African Development Bank President Dr Akinwumi A. Adesina has said that a concerted effort to change the narrative on Africa in the United States is necessary to attract increased investments into the continent.
He said the need for advocacy in the United States made having an African Development Bank office in Washington a matter of importance, and that he would be pursuing approval with the Board of the African Development Bank Group.
Meeting with African ambassadors at the chancery of the Embassy of the Republic of Congo in Washington on Friday 1 October, Dr Adesina said: “We are a responsive and solutions bank at the heart of Africa's development, and at the core of our work as a multilateral development bank, there is a very clear strategy to fast-track Africa's development.”
In a comprehensive tour d’horizon of the Bank’s priority agenda, Dr Adesina began by thanking the ambassadors for their strong support for his re-election to a second consecutive five-year term last year under the leadership of their Dean, Ambassador Serge Mombouli of the Republic of Congo.
Speaking to the Bank’s core objectives, he drew the ambassadors’ attention to the UNDP’s assessment, which showed that if Africa achieved the Bank’s High 5 priorities, it would have achieved 90% of both the African Union’s Agenda 2063 and the UN Sustainable Development Goals.
Promising results at scale
The African Development Bank chief told the ambassadors that the results already spoke for themselves. In the past five years, he explained, the Bank, through its High 5s, had positively impacted the lives of 335 million people. He said that 21 million people had gained access to electricity, 76 million people to agricultural technologies to ensure their food security, and 12 million people had gained access to finance through the investee companies the Bank itself had invested in. He also revealed that 69 million people had benefitted from improved transport infrastructure, while 50 million people had benefitted from improved water and sanitation.
“This is the kind of scale on which we work,” Dr Adesina said, explaining that the desired level of development will not come about by small projects but by those of scale.
The Bank chief said the Covid-19 pandemic had made the challenge of development tougher, with 5 million Africans infected by the virus and more than 200,000 lives lost. The Bank, he explained, had moved quickly, launching a $10 billion crisis response facility to provide fiscal support to countries, and going to the international capital markets to launch a $3 billion fight Covid-19 social bond – the largest social bond denominated in US dollars ever done in the world.
Dr Adesina decried the vaccine nationalism by developed countries. He said Africa had only fully vaccinated 24 million people, a mere 2% of its population. “In Africa we have 4.4% of the population receiving one dose, and 1.8 % of the population receiving the second dose. Compare this to 70% in Europe and 56% right here in the United States, respectively,” he said. “So, while developed countries are moving to booster shots, Africa is still struggling to just get basic shots.”
An African healthcare defense system
The African Development Bank president said Africa must learn some critical lessons from this experience. “Africa cannot, and Africa must not, outsource the health security of its 1.3 billion people to the generosity and the benevolence of others,” he stressed. “Africa must ensure health security for its people with a good healthcare defense system. Another virus will come, and we cannot be in this situation where we are not able to respond or where we are the last to be able to get access to vaccines.”
Dr Adesina said Africa must develop its indigenous pharmaceutical manufacturing capacity. He said this was important not only for Covid-19, but also for other viruses to come after Covid-19. As part of efforts to revamp Africa’s quality healthcare infrastructure, the African Development Bank is investing $3 billion dollars to support pharmaceutical and vaccine production on the continent.
The issue of debt sustainability also had resonance. The Bank president and the envoys agreed that the75% rise in Africa’s debt to GDP and the continent’s quantum $845 billion of debt was a matter of grave concern. The share of Africa's debt from private and commercial debt has risen from 17% in 2002 to 40% today. Most of this is high yield short-term debt.
Dr Adesina said the recent issuance of $650 billion special drawing rights (SDRs) by the IMF offered a unique opportunity to support countries going forward. He commended IMF Managing Director Kristalina Georgieva for her role in making this possible, as well as support from US President Joe Biden and US Treasury Janet Yellen.
While Africa is the least resourced region to tackle the continual effects of the Covid-19 pandemic, the continent only stands to receive $31 billion out of $650 billion in SDRs. Dr Adesina advocated a reallocation of SDRs by developed countries to developing countries, and to Africa in particular. He commended French President Emmanuel Macron for his leadership by example in recently announcing France’s donation of 2% of its own allocation of SDRs to Africa.
The group learned that the Bank was spearheading efforts to help Africa tackle climate change; and that it had doubled its allocation for climate finance to $25 billion by 2025 with 40% of its total financing going to climate finance. While Africa contributes less than 4% of greenhouse gases, it does suffer from it and has been found – by the International Intergovernmental Panel on Climate Change – to be heating up faster than the rest of the world – 10 years faster than originally projected.
“This is why the Bank is responding. We are increasingly applying more of our resources to climate adaptation,” Dr Adesina said. “Today, 67% of all our climate finance is in adaptation, which is the highest of any international financial institution in the world.” He quoted UN Secretary-General António Guterres’ recent commendation of the Bank’s leadership when he said at the UN General Assembly: “The African Development Bank has set the bar in 2019 by allocating half of all its climate finance to climate adaptation. Some donors have followed their lead. All must do so.”
