France targets quality and quantity at African economies summit

Debt and private sector growth will be the top agenda on Tuesday as French President Emmanuel Macron hosts a summit on financing African economies. Around 30 heads of state and leaders from international organizations will participate in the hybrid event, held both online and in-person in Paris. A note to journalists from L’Élysée last week noted that Macron wants to find “new and ambitious solutions” to help Africa face the unprecedented shock of the COVID-19 pandemic, and to “return to growth, like the other continents that were able to put in place massive recovery plans.” “There is an issue of quantity of financing, especially of course if you compare with the recovery plans injected in Europe or in the U.S. or elsewhere — of course, there is a disconnect and disbalance here,” Rémy Rioux, CEO at Agence Française de Développement, told Devex Friday. “But [there is] also an issue of quality of the financing [in Africa]. Are they turning to the best possible investments? What’s their duration? What’s the interest rate?” In Europe, the pandemic prompted a historic €750 billion recovery plan last summer, though national leaders cut €10.5 billion in budget guarantees for development banks and €5 billion in humanitarian aid from the European Commission’s initial proposal. “Probably at the start of the crisis of course, constituencies are first turning to their own needs,” Rioux said, adding that this week, beyond vaccines and health, “we are opening up a new stage.” AFD announced a new platform last week with Spain’s Agencia Española de Cooperación Internacional para el Desarrollo, Italy’s Cassa Depositi e Prestiti, and Germany’s Kreditanstalt für Wiederaufbau. The group aims to launch a co-financing framework by 2022 with common procedures to better set up joint projects. Rioux said the platform sprung from a common feeling that “we have to do better in Africa” and took inspiration from the Association of European Development Finance Institutions, or EDFI. “You know the way EDFI are working: One of them is coming with the idea of a deal, and the others are joining. And they are not repeating all the procedures, and so it’s very rapid and efficient.” At the summit, European and African leaders, including those who signed the April 2020 call for assistance to African countries to weather the pandemic, will meet for a working dinner Monday, followed by closed-door sessions on debt and private sector support on Tuesday. A press conference is foreseen Tuesday evening. Maé Kurkjian, acting director and senior advocacy manager at ONE France told Devex earlier this month that her organization will be watching to see how much of the $650 billion in Special Drawing Rights from the International Monetary Fund would go to the most needy countries. For now, African countries are expecting to receive around $30 billion, though that could increase if wealthy nations “recycle” their allocations. “There will be a final communiqué,” Kurkjian said Monday. “We hope that there is a percentage [of the share of SDRs for low-income countries] and that it is ambitious.” Meanwhile, Kurkjian predicted France would be pushing wealthy nations to go beyond the Debt Service Suspension Initiative by canceling or further postponing repayments on debt relief. On private sector support, Rioux said that Macron is pushing European and multilateral banks to pay more attention to Africa’s homegrown private sector. “When a firm, an investor is considering the African market, they are first searching for counterparts,” Rioux said. “If they do not find a solid enough SME, African firm, able to explain the market, able to partner, they are going in Asia. Simple as that.”