The African Development Bank’s strong actions in tackling Africa’s problems

On Friday around 16 p.m. (GMT), the main hall of the Accra International Conference Centre fell silent for a brief time. After a series of public meetings, information events, closed-door talks, and media sessions on Africa’s developing difficulties and prospects that could turn out to be cutting-edge solutions, the African Development Bank (AfDB) Group’s five-day annual general meeting came to an end.

Of course, most attendees were exhausted after five days, but not so much that they didn’t want to listen to Dr. Akinwumi Adesina, the president of the African Development Bank.

Following formalities and a few remarks, the ex-Nigerian agricultural minister ascended the rostrum with the zeal of ‘the African development evangelist,’ a new title liberally bestowed on him by certain regional leaders during the week.

The AfDB President took a moment to thank his team, the Board of Governors, and other attendees for their dedication to the cause of African economic development. He won many hearts for a few minutes as he sang Johnny Nash’s ‘I Can See Clearly Now’ to the audience. The audience couldn’t help but applaud Adesina’s performance as a philosopher, inspiring speaker, and prophet all rolled into one.

The “negative feelings” of the region being a cesspool of continuous anguish and helplessness had vanished for Africans who gathered on the old metropolis of Accra. But it wasn’t because the sky was fully blue, nor will it be anytime soon — that’s wishful thinking.

The gloomy clouds could linger for decades (in any event, every region is battling economic dark clouds), but there remained a glimmer of hope that Africa could tap into vast natural riches to feed, power, and industrialize itself.

But, in Adesina’s words, “there is no market in the world where potential is traded.” That means Africa must act quickly to start adding value and earning a respectable place in the global economy, rather than simply flaunting its natural resources.

Since taking over the reins of the bank seven years ago, these have been the core themes of the Adesina iconography – that Africa stops walking around with bowls in its hands, takes full responsibility for its fate, and produces an economy where everyone has a fair chance to prosper. It’s also an ideological endeavor that ignores the region’s economic and geopolitical realities, as well as funding limits. He frequently emphasizes the difficulties while instilling hope in the process of overcoming them.

The meeting’s dual theme – ‘Achieving Climate Resilience and a Just Energy Transition for Africa’ – is indicative of the region’s current woes. Africa has nine of the top ten most vulnerable countries to climate change, although contributing less than 4% of global emissions. The United States has a per capita metric ton of emissions of 16, whereas Mali has a per capita metric ton of emissions of roughly 0.1.

Climate change poses systemic hazards to African economies, infrastructure investments, water and food systems, public health, agriculture, and livelihoods, threatening to undo the region’s modest economic accomplishments and push it into a new level of abject poverty. Already, it is estimated that 300,000 African women and children perish each year as a result of unsafe cooking methods.

However, when it comes to finance, the region gets the short end of the stick. According to a survey, Africa received less than 4% of global climate change research funding during the last three decades. In addition, only one dollar of every $5 spent on global climate adaptation goes to Africa, according to Ghanaian President Nana Akufo-Addo, an imbalance that must be remedied to give Africa a fair chance to adapt.

Climate change costs Africa $7 to $15 billion each year, according to Adesina, and these costs could climb to $40 billion per year by 2030. Furthermore, the UN Environment Programme estimates that between 75 million and 250 million Africans could be affected by climate-related water scarcity, while funding COP26 compliance could strand Africa’s natural resources, particularly natural gas.

Despite the fact that Africa is progressively being left out of the climate adaptation and mitigation equation, the AfDB is not wallowing in self-pity. The African Adaptation Acceleration Program (AAA-P), which the bank is executing in collaboration with the Global Centre on Adaptation and former UN Secretary-General Ban Ki-moon, aims to mobilize $25 billion in investment for African countries by 2025.

The AfDB devotes 67 percent of its climate money to adaptation, the largest percentage of any multilateral development institution in the world. Through its Africa Disaster Risk Insurance Facility, the bank also assists countries in insuring themselves against catastrophic weather situations. The organization has already reached out to nine countries to help them pay for insurance premiums to protect themselves against climate-related calamities.

Madagascar, for example, receives a $4 million lifeline for full insurance premiums, allowing it to get $ 12 million in compensation for over 600,000 farmers when storms strike the island.

