The World Bank Group today approved $150 million from the International Development Association (IDA)* to help the Government of Rwanda increase access to finance and to support recovery and resilience of businesses affected by the COVID-19 pandemic.
The Access to Finance for Recovery and Resilience (AFIRR) Project also benefits from $25 million in IDA grants, as well as an additional $7.5 million grant from the Global Risk Financing Facility (GRiF), to help enhance business’ access to finance.
“This project is an important contribution to the government’s post-COVID Economic Recovery Plan, promoting investment in priority growth sectors, supporting jobs and reinforcing Rwanda’s financial system’s crisis preparedness.” said Rolande Pryce, World Bank Country M anager. “The AFIRR project provides significant resources to help further capitalize the Economic Recovery Fund coupled with enhanced support programs to improve firms’ capacity and remove barriers to access to finance. It provides a suite of instruments that strengthen the existing recovery ecosystem ranging from financial instruments to adjustment mechanisms that include innovative risk mitigation solutions.”
The project will provide financing targeting affected businesses to facilitate refinancing of existing debt obligations, provide working capital, and support investments for business adaptation and growth through the provision of longer-term sources of finance. This will be complemented by risk sharing instruments, including a partial credit guarantee scheme and a bridge loan and insurance facility, to increase access to finance for underserved segments, such as micro, small and medium sized enterprises (MSMEs). In addition, the project will provide targeted technical assistance to firms, participating financial institutions, and government implementing agencies, to address existing constraints for increasing uptake of the Economic Recovery Fund.
“Interventions under the project will help businesses to continue to operate and adapt to the post-COVID-19 environment. They will also provide a lifeline to firms in growth-potential sectors that find it difficult to access financing from financial institutions; this will contribute to preserving jobs and mitigating loss of otherwise productive firms that can help drive economic recovery” said Brice Gakombe, World Bank Financial Sector Specialist, and Task Team Leader of the project.
In addition to providing financing, the AFIRR project will bolster the capacity of key government and private sector stakeholders on the technical aspects of the financing and risk-sharing instruments, as well as disaster risk financing principles. As women were hardest hit by the COVID-19 (coronavirus) pandemic, the project focuses on increasing the share of women-inclusive enterprises able to access financing under the liquidity and financing facility and through targeted training to address gender specific constraints for MSMEs as well as improve outreach in underserved segments.
The AFIRR project will be co-financed in the amount of $100 million by the Asian Infrastructure Investment Bank (AIIB), of which Rwanda is a non-regional member. It is AIIB’s first investment in Rwanda.
WEF calls for new partnerships to generate private capital for fragile communities
The World Economic Forum released today a paper that calls for new collaboration between humanitarian and development organizations, businesses, investors and entrepreneurs to make a difference to the lives of the nearly 1 billion people living in fragile and conflict-affected settings worldwide.
Cultivating Investment Opportunities in Fragile Contexts: Catalysing Market-Driven Solutions to Strengthen Community and Economy Resilience outlines a practical approach to how organizations can build the capacity and strategic thinking needed to develop a sustainable business case for solutions that have the potential to unlock new sources of finance to reach impact at scale.
“It takes more than a single intervention to unleash transformational change in complex ecosystems. To truly leverage the potential for positive and sustainable social impact while meeting investor demand for returns, new ways of collaboration across sectors are needed,” said Børge Brende, President of the World Economic Forum.
The IKEA foundation is a partner of this initiative. Over the next three years the partnership will develop innovative business models and investments that strengthen local economies and increase the self-reliance and resilience of the most vulnerable communities and economies.
“We support the World Economic Forum because of our mutual goal to improve the lives of people who are affected by crises, including those who are forced to flee,” said IKEA Foundation CEO Per Heggenes. “We believe that together we can help attract the investment needed to strengthen fragile communities and empower the people who live in them to rebuild their lives and create a better future for children and their families.”
The joint discussion paper is an evolution of the work initiated by the Forum’s Humanitarian and Resilience Investing (HRI) Initiative, which was launched at the World Economic Forum Annual Meeting 2019 in Davos-Klosters, Switzerland.
As a first step, the initiative will operationalize the Organizational Readiness Playbook launched in 2020, and bring together a cohort of pioneers from humanitarian and development organizations, donor governments and development finance institutions to increase organizational capacity for HRI.
The initiative will also support investment opportunities targeting HRI to meet investor criteria and attract the commercial capital needed to reach scale. It will further facilitate the development of new tools, research and resources, including the standards, common terminology and analytic frameworks that allow for systems-level impact measurement.
