The African Development Bank will need a general capital increase sometime in the “near future” in order to make any kind of dent in Africa’s enormous demand for financing, according to the bank’s President Akinwumi Adesina.
Adesina, speaking at the Center for Global Development during the World Bank Spring Meetings in Washington, D.C., described the enormous gap between financing demand and supply for African infrastructure and social investments. He noted that the AfDB has made strides to operate more efficiently in recent years, and appealed to potential investors to be undeterred by the return of pessimistic views about Africa’s prospects, which he said were unwarranted.
Adesina painted a picture of a regional development bank — “Africa’s own bank” — doing everything it can to squeeze investment resources out of limited capital reservoirs, but he noted that eventually, the AfDB will need more money if it’s going to stay responsive to its client countries’ financing needs.
The African Development Bank is pushing for increased off-grid energy solutions on the continent as part of a wider New Deal on Energy initiative launched in 2016 as the bank's leading agenda. The AfDB vice president of Power, Energy, Climate and Green Growth tells Devex that without closing the energy gap the continent will struggle to attain other development goals.
Since Adesina assumed leadership of the bank two years ago, he has focused the institution on a set of “high five” goals: Light up and power Africa, Feed Africa, Industrialize Africa, Integrate Africa, and Improve the quality of life for the people of Africa. He described them as development “accelerators” that could help the continent achieve 90 percent of the Sustainable Development Goals. The bank is working to align donor countries around these five priorities, and has seen Japan, South Korea, China and France commit billions of dollars to support them, Adesina said.
The AfDB president highlighted the work the bank has done under his leadership to become a more efficient institution, pointing to administrative costs that are the lowest among multilateral development banks and decreasing cost-to-income ratios in recent years.
“The bank will achieve even greater efficiency gains and value for money as we roll out our new development and business delivery model,” Adesina said.
Adesina also described the numerous ways in which the AfDB is seeking to leverage its limited capital to tap private resources — “using all available instruments at our disposal,” he said. That includes exploring the possibility for the African Development Fund, which focuses on the 40 least developed African countries, to raise money by going to capital markets as the World Bank’s International Development Association has recently done, the bank chief said.
Job creation is a key priority for governments and populations — particularly youth — across Africa. Devex spoke with African Development Bank gender specialist Emanuela Gregorio about the bank's nontraditional investment to increase employment in the underdeveloped African textile and fashion industry.
“None of this is easy, I will tell you that. It will involve complex political negotiations among stakeholders.” Adesina said. “We will continue to look at all these options, but none will be enough to meet the risk capital resources required for achieving the SDGs in Africa through the high fives.”
“At some point, in the near future, the bank will definitely need a general capital increase,” he said.
Adesina also noted that the AfDB will host an Africa Investment Forum “toward the end of this year” to attract private capital pools to African investment opportunities, which he said would not be a talking shop, but a “totally transactional” forum for new investments.
Michael Igoe is a senior correspondent for Devex. Based in Washington, D.C., he covers U.S. foreign aid and emerging trends in international development and humanitarian policy. Michael draws on his experience as both a journalist and international development practitioner in Central Asia to develop stories from an insider's perspective.
Subscribe to Devex Newswire
Top international development headlines emailed to you every day