In this interview with some Nigeria journalists on the sidelines of the just-ended World Bank/International Monetary Fund Annual Meetings in Washington DC, the President of the African Development Bank, Dr. Akinwumi Adesina, shares his vision for Africa, and some interventions by the bank to prepare the continent and its people for the digital future. Harrison Arubu was there for the News Agency of Nigeria. Excerpts:
On support by the Africa Development Bank to women
We are supporting women. I think when Africa gets the issue of women right, it will get everything right. And so there is the issue of access of women to financing that we provide through Affirmative Finance Action for Women in Africa (AFAWA). This will help to mobilise $3 billion for businesses for women on the continent.
The other one is that we actually supported another fund which is called the Alethia Identity Fund, which has just closed at $75 million and that is to support growth capital for the businesses for women. So in other words, the small, medium and the large businesses for women are what we are supporting. Finally, I will like to see financial institutions in Africa being held fully accountable when it comes to financing women.
And so the bank will be launching what we call the Women Financing Index for Africa in which all financial institutions in Africa will be rated based on their lending to women. So, both in terms of the volume of lending, in terms of the terms of lending and in terms of the development impact of their lending for women. So, those who lend more to women will get more resources from us at a discounted rate from us, so you can lend more and have more impact for women.
So, we are focused massively on how we can drive investments for women. That’s a big issue for us, just to give you an update on that. We raised $251 million from the G7 leaders when I was in Biarritz with President Macron. It was great.
Can you elaborate on the Green Capital thing that the Africa Development Bank launched recently? What is it about?
Let me just say more generally as a bigger issue, when it comes to driving green growth on the continent. I believe that achieving green growth on the continent is not an externally imposed issue, it is in Africa’s interest to actually have green growth, to have clean air, clean water and to grow in an environment where people have good quality of life.
And so, you can have GDP growth but if you are having GDP growth in which it’s occurring huge amount of emissions, pollution of water, of air, it’s not improving the life of anybody. So, anybody telling me in any part of the world that my GDP is growing, that is not my concern. My question is: is at what cost? What does it mean for the lives of people?
So, for us at the Bank, we are very big on renewable energy. Today, we have doubled climate finance as an institution from $12 billion to $25 billion by 2025. Secondly, about 50 per cent of our climate financing is on climate adaptation. Because, you see a lot of draught, you see a lot of floods, you see all of these extreme weather patterns that are happening. So, we are actually doing a lot of that to support countries to adopt to climate change.
The other thing, of course, is that we have just launched an initiative which is called Desert to Power, meant to provide universal access to electricity all across the 11 countries in the Sahelean Zone of West and Central Africa.
The Sahelean Zone has the least access to electricity, but it also has the highest problems in terms of migration towards Europe. It also has the highest problem in terms of insecurity and fragility, and the highest challenge in terms of fertility rate. If you look at the birth rate in Niger, for example, that has almost 0.8 percent of rural access rate for electricity, the fertility rate is 7.2 per woman, which is one of the highest in the world. So, there is a direct correlation or association between not having electricity and rising fertility rate.
(Cuts in) So, they thrive in darkness.
Yes, they get busy with other things.
It has its own consequences.
What we have done is that we are leading this effort that will provide electricity for 250 million people across the 11 countries and 90 million of those will be through off-grid systems because of the sparse populations there. It is our biggest effort, and it’s going to be the world’s largest solar zone. We are not just talking about it.
We have started in Burkina Faso with a project called Yellen Rural Electrification Project which is a solar-based project we are doing with Agence Française de Développement (AFD), the French Agency for Development. We also have another one we’ve done in Chad that is called Djameya Solar Power Plant Project. We have in Mali and other places as well.
And of course, this will include northern Nigeria because we are working on a 1,000 megawatts solar power project that is going to be in Jigawa. So we take the whole of the Sahelean part of that.
Just to conclude on that, we have launched something that’s called the Green Based Loan Facility, a $500 million facility that will allow us to support countries that want to move out of dependency on coal or other fossil-based energy sources towards renewable energy, so that we are able to provide you financing at a cheaper cost to be able to make that transition.
What will be the criteria for eligibility for the Green Based Loan facility?