Von Der Leyen Condemns ‘Russia’s Blackmail’ on Food and Fuel
Ursula von der Leyen, President of the European Commission, denounced Russian aggression and its use of “hunger and grain to wield power”, in a special address at the World Economic Forum Annual Meeting 2022.
“Global cooperation is the antidote to Russia’s blackmail,” she said.
Her message focused on strategic priorities for Europe since the invasion. Boosting military spending is one such initiative. “We have to invest much more in solid European defence capabilities,” von der Leyen said. While NATO remains the world’s strongest military alliance, European spending on defence has not kept pace with recent increases by the United States, Russia or China, particularly since the 2008 financial crisis.
Increasing that spending – with a particular focus on the interoperability of nations’ defence investments – can help strengthen the region’s ability to defend itself from such threats.
She pointed to other key initiatives such as promoting green power, ensuring the resilience of supply chains and promoting food security. In terms of energy, she said, the crisis in Ukraine has galvanized Europe’s embrace of renewable sources and diversification of its energy supply.
RePowerEU, a €300 euro plan launched last week by the European Commission, aims to accelerate the green transition by nearly doubling Europe’s energy consumption from renewable sources by 2030.
Ultimately, “hydrogen is the new frontier of Europe’s energy network”, von der Leyen said.
Europe must respond to additional knock-on effects of the war, such as rising food prices, as Russia has confiscated Ukrainian grain and blockaded other food exports. Europe is helping by providing revenue, increasing its food production and supporting other regions such as Africa in becoming less dependent on food exports.
Technology can be a part of the solution to food insecurity to boost “climate-smart” agriculture. Vertical farming and precision irrigation are among the initiatives that can improve access to food in climate-responsible ways.
In a conversation with Klaus Schwab, Executive Chairman and Founder, World Economic Forum, von der Leyen noted that she could see a long-term future in which Russia found a path back to alignment with Europe.
“This brutal invasion is standing up against the leadership in Russia,” she said. The people of Russia, who ultimately will control the nation’s future, are the ones who will decide the nation’s way forward. If, in the future, the nation embraces “rule of law and respect for the international, rules-based order, it’s a clear yes”, she said.
Stoltenberg: Freedom Must Come Before Trade
NATO Secretary-General Jens Stoltenberg, in a keynote speech to the World Economic Forum Annual Meeting 2022, told participants that the brutal war of aggression on Ukraine has shattered peace in Europe, triggering an historic enlargement of NATO.
“NATO has two fundamental tasks in response to Russia’s aggression: providing support to Ukraine and preventing the war from escalating,” he said.
“Since Russia’s invasion, NATO has significantly stepped up support – with billions of dollars of weapons and other assistance to help Ukraine uphold its right to self-defence as enshrined in the UN Charter.”
“We may have been shocked by Russia’s brutal invasion. But we should not be surprised,” he said.
Stoltenberg pointed out that the invasion was one of the “best predicted” acts of military aggression ever, adding that NATO shared intelligence and made it public for months “to warn about Putin’s plans”.
“Russia’s attack on Ukraine is part of a pattern over many years – the use of military force to achieve its political aims: the destruction of Grozny; the invasion of Georgia; the annexation of Crimea; and the bombing of Aleppo.”
“In response we will defend every inch of NATO territory,” he said.
He laid out a series of significant actions taken by NATO – increased defence spending, deployment of combat battlegroups in the eastern part of the alliance and placing 100,000 troops on high alert. And, for the first time ever, a US Amphibious Ready Group has been placed under NATO command.
“NATO’s response is not to provoke conflict but to prevent conflict and preserve peace,” he said.
Referring to Finland and Sweden’s historic decision to apply for NATO, he said: “President Putin wanted less NATO on his borders and launched his war – and now he is getting more NATO on his borders.”
“Today, close to 600 million Europeans live in a NATO country, with the alliance protecting about 93% of the EU population,” he added.
In a question-and-answer with Børge Brende, President, World Economic Forum, after his speech, Stoltenberg pointed out a key lesson of the war in Ukraine that economic relations with authoritarian regimes can create vulnerabilities.
“Freedom is more important than free trade,” he said, and “the protection of our values is more important than profit.”
He said the World Economic Forum has brought the global community together for half a century to address some of the world’s most difficult problems. “Today we need this spirit of Davos more than ever.”
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