AFRODAD participated at the African Development Bank (AfDB) 2018 Annual Meeting held from the 21 – 25 May 2018...
in the dynamic city of Busan, South Korea renewed the quest for African countries to speed up industrialisation learning from the Korean experiences of the past and present. Africa needs not “leapfrog” but “leapcheetah” expressed some delegates. The Cheetah is the fastest land animal known in Africa. The Bank Annual meetings are statutory events and are basically a series of knowledge events organized to generate new ideas for developing and financing Africa’s development .
Accelerating Africa’s industrialisation was the theme of the 2018 Annual meetings. According to the Bank President, the choice of the host country was mainly based on “Korea’s … exceptional success as one of the world’s leading industrial and economic powerhouses”. Africa has a lot to learn from Korea’s experiences and its rapid growth. We have been told that “a few decades (50 years) ago, Korea was grappling with poor infrastructure, unemployment, a per capita income of less than $350 a year, and a dependence on foreign aid. But in just few decades Korea has the world’s 11th biggest economy”.
About the Bank (AfDB)
AfDB is one of the major multilateral development banks in the Africa. It was established in 1964.The Bank is composed of three major institutions, firstly, the African Development Bank (AfDB), secondly the African Development Fund (ADF) and thirdly, the Nigerian Trust Fund (NTF). The Bank’s Headquarters are in Abidjan, Cote d Ivoire.
The bank president is Akinwumi Adesina, formerly Nigeria’s Minister of Agriculture and Rural Development. He is the 8th President of the African Development Bank and was elected in 2015.
The AfDB is capitalised to the tune of US90Billion. The Bank’s 60% shares are held by African countries and 40% by non African countries. The AfDB receives funds from its member countries and donors it also borrows from the African and international capital markets to finance the development needs of African member countries. All 54 African countries are members of the bank and 26 are non-African regional member countries. The Bank uses three financial tools to finance development in African countries, i) Loans and grants, ii) lines of credits, guarantees and equity; and iii) technical assistance
Can Africa industrialize at a fast pace?
From September, 2015, President Akinwumi Adesina, launched five Bank priorities that are aligned with, and build upon, the 2013 – 2022 Bank Strategy. These are: i) Lighting up Africa and Powering Africa; ii) Feeding Africa; iii) Industrializing Africa; iv) Integrating Africa; and v) Improving the quality of life for the people of Africa.
African countries are still exporting unprocessed products, more than 80% of their natural resources. In order for Africa to industrialize it must add value to its raw materials, built the right infrastructure, built strong African private sector and improve its governance, both politically and economically.
The Meetings noted that Africa’s increasing new DEBT burden will inhibit capital investments in industrialization. Transparency in funds usage and management are key for industrialization. Corruption and financial leakages need to be addressed.
To fast tract Africa’s industrialisation process there is need to establish more of industrial African champions in the direct game changer sectors, such as:
- Agricultural Value Chain Industry – fertilizer companies
- Urbanization – middle class growth boost markets
- Transport and logistics
The Bank’s Industrialise Africa strategy focuses on supporting critical enablers such as improved investment climate and fiscal sustainability and good governance. The Bank pushes for adoption of national public-private partnerships, establishing economic special zones, infrastructure buliding, institutional and policy reforms,
What does Korea offer to Africa?
The Korean government pledged to help African countries “Leapfrog” or “Leap Cheetah” its pace of industrialisation through the provision of smart technologies e.g. drones; explore Africa’s competitive advantages; eradicate constitutional provisions and structures that increase the cost of doing business; and liberalize trade.
Meetings Key Takeaways
- Africa’s debt burden continues to inhibit capital investment in industrialisation.
- The Bank has intellectual resources and is better positioned to lead trade negotiations with China on behalf of Africa as a bloc of nations. This would be a regional and Pan –African Approach.
- Africa’s infrastructure needs are estimated between $130 $170 Billion per year (African Economic Outlook 2018).
- The AfDB need to be capitalised adequately. The Bank’s 60% shares are held by African countries and 40% by non African countries.
- The AfDB has an AAA credit rating. The bank also brows from the international capital markets.
Africa will become an industrial giant, when she puts in place right policies, regulations, investor friendly environment, fiscal discipline, and adequate domestic financing. African countries need to continue strengthening their relationships with Korea through building strong economic, business, educational, industrial, and technological ties. The 2019 Annual Meetings will be held in Malabo, Equatorial Guinea.