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Africa is waiting for great development fund

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File picture: Luc Gnago- President of the African Development Bank, Akinwumi Adesina.

By Dr. Akinwumi A. Adesina

Excellencies, Deputies, Ladies and Gentlemen,

Welcome to the third meeting of the African Development Fund (ADF) 16 replenishment. I wish to thank the Coordinator, Kyle Peters, for the great job he continues to do on this process. I also thank you all, the Deputies for your continued very positive and productive engagements with the Management and Staff of the Bank. I’d like to welcome the Executive Directors, especially the 12 new Executive Directors, to their first meeting on the ADF-16 replenishment process.

Many thanks to the Government of Senegal for hosting this meeting. I wish to thank His Excellency Macky Sall, President of the Republic of Senegal, for being a great champion and a great supporter of Africa, development issues facing the continent, and the African Development Bank. We look forward to our audience with His Excellency President Macky Sall today.

In this country, as soon as you arrive, you instantly see and feel the impacts of the African Development Bank and the African Development Fund.

You land at the modern Blaise Diagne International Airport – truly built to international standards – financed by the African Development Bank Group. You travel from the airport to the city of Dakar on an express road, a highway fully financed by the African Development Bank Group.

If you want to avoid rush hour traffic, you have the choice to use the Regional Express Train. The train has transformed urban transport, delivering green transport, with speed, efficiency and at low costs to the population. When I travelled on the train after its inauguration, which I also attended, I asked some passengers what they felt about the train. Responses ranged from reducing travel times, to lower transport costs, and efficient multi-modal transport networks and comfort.

Soon, with the second phase of the Regional Express Train, the ride from the airport will be done by train in just minutes.

Picture: REUTERS/Luc Gnago – The headquarters of the African Development Bank (AfDB) are pictured in Abidjan, Ivory Coast.

ADF is also linking Senegal to its neighbouring countries. You can see it in the investment of the ADF on the construction of the Senegambia bridge that’s changed the face of trade between the two countries so close, but which had never had a bridge to connect them.

Your Excellencies, Deputies, ladies, and gentlemen,

I am just coming from missions to some countries. In Cabo Verde, last week, I saw the African Development Bank Group at work with its investments in the development of the Port of Maio, which is connecting the Island to the rest of the country. I saw ADF at work in the provision of resources from the ADF’s Africa Disaster Risk Insurance Facility to support Cabo Verde to cope with the challenges posed by drought because rains have failed for the past five years. Thanks to the African Development Bank Group, Cabo Verde put up the Cabeolica, wind power station that now supplies over 25% of the nation’s electricity through renewable energy.

Thank you, Prime Minister Correia e Silva, for the wonderful hospitality in Praia.

Two days ago, I was in Mauritania. I saw the ADF at work. Thanks to the ADF, the capital city of Nouakchott has water supply for a million people with the Aftout Essahli project.

I saw private sector investments of the Bank at work with the support of $175 million for Mauritania’s national industry and mining company (SNIM) that has significantly expanded its exports, opening and rehabilitating mines and rail transport. Through another $45 million private sector investment, we helped to support the dredging of the mineral port of Nouadhibou.

The impacts are impressive. This has allowed the export of iron ore with larger vessels, which increased from 150,000-ton ship to 230,000-ton ship, lowering transport costs by 3-5% per ton. What is amazing is that this ADF country paid back its $175 million non-sovereign loan rapidly. I was also amazed that the company paid back its $45 million loan for dredging the port and did not even need to use the whole amount due to the profitability of the SNIM port.

Today, SNIM exports 13 million tons of iron ore, provides 17% of the revenue of government, employs over 6,000 people, and accounts for 58% of the export of the country – a great success in an ADF country.

And just so you know, Minister Kane started his work at SNIM in the 1980s as a young engineer, and later became Director General of SNIM.

Thank you, Minister Kane for your wonderful hospitality in Nouakchott.

Your Excellencies, Deputies, ladies, and gentlemen,

That’s why the ADF 16 should continue to strongly support the Private Sector Facility to provide such private financing to support the economies of ADF countries.

As I travelled, I heard voices of appreciation, and of hope, and at the same time I saw a longing for much faster pace of development. Their needs are also immense.

ADF countries, and indeed all African countries are facing three major challenges – the 3 C’s: Covid, Climate and Conflict. The solution to the 3 C’s is the same: 3 Fs – Finance, Finance, Finance.

Africa was still dealing with financing recovery from Covid when Conflict broke out as Russia invaded Ukraine, triggering soaring food prices and inflation.

To forestall potential food crisis in Africa from Russia’s war in Ukraine the African Development Bank announced on the 29th of May a $1.5 billion Africa Emergency Food Production Facility.

The facility will support 20 million farmers and provide access to climate resilient seeds for maize, wheat, rice, and soybeans. It will support production of 38 million metric tons of food, valued at $12 billion.

The African Development Bank has moved with incredible speed. Within 45 days of the launch of the facility the Bank had approved $1.13 billion for operations in 24 countries, and we expect to reach 35 countries at the end of this month, many of them ADF countries.

That’s who we are: a focused institution, working with speed and quality, with efficiency to deliver support to our member countries.

As I travel in the countries, I hear appreciation everywhere for what we’ve been able to do, especially how fast and efficient we have been. But I also hear of increasingly difficult challenges and pressures they all face now from climate change.

From Ethiopia to the Democratic Republic of Congo and Malawi, climate change is wreaking much havoc, from droughts to devastating floods.

Your Excellencies, Deputies, ladies, and gentlemen.

The continent is warming up faster than any other region of the world, as predictions from the Intergovernmental Panel on Climate Change show that the critical global warming levels will be reached much earlier in Africa. According to estimates from the African Development Bank, GDP losses per capita could be as high as 16-64% under high warming scenario.

