The IFC's Head of Public Affairs On Challenges And Opportunities In Africa For Investors
Aaron, to those not quite familiar - the IFC (International Finance Corporation) is a subsidiary of the World Bank. What’s the main difference between the World Bank & IFC mandate?
IFC is a member of the World Bank Group and is the largest global development institution focused on the private sector in developing countries. IFC applies its financial resources, technical expertise, global experience, and innovative thinking to help our clients and partners overcome financial, operational, and other challenges. IFC is also a leading mobilizer of third-party resources for projects. Our willingness to engage in difficult environments and our leadership in crowding-in private finance enable us to extend our footprint and have a development impact well beyond our direct resources.
In your view - what role do family businesses play in the development of less developed countries - especially in Africa?
Small and medium enterprises (SMEs) promote the economic and social development of emerging markets by generating income and jobs. SMEs – which are typically family owned businesses - create between 70 and 95 percent of new employment opportunities in emerging economies. In Africa, SMEs account for up to 90% of businesses, and are therefore central to its growth and development.
Where do you see African businesses struggling and why?
Maybe some of the biggest challenges businesses in Africa, and many other developing economies, face include lack of access to capital to grow their businesses, poor infrastructure, and unreliable access to energy. Africa is also home to the highest concentration of fragile states and countries recovering from conflict, places where private sector growth can be especially difficult.
However, the region’s commitment to reform and private sector growth is now generally well entrenched. Governments are simplifying regulations for entrepreneurs and undertaking key policy reforms so that they can tap into private investment for projects in infrastructure, agriculture, and other key sectors. All of these are critical for creating jobs for a young, dynamic, and growing workforce.
How does the IFC help African family-owned businesses?
IFC has a holistic approach to enhancing SME competitiveness that offers solutions to address key challenges SMEs face. First, a conducive business environment, i.e. investment climate, is the foundation of IFC’s support for SMEs. By focusing on the regulatory problems that impact SMEs most (such as licensing, registration and taxation) IFC and its partners can create entry points for the other building blocks of the approach.
Second, IFC helps provide SMEs with affordable access to localized and customized business management information, interactive tools, and training. In partnership with development agencies and the private sector, IFC has developed several capacity building products, like Business Edge and SME Toolkit, to enhance SME competitiveness.
Third, IFC has developed several programs that create linkages between SMEs and large businesses. By accessing new markets more effectively, SMEs create opportunities for long-term financial sustainability which can lead to increased job creation.
Access to finance is the final building block of IFC’s approach. IFC has developed several single and multi-country programs in collaboration with local financial institutions that enable SMEs to grow their businesses with affordable and tailored credit and investment. For example, by enabling banks to provide products and services to the untapped SME segment, IFC has provided thousands of SMEs across the continent with opportunities to fund and grow their businesses.
Lastly, recognizing the important role that women play in the economy, IFC has developed tailored programs, like Banking on Women, that provides financing and expertise to emerging market financial institutions to expand financial services and opportunities for women customers and business owners.
If you were to advise private investors from the Gulf who are interested in entering the African market - what would you tell them?
Take advantage of the proximity. Africa can be an untapped commercial market, but also increasingly a source of skilled labor, inputs and innovation.
You have travelled Africa extensively. And while every African country is unique in its own way - what is it that you like the most about the continent as a whole?
I have been fortunate enough to have travelled around the world throughout my whole career and I have one observation that I would say holds true: People are the pretty much the same everywhere – they want opportunity, to have decent jobs and to be able to provide for their families and loved ones, and they are resilient, they can overcome most challenges and thrive when given the chance and the right resources. I believe this applies not just to Africa, but certainly in many of the countries and regions I’ve been to.
Aaron Rosenberg is the Head of Public Affairs at the International Finance Corporation in Washington D.C.