The African Development Bank (AfDB) and the Japan International Cooperation Agency (JICA) have signed a $350 million loan to finance the bank’s support for private sector operations in Africa.

Development Diaries reports that the loan comes under the Enhanced Private Sector Assistance (EPSA) initiative, which is a component of Japan’s Official Development Assistance to Africa.

The fifth version of EPSA, for an amount of $4 billion, was signed by the bank and JICA at the Eighth Tokyo International Conference on African Development (TICAD 8) held in Tunis last August.

It is understood that the loan represents a crucial step in Japan’s efforts to work with the AfDB to support Africa as it faces the challenge of navigating multiple compounded crises including issues of debt sustainability and the impact of the war in Ukraine.

‘JICA’s support would be crucial in the implementation of the Special Agro-processing Industrial Zones, which will be the biggest game changer in Africa’s agriculture’, the AfDB President, Akinwumi Adesina, said.

‘It will transform rural economies, reduce food loses, process and add value to crops produced in rural areas and create jobs’.

A 2022 report by Overseas Development Institute (ODI) revealed that Africa had doubled its borrowing in the last decade.

The report noted that the continent’s ability to repay and to continue accessing finance for development and climate action was being hampered by the surge in interest costs and in oil and food prices.

Africa’s private sector is recognised as an indispensable stakeholder in the African Continental Free Trade Agreement (AfCFTA).

According to the United Nations Economic Commission for Africa (UNECA), Africa’s private sector accounts for 80 percent of total production, two-thirds of investment, and three-quarters of credit, and employs 90 percent of the working-age population.

Africa’s private sector is seen as the engine of economic growth and poverty reduction on the continent.

Source: AfDB

Photo source: AfDB