The effects will be devastating loss of crops, decimation of livestock populations and livelihoods of pastoralists; while child wasting will increase by 37% in West Africa, and 25% in East Africa. A one degree increase in temperature is also associated with a 11% greater risk of conflict in Africa, as it triggers weather related disasters and conflicts, with 4.3 million Africans already displaced due to climate change.

The continent receives only 3% of global climate financing. If this trend continues, Africa’s climate financing gap will reach $100 billion to $127 billion per year through 2030.

Your Excellencies, Deputies, ladies, and gentlemen.

Climate change is decimating the ADF countries, triggering even high pressure for migration to Europe on dangerous waters. 9 of the 10 countries most vulnerable to climate change are in sub-Saharan Africa, but all of them are ADF countries. ADF countries will need $500 billion to adapt to climate change up through 2030. Suffering from effects of climate change they did not cause; they now face climate change indebtedness.

In the face of all this deluge, Africa does not have the resources to tackle climate change. The current climate financing architecture is not meeting the needs of Africa. New estimates by the African Economic Outlook of the African Development Bank show that Africa will need between 1.3 and 1.6 trillion dollars between 2020-2030, or $118 billion to $145 billion annually, to implement its commitments to the Paris Agreement and its nationally determined contributions.

The climate change action window for the ADF 16 will clearly be a game changer for these ADF countries.

This window is hoping to mobilize $4 billion to $13 billion for climate finance for ADF countries, with flexibility over time. This will be used to support 20 million farmers with access to climate resilient agricultural technologies, access of 20 million farmers and pastoralists to weather-indexed crop insurance, reviving 1 million hectares of degraded land, and provision of renewable energy for about 9.5 million people.

Excellencies, Deputies, ladies, and gentlemen,

What is needed now is financing.

Commitments made by developed countries to provide $100 billion annually in climate finance for developing countries are long overdue.

At the African Climate Adaptation Summit in Rotterdam last week, African heads of state and global leaders of institutions around the world, and several development ministers in the ADF donor countries participated.

There was unanimity on the criticality of the climate action window. My friend Yannick Glemarec, the Executive Director of the Green Climate Fund has already confirmed the readiness of the Fund to work alongside with our ADF Climate Action Window. The IMF Managing Director, Kristalina Georgieva was there and supports the ADF climate action window. The representative of President Macron provided support for the African Adaptation Acceleration Program. The UK Government spoke strongly of its support for the climate action window, while Nordic countries present also supported the ADF climate action window.

I am delighted that Secretary John Kerry yesterday announced a contribution of $5 million by the US to the Africa Climate Change Fund, joining Germany, Italy, Belgium, and Canada which had earlier contributed to the Fund.

With substantial support from development partners, the African Development Fund will help ADF countries to build even more resilient economies. We will do so in partnership with other bilateral and multilateral institutions, the private sector, and others to leverage our financial resources in areas where we have comparative advantages.

Excellencies, Deputies, ladies, and gentlemen,

The African Development Fund is well recognized for its specialist delivery on infrastructure. With your support, we will scale up investments in infrastructure that foster low-carbon transition, protect biodiversity, and build resilience to climate impacts. We will invest in fewer, larger, and more transformative operations. ADF 16 will therefore expand quality, sustainable, climate resilient infrastructure investments, in agriculture, energy, transport, water and sanitation, health infrastructure and other sectors.

Excellencies, Deputies, ladies, and gentlemen,

The African Development Fund has led the agenda in Africa for fragility for the past two decades. However, challenges remain. Many countries are critically vulnerable to conflict, food insecurity, natural disasters, and shocks, including climate change. The Bank’s Transition Support Facility will introduce a programmatic approach that will help dedicate more resources towards preventing and addressing root causes of conflict and fragility.

Dear Deputies,

You have invested in, and are investing in ADF, a sound institution. A unique institution in Africa. An institution that is delivering value for money.

Just think of what the Fund has achieved in the past 50 years. It has connected 15.5 million people to electricity; supported 74 million people with improved agriculture; provided 50 million people with transport; built or rehabilitated 8,700 kilometers of roads; and provided 42 million people with upgraded water and sanitation facilities.

The past of the ADF has been good, but the future of ADF will be great.

A foretaste of greatness for the ADF came from the Fund being ranked by the Center for Global Development as the second-best concessional financing institution in the world among all 49 concessional financing institutions.

ADF will be great as it does more for countries.

ADF will be great as it becomes financially sustainable.

ADF will be great as it leverages donor resources.

ADF will be great as it works more efficiently.

ADF will be great as it invests more in regional operations to link countries to take advantage of the Africa Continental Free Trade Area.

ADF will be great as it helps countries to sustainably manage debt levels, reduce illicit capital flows and improve public financial management, and debt transparency.

Dear Deputies,

For these to happen, ADF will need a lot more resources, far beyond what the donors can provide, so we must ensure leverage to better resource ADF.

The ADF market leverage will be able to deliver an additional $5.5 billion per replenishment cycle. And we will do it while managing debt vulnerabilities. How great that will be for the countries!

The ADF market leverage will be the best thing to happen to ADF, as we build on our past legacies for a greater future. The ADF market leverage will enable the Fund to deliver more results on the ground without tapping more into increasingly difficult budgets of donor countries.

Africa is waiting for a greater ADF.

This is the time to support ADF 16th replenishment.

This is the time to support the Climate Action Window of ADF-16.

Your countries have been there with the ADF in the past, you have sacrificed, you have supported, you have believed in the ADF.

Thank you all very much.

Adesina is the President of the African Development Bank Group. This is a shortened version of a speech he delivered at the ADF 16 replenishment meeting on September 16 in Dakar, Senegal.