AECF calls for targeted investment in African enterprises to buffer economic shocks

The Africa Enterprise Challenge Fund (AECF) is urging intentional investment in enterprises that strengthen food systems, energy access, and local production across Africa. Lotfi Kourdali, AECF's director for West Africa, described such enterprises as strategic assets for managing economic risk. He emphasized that investing in them during periods of uncertainty helps reduce market fragility over time. In 2020, Sub-Saharan Africa's economy shrank by 1.6 per cent, the region's first recession in 25 years. Soon after, fertiliser prices rose nearly 80 per cent and wheat prices surged more than 60 per cent at their peak. These shifts reflected how external volatility directly impacts local economies through energy, food, and finance channels. Kourdali noted that global crises quickly affect everyday decisions in Africa, such as spending, investing, or holding back. He argued that resilience should not focus only on recovery but on building market buffers that reduce dependence on unstable supply chains. AECF's investments in distributed renewable energy during the COVID-19 pandemic helped maintain affordable power access when fuel costs rose. Similarly, support for climate-smart agriculture and local agro-processing during the food crisis strengthened domestic value chains. These enterprises now act as market stabilisers, reducing economic pass-through risks. Kourdali said catalytic capital should be treated as countercyclical infrastructure, with increased deployment of blended finance and guarantees when private capital retreats.

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