Interview
Akinwumi Adesina, president of the African Development Bank, at the opening press conference which took place during the bank’s annual meetings in Ahmedabad, India, from May 22 – 26, speaks on partnership between India and Africa; the resilience of African economies, future of agriculture in the continent, emphasizing that Africa in the next 10 years will absolutely feed itself among others. Maureen Chigbo, Realnews editor covered the event. Excerpts:
What is the state of the African economy today?
African economies have been growing roughly at 5 percent in the last decade. However, recently because of the fall in commodity prices, the growth has slowed down a little beat. So that last year, African economy grew at 2.2 percent but our projection based on the reforms that we have just launched shows that African economy will grow at 3.4 percent this year, and that growth will rise to 4.4 percent in 2018. Now you have to put in perspective the growth of the global economy. The global growth rate in terms of GDP growth in 2016 was 3.1 percent. For this year, it is projected by IMF to reach 3.4 percent and it will reach 3.7 percent by 2018. So all that tells you that African economies are doing relatively well in a very challenging global environment. One thing I want to say is that Africa is not just one country, it is a continent. Africa is actually quite heterogeneous when you look at the countries themselves.
Let me give some numbers that will really shock you. Cote d’Ivoire is growing at the rate of 8.3 percent, Ethiopia it is growing at 8 percent, Kenya is growing at 6 percent, Rwanda is 6 percent, Tanzania is 7.2 percent, Djibouti is 6.3 percent, Senegal is 7.2 per. That just tells you that you cannot generalize when it comes to Africa. Our economies are performing well. In fact, four of the five the fastest-growing economies in the world are in Africa today. Let me also say that when you take a look at it in honesty, 14 countries grew last year above 5 percent, and 18 countries grew at 3 to 4 percent. That also tells you how much diversity you have in the growth process in Africa. African economies are doing quite well and they are quite stable and very resilient.
How would you appraise the level of foreign direct investments in Africa?
Foreign direct investments continue to grow in Africa. Africa happens to be the fastest-growing region in terms of attracting foreign direct investments. Foreign direct investment by this year will actually reach $57 billion, only second to Asia. It is very important to recognize this, and the reason you find this is because African countries are doing the right thing in terms of business and regulatory improvement. Today, 30 percent of all the global improvement in business and investment regulatory environment happen in Africa. So Africa continues to be the place absolutely to be.
What informed the choice of India as the host of this year’s AfDB meetings?
Let me say that India was chosen because the theme of this year’s meetings is how to make agriculture a viable business. India has shown the rest of the world that it took its agriculture from where it used to be dependent on food import and India became totally self-sufficient in food in just three years. It just tells you what can happen when there is the political will, and so we are here to draw inspiration from that Green Revolution in India and also encourage African countries that they can have that Green Revolution that could be adapted to the African situation.
Why did the Bank decide to focus on agriculture in its 2017 Annual Meetings?
Agriculture is so crucial for Africa because the continent is spending $35 billion to import food today and if we don’t do anything the amount that Africans spend in importing food may arise to $110 billion by 2025. I am sure you will agree with me that that makes no sense.
Africa should not be importing food. Rather, Africa should be a net exporter of food. Why? I don’t plan to be around by 2050. I don’t know how things are going to be by 2060 and 2070, but I do know what can change in the next 10 years. It is that in the next 10 years Africa will have to absolutely feed itself. It has to turn that around and that is why this year’s Annual Meetings is very important.
Could you give us an insight into AfDB’s High 5 agenda and its transformational impact in Africa?
The High 5s agenda is very important to the bank. The five pillars of what we call the High 5s of the Bank are Light-up and Power Africa, Feed Africa, Industrialize Africa, Integrate Africa and improve the quality of life of the people of Africa. In this year’s meetings, we are focusing on the issue of Feed Africa. Let me also say few things about Feed Africa and the areas you will be hearing from us in the next few days. You will be hearing what we are doing to encourage young people to get into agriculture as a business because I believe that agriculture is the coolest thing that you can ever have.
The second thing I want to say is how to make agriculture a huge business by unlocking its income benefit for the people of Africa. Why is this important? It is important because the size of the food and agricultural market in Africa will rise to $1 trillion by 2030. That tells you that it is where the billionaires from Africa should be coming from.
