ON the weekend, African Development Bank (AfDB) president Akinwumi Adesina, gave the a keynote address at the Africa 2016 Forum held in Sharm el-Sheikh, Egypt.
At the conference, dubbed Business for Egypt, Africa and the World, Adesina made perhaps the most impassioned and engaging speech of the otherwise stilted and formal meeting, imploring African leaders to make the “Africa rising” narrative a confident one.
Speaking of the 2015 landmark agreement to open up trade between the East African Community, Common Market for East and Southern Africa, and the Southern Africa Development Community, Adesina said to the gathering that included heads of state: “There is no doubt: an open Africa will be an unstoppable Africa. Breaking down the barriers is the key to Africa’s long time growth and prosperity. Your Excellencies, bring down these walls!”
Adesina was firm that the Africa rising story “is not over”, despite the economic headwinds that the continent is facing from the decline in the price of oil, mineral and agricultural commodities. China’s slowdown, too, has complicated the current account and currency positions of many African countries.
“But we must not believe the narrative of doom and gloom on Africa,” he said. While the global economy is projected by the International Monetary Fund and the OECD to grow at 3% this year, Africa is expected to grow at 4.4%, and strengthen further to 5% in 2017.
Egyptian President Abdel Fattah al- Sisi (right, UAE prime Minister Sheikh Mohammed bin Rashid al- Maktoum ( centre) and Egyptian Investment Minister Ashraf Salman (left ) talk about the new city project in a file photo. (Egypt Presidency/ AFP)
“That is good news. African economies are not unravelling – they are resilient. Africa is still the best place to invest,” he said.
Nonetheless, the continent is facing challenges related to financing its development, and which may inform some of the recent cautious stances on a continent that has in past decades been disappointed.
Between 2006 and 2014, several African nations including Ghana, Zambia and Kenya issued Eurobonds worth $26 billion, as they took advantage of record low interest rates on the global market.
Now, the challenge is meeting the rising cost of financing in repaying the foreign denominated debt, or taking on new one.
“Africa must not fall again into the debt trap”, Adesina said, highlighting the urgent need for macroeconomic stabilisation, rapid diversification of African economies, broadening of export market destinations, and securing its own domestic resources for development and sustained growth.
Remittances to Africa have risen from $11 billion in 2000 to over $62 billion in 2014, exceeding what the continent gets in official development aid. Sovereign wealth fund assets under management have similarly grown from $114 billion in 2009 to $162 billion five years later; pension funds stand at $334 billion, and the continent generates $500 billion in domestic taxes.
“Africa must mobilise all these domestic resources to accelerate its development – that way it can decide its own direction and pace of growth. It can develop itself with pride.”
‘Must think big’
Adesina singled out Egypt’s ambitious $8.2 billion Suez Canal expansion project that was completed in just one year, and whose funds were mobilised in just eight days entirely by Egyptian citizens. There is also the plan to build a new modern capital city with the price tag of $45 billion, with an audacious completion timeline of seven years.
“The message and lessons [from Egypt] are clear – Africa must think big, act big – and deliver big. We must never have low aspirations for Africa,” he said.
Along these lines of bold, ambitious development, Adesina highlighted what he called the “High 5s for Africa”, a five-point focus that the bank will concentrate its efforts on:
1. Light Up and Power Africa
Over 640 million Africans do not have access to electricity, and 700 million go without access to clean cooking energy.
“Africa is simply tired of being in the dark,” Adesina said; the AfDB’s New Deal on Energy for Africa aims to add 160 gigawatts of new generation capacity via the grid, deliver 130 million new grid connections and 75 million off-grid connections. It will take an investment of $12 billion in the continent’s energy sector over the next five years, and leverage $40-50 billion. The bank will also triple its climate finance to Africa to $5 billion per year by 2020 to support climate adaptation and mitigation efforts.
2. Feed Africa
“There is absolutely no reason why Africa is a net food importing region, spending over $35 billion importing food,” the AfDB president said. With the continent having 65% of all the arable land left in the world to feed 9 billion people by 2050, the bank is looking to accelerate support for agricultural transformation in Africa. Agriculture, across Africa, must be taken as a business to generate weath and rapidly diversify economies, “not simply to manage poverty.”
3. Industrialise Africa
Africa currently accounts for just 1.9% of global manufacturing; there is an urgent need for the continent to rapidly industrialise in order to reduce its susceptibility to volatile commodity prices. AfDB says it will support the private sector and financial market development, to help Africa move nearer to the top of global value chains.
4. Integrate Africa
African trade represents 2% of the global total, and intra-African trade makes up 12% of the continent’s activity, compared to 60% in Europe and 35% in Asia.
“This is not acceptable,” Adesina said; AfDB will continue to invest heavily in regional infrastructure, especially rail, transnational highways, power interconnections, ICT, air and maritime transport.
5. Quality of Life for Africa
Jobs and skills are the continent’s critical challenge, and global opportunity. AfDB will soon be launching the Jobs for Africa’s Youth Initiative, which will work across all African countries, Adesina said. The initiative aims to reach 50 million youth over a 10-year period and stimulate the creation of 25 million jobs, which could add an additional $30 billion into African economies.
—Adopted from the condensed speech by Adesina delivered on February 21, 2016.