The International Finance Corporation (IFC), a member of the World Bank Group, announced on Wednesday a $2 billion commitment to support smaller businesses and increased trade in Africa to speed up the continent's economic recovery from the pandemic as well as sustaining and creating jobs and business activity.

The IFC will invest $1 billion in new direct financing for micro, small and medium-sized enterprises (MSMEs), the backbone of African economies, via mezzanine financing and risk-sharing instruments.

They will invest a further $1 billion in support of international trade finance for Africa to facilitate the flow of imports and exports of essential goods, including food and medical products.

The IFC said in a statement that the combined $2 billion package is among the IFC's largest ever commitment to specific initiatives in Africa and comes as the continent grapples with the ongoing COVID-19 crisis, which has plunged the region into recession, reduced foreign direct investment flows, and pushed millions more Africans into poverty.

"To create the conditions for an inclusive and sustainable recovery, it is essential to expand and adapt our approach to MSME financing and ensure that trade—which is the lifeblood of economic activity—flows without interruption. This is a critical time for people, businesses, and economies across Africa. Long-term recovery will depend on getting funding to the pillars of the economy that need it today”, said the IFC’s managing director Makhtar Diop.

The $1 billion MSMEs finance initiative will provide smaller businesses—that were already credit constrained before the pandemic, and that now face increased risks and uncertainty—with new sources of funding, beyond traditional ones, according to the IFC.

The focus will be on job-creating sectors while accelerating access to financial services through digital channels, and agrifood, given the continent's persistent food security issues.

Meanwhile, the $1 billion for recovery in African trade will support trade flows of critical goods by providing trade guarantees, risk-sharing facilities, and support to SME importers and exporters.

Besides food and medical products, the focus will be on supporting trade in the green energy and climate-smart agriculture sector.

The IFC said that these initiatives are open to public and private partners who wish to join the corporation.

COVID-19 has already dragged Africa into its first economic recession in 25 years, stifling private sector momentum and shrinking foreign direct investment to the continent by 18 percent, according to the IFC.

To support resilience and recovery, the IFC in 2020 announced a global $8 billion fast-track financing facility for existing clients to help sustain economies and preserve jobs during this global crisis. Over half of the $8 billion has already been deployed, of which more than 30 percent went to IFC clients in Africa.