Coming out on top of the crisis: towards a more sustainable growth model

By 2100, average temperatures in Africa will rise by 1°C to 4°C, while episodes of flooding and drought are set to become more commonplace. Over the same period, Africa’s population is expected to nearly triple in size. With companies looking to reinvent themselves and find new business models, isn’t it time to build back better? Can Africa’s private sector make a substantial shift towards sustainable growth by focusing on reducing greenhouse gas emissions, building resilience to climate change, preserving biodiversity and developing the circular economy?

Key points:

Covid crisis: a threat to climate change awareness or an opportunity to build back better?

Adaptation: is Africa’s private sector prepared for greater climate disruption? Financing, regulatory easing, human resources:what do African businesses need to change their growth model?

Webinar, July, 1st : Boards and the virus: leadership in time of crisis

How to organize the decision-making process in times of crisis: surviving, rebuilding and thriving in the "new normal"?

This webinar for directors and officers aims to :

• Give keys and examples to apprehend and understand decision making and risk management in times of crisis.  
• Guide boards of directors and executives in their roles and responsibilities to "weather the storm". 
• Understand the extent to which the crisis is reshaping corporate governance.
• To provide pragmatic considerations that boards and executives should keep in mind when considering the future and the "new normal".

In 2018, the ILO estimated that approximately 42% of the global workforce, 1.4 billion people, were in vulnerable employment, for developing countries this proportion was 76%. The 2020 Covid-19 crisis will significantly reduce the number of people in jobs and proportionally increase the number in vulnerable employment. As market demand comes to a sudden halt, developing country firms that are linked into, and supply global value chains face major challenges. Looking forward, lead firms are also likely to shorten their supply chains, potentially cutting high productivity and high-income jobs in manufacturing in poorer countries.

This presents an opportunity for Development Finance Institutions (DFIs) to strengthen firms in their target markets, through strategic, practical and financial means. In the short-term, finance and specialist guidance could be provided to more productive firms at risk of closure to ensure that higher productivity jobs are maintained, as these will act as the engine driving economic recovery. In the medium term, investments could target diversification opportunities that play into regional supply chains, making markets and jobs more resilient to international shocks. Finally, longer term investments could target economic transformation opportunities driving high value employment and economic growth.

This involves transitioning of workers form informal to formal sector and making the most of a digital economy. However, some key issues need to be investigated. For example, how will DFIs balance the need to preserve jobs with increased investment risk? Can they play a role in identifying and developing sectors that will drive the diversification and transformation process? Finally, what can DFIs do to develop the technical capabilities that would be required to sustain such processes?

A recent analysis by ODI found that a small share of development finance investment is explicitly directed toward the health sector. However new health sector initiatives from the US Development Finance Corporation (DFC) and the UK’s CDC following the onset of the Covid-19 crisis indicate that this may be changing. In response to the crisis, development finance institutions (DFIs) have supported clients that have traditionally been outside the health sector to refocus their operations in support of the global crisis response.

Our research also highlights DFI risk taking and innovative approaches in the health sector; examples which demonstrate the ability of DFIs to mobilise much needed investment into health. The use of pooled investment vehicles, volume guarantees, first loss guarantees and development impact bonds (DIBs), exemplify how DFI investment can act as a catalyst for market development in different areas of health supply chains.

We explore how DFI investment could support and complement public sector investment in the health sectors; both in the short-term and with a view to building long-term resilience. We also discuss which innovative financing approaches could best suit different-sized DFIs and how these entities could partner to maximise their approach.