The African Development Bank (AfDB) President Dr Akinwumi Adesina has told the African diplomatic corps in Seoul that finance, energy and stability are the three main obstacles to private sector development in Africa.
Adesina has identified the three main obstacles to private sector development as access to finance, energy and stability.
AfDB has invested USD 1 billion in AfreximBank, including USD 650 million in trade finance lines of credit and USD 350 million in trade insurance.
The Bank has also invested USD 630 million in First Rand Bank and AbSA in South Africa to support expanded access to trade finance for 20 countries.
This financing effort includes small and medium-sized enterprises, which represent more than 80 per cent of businesses in Africa.
In this respect, Dr. Adesina cited the Asian example, where large companies relied on value chains dominated by SMEs including suppliers and subcontractors.
AfDB’s strategy is to develop large companies while connecting them to SMEs for increased value creation.
Largest solar project in the world
To address the challenge of lack of energy in Africa, AfDB has made access to electricity a top priority.
Its ‘Desert to Power Initiative’ will develop an estimated 10,000 MW in the Sahel region, making it the largest solar project in the world.
“Without electricity it is impossible to industrialize Africa,” Adesina said.
AfDB plans to make Africa a renewable power-house through the Desert to Power Initiative. The solar project is set to stretch across the Sahel region. On completion, it is expected to connect 250 million people with electricity by tapping into the region’s abundant solar energy.
The Bank says that energy poverty in Africa is estimated to cost the continent 2-4 per cent of GDP annually.
Currently, 64 per cent of the Sahel’s population – covering Senegal, Nigeria, Mauritania, Mali, Burkina Faso, Niger, Chad, Sudan, Ethiopia, Djibouti and Eritrea – lives without electricity, a major barrier to development, with consequences for education, health and business.
Increased finance to affect Africa’s millions positively
Adesina who heads Africa’s leading development finance institution says, the Bank’s 2018 Africa Investment Forum in South Africa, “secured investment commitments worth USD 38.7 billion in less than 72 hours.
He says, “This provides a strong indication of global interest in Africa’s emerging markets.”
Experts say in order for the African Development Bank to continue supporting the continent’s development, a general capital increase is necessary.
According to Adesina, an USD 11 billion increase in paid-in capital for example would significantly change the lives of millions of people, including 105 million who would have access to electricity.
137 million would benefit from access to improved agricultural technologies while 22 million would benefit from investments in private sector projects.
Improved transportation services
Some 151 million people in Africa would have access to improved transportation services and 110 million would be provided with access to improved water and sanitation services.
The dean of the Board of Directors of the African Development Bank, Abdelmajid Mellouki, estimates that a general capital increase would enable the Bank to provide African countries with funding at significantly lower costs.
Adesina spoke during his three-day visit to Korea which includes several official visits.
He is also to receive the SunHaK Peace Prize awards for which he and co-laureate, Waris Dirie a well-known activist against female genital mutilation, are the 2019 nominees.
This is the first time the SunHak Peace Prize has been awarded to the African continent.