Improving the quality of Guinea’s public services to small and medium-sized enterprises (SMEs), which have been labelled the backbone of Guinea’s economic growth and key for job creation, will be at the core of the International Finance Corporation (IFC)’s $30 million investment programme for 2015.
The allocation to the West African country is nearly triple the amount of IFC’s total investments for the last three years, a rise which reflects the importance the World Bank’s private investment arm attaches to opening up multinationals’ current monopoly over energy- related opportunities to a viable local supply chain of SMEs and gradually privatise Guinea’s energy sector, a source close to the matter revealed to Infrastructure Investor in a phone conversation.
“SMEs are critical to job growth and economic recovery, and IFC is working through our financial intermediary and corporate clients to ensure SMEs have the capital and access to markets they need to grow, as well as training and capacity building to boost their competitiveness,” said Jin-Yong Cai, IFC chief executive officer, at the Ecconomic World Forum in Davos last week.
The IFC, in partnership with UK-based mining group Rio Tinto, is setting foundations for the creation of thousands of jobs around the multi-dimensional Simandou project, a 2 billion-tonne iron ore mine exploration project, expected to lead to an affiliated trans-Guinean 760-kilometre (km) railway line from the mining plant in Southeast Beyla to the Northwestern coastal prefecture of Forecariah, as well as the construction of a deep water port south of Conakry.
The multilateral expects 3,500 SMEs to supply the overarching project’s construction and operational phases, activities respectively catalysing 10,000 and 20,000 additional jobs during the project’s lifetime.
Under the IFC’s investment climate programme, support will be given to public-private dialogue platforms designed to improve business regulation, investment and tax policy and general assistance in improving the energy sector’s services to SMEs and other private sector players. Technical assistance to mining companies will be provided in areas such as procurement.
With regards to the Simandou mining project, IFC currently owns 5 percent of the concession holding company Simfer, while Rio Tinto owns 95 percent. The government of Guinea has negotiated a right to acquire up to a 35 percent interest in Simfer (under various option arrangements) and a 51 percent fully funded interest in the related Simandou infrastructure (port and rail) projects. Subject to satisfaction of certain completion requirements, Chalco (a subsidiary of Chinalco, a multinational Chinese state-backed holding company) will have an indirect participation in Simfer through a joint venture agreement with Rio Tinto.
Cai pointed out that the Ebola-stricken country had been facing a $900 million financing gap for its SME sector, and only six percent of firms had been able to access the credit they needed – even before the Ebola crisis erupted in the country and the IFC introduced its lending programme.