West Africa Trade Hub opens a fund for COVID-19 related relief for businesses

By Janey Fugate 

This story was updated on Aug. 25, 2020 to reflect new information on the Trade Hub’s additional funding. 

The USAID West Africa Trade and Investment Hub is poised to issue grants to support West African businesses affected by the coronavirus pandemic, with an emphasis on stabilizing supply chains and generating new, sustainable employment.

The U.S. Agency for International Development designated an additional $50 million in funds to the Trade Hub, with $36 million allocated specifically for COVID-19 relief. With this additional funding, the Trade Hub will partner with financial institutions to increase the working capital available to small and medium sized businesses hit hard by the pandemic. These partnerships aim to retain employment and to develop local solutions to mitigate COVID-19’s impact, notably in food security. 

This relief also supports the U.S. government’s Prosper Africa initiative. Prosper Africa aims to partner with the private sector to create sustainable, inclusive two-way trade and investment between the U.S. and African companies to support economic growth in the region through targeted co-investments.

The pandemic-related activity has three objectives: Overcoming disruptions in export-oriented supply-chains; supporting domestic food security initiatives and prevention of job losses; and scaling up production and service capabilities of companies engaged in COVID-19 response on a case by case basis.

Prior to the pandemic, supply chains were fragile and were a key focus of the Trade Hub, says Jim Winkler, Vice President of the Economic Growth Division at Creative Associates International, which implements the USAID program.

“The pandemic has forced us to rethink and shorten supply lines, particularly if they come from outside the continent,” says Winkler. “In addition, COVID-19 presented the Trade Hub with an opportunity to exercise the same values we want to see in all grantees, especially the ability to be agile and engage directly with the most pressing issues of the time.”

Michael Clements, the Trade Hub’s Chief of Party in Abuja, Nigeria, says, “as a USAID-funded program, the Trade Hub has a responsibility now more than ever to generate private investment, create jobs and increase trade across the region.”

New models for impact investing

From staffing cuts to border closings, a myriad of factors has made getting products from producers to consumers extremely difficult.

A Trade Hub survey of companies in its pipeline found that 68 percent of respondents planned to continue with their planned investments, 30 percent of the respondents who made staff cuts said they laid off at least a quarter of their workforce. In many cases, a reduced workforce has slowed down transportation. 86 percent of survey respondents reported that the COVID-19 pandemic had adversely affected their ability to sustain their operations and financial situation, with 28 percent of the firms indicating that they had partially suspended operations.

One survey respondent left this comment: “We have lost many of our onion and tomato production, because the weekly farmer’s markets were suspended and we lack storage capacity.”

The Trade Hub’s findings are in line with the U.N. Economic Commission for Africa’s data showing that 19 million jobs have been lost across the continent, underscoring the need for the rapid deployment of working capital to the private sector.

“The pandemic has woken us up,” said Winkler at the Corporate Council for Africa’s Leadership Forum in June 2020, which addressed COVID-19’s impact on the African economy. “When you’re a small- or medium-sized business facing an existential crisis, you either die or survive.”

Even before the pandemic, the Trade Hub was preparing to pilot new models for impact investment ventures that include small and medium sized businesses. A partnership with plans to channel working capital to thousands of small trucks, customers and small businesses moving goods in the formal and informal sectors in Nigeria could bring to relief on a scale unmatched by the agency before. As the economy faces a prolonged downturn from the pandemic, these kinds of ventures will become more urgent.

Women entrepreneurs and COVID-19

One of the Trade Hub’s benchmark metrics is the creation of 40,000 new jobs—with half for women—during the next five years. Because economic losses from the global crisis are not gender neutral, this standard is vital to sustaining gains made by women entrepreneurs in recent years.

The National Survey on the Impact of COVID-19 on Women Businesses in Nigeria, commissioned by several Nigerian government agencies, reported on the acute vulnerability of micro, small and medium-sized businesses, which are the kinds of enterprises typically headed by women.

One woman representing the agricultural industry who responded to the Trade Hub’s survey said: “We are now very low on farm inputs, which we get from Kaduna and Abuja, because the supplier is having serious challenges getting to us.”

Another respondent echoed the predominant sentiment that supply chain disruption is perhaps the most daunting challenge.

“After the pandemic, importation of items from outside the country will be hard, especially from China, because most of our raw materials come from China,” she said.

Given their findings, the National Survey’s writers encouraged policy makers to design stimulus packages with a gender sensitive lens. Similarly, the project’s COVID-19 specific response and its wider goal of elevating women entrepreneurs in West Africa are in line with the Women’s Global Development and Prosperity Initiative (W-GDP), an effort of the U.S. government to reach 50 million women by 2025 through public private partnerships and other government activities. 

The Trade Hub is not only looking at the quantity of jobs provided to women, but also their quality, while allowing the reality of the pandemic’s adverse effects on female-led businesses to shape its efforts going forward. Through its co-investment partnerships, the Trade Hub will work with companies to put more women in decision-making roles, and significant portion of the funds will be dedicated specifically towards W-GDP initiatives.

Imagining a different future

Organizations and businesses promoting economic development in Africa faced steep challenges before COVID-19. But despite new pressures, the Trade Hub’s ability to facilitate and pilot strategic public-private partnerships and new ways of doing business could prove to accelerate the region’s move towards inclusive, sustainable economic growth through intra-regional trade and two-way trade with the U.S., and offer a model for weaning countries’ reliance on inefficient import systems for food and other goods.

In this way, the co-investment funds will reach qualified companies in West Africa at a critical moment, when the chance to not only recover but to reimagine doing business has never been timelier.

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