Signing of a loan agreement to support COVID-19 responses in Africa (Private Sector Investment and Finance)
On March 30, the Japan International Cooperation Agency (JICA) signed a loan agreement of up to $200 million with the African Export-Import Bank (Afrexim) to support COVID-19 responses through Private Sector Investment and Finance. The loan will be co-financed with the Sumitomo Mitsui Banking Corporation (SMBC) and Mitsubishi UFJ Financial Group (MUFG) (*1).
COVID-19 pandemic has significantly affected the entire African continent. Social and economic activities have been hindered due to the pandemic, which in 2020 resulted in its worst historical GDP growth rate, recording negative 1.7% in Sub-Saharan Africa (source: IMF) and negative 1.1% in North Africa (source: African Development Bank). In order to recover smoothly from the pandemic, provision of health and medical services, including COVID-19 vaccination, is essential. Also, COVID-19 revealed that Africa lacks medical and pharmaceutical products as well as infrastructure such as hospitals, and Africa’s healthcare system is quite fragile (*2). Thus, strengthening the healthcare system is critical for Africa.
Afrexim is a multilateral financial development institution which has 51 member states in Africa. It has been supporting Africa in mitigating the impact of COVID-19 since it broke out, and will deploy the loan to advance the development of local production capacities for vaccines and medical products, with the overarching ambition to promote the self-reliance of African countries in their response to the pandemic and reduce their dependence on non-African products and international supply chains.
JICA’s loan will be used to manufacture medical and pharmaceutical products including vaccine manufacturing lines, development of supply bases for those products, and development of medical and health facilities such as hospitals, through Afrexim. It will also mobilize Japanese commercial banks’ capital within the continent. This will lead to creation of a stronger healthcare system as well as smoother recovery of social and economic activities from COVID-19. It is also aligned with Sustainable Development Goal 3 (Good health and well-being), Goal 9 (Industry, innovation and infrastructure), and Goal 17 (Partnerships for the goals).
(*1) The SMBC-JICA Sustainable Finance Framework, which was launched on March 30, 2021, will be applied to this loan agreement. SMBC’s loan will also be used for social and economic recovery from COVID-19 in Africa.
(*2) Africa heavily relies on imported vaccines, where 99% of vaccine doses (COVID-19 vaccines, flu vaccines, and others) are imported.