The African Development Bank (AfDB), President, Akinwunmi Adesina has recommended ways the international community can play a role in making African nations wealthier. He disclosed this in a video published via his X page on Sunday, September 29, 2024. He made the recommendation at the recently concluded 79th session of the United Nations General Assembly (UNGA 79).
A wealthier Africa
Adesina, who spoke on the floor of the UN assembly, said building a wealthier African future requires more than a reform of the global financial architecture.
He said there is need for a new institutional support systems that build a more solid and resilient future for Africa.
The institutional systems, according to him, are foundational.
First, he said stakeholders must tackle the biases in the current global credit rating systems that lead to higher costs of accessing capital for Africa than in other parts of the world.
“The establishment of the Africa Credit Rating Agency, called for by the African Union, is critical to achieving this,” he added.
Secondly, he stressed that the global financial system does not protect Africa from the contagious effects of global financial shocks, adding that is why it is critical to establish the African financial stability mechanism to provide a safety net for Africa.
“Africa is the only region of the world without a financial safety net,” he said.
Thirdly, he urged stakeholders to address the risk facing Africa in leveraging greater private-sector financing.
He said the African Development Bank is already pulling all its guarantee instruments into an African insurance and guarantee agency, deploying risk instruments at scale to bring more investments to Africa. Fourthly, he asked the UN assembly to tackle the rising insecurity in Africa, and the rising expenditures on security which are displacing financing for development.
He said actions are underway to establish security index investment bonds that will be used to tackle the reconstruction of areas damaged by conflicts in Africa, seizing the moment to call for further support. Lastly, he submitted it is time to properly value the green assets of Africa and include them in the Gross Domestic Product(GDP) of Africa.
” Africa must move from being green and cash poor to being green rich through proper valuation of its natural capital in its GDP.
“Africa’s vast forests, biodiversity, and carbon sinks are the key to saving the world,” he said.
The bank chief stressed that the aforementioned foundations will “assure a much richer and wealthier Africa for future generations.”
He called on African leaders to boldly support the initiative to move Africa into a future with sound financial structures to bolster its development.
More Insights
The Afdb’s advocacy is amid the pressing financial demands on the African continent. On June 16, 2024, it launched the African Debt Managers Initiative Network (ADMIN), to provide home-grown solutions to Africa’s debt challenges.
This is even as it disclosed that 13 African countries are currently at high risk of debt distress, while six are already in debt distress. The bank had announced the inauguration of the initiative to address the debt problem in a statement on Saturday.
When it comes to Nigeria’s multilateral creditors, the AfDB stands out as one of the country’s largest and most reliable sources of credit. According to data from the Debt Management Office, Nigeria’s loans from the AfDB have increased from approximately $3 billion in 2022 to $3.2 billion by the end of 2023.
This is up from $2.8 billion in 2021, demonstrating steady growth in the extension of credit to Nigeria.