It is open for any country that wants to have access to it. It is that you must have a bankable project that can use it and you will meet all the conditions that the bank will normally require, but it is an open thing for any of the countries willing and interested in doing it, even the private sector by the way.
What is the total climate fund that AfDB has committed in Nigeria in recent times, say within the last three years?
The issue for us with climate finance is we build climate finance into our projects. For example, if you take the case I just mentioned to you now, we are supporting the development of a thousand megawatts of solar that is going to be in the Jigawa area, which is huge for us. We provided as well for the evacuation of power in Nigeria with the Transmission Company of Nigeria.
We provided them with $200 million that can support the evacuation of power and that is a big problem in Nigeria because of the liquidity crisis that is in the energy sector. We have also provided support to the Nigerian Bulk Electricity Trading (NBET) so it can meet some of its own payment requirements to those supplying them with gas.
The other thing that we are doing obviously that is linked to climate in Nigeria is in the north of Nigeria where we have put about $253 million into the north east area project, because a lot of the challenges we are facing are linked to climate: population growth, urbanisation, climate, and environmental degradation. So, some of the challenges you find, the fragility you find in that part of the country comes from that. That’s why we built climate finance into our financing in the sector.
Can you speak on your role in the agricultural sector? We know that is what you are passionate about.
In Nigeria, our work on agriculture is going to focus a lot on what we call Special Agro-Industrial Processing Zones, because as a person I have very little or all almost zero interest in little projects, I don’t have such interest. I want things that are structural, systemic and scalable. So, our discussion with the government is on how we can support these special agro-industrial zones to enable them with infrastructure- power, water, roads, ICT and also with irrigation facilities.
There will be zones wherein private food and allied industries or companies will be located close to where the farmers are. So, you will have processing, value addition to all commodities done within those zones; create market for the farmers, stop the movement of raw materials, create jobs within rural economy and in fact, turn the rural zones away from what I call today, zones of economic misery towards zones of economic prosperity. And that conversation is going on very well with government and we are very strongly supportive of that, and I hope that will continue.
We are also financing other work on the fertilizer side. We are supporting a few fertilizer companies in Nigeria. There is a new work with its Dangote fertilizer that we are supporting, and others in Nigeria.
The other thing we are also going to be supporting in Nigeria is to support young people to get into agriculture as a business because this is the wealth sector. I was in Iowa where I unveiled my personal foundation to support young people in agriculture as a business. I put together $1.1 million of prize money I won from World Food Prize and the Sunhak Peace Prize this year.
I endowed the foundation to support young people to go into agriculture as a business, and he was appreciated by everybody around the world for that. So, I think that the young people in agriculture need to see it as a thriving business. I’m excited that since I started this in Nigeria, agriculture is now cool and sexy in Nigeria, and I think that is the way it should be.
At the annual meeting in Malabo, there were talks on connecting Africa not just on the diplomatic level but on infrastructural level, and they were talking about building roads that connect countries. With the African Investment Forum coming up, what new projects should we expect to be tabled before investors?
I think the whole issue of regional integration is very important for Africa today within the context of the African Continental Free Trade Area (AfCFTA). The AfCFTA gives you a market of $3.3 trillion which is the largest free-trade zone in the world since the World Trade Organisation was set up. But for that to work well, we will continue to make our investments in infrastructure to enable it.
So, let me just give you some examples of those critical regional infrastructures. The bank is already financing ECOWAS for the development of the feasibility studies for the Lagos-Abidjan highway that will connect that whole corridor as a big highway, and that will go all the way to Dakar. It’s a very transformative highway there.
If you look, for example, what we have done in terms of deep seaport in Togo, it has helped a lot in opening up the economy for Togo. We supported also infrastructure for modern airports in Morocco, Ghana, Kenya, and other places just to make sure that you have access to transport infrastructure.
But, as one thinks of regional connectivity, it is not just roads, you need digital connectivity. Therefore, the bank is investing heavily in digital infrastructure. For example, we financed what is called the Trans-Sahara Fibre Optic Network. It is linking Nigeria, Niger, Chad to Algeria.
We supported the Central Africa Fibre Optic Submarine System that is linking DRC Congo with Central Africa Republic and also Congo itself. Then of course in East Africa, we supported what is called the East Africa Backbone, that is connecting all of the East African countries together.
