What Africa must do to advance, by Adesina
Dr. Akinwumi Adesina is the President of the African Development Bank (AfDB). He previously served as Nigeria’s Minister of Agriculture and Rural Development. Until his appointment as minister in 2010, he was Vice President of Policy and Partnerships for the Alliance for a Green Revolution in Africa (AGRA).On the sideline of the just concluded maiden Africa Investment Forum (AIF) in Sandton, Johannesburg, South Africa, he spoke with ADEYEMI ADEPETUN on what Nigeria and other African countries must do to develop. Excerpts:
What more can Nigeria do to attract investments?
Investment is like work, and you look around. So, wherever you find capital, keeping it to grow the macro economy requires understanding, appreciation and support of private sector. And I think in the case of Nigeria, I was very pleased with Vice President Yemi Osinbajo, when he mentioned the Industrial Council to me. I know the Nigerian Export Promotion Council (NEPC) is doing a lot to market Nigeria. But to attract fresh investments at this level, we must have certain things in place and it is crucial we work harder.
First, we must solve the power problem because I don’t see how Nigeria can be an industrial hub unless we have secure and stable power that can allow our industries run 24 hours daily at a minimal cost.Presently, the President is doing well and I say to people, we need to have more conversations about our development.
Nigeria cannot be a dumping ground. The country needs to become an industrial hub, and to get this done, we need infrastructure. We need quality roads, constant water supply, improved education system and upgraded agricultural system. We also need to ensure that we have a financial sector that makes funds available to businesses at affordable rate, and also, we need a policy control system that guarantees stability.
There is nothing that kills an investor more than policy inconsistency, because if you are going to make a long-term investment for 10 to 15 years, there must be stability of polity. Government comes and goes, but if investment goes in and out as governments go, then there will be a huge problem.
I am confident in Nigeria, and it has the population and the potential but as you know, I say not just for Nigeria but Africa all the time. Potential is very good but no one eats potential, we need to unlock all of them, you have to continue to work. The greatest potential Nigeria has is young and smart people. I have confidence that things will get better in Nigeria.
What do you consider the greatest disservice to Africa’s development?
Let me say the biggest thing that keeps me awake at night is how we are going to get electricity at 100 per cent for Africa because the continent cannot develop in the dark. The world is moving fast, there is fourth industrial revolution, digital revolution, robotics, artificial intelligence; all of these things operate on electricity. Unless Africa accelerates, it will be doing itself a disservice. It will be doing its children and future a massive harm.
For the continent to have electricity, we have devoted about $12 billion to power. As a bank, we hope to improve that to between $45 billion and $60 billion so that we can make real progress. I am excited to see a lot of changes, especially renewable energy. Africa is the youngest continent with so many young people with ideas, creativity and hope. These people surely need finances to run things.
I believe we have to make capital available for poor young people to thrive. The Zukerbergs of this world could have come out of Africa. The world benefitted from Bill Gates, Africa can also impact the globe positively.I am always saddened when I see young people embracing drugs, violence and boarding rickety ferries to Europe for an elusive greener pasture. Youthful and talented Africans should not end up at the bottom of the Mediterranean Sea. So, we must do something very fast to salvage the continent. We must create opportunities that could lead to quality growth and job creation. I mean decent jobs for people. If there is anything that keeps me awake, it is this and I know that if we can get electricity right, things will take better shape in Africa.
People talk about migration. I was talking to the German Chancellor recently when I went to Berlin and I said if there is no electricity in Africa, where do you think the young people will run to? They will move to where there is electricity and improved quality of life like Europe.
We are not relenting at AfDB. We are working on a solution, which is going to help countries in the region create 25 million jobs over the next 10 years in three critical sectors. They include ICT, Fintech industry and the small and medium scale enterprises (SMSEs). Agriculture is also inclusive.
We are working with Google and Microsoft to set up 200 coding centres in Africa. We have smart young people and they will be able to code, which means that they can tap into the global market for digital technology as it progresses.So, when people ask me about my job, I say I have a mission to make sure that we accelerate the future of Africa.
West Africa was silent in the consummated deals at this event. Could you possibly offer a reason for this seeming puzzle?
This particular forum is not one where investments have to be divided based on affirmative action. This is an event where everyone was given same platform to develop bankable projects. So, this is a competitive framework and not allocative in nature. Those that did the right things invested both with their pockets and got results. Like in the case of Nigeria, Vice President Yemi Osinbajo was here, he met several investors. If you look at the boardroom, the Minister of Finance, Zainab Shamsuna Ahmed, was also around. There were talks about the Brass Fertiliser project, which is about $5 million investment.
One of the participants had said if the forum held five years ago, they would have long closed the transaction that took them many years to initiate which was only sealed in two days on this platform.If you take a look at another interesting project in Nigeria, the Eko Atlantic, it is fabulous and over-subscribed. It would see billions of dollars going into it.
Aliko Dangote is doing a lot of work on gas pipeline, which is also very huge. So what I am saying is that it is based on what opportunities you have for investors and the policy and regulatory environment in place that would instill in them the confidence to commit cash.
Besides these deals, what are the projections for 2019?
As we said, it is a constant ecosystem. It doesn’t end here, the conversation will continue. We have launched a digital platform, which will allow that go on real time. There is no way we will rest because expectations are high. What I always say is that it is a privilege to be in the position where I am today. Therefore, there must impact people positively. So, 2019 begins in 2018.
How does the AIF intend changing the African narrative?
I feel happy because this is all about Africa and how we change the negative perception. I don’t just want the continent to be seen from the development line but also the investment lens. And I think we have managed to do that. AfDB has put up a world-class event in which the globe has shown up with top organisations indicating interest to do business with us.
The second thing is that Africa has an infrastructure deficit of between $68 billion and $108 billion. I have heard those numbers for so long and I am not scared at all because we can actually deal with them. The issue is how you deal with the challenge.I see it as a glass half full, which means it has lot of opportunities. So, if I can attract investments to Africa, we can close that gap and that is why we created the Africa Investment Forum.
Why we did this event was to tackle the massive infrastructure gap. I know the money is there. If you check the pension and sovereign wealth funds, the amount of asset under-managed for pension finance is around $56 trillion. If you look at the amount of pension funds and sovereign wealth funds around the world, it is around $622 billion.
So, if you look at the five things that we considered very important in achieving sustainable development goals in Africa – man power, food, industrialisation, integration and quality life – I feel excited that if they are attained, the continent would have achieved 90 per cent of the SDGs and 90 per cent of its agenda that would cost us $170 billion yearly.
But if I take the $56 trillion that is there in terms of global pension and sovereign wealth funds, and juxtaposed with the $170 expenditure, that is 0.3 per cent of the total asset of management, we can actually get some things done on the continent.
All we need to do is to smartly attract investments to Africa. That was what this forum made to do but while considering that, questions arose. Some included how to manage investors’ risk, improve investments and extant regulations? However, we are tackling the challenges.
I feel so good because when we were embarking on the journey, I said we are going to have $40 billion. We’ve worked a lot over the last couple of months. We had boardroom conversations with investors. We concluded 45 transaction deals worth $32 of the $40 billion projection. That’s 80 per cent success on our first try. I feel delighted because I schooled in Nigeria and if you score 80 per cent, that’s an A plus.
One of the interesting things about this forum was that we had about 335 investors globally. They came from 53 countries, including Asia, Latin America, Europe and the rest.The institutional investors hold trillion of dollars. We had about 101 of them at this forum. Many of them now see Africa differently. We have a powerful and united group working for Africa like never before.