How to strengthen the contribution of the private sector to African development by improving its financing?
May 11, 2021
At the beginning of May, two major debates will end, fuelled for many months by intense discussions.
First, the Summit on Financing African Economies will be held in Paris on May 18. FERDI has two key proposals for this Summit.
One is related to the external financing of African economies. FERDI has joined with the Center for Global Development (CGDev), represented by its President Masood Ahmed, to plead through an event on March 16 that it is not only a question of mobilising additional resources but -especially concerning concessional resources- it is also necessary to ensure that flows are allocated adequately among African countries: "Mobilizing and allocating external financing for Africa". FERDI contribution highlights the importance of taking into account the structural vulnerability in the allocation of these resources among African countries: "How to Allocate New External Financing to African Countries? The Vulnerability Challenge. A Briefing in Response to the Paris Summit on Financing African Economies". It is a matter of justice, effectivenesss and transparency. It is primarily an issue for the multilateral development banks, in particular the African Development Bank and its concessional window, the African Development Fund. That institution should be able to demonstrate its strategic priority in the fight against state fragility and in adaptation to global warming. AfDB is able to draw on the important discussions underway at the United Nations to define a multidimensional vulnerability indicator (economic, climate and societal), discussions in which Ferdi is actively involved. In collaboration with FERDI, the Commonwealth Secretariat has already developed a draft of an innovative indicator that Commonwealth Secretary-General RT Hon Patricia Janet Scotland presented at an event on “Financing LDCs and other vulnerable countries” held on 12 April as part of the ECOSOC Financing for Development Forum and organised by FERDI, the OECD Development Centre and UN OHRLLS. Moreover, structural vulnerability, as FERDI argued, must also be taken into account in two other major areas where African countries are expecting new resources: the allocation or reallocation of SDRs and debt treatments.
Second, for the Paris Summit, FERDI has recently examined studying the strengthening of the private sector through the improvement of its financing, especially for small and medium-sized enterprises. Between microfinance and the financing of established companies of varying sizes, there is a "missing middle" which encompasses firms that are essential for the economic future of Africa. These firms are led by young entrepreneurs ready to innovate in value chains, particularly in the agro-industrial sector, and struggling to find financing to carry out their projects. The event organised on May 3 by FERDI on this issue brought together young African entrepreneurs and leading international experts. It outlined ways in which their needs can be met by reducing the perceived risk on loans. A policy brief "How to strengthen the contribution of the private sector to African development by improving its financing?" prepared for the event and enriched by the interventions specifies the diagnosis and the proposals.
In addition to this debate is another extremely urgent and important discussion, which also has strong financial implications: how to respond to the crucial need to rapidly expand access to Covid-19 vaccines throughout the world, especially in low and lower middle income populations, while preserving the incentives for innovation for the pharmaceutical laboratories that have discovered the vaccines and must be able to create new ones if necessary? A solution does exist, the theoretical foundations and some practical details of which have been examined by Vianney Dequiedt, scientific director of Ferdi, in collaboration with Etienne Billette de Villemeur and Bruno Versaevel. They published a correspondence in Nature on 19 March 2021 and a FERDI policy brief afterwards "Covid-19: Should intellectual property rights be challenged?" which was reported in the French press "Les Echos". The idea is to use the Medicine Patent Pool, which makes it possible to transfer on a voluntarily basis while retaining intellectual property and on a collaborative basis the means to manufacture vaccines in the countries where they are to be used. It seems that the French President, in his speech to the European Council in Portugal on 8 May, took a position along these lines. Let's note finally, the report of the Independent Panel for Pandemic Preparedness and Response submitted today to WHO includes the Medicine Patent Pool among its main proposals.
In these three important areas, which call for forthcoming decisions, may scientifically sound arguments help to find equitable and effective solutions and overcome inertia!
