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Frequently Asked Questions about the Investment Climate Facility (ICF)

1. What is the problem?

If Africa is to achieve the 7% growth necessary to meet the key Millennium Development Goal of halving the proportion of people in absolute poverty by 2015, the business environment must improve significantly.

Investment is essential for economic growth. Economic growth is vital for job creation, better services, greater prosperity and poverty reduction. Without these, Africa will not be able to lift itself out of poverty and meet the MDGs.

The Commission for Africa, NEPAD and the G8 have all recognised the need for a vehicle to improve investment in Africa.

2. So what is the ICF?

It is a new private-public partnership, focussed on improving the continent's investment climate. It aims to make Africa a better place to do business, by removing obstacles to domestic and foreign investment and by promoting Africa as an attractive investment destination.

It is supported by NEPAD and endorsed by African Heads of State. The ICF is an independent trust with strong African representation on the Board of Trustees. It is managed according to business principles

It will be the means through which the private sector, the G8 countries, other donors and African governments and institutions can support Africa's vision for sustainable growth and development.

3. What will the ICF do?

The ICF aims to facilitate the removal of real and perceived obstacles to doing business in Africa. This will involve:

The ICF will also work towards improving Africa's image as an attractive investment destination, publicising, among other things, improvements made to the investment climate.

The ICF will work with African governments, regional organisations, donors, companies and civil society to prepare and finance initiatives to improve the investment climate at national, regional and at a continental level.

5. What type of activities will the ICF fund?

In addition, it will support the recommendations that arise from the Africa Peer Review Mechanism process in relation to the investment climate.

Activities funded under the ICF are likely to include: research and analysis; legislative review and reform; capacity building of institutions such as land registries, company registries and commercial courts; pilot projects (such as streamlined business registration systems); and facilitation of better public private dialogue.

6. What is the scope and scale of the ICF?

The ICF will focus its programmes mainly in the 24 African countries that have signed up to the Africa Peer Review Mechanism under NEPAD. Over its initial phase of three years, the ICF expects to support initiatives costing up to a total of US$120 million. But over its full life of seven years the ICF expects to be able to facilitate in excess of US$500 million of reform work.

7. What will be the private sector's role?

The private sector is a valued partner and co-funder of the ICF. Each supporting company is providing US$2.5m to the ICF over 5 years. The private sector funding companies will not have any direct role in the funding decisions of the ICF (these will be made by the Board of Trustees. They will however nominate a total of 2 nominees to the ICF Board and they will meet regularly with the ICF Executive Secretariat to ensure that the IF work addresses the most important constratints to doing business in Africa. Since the ICF is accountable to its funders, the companies supporting the ICF will also attend ICF AGMs and receive ICF reports and evaluations.

8. What will be the donor's role?

The donor community will provide the majority of the funds for the ICF. DFID has committed support of US$30m over 3 years and others are considering their position. Donors will have a total of three nominees on the Board of Trustees and donors will have the opportunity to submit written comments on ICF proposals. Since the ICF is accountable to its funders, donors will also attend ICF AGMs, receive ICF reports and conduct periodic external evaluations of the ICF's performance.

9. What will be the role of African governments?

African governments are THE key stakeholder and main beneficiary of the ICF. The ICF is a Facility for African governments to apply to and draw on. Governments may propose specific projects or they may be prompted through discussions with the ICF Secretariat. Governments will also be represented on the ICF Board of Trustees through the NEPAD and AU observers.

10. How will the ICF allocate its projects and spending between Africa regions/ countries?

The ICF will focus initially on the countries that have acceded to NEPAD's Africa Peer Review Mechanism process, since the leadership in these countries has demonstrated willingness towards improving governance.

The ICF recognises that regions and sub-regions in Africa may have barriers in common and thus both country and regionally specific approaches will be adopted to facilitate inter-regional trade and investment. It will be important to maintain a balance of reform support between Anglophone and Francophone Africa.

11. How will the ICF determine which projects it will fund?

The ICF will fund proposals that offer the highest rate of return in terms of improving the investment climate, particularly those that have the greatest impact on the environment for small business and poverty reduction (primarily through job creation). Project proposals will be screened, appraised, consulted on and further developed as necessary by the ICF Secretariat. An Investment Sub-Committee of the Board of Trustees will consider which projects to select or reject on the basis of agreed criteria. The Investment Sub-Committee will operate on a consensus model. Major projects will require full board approval.