Dr Adesina also spoke about the Bank’s collaboration with the Global Center on Adaptation to mobilize $25 billion for African climate adaptation.
Outlining the Bank’s efforts to light up and power Africa, Dr Adesina spoke about how the institution was harnessing the extensive sources of solar, hydro, wind and geothermal power. He highlighted the Desert to Power project, a $20 billion investment by the Bank and its partners to create the world's largest solar zone in the Sahel. It will help to develop 10,000 megawatts of electricity and provide electric power to 250 million people.
On the environment, the Bank president spoke of efforts to protect very fragile and vulnerable regions of the continent from the impact of climate change. He talked about the Great Green Wall initiative launched by the Bank and the African Union, designed to provide an environmental defence shield in the Sahel and the Sahara against desertification.
Trade and investment
On trade, Dr Adesina said the African Continental Free Trade Area (AfCFTA) represented a huge opportunity to transform Africa with a combined GDP of $3.3 trillion, the largest free trade zone in the world. He said the size of consumer and business expenditures in Africa would rise to $6.7 trillion by 2030. “Africa is no longer a continent that can be ignored,” he said. “And if you are not investing in Africa, the question I would ask is: where in the world are you investing?”
The ambassadors were presented with several examples of Bank-financed infrastructure projects that were impacting development across the continent. The Bank has invested over $40 billion in infrastructure, working closely with the African Union's New Partnership for Africa’s Development.
“The African Development Bank is the largest financier of infrastructure in Africa – far above the World Bank and far above any institution that you can find,” Dr Adesina told his audience.
Dr Adesina said Africa's massive infrastructure needs presented viable economic investment opportunities for institutional investors in Africa and those from the United States.
“This is the time to change the investment narrative on Africa in the United States,” he stressed. “The African Development Bank is developing strategic alliances and partnerships, taking advantage of the new outlook of new US administration.
“We are working closely now that the US Development Finance Corporation, The Millennium Challenge Corporation, the Corporate Council on Africa, the United States Trade Development Agency, USAID, and of course, the Department of Energy, PROSPER Africa, and the US Exim Bank to launch a new approach of working together to massively direct US capital investments to infrastructure in Africa.”
The African Development Bank president applauded the US government’s Build Back Better World launched by President Biden. He enjoined the ambassadors as African diplomatic envoys in Washington to help to make this initiative a huge success, describing it as a unique opportunity for Africa. “It is time to expand US investments in Africa at scale,” he stressed.
Africa Investment Forum
While on the subject shoring up US investments in Africa, Dr Adesina spoke about the forthcoming Africa Investment Forum, an annual forum organized by the African Development Bank, which has become Africa's premier investment marketplace. He said it presented the perfect opportunity to attract greater US investment in Africa.
The ambassadors learned that the maiden edition of the forum in 2018 mobilized $30.7 billion of investment commitment interests to Africa – and this in less than 72 hours.
The Bank president said: “Some people used to think that Africa was not bankable, I know Africa is bankable. I just don’t know where your bank is. You should bring your bank to Africa.”
He said that in 2019 the African Development Bank mobilized $40 billion in investment interest – again, in less than 72 hours. This included a $24 billion transaction for liquefied natural gas in Mozambique and will make Mozambique the third-largest producer of liquified natural gas in the world.
The African Development Fund 16th Replenishment
The African Development Bank president called on the ambassadors to support the 16th replenishment of the African Development Fund, the Bank’s concessional lending window, which it uses to support low-income and fragile states. He said it was desirable that the African Development Fund be allowed by donors to go to the capital market, just like the World Bank Group’s International Development Association (IDA) had gone to the capital market.
“We have equity in the African Development Fund of $26 billion. But we can go to the capital market and raise an additional $33 billion that we can use to scale up support for African economies, especially low-income countries,” Dr Adesina told the ambassadors. “Your advocacy with donor countries, especially the United States Treasury, and the mobilization of strong support for this is crucial.”
A physical presence in Washington
Finally, the African Development Bank chief said the need for advocacy and for changing the narrative on Africa in the United States made having an African Development Bank office in Washington a matter of importance, and he would be pursuing approval of this with the African Development Bank Board. “It is very important that Africa’s voice be heard. It is very important to have the mindset on Africa change,” he said.
Dr Adesina concluded by emphasizing that “Africa was not begging for help. Africa is an investment destination for the United States, and it must be respected by all, as the frontier of investment in the world.”
The African ambassadors showed enthusiastic support for the Bank’s agenda and commended Dr Adesina for his leadership. They decried the imposition of vaccine passports by developed countries, which was found to be discriminatory against travellers from Africa. They agreed on the need to change the mindset of Africa as a welfare continent that only received but rather one that had a lot to offer.
The ambassadors thanked Dr Adesina for his guidance and welcomed the continued technical support of the Bank, which they felt would make up for the technical expertise that they did not necessarily have in the areas of the Bank’s comparative advantage. There was broad agreement that a Bank office in Washington was timely.
The group said they were engaging with the new administration in Washington and found that there was a new mood in Washington – an interest in doing business with Africa.