The institution’s climate adaption strategy is in line with its Feed Africa Strategy and Africa-wide agro-economy goals. Indeed, the Bank’s Africa strategy was launched six years ago with the goal of providing millions of farmers with climate-resilient agricultural technologies. Over 76 million farmers have already benefited from the program’s improved agricultural technologies.

In just over two years, the main component, Technologies for African Agricultural Transformation (TAAT), is said to have given climate-smart seeds to 12 million farmers in 27 nations. It provided water-efficient corn to 5.6 million East African families, a region struck by severe droughts three years ago, making food security extremely challenging. TAAT funded the planting of 65,000 metric tons of heat-tolerant wheat cultivars in Sudan. This enabled farmers to plant the kinds on 187,000 hectares, resulting in a 50% decrease in Sudanese wheat imports.

The success of TAAT in Ethiopia is being used as a model for how Africa may become a solution to the world food crisis. In 2018, it distributed 45,000 metric tons of heat-tolerant wheat seeds to Ethiopian farmers. Farmers grew from 5,000 hectares of heat-tolerant wheat types cultivated in 2018 to 167,000 hectares two years later and doubled capacity to 650,000 hectares this year, bringing the country’s production capability to 100% self-sufficiency with plans to begin exporting the crop next year.

And its strategy is crystal clear: Ethiopia’s Prime Minister, Abiy Ahmed, is alleged to have stated that the country plans to cultivate two million hectares next year and sell a minimum of 1.5 to two million metric tons to Kenya and Djibouti, both of which have previously relied on war-torn Eastern Europe.

As a result of Russia’s invasion of Ukraine, Africa is facing its biggest food crisis in recent memory, the regional bank has devised the Africa Emergency Food Production Plan, which aims to produce 38 million metric tons of wheat, maize, rice, and soybeans. The emergency food production plan is worth a total of $12 billion.

While some doubt the plan’s practicality and dismiss it as overly ambitious, Adesina claims the bank just requires $1.5 billion (which has been approved by the board). The funds will be multiplied by eight in order to carry out huge ambitions to turn Africa into the world’s food basket.

Surprisingly, this isn’t AfDB’s only leverage strategy for breaking the shackles of financial restraints. Since its founding, the Africa Development Fund (ADF), a 50-year-old concessional lending institution of the Group that has provided over $45 billion in support to impoverished and vulnerable countries in the region, has been a beacon of light in the continent’s financial crisis. However, with only $25 billion in equity, the company’s balance sheet can only support so much credit.

The African Development Bank (AfDB) wants to use the capital market to leverage the equity to $33 billion, but it is legally unable to do so and is seeking help from other parties. Relevant clauses must be revised as soon as possible, according to Akufo-Addo, to make the AfDB more relevant and fundamental to Africa’s development strategy.

However, ADF equity is not the only resource that the AfDB is considering. Some major economies and multilateral institutions are considering using the bank to channel Special Drawing Rights (SDRs) to African countries.

Vicky Ford, the UK’s Minister for Africa, Latin America, and the Caribbean, stated last week that her country would be willing to transfer funding through the regional bank.

SDRs, according to Adesina, will lower African countries’ susceptibility to debt obligations by serving as sources of inexpensive funding when leveraged. Currently, private sources are said to hold over 40% of African debts, which are often non-concessional and thus expensive.

Ghana, which hosted the AGM in 2022, is a symbol of AfDB’s infrastructure financing capabilities. The African Development Bank’s Board of Directors granted a $120-million corporate loan in 2015 to assist the capital investment program of Ghana Airports Company Limited (GACL). One of the results of that money is the Kotoka International Airport. Accra has been designated as a West African aviation hub by The Airports Council International for three years in a row, earning it the title of “Best Airport in Africa” (2019 to 2012). It reached a peak of three million passengers per year before the COVID-19 closure.

The Pokuase Interchange, a four-bridge complex in Accra’s core, has been transformed into a tourist attraction. The sustainability initiative, which is based in Ghana but attracts visitors from all across the sub-region, is a model in West Africa and the second of its kind in Africa. It was also supported by the African Development Bank.

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