26 Oct 2021 / Article

“We can bounce back…but we need to reduce bureaucracy” - IFC Managing Director, Makhtar Diop

 

The new head of the International Finance Corporation (IFC) discusses reigniting foreign investment in Africa and the continent’s road to recovery from the Covid-19 crisis.

 

Makhtar Diop has been the Managing Director of the International Finance Corporation (IFC) since March 2021. Prior to this, he was the World Bank’s Vice President for Infrastructure and he previously served as the Bank’s Vice President for Africa. An economist by training, he has also held government positions, most notably as Minister of Economy and Finance of Senegal.

 

In an exclusive session with CNN’s Eleni Giokos at the Africa CEO Forum-Digital Edition, Diop consider the impact of the pandemic, which has shaken up value chains and forced Africa to import close to 99% of its vaccines needs.

 

Eleni: What are the lessons that you’ve learned over the past year?

 

Makhtar: Firstly, it’s to react fast and quickly. We saw that banks on the continent weren’t providing much financing, so we needed to significantly increase the volume of trade financing available. And this year, we provided $18 billion of free trade financing, a big focus of it in Africa. We also discovered the need to innovate when faced with new challenges and introduced some new initiatives, such as the successful distressed asset recovery. When there is a crisis like this, a lot of companies have assets that are viable in the long term but because of the shock, need to be supported. Lastly, we needed to review the bankruptcy policies in many countries. Many governments had outdated policies that made it difficult to rebound and to help the private sector. That being said, we have seen a lot of resilience in African economies due to measures taken in the past.

 

Eleni: Entrepreneurs and the private sector have been incredibly adaptable amid the crisis. How has that changed your strategy at IFC?

 

Makhtar: First of all, we have increased the volume of lending and intervention in sectors where we weren’t as strong in the past. For instance in health, we’ve increased our portfolio tenfold and are also currently leading a consortium of lenders to support vaccine production in Africa. We’ve also launched the Africa Medical Equipment Facility to help the private sector get quality equipment for better response. A second thing we have done is focus more on digital access. This crisis has shown us that there’s a big digital divide in Africa, which needs to be filled if we want to enable African economies to respond adequately. We also have two large submarine cables coming alive in a couple of years, which will increase the volume of data available on the continent by close to 30 times. With the right policies, we can reach the goal of universal digital and internet access in Africa by 2030, and help startups and SMEs to be part of the digital economy.

 

Eleni: Insufficient vaccine access is still a big threat for African recovery. How can the private sector work together to prepare for future pandemics?

 

Makhtar: We are working very hard and have some large companies that have decided to install more advanced vaccine technology in Africa. Another company announced a $500 million investment in a mRNA vaccine. The private sector is realising that this is the next frontier and where we need to invest. The WHO DG recently announced the availability of a malaria vaccine. For me, this crisis gives us an opportunity to eradicate diseases that are still existing in Africa and also create an ecosystem for a stronger pharmaceutical industry.

 

Eleni: Are you optimistic that we can accomplish vaccine production quickly and be better prepared in the event of another pandemic?

 

Makhtar: Vaccine production is a complex process. So there is a need for caution and to ensure that all conditions are in place. Meanwhile, some countries like Senegal, via the Institut Pasteur de Dakar, have been working on a yellow fever vaccine for a while. You have to consider your level of scientific development before you follow through with industrial activity. Countries like South Africa, Senegal, and Rwanda are somewhat advanced. Also, we need a level of specialization among countries. And I think with the African free trade agreement (AfCFTA), countries will be able to specialise in specific parts of the value chain, which will help build a competitive pharmaceutical sector in Africa.

 

Eleni: Could you tell us if you’re hopeful about the future and how the private sector views the continent in terms of foreign direct investment (FDI)?

 

Makhtar: After a time of increased investments in the continent, particularly in commodity related activities, we have seen a small decrease. But I hope that next year, we can bounce back. I am very confident that in the future things will pick up but we need to reduce bureaucracy, not only for foreign direct investors but also local investors. We also have to take advantage of the digital economy and empower our youth by listening to them. Lastly, we have to ensure that women play a role in the productive sectors. My optimism comes also from the amazing energy coming from Africans in the diaspora. Things are changing fast and I hope in six months’ time, what I’m telling you today will be obsolete.

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