As countries in Sub-Saharan Africa (SSA) have managed to keep the COVID-19 virus under control with a relatively low number of cases, the pandemic continues to take a toll on the region's populations and economies. Economic activity is estimated to have contracted by 2% in 2020, leading to the first recession in SSA in over 25 years. This situation could also push up to 40 million people into extreme poverty, reversing the progress made in the region over the past two decades.
FDI inflows to SSA decreased by 11% to approximately $28 billion in 2020, according to UNCTAD.
MIGA has been stepping up its support to Sub-Saharan Africa and help promote sustainable development across the region. We focus on our strategic priority areas, including low-income (IDA) countries, fragile and conflict-affected situations (FCS), and climate change.
In FY21, MIGA supported 16 projects in the SSA region and issued guarantees for $512.5 million, all of which supported one or more of its strategic priority areas. In Sierra Leone and Liberia, the Agency issued guarantees to back the expansion of solar energy generation to power existing and future cell phone towers and improve connectivity. In Rwanda, Kenya and DRC, MIGA is supporting off-grid solar technologies and helping increase access to electricity in rural areas and reduce CO2 emissions.
In FY20, MIGA supported 22 projects in the SSA region by issuing guarantees for $1.3 billion. Political Risk Insurance (PRI) guarantees issued in the region supported 14 Capital Optimization guarantees for $732 million, the development of two solar power plants and two wind power plants in South Africa, two solar power plants in Senegal and the expansion of a thermal power plant in Côte d’Ivoire. The Agency also issued a guarantee that is a new application of the existing Non-Honoring of Financial Obligations (NHFO) product to facilitate trade finance by a regional development bank to 22 countries in Africa.
EXAMPLES OF MIGA-SUPPORTED PROJECTS IN Sub-Saharan Africa
Sierra Leone and Liberia
In December 2020, MIGA issued guarantees of up to US$25.6 million to Escotel Mauritius covering its investments in solar power generation in Sierra Leone and Liberia for a period of up to ten years. The guarantees will support the provision of electricity and logistical services to power existing and future cell phone towers (Telecommunication Network Sites or TNS) in the two countries.
MIGA’s support for these projects will yield significant climate mitigation benefits. It is expected that 600 TNS will be modernized by 2028 in Sierra Leone, resulting in an avoidance of more than 58,000 tons of CO2 equivalent (CO2e) emissions over the period. In Liberia, a fragile and conflict-affected situation (FCS), nearly 158,000 tons of CO2e emissions will be avoided by the modernization of 612 TNS over the same period.
Rwanda, Kenya and DRC
In FY21, MIGA issued guarantees of up to US$37.1 million to a fund (AIIF3) managed by African Infrastructures Investment Managers (AIIM). The guarantees cover the fund's equity and quasi-equity/shareholder loan investments in Bboxx Capital Limited’s (Bboxx) subsidiaries in Rwanda, Kenya, and DRC for up to 10 years. An additional guarantee of up to US$5.9 million was issued to the Facility for Energy Inclusion’s Off-Grid Energy Access Fund (FEI-OGEF LP) of Mauritius to cover its loan to Bboxx DRC for a period of up to 5 years. The MIGA guarantees provide protection to AIIF3 and FEI-OGEF against the risks of Currency Inconvertibility and Transfer Restriction, Expropriation, and War and Civil Disturbance.
Bboxx is a next-generation utility, transforming lives and unlocking potential through access to energy. MIGA’s guarantees will strengthen Bboxx’s operations in the three host countries as the company expands its provision of clean energy. This will significantly improve economic opportunities in rural areas with low rates of electrification.
In June 2020, MIGA issued guarantees of up to US$235 million to a wholly-owned subsidiary of South Africa’s FirstRand Group, for a period of up to 15 years, covering the subsidiaries’ mandatory reserves held as per regulatory requirements in Botswana, Eswatini, Ghana, Lesotho, Mozambique, Nigeria and Zambia.
The guarantees will help unlock funding and liquidity, and support the economies of the host countries, which are being severely impacted by the COVID-19 pandemic, particularly in the commodities markets. Nearly 60% of the support provided by the MIGA guarantees will be directed to low-income (IDA) countries, and twelve percent will go to Nigeria, a country recently affected by conflict.
MIGA 2020 Gender CEO Award: Women Driving Growth in Africa
Ms. Aïssata S. Béavogui, Director General at Guinea Alumina Corporation (GAC), is the recipient of the MIGA 2020 Gender CEO Award. She oversees the implementation and strategy for sustainable development in the largest greenfield investment in Guinea, providing a leading example of how the mining industry can operate throughout the region. Ms. Béavogui is also the first woman director of an international company in Guinea and she is determined to inspire and empower local women as well as support sustainable development of local communities.
Somalia joins MIGA
In March 2020, the Federal Government of Somalia became the 182nd member of MIGA, following normalization of its financial relationship with the World Bank Group. Against the backdrop of the COVID-19 pandemic, Somalia’s membership will afford it new opportunities for drawing foreign direct investment and fostering economic growth in the coming years.