Stop backing infrastructure loans with natural resources, Adesina warns African governments

• FDI flow to Africa doubled to $87b in 2021, AIF commits to electric cars, others

President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, yesterday, warned governments in the continent to stop securing infrastructure loans with natural resources, as doing so could make them “mortgage the future of their countries.”

Instead, Adesina appealed to the countries to open their space for private equity inflow and key into the huge potential of public-private partnership (PPP), to bridge the huge infrastructure gap in the continent.

The AfDB President, who spoke during a media briefing at the ongoing African Investment Forum (AIF) Market Days 2022 in Abidjan, Cote d’Ivoire, insisted that the regional bank does not support using natural resources to back facilities for building infrastructure.

With transparency, accountability and efficiency in the management of public infrastructure financing, he said, African countries can attract private equities from the global market and turn their fortune around.

He said: “At AfDB, we do not support using natural resources to back infrastructure financing. That will be mortgaging the future of those countries. All infrastructure loans should be transparently and competitively done in such a way that they give value to the countries.

“Of course, you know that infrastructure is murky and sort of dark sometimes. So, there should be transparency; and there must be efficiency in the use of public resources on infrastructure.”

The former Nigerian minister of agriculture said there was a huge funding gap in the African infrastructure space. He said the bank and AIF were exploring different options, including seeking the understanding of the International Monetary Fund (IMF) to deploy its Special Drawing Right (SDR) through development institutions, to bridge the gap.

Akinwumi also kicked against the continued reliance of the region on the outside world for its medical need, warning that it would be risky for Africa “to outsource the health of 1.4 billion people to the benevolence of others.”

He decried the importation of 80 per cent of health consumables from other regions, saying the COVID-19 experience should serve as a lesson.

For AfDB, he said, an investment of $3 billion would be committed to health infrastructure to achieve Africa’s health sovereignty.

He was optimistic that Africa, through the efforts of AfDB and AIF in recent years, is getting back on track.

He disclosed that foreign direct investments (FDI) fell from $47 billion in 2019 to $40 billion in 2020 during COVID-19 but doubled to $87 billion last year.

He said the strategic development focus of AIF in the coming years is anchored on three areas: special agro-industrial processing zones across the continent, the future of electric cars and renewable energy.

The agro-processing zones, according to him, will turn Africa’s rural areas from misery to wealth centres and boost the region’s food sufficiency.

On electric cars, he said Africa, with its huge resources in lithium and other resources, should not repeat the past mistake of consigning itself to being a source of raw materials but seek to be at the forefront of electric car manufacturing.

Also, Adesina argued that Africa, with its huge solar resources, does not have a guaranteed energy future if it does not manufacture panels and other components needed for renewable energy.