Adesina spoke about the Bank’s significant investments, including spending $44 billion in regional and national infrastructure projects over the past seven years
African Development Bank Group (http://www.AfDB.org) President Dr. Akinwumi Adesina on Sunday, outlined the Bank’s significant achievements and commitments to Africa, underscoring the Bank’s determination to mobilize resources for driving economic transformation, climate resilience, and addressing the continent’s debt challenge, among other priorities.
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.
He said the General Capital Increase of the Bank in 2019 from $93 billion to $208 billion, “the highest ever in its history since its establishment in 1964––provided the Bank with the financial firepower to strongly support Africa to deal with and recover from the Covid-19 pandemic.”
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.
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.
Reporting on the Bank’s resource mobilisation efforts, Adesina said 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, 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.
He said the Bank was 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 have 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 needed to change its approach to debt and called for an end to all natural resource-backed loans. He said: “They are not in the interest of Africa, as they are non-transparent. They undervalue resource assets, and pawn national assets.” He said 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 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.
In his remarks to open the session, Comoros President and current AU Chair Azali Assoumani said Africa must close its ranks to achieve its vision of an integrated, prosperous and peaceful continent.
Today, Africa has $640 billion in debt stock, paying close to $70 billion every year
Assoumani said: “In this increasingly turbulent world, we need more than ever to close ranks if we are to meet the challenges that continue to grow with each passing day, and it is through what is now our motto, African solutions to African problems, that we will achieve an Africa that is reconciled with itself, prosperous and open to the world.”
The AU Chair commended the progress made in implementing the various pan-African initiatives, including the African Continental Free Trade Area (AfCFTA) agreement, to propel the continent’s vision for prosperity. He urged member states that had not ratified the agreement to do so “as soon as possible.”
Assoumani urged African countries engaged in political conflicts to “silence the guns” for a frank and sincere dialogue. “It is through dialogue that we will succeed in settling our differences and remove the obstacles that stand in the way of our progress.”
Kenyan President William Ruto said Africa must capitalise on the current reform momentum at the AU to develop an effective capacity to deliver the much-desired pan-African transformation. He said to do this, self-reliance was essential. He added that a fit-for-purpose institutional architecture was also indispensable at the AU.
Ruto said: “It is my prayer that we finally make the right decision and build an organisation that is fit-for-purpose, has the requisite finances, the needed voice and the leadership that can project Africa’s position much more, clearly, with a strong voice, so that we can take our place in the community of nations.”
Ruto bemoaned the current global financial architecture, saying part of Africa’s debt and liquidity challenges were caused by an unfair financial architecture. “We want a financial system that doesn’t profile Africa as risky, he said, adding: “Today, Africa has $640 billion in debt stock, paying close to $70 billion every year. It is only fair that we have a financing mechanism that treats us equally.”
Ruto said the African Climate Change Summit, to be held in Nairobi in September, will provide a platform for the continent to adopt “a more robust position and composing, transformed and inclusive global approach” to tackling the climate change crisis ahead of this year’s global climate summit, COP28, in Dubai.
Amina Mohamed said Africa must have a strong voice in the G20, defining its innovation ideas and a unified action to disrupt the “unacceptable status quo.”
She said: “The continent faces a moment of reckoning when the world appears to take its gaze off Africa – we may appear down, but we are far from out, and as our leaders, we continue to count on you to forge a path toward delivering a vision for Africa that is enshrined in the 2063 agenda.”
Mohamed reemphasised the need for Africa to remain united with “no lines” between its leaders. “If the wall cracks, the lizard will enter,“ she said, quoting an African proverb to buttress the call for unity.
In his welcome remarks, Moussa Faki Mahamat said Africa must continue to pursue its own solutions to its problems.
He noted that despite signs that the G20 was opening up to the African Union, there was still a long way to go before the continent is truly included in international political and financial decisions.
Mahamat commended the African Development Bank for its development interventions across Africa. “I am pleased to highlight with appreciation the initiatives undertaken by the African Development Bank under the leadership of our brother, Dr Akinwumi Adesina, to finance regional integration,” he said.
He added that the African Development Bank had provided an additional $12 million in grants to the African Continental Free Trade Area secretariat, on top of the AU’s $5 million grant, which earlier helped to establish the secretariat.
Mahamat said: “One thing is certain: Africa cannot build its development ambitions on what others do for it.”
The 5th Mid-Year Coordination Meeting of the African Union and the Regional Economic Communities and Regional Mechanisms is a significant gathering focused on enhancing the coordination and alignment of continental development and integration agendas across various African institutions and stakeholders. The meetings began on the 13th of July and concluded on the 16th.