Dr Akinwumi Adesina, the President of African Development Bank Group (AfDB) has outlined the bank’s future vision for growth and climate resilience for Africa, while underscoring the bank’s determination to mobilise resources for driving economic transformation, and addressing the continent’s debt challenges, among other priorities.
According to the AfDB President, the General Capital Increase of the Bank in 2019 from $93 billion to $208 billion, was “the highest ever in its history since its establishment in 1964. It provided the Bank with the financial firepower to strongly support Africa to deal with and recover from the COVID-19 pandemic.” Dr Adesina noted that the Bank provided a COVID-19 response facility of up to $10 billion to support governments and the private sector to tackle the effects of the pandemic.
Dr Akinwumi Adesina made this known while addressing the 5th Mid-Year Coordination Meeting of the African Union (AU) in Nairobi, Kenya. Adesina spoke about the Bank’s significant investments, including spending $44 billion in regional and national infrastructure projects over the past seven years.
The meeting was attended by nine heads of state and government, the Chairman of the African Union Commission, Moussa Faki Mahamat and Deputy Secretary General of the United Nations, Amina Mohammed. Also present were the heads of Pan-African organisations and regional economic communities, and representatives of international agencies. The AU convened the meeting under the theme, ‘Acceleration of African Continental Free Trade Area (AfCFTA) implementation’.
Mobilising Resources for Africa
Reporting on the Bank’s resource mobilisation efforts, Adesina indicated that following two years of hard work, the African Development Bank helped to pioneer, together with the Inter-American Development Bank, an innovative financial structure that met International Monetary Fund (IMF)’s technical requirements to re-channel Special Drawing Rights (SDRs) through multilateral development banks.
Since last year, he said African leaders have been calling for an additional $100 billion in SDRs for the continent, and that a share of this be re-channelled through the African Development Bank, which is a prescribed holder of SDRs.
The initiative, which won plaudits from United Nations Secretary-General António Guterres and other world leaders, would enable the African Development Bank to leverage the SDRs by a factor four and deliver significant resources for the continent.
Adesina told African leaders that their outreach was needed to firm up the re-channelling of the SDRs to the African Development Bank this year.
Easing Africa’s Debt Burden
Adesina disclosed that the Bank is proactively pursuing mechanisms, working with the World Bank and the IMF, and bilateral creditors on managing Africa’s debt situation within the G20 Common Framework.
The G20 launched the Common Framework to coordinate debt reprofiling and restructuring by official and private creditors, including non-Paris Club member lenders such as mainland China, India, Saudi Arabia, Kuwait, and Turkey to ensure fair burden-sharing across all creditors. Chad, Ethiopia, and Zambia also requested debt relief under the Common Framework.
“We must decisively tackle Africa’s rising debt challenge,” Adesina urged, expressing concern at the continent’s total debt stock, which stands at $1.3 trillion. The cost of debt servicing reached $22 billion in 2022 and is expected to rise this year.
However, the Bank President said Africa needs to change its approach to debt and called for an end to all natural resource-backed loans. He thus, said, “They are not in the interest of Africa, as they are non-transparent. They undervalue resource assets, and pawn national assets”. He added that natural resource-backed loans had led to “predatory creditor lending practices that are leaving borrowing countries worse off.”
In terms of mobilising resources to tackle Africa’s food insecurity, the Bank President highlighted the January 2023 Dakar 2 Food Summit, which up to 34 heads of state and government, development partners, farmers and the private sector operatives attended. The Bank has to date mobilised $72 billion to implement the food and agriculture delivery compacts developed during the summit.
Adesina also spoke about the outcome of the $1.5 billion emergency food production facility that the Bank launched in May 2022 in response to the Russian-Ukraine war, which sent wheat and maize prices soaring globally and posed a threat of a food crisis in Africa. Many countries on the continent depend on the two countries for imports of maize and wheat. Up to 44 countries are benefiting from the facility, which Adesina said is “supporting 20 million farmers across the continent to produce 38 million metric tons of food.”
The African Development Bank Group head highlighted the impact of the 16th replenishment of the African Development Fund – the group’s concessional window for Africa’s low-income countries last year, which mobilised $8.9 billion for these countries. He said this was the highest replenishment since the Fund was established in 1972. He explained that the replenishment also created a special Climate Action Window to support climate resilience in low-income and fragile states, to which the Bank has mobilised $429 million.