The African Development Bank Group and the European Bank for Reconstruction and Development (EBRD) signed a memorandum of understanding (MoU) on Monday to promote sustainable private-sector development in Africa.

The MoU will catalyse new sources of financing to help bridge the US$2.5 trillion annual financing gap for development in Africa. This gap requires that development finance institutions work in partnership.

Under this partnership, the African Development Bank and the EBRD will capitalise on their respective expertise and experience, with a particular focus on climate change, green and resilient infrastructure and the development of capital markets. They will also work to improve business environments, bolster the real economy and mobilise private-sector investment.

Covid-19 is threatening progress made towards the UN Sustainable Development Goals and exacerbating the debt vulnerability of many African countries. Sustainable private-sector development will be key to recovery and prosperity across the continent.

“The new partnership agreement between our two institutions will pave the way for us to do more together, especially in supporting the growth of Africa’s private sector. The impact of Covid-19 on government resources is huge and we need to mobilise more private resources to help African countries build back stronger,” said Dr Akinwumi Adesina, President of the African Development Bank, on signing the MoU with his EBRD counterpart.

EBRD President Odile Renaud-Basso said: “The Covid-19 crisis has made the need for better and closer collective action even more urgent. Over the years, collaboration between the EBRD and the African Development Bank has grown from strength to strength in the region. This partnership will allow our institutions to do even more to promote sustainable private-sector development in North Africa.”

The African Development Bank and EBRD have a long history of cooperation. Last month, the two institutions signed a US$ 114 million financing package for the construction of the largest private solar plant in Egypt.

This new partnership will enable them to strengthen their potential for joint projects and activities, unlocking investment opportunities in economies where both organisations operate.