Why is this important? First, digital payment, because to be able to do trade, you are not going to carry cash around, you have to be able to make digital payment. Second, is to be able to have entrepreneurs, digital entrepreneurs to emerge. This is because in a digital world you want to have digital entrepreneurs but they must have the backbone infrastructure for the service industry like Jumia and others to emerge.
The last thing, of course, is that even if we have all of that, infrastructure to connect coastal countries, landlocked countries, they will not be as good enough unless people can physically move. So, you can have tariff-free zones but you must also have literally borderless Africa in terms of labour mobility. And so the bank is supporting a lot of work in that area.
Today, if you are an African, you can visit only 25 per cent of African countries and get visas on arrival. For another 24 per cent of it, you will have to apply and you cannot even get it on arrival. And so if labour cannot move easily, it becomes a challenge. So it’s both physical infrastructure and soft infrastructure.
Talking about free movement, Nigeria has closed its land borders to neighbouring countries since August. What do you have to say to that?
The fact is I believe this is one area the two countries have to work together and make sure that they are in agreement about what needs to be done to ensure there is freer movement of goods and people. From all I see, those conversations are ongoing.
What is the bank doing about human capital development and health, which are two areas the continent is facing huge challenges?
Let us take the case of human capital. First and foremost, we are investing today in universities of science and technology, centres of excellence in science and technology. We have one in Nigeria, we have one in Kenya, we have in Tanzania, we have one in Egypt and then in South Africa. These are called Mandela Centres of Excellence, basically to develop world-class talents in science and technology.
We are in an era where it is all about fourth industrial revolution. So, automation is going to be important, artificial intelligence, robotics, big data, quantum data analysis. These are the things that are already driving the world, and they would be the future of the world. So, Africa must prepare people, use your own people for the jobs of the future, not the jobs of the past. And so when we take a look at universities, what do we find? We find that no more than two to three per cent of universities have people that are in science, technology, engineering, and mathematics. I don’t want Africa to be a laggard when it comes to innovation in a rapidly digitised world or the fourth industrial revolution.
So, that is one component of the science and technology. Let me give an example of what that looks like: we invested, for example, in Kigali. It’s called the Kigali Institute of Science and Technology. That centre today is producing world-class students in ICT. One hundred per cent of all the students get jobs before they leave. They are connected with some of the biggest companies in the world, whether it is Google, Microsoft and all of that. This just tells you that this is where the future really is and we are financing that.
The other area that I think is important is coding, computer coding. It is going to be the currency of the future. So, a lot of companies outside are going to outsource their coding, and therefore positioning yourself with the necessary human capital to be able to tap into that huge coding market is very important. The bank right now is supporting efforts to develop about 123 computer coding centres in Africa that would allow young Africans to be able to benefit from there.
Another area which is very important for us is the whole issue of how do you support young entrepreneurs in the ICT space with access to finance. So, the bank has a number of private equity funds that we have already set up. In the case of Nigeria, one of the companies we are working with is called TLcom Tide. It is a private equity platform that we have, that is actually run by Nigeria’s Omobola Johnson, who is doing a fantastic job. She was my colleague when I was a minister in Nigeria. So, I think human capital is the key.
But having said that, we can build all the human capital that we want, if the young people can’t find jobs, it’s a crisis. We’ve got a third of the young people in the continent don’t have jobs, we’ve got a third of them that are underemployed. The rest that are probably employed and maybe not happy. So, that is a big challenge, and I believe that it is time to begin to put our capital at risk on behalf of young people. If we don’t, we are all going to be at risk.
That why the African Development Bank is really supporting a major effort called Jobs for Youths in Africa, which is our big programme to help countries to create 25 million jobs for young people over a 10-year period, in agriculture, small and medium enterprises and in the ICT sector. You can imagine when you have 673 million young people on the continent, but you don’t even have the financial institutions that would support them.
That is not acceptable. So, a young people walks into a bank, they look lost, they are like in a forest. They don’t even know what to do, and the instruments are not developed for them. I have said it many times and I will say it again.
“I don’t believe in youth empowerment, at all, because when you say you have empowered somebody and then you train them but there is no financing, investments for them to grow their businesses, what is the good of that? So, we must move from youth empowerment to youth investment”.
