Africa needs $285 billion to boost access to finance

Africa will need at least $285 billion by 2025 in order to increase the ability of its population to access finance and deal with the effects of the Covid-19 pandemic. Aissa Touré Sarr, Country Manager of African Development Bank (AfDB) in Rwanda, who was speaking at the microfinance summit, said that it could cost nearly twice as much to get countries get back to pre-pandemic growth trajectories. “Our population needs to access financial services in a simple and more efficient manner. Digital finance alone could benefit billions of people by spurring inclusive growth that adds $3.7 trillion to the GDP of emerging economies within a decade,” she said. Delegates during the Microfinance Summit in Kigali on October 20. Photo: Courtesy. She noted that digital financial services will provide low-income households with access to affordable and convenient tools that can help increase economic opportunities. Rwanda’s Economic Recovery Fund is set to benefit from the extra financing of $350 million in the next phase, up from $100 million that was injected in the first phase. To ensure inclusive finance, part of it has so far benefited over 3,000 small businesses. At least between Rwf4 billion and Rwf5 billion has been channelled through microfinance institutions to help small businesses deal with the Covid-19 effects. “For extreme poor families, combining digital financial services with livelihoods promotion and mentoring will boost their lives,” she added. Inclusive finance is also seen as one of the ways to accelerate the achievement of Sustainable Development Goals (SDGs) as well as economic development on the continent. She said that due to the pandemic, many countries were off-road to achieving SDGs. “The impact of Covid-19 on SDG1: no poverty, no hungry shows a potential 41 to 169 million people in extreme poverty by 2030 in countries with low and medium levels of human development including20 and 83 million women and girls,” she said. The pandemic has also undermined efforts to fight malnutrition. Sarr estimates that malnourished people could increase to 12 million by 2030. While Africa’s economic growth is projected to peak at 5 per cent from 2022 onward, the growth is increased and faster progress on Covid-19 vaccine development. Sarr says that there is also a need for credible policies to stimulate investments. Meanwhile, she added that medium debt levels in sub-saharan Africa are projected to peak in 2021/22. However, she added that debt levels will start moderating from 2023 if there is aggressive fiscal consolidation after the pandemic, increased proportion of high concession debt in countries’ debt profile as well as debt management practice.

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Africa needs $285 billion to boost access to finance