The African Development Bank President Dr Akinwumi Adesina was among the world leaders who attended the World Economic Forum on Africa that was held in Kigali last week. It is eight months since the Nigerian economist replaced Rwanda’s Dr Donald Kaberuka as AfDB President; in an exclusive interview with Kenneth Agutamba and Samantha Teta, he talked about his early wins, views on Rwanda, agenda for Africa, as well as the blueprint to achieve his targets.
Below are the excerpts:
Eight months now at the helm of the African Development Bank, what has it been like and any early wins or challenges to share?
I am surprised it is already eight months; it feels like two years given what we have been able to do, it has been quite exciting. When I was elected President of the Bank last year, we hit the ground running to build upon the legacy of our predecessors.
The critical thing we have is what we call our 10-year strategy for the Bank and so my task right away was to focus on what kind of things the Bank could do differently to accelerate its developmental impact on countries. So we decided to focus on five major areas and those areas we call them the ‘high five.’ These include: light up and empower Africa, feed Africa, industrialize Africa, integrate Africa, and improve the quality of life for the people of Africa.
Why those five?
If you take the situation of electricity alone, we have over 650 million people that do not have access to electricity and I do not think that is acceptable. Without electricity you can’t do anything at all so it’s one of the most important of five areas that we are looking at, so in the last few months, we have developed all our strategies for all these five areas which are going forward.
We have developed a new business model for the Bank aimed at taking the Bank closer to its clients. We are decentralising the AfDB completely. There will be full delegation of authority to Directors General that will be running business in our regional offices in West Africa, East Africa, Central Africa, North Africa and in Southern Africa. That way, we will be closer to our clients.
Over the last eight months, we have fast-tracked the approach of the delivery of our ten-year strategy by focusing on the high-five areas but also change our business model to do more for African countries.
We have also, in the last eight months, expanded our climate financing to support African countries to meet their challenges of climate change and I have announced that the Bank will triple its climate financing to US$5billion annually, by 2020. Therefore, from the angle of strategy development in terms of business development, in terms of supporting countries, I think a lot has been done in the last eight months.
The decentralisation model sounds like a total overhaul of the Bank, is this the blueprint to execute your five-point agenda?
Yes. Look at it the way you want to play a soccer game. You hire the best people but you have to put them in front to score. Everybody can’t be behind otherwise you won’t score. We have got to score a lot more goals on development; Africa’s development needs fast-tracking. I am somebody that is impatient with seeing this continent’s high levels of poverty.
The fact that we do not have electricity does not make any sense to me. Without electricity you cannot industrialise, without electricity these small and medium enterprises cannot create the much-needed jobs. Africa today loses five to seven percent of its GDP because of lack of electricity and Africa cannot compete globally because of lack of electricity.
Here at the World Economic Forum we are going to be talking about the 4th industrial revolution, I don’t care about what revolution you talk about because if you don’t have electricity you don’t have anything and so this new business model will allow us to deliver on these needs.
We plan to invest US$12bn over the next five years just on the electricity sector alone and leverage 45 to 50 billion dollars on the energy sector in Africa over the next five years.
In the agriculture space, our model will allow African countries to take agriculture as a business; to focus on not just producing primary commodities but producing value chains that allow them to process and add value to every single thing that they produce. The Bank is rolling out a major investment framework that will focus on helping countries promote agro-allied industrialization.
We have an exciting initiative about creating jobs for Africa’s youth. We have 10 to fifteen million young people entering the labour market annually but with only three million of them being able to get jobs.
With that I think Africa today has an unemployment crisis. So we are going to fast track the provision of jobs for young people. The Bank has developed and will be rolling out ‘Jobs for Africa’s youth initiative’ aiming at creating 25 million jobs in ten years.
The initiative will focus on enhancing skills, entrepreneurship development, special financing facilities for young business that are owned by young people but also to help to reduce the skills mismatch between the labour market and the kind of skills that people have. So you can see that we are kind of pragmatic to see things happen fast.
Your five-point agenda is identical to Rwanda’s own national agenda; there is a close relationship already but what should we expect under your leadership?
The AfDB will continue to strongly support Rwanda. I am a great fan of President Paul Kagame and his leadership. Your economy has been growing very well, bouncing back from 3.7 per cent in 2013 to 7 per cent in 2015. This is a country that is doing very well in terms of macroeconomic development.
Today, we have around 26 operations in Rwanda, worth US$586 million, and covering different sectors, including energy, agriculture, transport development and higher education where we are supporting Rwanda with the Carnegie Mellon University to train the next generation of ICT experts for Africa.
I think Rwanda is at the forefront in developing the next generation of those that will be in computer sciences that will be the breakthrough for Africa so we are supporting a lot of work in that area.
We have a country strategy paper that we have just developed, from 2016 to 2018, and the sectors in which we shall further intensify our support will be energy, infrastructure, in particular, but also agriculture and jobs for young people.
