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

The EBRD said the MoU is expected to catalyse new sources of financing to help bridge the $2.5 trillion annual financing gap for development in Africa, adding that the gap requires development finance institutions to work in partnership.

Under this partnership, the AfDB and EBRD will 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.

The coronavirus is threatening progress made towards the UN Sustainable Development Goals and exacerbating the debt vulnerability of many African countries, said the EBRD, adding that 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 Akinwumi Adesina, president of the AfDB.

EBRD President Odile Renaud-Basso said the pandemic crisis has made the need for better and closer collective action more urgent.

“Over the years, collaboration between the EBRD and the AfDB 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,” Renaud-Basso explained.

In April, the EBRD and AfDB signed a $114 million financing package for the construction of the largest private solar plant in Egypt during the EBRD president's first official visit to the country and the Mediterranean region.

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

EBRD is positive on Egypt’s economy in 2021 and beyond thanks to the country’s economic reform programme and its robust macroeconomic performance, EBRD’s president told Ahram Online in an interview published in April.