Africa is poised to undergo the most significant transformation of any continent in this century. By 2100, it is expected to house nearly 40% of the global population.
If sustainable development benefits Africans by then, the continent’s economic power will be immense. Conversely, Africa could face severe economic and environmental crises without such development.
On June 12, 2024, Akinwumi Adesina, President of the African Development Bank (AfDB) joined Stephen Sackur on BBC’s HardTalk to discuss the continent’s future. He highlighted Africa’s robust economic growth, with GDP rates of 3.1% last year, 3.7% this year, and a projected 4.3% next year, surpassing the global average.
Adesina noted that despite global economic shocks and high inflation, Africa remains resilient, with 10 of the world’s 20 fastest-growing economies on the continent. However, he acknowledged that Africa must sustain double-digit growth for 10-20 years to reduce poverty significantly.
Food security
Adesina emphasized on HardTalk, that the continent’s vast opportunities, especially in agriculture. With 65% of the world’s uncultivated arable land in Africa, this is crucial for feeding a projected global population of 9.5 billion by 2050.
Investments
As AfDB President, Adesina’s role involves convincing investors to view Africa as a viable investment opportunity despite political instability and economic challenges, such as high youth unemployment. He argued that risk management is a universal challenge, and investors should recognize Africa’s potential. He cited data from Moody’s Analytics showing that the actual risk of loss in Africa (1.6-1.9%) is lower than in Latin America (12%) and North America (10%).
Adesina emphasized the importance of instruments like partial credit guarantees, which have helped African countries like Benin, Senegal, and Côte d’Ivoire raise substantial funds from external investors at lower interest rates. These mechanisms are crucial in de-risking investments and fostering long-term financial stability.
Governance
Regarding governance, Adesina acknowledged the need for improved transparency and accountability in Africa on HardTalk. He highlighted the African Development Bank’s initiatives, such as the Strategy for Economic Governance in Africa (SEGA) program, which focuses on economic governance, public financial management, and reducing illicit capital flows.
He countered criticism about the bank’s Anti-Corruption Fund, explaining that implementation issues related to conflict of interest were being addressed.
Climate Change
Climate change and energy transition are central to the AfDB’s strategic vision. Adesina detailed the bank’s commitment to doubling climate finance to $25 billion by 2030 and the African Adaptation Acceleration Program, aiming to deploy $25 billion for climate adaptation.
He also mentioned the Africa Disaster Risk Insurance Facility, which was designed to help countries manage catastrophic risks.
Energy Transition
While the AfDB does not fund upstream oil or gas projects, it supports natural gas as a transition fuel, which is critical for clean cooking and reducing emissions. Adesina argued that Africa’s natural capital, including its vast forests, should be revalued as part of its wealth, impacting its debt-to-GDP ratio and borrowing capacity.
Demography
On demographics, Adesina viewed Africa’s young population as an asset. He stressed the need for education, job creation, and financial institutions focused on youth entrepreneurship. He noted the ADB’s initiative to establish Youth Entrepreneurship Investment Banks to support young African businesses.
Adesina also addressed international cooperation, noting the AfDB’s broad shareholder base, including the US and European countries. He highlighted successful projects like the Lobito Corridor and the Africa Investment Forum, which has mobilized over $180 billion in investment interest.