Private sector crucial to overcoming Africa’s critical investment gaps

ABIDJAN (Capital Markets in Africa) — The African Development Bank Group’s governors (www.AfDB.org) will address three strategic challenges when they meet next month for the group’s Annual meetings, the group’s Secretary General Vincent Nhemielle said during a news conference held on April 20.

The challenges confronting Africa in the coming year are: financing a low carbon development path that delivers growth and inclusivity and the continent’s climate goals; placing climate adaptation at the heart of economic policies; and unleashing Africa’s potential to address food insecurity and feed itself, he said.

The conference took place on 4 April 2023 to give participants an idea of the agenda of the Annual meetings, which will be held in Egypt, from 23-26 May.

The Secretary General chaired the event, which took place in a hybrid format, and offered journalists opportunity to learn more about focus areas during the institution’s most important annual event.

Five of the Bank’s vice presidents participated in the conference including Chief Economist and Vice President for Economic Governance and Knowledge Management, Kevin Chika Urama; Vice president for Regional Development, Integration and Service Delivery, Marie Laure Akin-Olugbade;  Vice President for Private Sector, Infrastructure And Industrialization, Solomon Qaynor; and Vice President for Agriculture, Human and Social Development  Dr. Beth Dunford.

Quaynor noted that African governments currently have little fiscal room owing to “black swan” events that have occurred in the last 3 years. These include Covid-19 impacts and Russia’s invasion of Ukraine, both of which have had global impacts.

“The context is really limited fiscal space all around for our regional member countries,” Quaynor said. “ Given that we still have to address the impacts of climate change, we have to really look at alternatives to leverage limited fiscal space and also innovative ways to crowd in the private sector.”

Quaynor addressed a growing emphasis on mobilizing resource from within African countries. As an example, he cited the bank’s partnership with the African Sovereign Investor’s Forum which it agreed (https://apo-opa.info/44aAUE2) last June. The pact represented an important step in terms of increasing the leverage of investments as well as reassuring global investors seeking to invest in Africa, he said. Assets managed by African sovereign wealth funds, African pension funds and African life insurance pools is estimated at over $2 trillion  equivalent, according to Quaynor.  

Urama  said the annual meetings would feature five knowledge events. One of these will focus on efforts to tap the private sector to close Africa’s climate financing gaps, which aligns with the 2023 theme of the meetings: Mobilizing Private Sector Financing for Climate and Green Growth in Africa.

There would also be a presidential dialogue featuring African heads of state in dialogue with the president of the Bank on the changing global financial architecture, Urama said. Discussions would center on the evolving role that multilateral development banks will play in galvanizing more robust funding for Africa’s climate action goals.

As in past years, the annual meetings will feature the launch of the 2023 African Economic outlook report, Urama said. The report, the Bank’s flagship, will address the same theme and also examine ways to harness Africa’s abundant natural capital—including rivers, coastlines, peatlands—to serve its development and economic growth.

Dunford pointed to recent bank efforts to bolster food security in Africa, which are being complicated not only by external shocks but also climate driven weather events such as cyclones, flooding and droughts.

In January 2023, at a summit hosted by the bank and the government of Senegal, development partners agreed to commit what has since increased to $70 billion to boost agricultural productivity and drive Africa’s resolve to become the world’s breadbasket.  

“Sixty five percent of the world’s arable yet uncultivated land is in Africa; there’s a huge yield gap so huge potential to increase productivity of the agriculture that exists and really seeing that transformation of agriculture to move up the value chain and increase the value addition of crops that are produced in Africa,” Dunford said.    

Bank leaders answered questions from journalists on a range of subjects. On the bank’s stance on corruption Akin-Olugbade said the bank had zero tolerance. “It supports African countries in the fight against corruption upstream and downstream, helping them to strengthen good governance, put in place tools for accountability to citizens, carry out audits and develop an effective judicial system capable of punishing acts of corruption,” she added.

Other questions addressed Bank initiatives to blunt the impact of crises in the last years, taxes to support upkeep of infrastructure and on the status of IMF special drawing rights available to African countries.

The statutory annual meetings are the African Development Bank Group’s most important event of the calendar year, attracting around 3,000 participants. The 58th Annual Meetings of the Board of Governors of the African Development Bank and the 49th Meetings of the Board of Governors of the African Development Fund will take place in the Sharm El-Sheikh International Conference Centre from 22-26 May.