MW hydropower plant on the Sanaga River that will contribute an additional 30 percent of installed generation capacity in Cameroon, along with significant climate co-benefits. IFC’s investments and MIGA’s guarantees in the digital infrastructure sector in Africa are also helping to connect the unconnected and to create business opportunities.
One of the goals of private capital mobilization in Sub-Saharan Africa is support for SMEs, which face particular challenges in accessing credit to finance growth. Launched in 2014, the Development Finance Project for Nigeria improved the availability of and access to finance for MSMEs through eligible financial intermediaries, with the support of a new wholesale development finance institution (DFI). The project provided tailored technical assistance to the participating financial institutions, and supported the establishment of financial consumer protection measures, enhancing responsible finance and affordability. It provided $445 million to the new DFI for lines of credit to PFIs for on-lending to eligible enterprises and sub-projects and established a $35 million credit guarantee facility. By closure in 2023, the project had succeeded in leveraging its line of credit and partial credit guarantee (PCG) facility to increase access to finance for MSMEs. As at project closure, the LoC facility has disbursed $1.4 billion to PFIs for on-lending to 312,861 MSMEs, and the PCG facility had supported over 28,000 MSMEs, with guaranteed loans of $302 million. The DRC SME Development and Growth Project, supported the establishment of 3,612 new formal firms, 63 percent of them owned by women and 35 percent by young entrepreneurs, creating 9,360 jobs.
In a region where the population is growing at a significant rate, and unemployment thus poses a crucial challenge, job creation is one of the World Bank’s priorities for Sub-Saharan Africa. With the support of the World Bank, the government of Senegal is reviving tourism as a priority sector to drive economic growth and contribute to job creation, especially for youth, women, and less skilled workers. One initiative is the Senegal Tourism and Enterprise Development Project, a 5-year, $74 million project financed by IDA. Around the coastal town of Saly, which had suffered a loss of tourism as a result of severe beach erosion due to climate change, the project helped reclaim 325,000 square meters of beach, equivalent to over 45 soccer fields, and more than 12 times the initial target. Beach protection and restoration work was extended to include two fishing villages, enabling fishermen to once again dock their boats at their villages. The project also built structures for fish drying and sale, equipment storage, and cold storage facilities for fresh fish. Since the restoration of the beaches, businesses have recently made investments in tourism totaling $350 million, with knock-on effects on other businesses benefiting from increased tourism and job creation, including restaurants, shops, travel and tour operators, taxis, and banks. The economic revival has resulted in the preservation of an estimated 15,000 jobs directly and indirectly linked to tourism.
The Youth Employment and Skills Development Project (PEJEDEC) in Côte d'Ivoire is helping workers to pursue new opportunities to access jobs, and supporting the acquisition of job-relevant skills by people. The project also connects educational institutions with the private sector to ensure that students are acquiring the skills needed for jobs. It aims to equip a large cohort of youth with the skills needed to drive Côte d’Ivoire’s digital transformation. Under PEJEDEC, 65,000 young Ivorians, 43 percent of them women, have found employment through labor-intensive work, or taken part in internship, apprenticeship or entrepreneurship programs. With PEJEDEC’s third phase, which runs through 2026, a total of 102,000 young people are expected to benefit from interventions to enhance their employability.
In Mozambique, the Integrated Growth Poles Project established a Catalytic Fund for Innovation and Demonstration, fostering inclusive business models under which small farmers, typically organized in associations, enter partnerships with agrobusiness companies to access new or existing markets. The Fund co-financed established agribusiness that linked with smallholder farmers, while offering the farmers the technical assistance they needed to gain access to stable markets and accelerate growth. In the Beira and Nacala Corridors, the Fund targeted high-potential value chains of such as oilseed and cotton, soybeans, maize and poultry, beef, fisheries, fruits, and vegetables.
In DRC, the $100 million SME Development and Growth “PADMPME” Project and the follow-on $300 million Empowering Women Entrepreneurs and Upgrading MSMEs for Economic Transformation and Jobs “TRANSFORME” Project have helped mobilize private capital to enhance growth of new and existing MSMEs, especially women-owned businesses, and promote formal job creation by the private sector. In five years, the $20 million partial guarantee fund established under the project has catalyzed $26.5 million (57 percent of total investment) from the private sector and funded 18 subprojects that benefited 21,203 farmers, of whom 33 percent were women. This successful model was duplicated in later projects (Southern Africa Trade and Connectivity Project; Economic Linkages for Diversification; Access to Finance & Economic Opportunities Project), which placed an even stronger emphasis on training and certifications to complement matching grants, and prioritizing SMEs investing in green competitiveness and the economic empowerment of women.