1 Saving Africa’s private sector jobs during the coronavirus pandemic San Bilal, Stephany Griffith-Jones, Sony Kapoor, Stephen Karingi, Vera Songwe and Dirk Willem te Velde 1 15 April 2020 Key messages: • As a result of the coronavirus pandemic, Africa’s private sector is facing a very large recession, the likes of which has not been seen for 25 years. This is putting more than 20 million jobs and many livelihoods at risk, and pushing millions into poverty. • Africa is unable to provide the economic stimulus required to protect jobs. This will put in jeopardy many years of private sector development and job creation on the continent, and is wiping away hopes of a resilient recovery. There is an urgent need to provide additional liquidity for Africa’s private sector. • International donors have begun to step up their support to African public sectors, through, for example, World Bank, IMF, WHO and European Commission aid. • European Development Finance Institutions and their shareholders must step up with additional resources and use their links with the domestic banking sector and their competencies to channel liquidity to Africa’s private sector. • European DFIs support millions of jobs in Africa, often highly productive ones that have strong interlinkages with the rest of the economy. These direct and indirect jobs must be protected in the recession as they will be crucial to Africa’s bounce back. • For that European DFIs need to immediately boost the liquidity support for investee firms, increase their risk tolerance, relax debt servicing requirements where necessary, provide scarce foreign exchange when needed, come up with innovative support mechanisms including credit guarantees to deliver countercyclical support and set up a bounce back better and recapitalisation vehicle to inject equity into otherwise viable firms hit by the crisis. • This will require new capital, increased risk tolerance, temporary suspension of minimum return requirements and new credit lines and guarantees from donors of between € 2-5 billion. This will allow European DFIs not only to protect the jobs they support but also to prevent the loss of jobs in otherwise viable firms. 1 Dr Dirk Willem te Velde is Principal Research Fellow and Director of International Economic Development at ODI; Dr Sanoussi Bilal is Head of Programme at ECDPM; Professor Stephany Griffith Jones is Senior Research Associate at ODI and Financial Markets Director at Columbia University; Sony Kapoor is Managing Director at Re- Define; and Dr Vera Songwe is Executive Secretary and Dr Stephen Karingi is Director of Regional Integration and Trade at the UNECA. This paper has emerged after questions from EDFI on the note by Griffith-Jones and te Velde (2020). We are grateful to Kjell Roland and Soren Andreasen for suggestions, discussions and encouragements. The views expressed are those of the authors alone, and not necessarily their institutions. Comments welcome to d.tevelde@odi.org.uk