The Private Sector Can Help Transform the Sahel

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Even in the most challenging places, investment and growth are possible.

And of all the places most in need of development, the Sahel must sit near the top of the list.

A wide belt of countries stretching across Africa from the Atlantic to Lake Chad, the Sahel encompasses stunning landscapes and proud and varied cultures.  

But, it is also a geography united by poverty, rapid population growth, shifting climate, food shortages, instability, and ongoing violence that has killed and displaced tens of thousands of people—the combined challenges creating a stubborn “fragility trap”.

The United Nations warned only last week about escalating conflict in the region and how it is threatening to spill into other parts of West Africa.   

There are no easy answers for the Sahel—which includes Burkina Faso, Chad, Mali, Mauritania, and Niger—yet any long-term, comprehensive solution for the region’s 80 million people will certainly involve the private sector and its vital contribution to job creation, inclusion, and economic growth.

The Development Finance Forum, an annual gathering of public and private sector experts seeking ways to strengthen economies and improve lives, took place in Abidjan this week and marks an important opportunity for the Sahel.  

This year’s event examined the hurdles to development in West Africa and the Sahel and sought concrete steps to overcome them. Discussions focused on agribusiness and food security, digital infrastructure, and transport—three sectors considered critical to transforming lives in the Sahel, where investing has proved difficult, but never impossible. 

In Mali, for example, IFC, a member of the World Bank Group, has just announced an investment of €2.5 million in Mali Shi, a shea nut processing company based near Bamako. The financing will allow the company to build Mali’s first active modern shea butter processing plant, increasing incomes for 120,000 shea nut producers.

IFC also recently helped Niger mobilize $74 million for its Dosso Dry Port, an important infrastructure project, and is providing financial and advisory support in Burkina Faso to help its cotton farmers better contend with erratic rainfall patters and boost their production.  

Outside of agriculture, entrepreneurs are the backbone of the Sahel’s economies. Here, as in other developing countries, they have trouble accessing the finance they need to grow. Big banks struggle to manage risk when lending to small business. So, IFC challenged itself to come up with a new tool to help both.

We created the Small Loan Guarantee Program, which is supported by the IDA Private Sector Window. The program guarantees 50% of loans big banks make to small businesses. IFC has invested EUR 40 million in the Banque Atlantique network – a subsidiary of ABI, Morocco’s second largest bank - to help them lend to entrepreneurs in eight countries across West Africa. This complements another $37 million SME risk sharing facility with Bank of Africa Group, that covers many African countries, including Burkina Faso, Togo, Mali, Niger and Senegal in the Sahel.

Another region-wide project is IFC’s $2 million investment in the Caisse Régionale de Refinancement Hypothécaire (CRRH), a recently-founded mortgage refinancing company that will help people buy affordable homes in West Africa.

These projects alone won’t transform the Sahel’s fortunes overnight, but they reflect IFC’s—and the wider development community’s—deepening efforts to support a region long overlooked for its potential for growth and its need for investment.

For its part, IFC has invested more than $3 billion in Africa’s fragile situations over the last 10 years and has set itself targets to greatly increase its support.  

A strong private sector is vital in the Sahel because it can help provide jobs and opportunities to the region’s population, especially its young people, giving them a stake in the future of their countries and reasons to work towards stability.

Authors

Aliou Maiga

IFC’s Regional Director for West and Central Africa

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