12. How does the ICF differ from other donor initiatives?

The ICF is a new and unique private-public sector funded independent trust, in support of and supported by NEPAD and endorsed by African Heads of States. It is the only pan-African body, based in Africa, explicitly focused on improving the continent's investment climate. It is in line with Africa's own vision for the future, will be run in accordance with private sector principles, and will be quick disbursing, dynamic and responsive.

13. How does the ICF link with the Millennium Development Goals and the APRM process?

If Africa is to achieve the 7% growth necessary to meet the key MDG of halving the proportion of people in absolute poverty by 2015, the business environment must improve significantly. The ICF is singularly focused on this issue. The ICF is closely linked to the APRM process and is seen as a key vehicle to assist African Governments to address economic and corporate governance shortfalls highlighted in their Peer Review reports.

14. What relationship will the ICF have with regional economic communities in Africa?

The Regional Economic Communities (RECS) are very important partners for the ICF, particularly as the ICF has the ability to work on a sub-regional basis. The ICF will work closely with, and support, the regional economic communities to progress their activities to improve the business environment in their respective regions.

15. What is the ICF's governance structure?

The ICF will be governed by a Board of Trustees with strong African representation. The Board will provide oversight, direction and accountability. The Investment Sub-Committee of the Board will consider and decide on project proposals submitted for funding. An Executive Secretariat appointed by the Board will be responsible for managing the ICF on a day-to-day basis and delivering its results. The ICF's structure incorporates best practice in terms of corporate governance.

16. What role does the Board of Trustees play?

The Board ensures that the ICF is responsible to its investors and to African and other high-level stakeholders. It decides and reviews the overall strategic direction and policy for the ICF and monitors overall performance of the ICF, including its management. The Board will be accountable to the ICF's donor and company funders regarding use of funds, and will establish and maintain effective procedures and controls for the management of risk based on good practice. The Board will report, bi-annually, on the ICF's performance to stakeholders within the AU and NEPAD structures.

17. Who will be the Trustees of the ICF and who selects them?

The Board of Trustees will be made up of a maximum of 14 people acting in their individual capacity. The Trustees will be African nationals or people with a demonstrated record of engagement in Africa. The composition of the Board will reflect a good balance of the diversity of Africa and appropriate skills and experience. The corporate and donor investors will select the Trustees.

18. How will the ICF prevent conflict of interest regarding private sector investors?

No projects that are to the benefit of one particular company or small group of companies may be funded by the ICF.

All projects will be for the benefit of the business community as a whole, broad sectors of business (e.g. the ICT sector) or parts of the business community (e.g. small business).

19. How will the ICF measure impact?

The ICF will create a baseline of key macroeconomic and other indicators for its main target countries, against which its impact will be measured. The majority of indicators will be drawn from existing sources. They will include rates of domestic and foreign investment per country, average annual economic growth rate, employment rate, number of registered businesses, days to register business, levels of access to finance, poverty measures, etc in APRM countries. The ICF will also measure impact against a number of more qualitative measures, such as improved dialogue and trust between business and government.

20. Why does the ICF have a limited life-span?

The ICF is a facility to catalyse change and, as such, it will support and enable the appropriate institutions across Africa to improve the business environment. It is expected that it will have made a substantial impact and delivered self-sustaining processes after seven years.

21. How will the ICF ensure that the initiatives it funds will have sustainable benefits? The long-term sustainable benefits of the ICF will be achieved through its efforts to strengthen and build the capacity of African governments, independent regulators, business associations and other institutions - all of whom will be the ICF's partners.

22. Why should donors and corporates invest in the ICF?

By investing in the ICF donors will be supporting Africa's own agenda for increasing investment, jobs and economic growth and attaining the MDG's. For corporates, a faster growing more prosperous Africa is simply good for their businesses. For both, the ICF offers a unique opportunity to work together, with and in Africa, to promote sustainable growth and development.

23. Which other countries/donors are supporting the ICF?

The UK government is actively encouraging other donors to commit to the ICF, and hopes that by announcing its contribution, will encourage others to follow the UK's example.

24. How can organisations and interested parties access ICF funds?

The ICF welcomes proposals from appropriate organisations, where these address the strategic themes and priority areas identified by the ICF. Organisations are welcome to approach the ICF with an initial concept note. The concept note template can be downloaded from the External website ICF website. In addition, the ICF website will include notice of opportunities to tender for specific projects.

Further information