“Africa is the continent of the future.” – Tunisian Finance Minister Zied Ladhari
“This is no longer business as usual,” African Development Bank President Akinwumi Adesina (AfDB.org), said at the start of meetings with Finance Ministers from North African countries, held at the Bank’s headquarters.
He was referring to his promise during last year’s Annual Meetings to cultivate closer interactions with the ministers who serve as Governors of their countries in the Bank.
But the President could also have been referring to the sense of urgency gripping the region and the continent at large, as it struggles to keep pace with a booming population of unemployed youth despite robust economic growth.
The Bank, he asserted, is uniquely positioned to support the region at a time of unprecedented transformation.
At the core of the Bank’s interventions is a ten-year strategy anchored in a set of objectives known as the High 5s (afdb.org/en/the-high-5) – Light up and power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the quality of life for the people of Africa.
When fully implemented, the High 5s will enable Africa to achieve 90 percent of the UN Sustainable Development Goals, according to a study conducted by the United Nations Development Programme.
During the consultations, the ministers from Egypt, Tunisia, Morocco, Algeria and Mauritania, said the High 5s reflect their own development vision and strategies.
Home to 14 percent of the continent’s population and the driver of one-third of its GDP, North Africa has the potential to serve as a growth engine for the continent.
However, the region faces a staggering 31 percent unemployment rate among youth and women, food and water insecurity, poverty and inequality, as well as challenges of economic transformation and integration.
Against this backdrop, the Governors highlighted benefits of the Bank’s decentralization, which has brought the institution closer to its member countries and the positive impact this is making on the economic growth of these countries.
Egypt’s Ambassador to Côte d’Ivoire, Mohamed El-Hamzawi, who represented the Finance Minister, said the country has seen two revolutions in 2011 and 2014. He thanked the Bank for supporting the country’s macroeconomic stabilization, financial reforms, infrastructure, and energy, among others.
The biggest challenge for Africa today is job creation. It is a stake of stability and a lever to pull economic growth upwards
Tunisia’s Finance Minister Zied Ladhari recalled how the Bank’s 11-year temporary relocation to his country has helped to strengthen the bonds between them.
“We share the Bank’s vision. Africa is the continent of the future. This is a great Africa moment with the Bank at the centre. Unleashing the potential of African economies is a task which the Bank must accomplish,” the Minister said.
Algeria’s Finance Minister, Abderahmane Raouia, said, “The biggest challenge for Africa today is job creation. It is a stake of stability and a lever to pull economic growth upwards. We must offer job opportunities for young people to convince them to stay here on the continent.”
Acknowledging expressions of support, President Adesina seized the opportunity to remind the Governors that, as the Bank approached the limits of its prudential ratio, the time had come to contemplate a general capital increase.
“We have 12 years left to the SDGs. It is an alarm bell because if Africa does not achieve the SDGs, the world won’t achieve them. We need to accelerate development,” he stressed. “We are leveraging more resources and the impact of our interventions is being felt.”
President Adesina highlighted some of the Bank’s achievements over the last seven years. Approximately 27 million Africans have benefitted from new electricity connections, while 49 million enjoyed improvements in agriculture. 35 million gained better access to water and sanitation, and nearly a million small businesses have been provided with financial services. Over the same period, 23 million women saw improvements in agriculture and 10 million were able to take advantage of investee projects.
Lending to low-income countries increased seventeenfold, from $434 million in 2010 to $7.5 billion in 2016. Lending to middle income countries, such as North African countries, doubled. The Bank’s active portfolio rose from $15 billion in 2010 to $30 billion in 2016.
President Adesina noted that the Bank leveraged $9.73 billion from the capital markets for African countries last year and achieved its highest annual disbursement ever in its history, at $7.67 billion.
However, Célestin Monga, Chief Economist and Vice-President, Economic Governance and Knowledge, drew the Governors’ attention to persistent development challenges that African countries face in various degrees due to weak macroeconomic environment, low diversification and high rates of unemployment. These pose huge development challenges which the Bank can better tackle with additional resources that can be generated by raising its capital ceiling.
The Bank will mobilise resources through the African Investment Forum. Vice-President for Private Sector, Infrastructure and Industrialization, Pierre Guislain, invited the ministers to explore possibilities for leveraging other sources of financing at the Forum, scheduled to take place in Johannesburg, South Africa, in November 2018. The Forum, which will be purely transactional, will showcase bankable projects, attract financing, and provide platforms for investing across multiple countries, among others, he said.
With a substantive capital increase, the African Development will be able to deliver on a robust pipeline of operations (15bn in 2018 alone). Prospects for 2018-2020 are bright, with 50.3 million people projected to benefit from improved access to transport compared to 14 million in 2017. More than 35 million people stand to gain new or improved electricity connections, in contrast to 4.4 million delivered in 2017.
In his closing remarks, President Adesina commended the Governors for their generous appreciation of the Bank’s work and commitments to the institution. “We appreciate what you are doing in North Africa and salute your work as ambassadors of the Bank.”
The Governors’ consultation on Africa’s development challenges and the Bank’s reforms is the third of five regional meetings involving all 54 regional member countries of the Bank.