A new private sector initiative announced Wednesday will provide at least $450 million in commercial financing to the three West African countries hardest hit by Ebola to promote trade, investment and employment.
The International Finance Corporation, which is part of the World Bank Group, announced that the package will include $250 million in rapid response projects and at least $200 million in investment projects to support the economic recovery of Liberia, Sierra Leone and Guinea after the Ebola outbreak is controlled.
The announcement coincides with the U.N. Development Program’s release of a study on the socio-economic impact of the outbreak, which found that the governments of the three countries need $328 million to be able to function at pre-crisis levels. The study said the shortfalls are caused by increased spending to tackle Ebola and the slowdown of economic activity in fields such as tourism, mining and trade.
“Ebola is a humanitarian crisis first and foremost, but it’s also an economic disaster for Guinea, Liberia and Sierra Leone,” World Bank President Jim Yong Kim said in a statement. “That’s why in addition to our emergency aid, we will do all we can to help support the private sector in these countries to build back their business.”
IFC, the largest global development institution that focuses exclusively on the private sector, said its initiative includes a $75 million Ebola Emergency Liquidity Facility to fund critical imports for the Ebola-affected countries, including energy, food and agricultural commodities and manufactured goods.
IFC said its board approved the rapid response program last week. It will initially be available to six IFC client banks and could be expanded to additional banks.
Jin Yong Cai, IFC executive vice-president and CEO, said the corporation “will find and create opportunities to encourage private investors to play a large role in the recovery of markets directly and indirectly affected by the ongoing Ebola outbreak in West Africa.”
The UNDP study found that because of Ebola, government expenses have risen about 30 per cent in Liberia, Sierra Leone and Guinea, and fiscal deficits in the three countries are rising. In addition, Liberia has sacrificed $20 million worth of infrastructure improvements and Sierra Leone has sacrificed $16 million worth since the beginning of the crisis, it said.
In Liberia, half the mining and agricultural concessions have reduced their activities, UNDP said. In northeast Guinea, exports of fruit and vegetables to neighbouring countries have dropped 90 per cent, and in Sierra Leone’s capital, Freetown, nearly all bars, restaurants and nightclubs have closed. That has forced the country’s largest brewery to scale down operations, culminating in a loss of 24,000 jobs in the supply chain.
The financial constraints have forced the three countries to resort to domestic and international borrowing, and they have already taken financial packages from the International Monetary Fund and the World Bank, UNDP said.
UNDP’s Africa regional director, Abdoulaye Mar Dieye, said the crisis has taken a toll on budgets and reduced the ability of the three governments to invest in critical areas such as health and education.
“We need to make sure that the Ebola outbreak does not lead to socio-economic collapse,” Dieye said in a statement. “These countries were heavily reliant on aid but beginning to see healthy rates of economic growth and opportunities for business, economic diversification and domestic resource mobilization. We need to avoid a situation where these countries increase their dependence on external sources of financing.”