African Development Bank to disburse $6.6b in Africa this year – Adesina

African Development Bank President Akinwumi Adesina African Development Bank President Akinwumi Adesina

The African Development Bank (AfDB) says it will disburse $6.6 billion through the African Development Fund (ADF) to African countries in 2016.

Speaking at the Final Pledging Session for the ADF 14th Replenishment meeting in Luxemburg November 28, 2016, the President of the Bank, Dr. Akinwumi Adesina said four of the five High Five strategies of the Bank were developed and approved by the Board within a period of six months.

Dr. Adesina indicated that while it normally takes up to two years sometimes to get one strategy of the Bank approved, the Board has been impressive and worked so hard, and they are tackling the challenge of low disbursements compared to approvals, which has been raised over the years.

“Since I signed the Presidential Directive on this in November 2015, the lapse of time between approvals and declaration of effectiveness for first disbursement has declined by over 40 per cent. Projected disbursements this year are $6.6 billion (UA 4.4 billion) – the highest in the history of the Bank. You will hear more from my colleagues,” he said.

The AfDB, has through the ADF been financing development in African countries since 1974.

Dr. Adesina acknowledged that this particular replenishment is taking place at a time when many ADF countries have been hit by several shocks – the sharp decline in commodity prices, tighter financing conditions, and a severe drought in southern and eastern Africa, after an extended period of strong economic growth in most of these countries.

“Growth,” he said, “fell in 2015 to its lowest level in some 15 years and is expected to slow further in 2016. However, we should not conclude that Africa is all gloom. The picture is in fact more positive; some of the fastest-growing economies in the world are in Africa. The growth performance differs significantly across countries, with most oil importers faring reasonably well,” he added.

He also indicated that medium-term prospects remain favorable, but many countries need to reset their policies urgently to reinvigorate growth and realize their potential.

“To this end, the Fund will support countries as they adjust fiscal, monetary and other policies targeted at diversification and financial sector development so as to strengthen resilience and boost growth,” he said.

Dr. Adesina noted that the times are difficult all over these days, and so, having an ADF replenishment in the midst of a global environment with sticky slow growth is challenging, he said.

“I know you all face challenges in your fiscal environment at home. Other unexpected shocks have happened, including Brexit, which has significant implications for multilateral finance institutions. The migration crisis in much of Europe is displacing development financing to solve national issues. A move away from multilateralism in some places could also impact global development,” he said.

Despite the difficulties, Dr. Adesina said he believes that Africa deserves significant support, even in the midst of these challenges.

Reminding the meeting that the reason several thousands of Africans have been migrating to Europe, is because of lack of jobs and shrinking economic opportunities back at home, he argued that the resolve of development partners must not be to reduce support, but to increase support to help Africa, to build greater resilience, boost its economies, address its structural challenges, such as closing its huge infrastructure gap, strengthening intra-regional trade and creating jobs for its teeming youths,

“Investing in Africa is investing in your homeland security as well,” he pointed out.

The AfDB through the ADF has invested in projects to support food security in Madagascar and Senegal New Rice for Africa (NERICA), the Ketta-Djoum-Brazzaville road in the Congo, the Mozambique drinking water project and the Menengai Geothermal Power Station in Kenya.

In recent times, the ADF has launched projects like the development of agricultural value chains in The Gambia and a project to create employment and improvement of livelihoods in Mozambique, the Bank says on its website.

The purpose of the ADF, the Bank says is to change the lives of the most vulnerable African populations.

According to the AfDB, for 2017 to 2019, the AFD-14 goals focus on its High 5 development priorities.

  1. Light up and power Africa: $2.9 billion will be invested in energy to install up to 4,600 MW of capacity and to connect 23.6 million Africans to the power network.
  2. Feed Africa: $2.1 billion will be allocated to the agriculture sector to grow farm incomes and reduce poverty in rural areas.
  3. Industrialize Africa: $1.7 billion will be reserved for industrialization projects. The priority will be on funding the private sector through a range of risk mitigation instruments, guarantee products and mixed funding mechanisms to attract other funds to fill the funding gap.
  4. Integrate Africa: $2.7 billion will be mobilized in support of regional integration projects to address the lack of integration that is costing the continent between 1 and 1.5 per cent in annual GDP.
  5. Improve the quality of life for the people of Africa: $1.9 billion will be invested to create 17.5 million jobs in ADF countries and strengthen the economic and employment skills of 50 million young Africans by 2050.

The Bank states that the crucial importance of the ADF is long established: between 2008 and 2013, ADF-funded projects and programmes meant that over 13 million Africans gained access to safe drinking water and sanitation services; 42.2 million benefited from new transport infrastructure; and 64 million were able to access education. Over the same period, more than 3 million Africans were connected to the electricity grid for the first time; 46.1 million saw their agriculture skills improved; and 10.2 million benefited from microfinance initiatives.

In nearly 40 years of existence, the Bank says the ADF has awarded more than $40 billion in funding, making it one of the main sources of concessional funding in Africa with 38 recipient countries* and 29 donor countries to date. It is one of the three separate entities that make up the African Development Bank Group, with the AfDB itself and the Nigeria Trust Fund (NTF).

The meeting ends today, November 29, 2016.

Source: GBN