Ebola is defeated. WEF-Africa was themed around connecting Africa’s resources with digital transformation. Plenty of opportunities. But what do you see as the lingering threats?
There are three things; the end of the commodities super-cycle that we enjoyed, characterized by high commodity demand from Europe and from China. With weak growth now, countries are facing significant balance of payment problems.
The other challenge, as I said, is Africa’s jobless young people. Between now and 2050 or 2030, we are going to be adding literally 500, 000 young people between the age of 15 and 24 to the population. If we don’t create jobs for them, it will heighten socio-economic and political fragility of the continent.
Therefore, the biggest challenge is how we can help countries build resilience from the economic shock, to diversify further their economies and create new opportunities for inclusive growth, especially turning Africa’s demographic asset into economic dividend. These, in my view, are the challenges facing Africa today.
Let us talk about African integration. Is this something we can achieve, considering all the restrictive visa regimes that countries have in place?
Africa has no choice but to integrate. You cannot prosper as a continent of 54 countries that are all small countries and isolated from each other. The critical way to prosper is for Africa to open up and reduce tariff and non-tariff barriers all across the continent. Some progress has been made but we need to do more considering that the percentage of intra-Africa trade is not more than 11 per cent. It is about 65 per cent in Europe and 45 per cent in Asia.
We recently released a visa openness index that found that Africans can only travel to 55 per cent of African countries without needing a visa. It means you cannot do businesses or hire skilled labour from one country to the other.The idea of an African Passport must be fast-tracked.
Integration requires connectivity in particular, of infrastructure, that is why we’re investing heavily in East Africa’s Northern Corridor projects because it’s very critical integrating landlocked countries to coastal countries. We must also integrate Africa’s financial markets because I firmly believe that African countries should not be going to the international market to raise capital through euro-bonds.
Between 2006 and 2015, African countries have raised about US$26.3 billion from Eurobonds, withUS$8 billion raised last year alone. It was good as long as the interest rates were low, but today they are rising meaning African countries will have to pay significantly on a higher cost based on the bonds they have issued.
We need to tap into domestic capital markets, its immense the amount of money they have on their hands, you take a look at pension funds we have today, it’s about US$334 billion, sovereign fund has US$164 billion, private equity fund have US$22 billion dollars.
We must integrate the financial markets across Africa deep into those financial markets and find instruments that make it easier for our pension funds to invest in Africa’s development.
The AfDB recently launched Africa50 in response to the urgent need of raising more funds for high impact infrastructure development in Africa, any updates?
Africa50 is a great initiative. We expect it to help push the agenda forward on the issue of infrastructure development considering there’s currently a funding gap of about US$70 billion. We just recruited the Africa50 Chief Executive Officer with experience from running the IFC global ventures; he’s well tested to run the fund.
Country subscription to Africa50 has increased tremendously, from seven two years ago to over 25 today, raising US$823 million as of January this year. The fund will deploy its instruments to help with the development of bankable infrastructure projects.
The global conversation is now on the 4th industrial revolution involving intelligent robots and self-driving cars; is Africa ready for that conversation considering that most of the continent is still dealing with 2nd industrial revolution issues of electricity generation and mass production?
I don’t really care what type of revolution we talk about because everything revolves around elements that are needed for the industrial set-up. For any industries to work, you absolutely need to have energy and so you can not have any industrial revolution without energy and that’s the AfDB’s number one priority.
We are launching what we call a ‘new deal on energy for Africa’ to allow Africa to have access to electricity within the next ten years which will allow Africa to industrialize.
The 4th industrial revolution is all about artificial intelligence and smart technologies which rely on computers but computers require electricity, so without electricity you are not even in the game. That’s why electricity is one of our high five points.
Even then, for Africa to benefit from these technological advancements, we have to expand our investment in research and development as well as significantly raise scientific investment to match countries such as Denmark and Finland with about 10,000 scientists per 1million people.
From large to small economies, resources are being lost to corruption; is this something AfDB is concerned about?
Resources for countries don’t belong to individuals. They belong to the people of the country and they should be managed wisely with great transparency and accountability. That is why illicit capital flows out of Africa must end.
The AFDB is working closely on this issue of illicit capital flows with President Thabo Mbeki’s committee that is engaged in that particular effort.
Through the African Natural Resource Centre established at the Bank, we are also helping the continent manage its tremendous amount of natural resources like the blue economy, huge amount of forest and agriculture, gas and oil resources.
Africa is not a poor continent but Africa has many poor people because we have not managed those assets properly. So transparency, accountability and rule of law are fundamental to changing this phenomenon.
Finally, the AfDB Annual Meetings later this month in Zambia, what should we expect?
It will be my first Annual Meetings and I am very excited about it. The focus this year is energy and climate change because I believe that Africans are tired of living in the dark and, therefore, we have to accelerate universal access to electricity. Climate change because many African countries as you see even right now are suffering from extreme floods and drought.
We are going to talk about how African countries can be supported to adapt to climate change.We are going to have a lot of discussions and many heads of state are going to be there.