How would you appraise the bank’s performance as Africa’s premier development finance institution in the last one year?
In the last one year, the bank has been in a stronger situation than it has done before. Last year, the Bank approved a total of $10.5 billion for loans and investments. That is the highest in the history of the AfDB. The Bank also last year disbursed $6.5 billion. This is also the highest in the history of the AfDB. Let me also say that the Bank maintained its AAA credit rating last year and that is what allows us to be able to raise money from the international capital market to finance our work. Last year, the Bank raised $10.5 billion from the international capital market to finance its work; it just tells you how well we are doing. The income of the Bank is rising more than before. Our income as a Bank grew from $192 million in 2015 to $285 million by 2016.
What role is the Bank playing in bridging Africa’s huge infrastructure gap?
The Bank has set up a private equity platform for infrastructure that is called Africa50. Africa50 has mobilized $850 million dollars; it is going to go to a billion dollars by the end of the year. The other thing that we are doing to close that financing gap is syndications. Last year, the AfDB led eight banks to do a whole syndication of $1 billion for South African utilities which is the highest in terms of syndication.
How much is India Investing in AfDB?
Let me say that India is a very important partner with AfDB. India joined the AfDB and African Development Fund in 1982 and 1983, respectively, so India has been a long time supporter of the AfDB. India has been supporting AfDB in two different ways. In November, last year, the Indian government provided $27 million to the African Development Fund, which is the fund, used in supporting low income countries. In 2015, it announced a US $10 billion Line of Credit through the Exim Bank of India over the next five years for Indian companies wishing to invest in Africa.
Secondly, Indian investments in terms of bilateral trade with Africa have been rising and will continue to rise. In 2005/2006, India’s bilateral trade with Africa was $11.7 billion and by 2016 that has grown to $56.9 billion. That tells you the pace at which Indian investment is growing in Africa. We expect that bilateral trade with India will rise to almost $100 billion in the next two years. That is why I want to highly commend Prime Minister Narendra Modi for the wonderful job he is doing with the India-Africa partnership.
What role does energy financing play in your effort to feed the entire African continent?
When it comes to the issue of energy, it is the first priority of the AfDB. Today, you have 645 million Africans that do not have access to electricity, and you cannot develop in the dark, you cannot industrialize in the dark, you cannot learn in the dark. We made a decision that we are going to invest everyday in the electricity sector. The AfDB is investing $12 billion in the energy sector over the next five years, and we expect to leverage anything between $45 and $50 billion from that sector. Secondly, we want to connect 130 million people to the grid, and we also want to use the off grid system especially those that rely on solar system, we want to connect 75 million households to power via the off grid system. India’s role is important to this. Prime Minister Modi launched what is called the International Solar Alliance (ISA) from which the AfDB is discussing with the Indian government and we hope that $2 billion out of the $10 billion that Prime Minister Modi announced towards that ISA can be used to support Indian businesses working with the AfDB to be able to accelerate the renewable energy space for solar energy.
Finally, I want to say that the other part of the energy story is that the AfDB today is actually leading in terms of renewable energy, and that renewable energy is very critical because we set up what is called Africa Renewable Energy Initiative for the AfDB to mobilise $10 billion just for renewable energy.
What is AfDB’s target for next year?
Our targets remain the same. We are focusing on the High 5s. We are going to base our work this year on the energy sector and one of the things we are going to focus on is the off grid revolution. The Annual Meetings this year is focusing on agriculture and last year we invested in our young people in agriculture and it is the coolest thing that you can think about. We invested $800 million last year to support the businesses of young people in eight countries. That’s why we have launched the ENABLE Youth programme with the aim of establishing 10,000 youth-run agribusinesses in every country in Africa.
This year, we will also accelerate our work in terms of the facilities we have developed for women in Africa. Our target is to be able to mobilise $3 billion specifically over 10 years for the businesses of women in Africa.
— May 30, 2017 @ 13:45 GMT
Tags: AfDB African African Development Bank Akinwumi Adesina economies Ethiopia informed investments meetings
