Why Africa is the place to be, by AfDB’s President
CNBC Africa’s Bronwyn Nielsen in conversation with Akinwumi Adesina, President of the African Development Bank discusses the Africa Investment Forum and why Africa is the place to be for investors.
You’ve just come from Michigan where you were given an honorary doctorate so let’s start there. Can you take me a step back and tell me what they were honouring you for.
It’s actually great, I was in Michigan state university in the united states where on the 4th of this month, they conferred me with a honorary doctorate of agriculture which was a great honour and I told him that I did my Phd at Purdue university even though I was admitted at Michigan state university, maybe they’re trying to compensate for that but it was wonderful to have. One of the things that they did which was a real motivation for me, was the mayor of the city of Lansing then made a proclamation that may 3rd of every year in perpetuity will be named Dr Akinwumi Ayodeji Adesina day which blew everybody away and for me it just means we have another platform to push the African agenda and it was such a humbling experience and also a great honour for me and for Africa as well.
Its adds to your list of prizes obviously, the world food prize highlight of the 2017 but we’re now in 2018 and you said in Davos, Switzerland earlier this year, the Africa investment forum is coming, and here we are sitting with the launch of the Africa Investment Forum nearly upon us. Why now and what is the African Investment forum about?
Africa needs to develop on its own terms, Africa needs to take advantage not only of resources that has domestically but it needs to market is better and leverage global capital for its own development. So when you take a look at the amount of infrastructure gap that Africa has today in terms of financing, it’s anything between $78 billion and $1.12 billion. Obviously the government can play a role, the bank can play a role, the private sector in Africa can play a role, but there’s a pool of capital out there looking for where to invest and so what we decided to do was to setup the Africa Investment Forum and the focus of this forum is not just to be another forum where you go and talk no , we’re tired of talking we just basically want to have nothing but transaction, transaction, transaction.
So this particular Africa Investment Forum is 100% transactional; no speeches or political speeches. We just want to connect global pension funds, sovereign wealth funds and institutional investors to Africa and leverage those investments to Africa. What is going to be unique about it is that people will say the capital is there but where are the bankable projects? A key part of this is developing the bankable projects for Africa and second is people always talk about risk but I don’t think risk is a big issue. The issue is how you manage your risk so what we’re trying to do with this is we’re setting up a very powerful core guarantee platform that will de-risk the investments that land on Africa on this particular platform. So it’s a 100% transactional forum trying to leverage the pools of moneys that are out there for Africa.
How do you guarantee that it is different from the many many talk shops aimed at Africa out there and make it transactional?
The only talk allowed is transaction, it’s going to be an investment market place in which we bring the project developers together and also those that are going to be financing the project so you have to make them connect. Secondly, at the end of the day you will find any investor will always tell you whether it’s project risk, financial risk, market risk or whether it’s political risk, it’s all about risk. What we do well at African development bank and our other partners is to de-risk those investment but we do it in a very separate way, we each have our partial risk guarantees and partial credit guarantees in different ways but this time on this platform we agree to come together; that is the African Development Bank, the World Bank, the International Finance Corporation, the European Bank for Reconstruction and Development, the Asia Infrastructure Investment bank, the Islamic Development Bank and multilateral investment guarantee agency very powerful platform where all the investments that come in whether from Latin America, Asia or Europe that land on this platform will put our resources together and we de-risk them so that makes sure that you can have transactions that are backed by de-risking elements that make them work
Additionally, you said there’s going to be no long political speeches, now given the penchant for political speeches on the African continent, how are you going to move away from the protocol that often follows these types of events?
It depends on what you want to achieve, what we want to achieve is not political speeches, what we ant to achieve is accelerated investments, concrete investments. Investors are very serious so this is not this is not just an event where you come to do investment promotion, no it’s a forum where we have actually spend several months before the main preparing the bankable projects, interacting with those potential investors and using our instruments to figure out how to structure this better, how to manage your risk and so on so that when it actually comes to the event it’s actually a deal making event. So for the few heads of state that are going to be there, will be there as ceos of their countries in other words they will be talking to investors so if a pool of investors wants to invest $15 billion dollars in a given country, they’re going to ask the question what are the policy issues, what are the legal regulatory issues; the barriers to those investment happening, so Mr President if you kick out 1 2 3 4, those investments will happen. So is that kind of an interactive engagement that you’re going to have so that makes it very very very unique because it’s all about making things happen in which our leaders are going to play a very very important role but not speeches.
Are you looking to measure the success of the AIF on the number of transactions that are actually signed on the day of the week after?
Yes, it’s going to be measured in terms of the number of projects that actually come to the transaction platform, secondly is that I actually sealed and de-risked through the platform and thirdly is not just about signing is really about making sure that those engagement actually followed through. So the Africa Investment Forum will create an Africa Investment Forum tracker that actually tracks investment right through the year and there’s going to be a reporting back in the next forum about what has been done and just to make it a lot easier for our heads to state; the leaders that actually have to help push this and we need them badly. We’re going to support them to have delivery units in the offices so it right in their line of sight about what needs to be done.