African Development Bank Group (AfDB) President Dr Akinwumi Adesina has called for a major political commitment to kick-start construction work on Democratic Republic of Congo’s giant Inga 3 dam.
According to the AfDB President, the Inga 3 project has the potential to meet the power needs of more than a dozen countries in central and southern Africa. “We have been talking about Inga 3 for many years… What we need is political coordination,” Adesina told members of the Board of Directors of the Development Bank of Southern Africa (DBSA) led by its Chairman Ebrahim Rasool during a meeting at the Bank’s headquarters in Abidjan.
Recalling that South Africa’s President Cyril Ramaphosa had raised the issue at last year’s Paris Summit on a New Global Financing Pact, Dr Adesina declared that the huge potential output from Inga 3 could solve South Africa’s perennial energy shortage which has badly affected the country’s economic performance.
“While South Africa is Africa’s largest industralized economy, it continues to face challenges in its energy sector, causing a drop in its industrial output, contracting of the GDP and job creation, and this is also having an impact on the region.”
Dr Adesina
President Ramaphosa told global leaders, “To prove that these summits are not summits where we just talk, let us now put money on the table and collectively say we are going to address this mega project which will generate electricity for up to 12 to 15 countries. This is a project that multilateral development banks working together can fund.”
The Bank is already financing the Mphanda Nkuwa hydroelectric project in Mozambique which is set to generate 1,500 megawatts for South Africa and help in overcoming crippling electricity shortages which have led to several hours of power cuts every day for the last few years and driven local businesses to despair.
Dr Adesina added the Bank would continue to work with DBSA, other development partners and the government of South Africa to tackle the country’s energy challenges including its transition from coal to clean energy.
Other Challenges Facing South Africa
Besides energy challenges, Dr Adesina said there are other challenges facing South Africa such as poverty in the townships and rural areas as well as unemployment among young people that need urgent attention.
The Bank and DBSA, already working together on several projects, expressed their readiness to deepen the relationship by investing in transport corridors, such as Mozambique’s Nacala corridor which links Zambia, Malawi and Mozambique, and the Lobito corridor linking Zambia to Angola and the Democratic Republic of Congo.
Adesina and Rasool said their institutions should devise local financing solutions for infrastructure transactions to avoid depreciating currencies in many countries resulting in increasing borrowing costs on dollar-based loans.
To tackle youth unemployment, Dr Adesina spoke about the Bank’s Skills Enhancement Zones program, through which it has invested $81 million in Nigeria’s Ekiti State to create an ICT digital hub that involves fintech companies moving out of Lagos into this new ecosystem. The Bank is supporting the development of housing, an airport, and digital infrastructure in the area.
South Africa could also benefit from the Bank’s Youth Entrepreneurship Investment Banks initiative that is developing a financial and technical ecosystem to support business by young people. Explaining the aim of the initiative, Adesina said, “It’s not possible that we have 477 million young people under 35 but no financial ecosystem to support them.”
Rasool agreed. “I don’t think we’ve ever trusted young people to ask for money, to lend them money, to ask for grants with business plans,” he said.
Regarding investment in women, Rasool attributed the existing financing gap for businesses owned or run by women to “prejudice which translates into discrimination, which becomes a disposition,” and praised the African Development Bank for “putting your money where your mouth is.”
The African Development Bank runs the Affirmative Finance for Women in Africa initiative (AFAWA) to mobilise $5 billion to support businesses run by women.
On health care, Adesina proposed a new and scalable business model to invest in primary health infrastructure across Africa and called on DBSA to join it in this effort.