We must invest in the youth and unlock their potential. That’s why I have been saying that we need to have youth entrepreneurship and investments banks specially developed, and dedicated to young people; where a young person would enter, and they feel at home; they feel welcomed because it is fully dedicated to them.
When we had challenges for very micro-businesses to have access to finance because you have missing institutions, we developed micro finance institutions for them. In the case of young people in Africa, you have government failure, you have institutional failure, and you have missing markets to support them. They are just there, floating; there is nothing around them. So, I believe it is time to really set up youth entrepreneurship and investment banks that would basically support young people to thrive.
That’s a big issue for me. So, it’s not just the capacity, but we must create opportunities for young people to thrive. You see, the young people are not just the future of Africa, I don’t believe that. They are the today of Africa if you take a look at it. So, whatever we have to do, we have to do it now.
How will the Jobs for Youths in Africa programme work? How will it create the very ambitious 25 million jobs?
As ambitious as it is, the 25 million jobs are not enough because 11 to 12 million young people enter the labour market every year, but only three million of them can get jobs. So, we are only doing the maximum we can. Even at that, it is not enough. We are doing that in three ways: first is within our project as a bank, we do roughly over 10 billion dollars of lending every year. We set up all of our projects, we want them to be mainstreamed to create jobs for young people, and women, by the way. In the case of women, we have something that we call a Gender Marker System where every single one of our project is tagged. What is it going to deliver for women? That is one side. So, a lot of our projects are dedicated to making sure that they do that.
Second, we set up a fund together with the European Union Commission that is called Boost Africa. It is a 200 million dollar fund; a private equity fund to support early-stage growth of businesses of young people on the continent. I just talked to you about the TLcom Tide Fund in Nigeria that is supposed to support digital entrepreneurs as well in Nigeria. But with all of these, at the end of the day there needs to be a more systemic approach in which the financing sector supports the youth. That is why I believe that helping to stimulate, and we are going to do that, stimulate the establishment of the Youth Entrepreneurship and Investment Bank. It is crucial, otherwise, we are just dancing around the edges of the issue.
But because you asked me that question, let me turn in to the issue of women which I said before you cut in. Women run Africa, but they don’t get access to finance. I was so delighted that President Macron did a great job of really helping us to launch this during the G7 meeting in Biarritz. It is $3 billion dollars specifically for women businesses, and one thing that we are also doing is that we are establishing what is called the Women Financing Index for Africa, that will allow us to rate and rank all financial institutions based on their volume of lending to women, in terms of their lending volume and the developmental impact of their lending.
What does that mean? It means that if you come to us soon, we are going to ask the banks: what have you done for women lately? We’d be looking at lines of credit; we’d be looking at trade financing. We want you to be lending more to women because no bird can fly with one wing. Africa has to fly with two.
Are you worried that IMF has projected growth for Africa for 2020 at 3.5 per cent? If you are, are there some strategic measures that your bank is taking to address that?
Well, our own projection for this year for the growth of Africa is 4 per cent. Next year, we project 4.1 per cent, but of course, you know that we are in an environment in which we have a number of global shocks, headwind issues. You have the Brexit issue and you have the continued trade tensions between China and the United States. Of course, it could and is already affecting opportunities for export markets for African countries. So, a number of issues that we want to really do to support countries is first and foremost, to make sure that we stimulate domestic demand. The way to grow is to make sure that Africa builds its own domestic demand. Second is public expenditure for infrastructure, because infrastructure enables growth, and growth drives a lot of jobs and a lot of revenues. I think that’s particularly important. Thirdly is the importance of regional integration. Expanding that regional market is very important.
But I will make two other points related to that, which is how to mobilise capital for Africa’s accelerated growth. Africa today has in its pension funds, in its sovereign wealth funds, and insurance pool of funds, mutual funds, $1.8 trillion dollars of assets under management. Those sovereign wealth funds, those pension funds are being invested outside of Africa in money market instruments that are generating negative real yield of returns.
Now, that’s my concern. If you are a pension fund and you are investing your money outside the continent and in such a negative real yield of return, let’s even assume you have a good real yield of returns and you make annuity payments for people for the rest of their retired lives of what good is that? If they retire with very good annuity payments to live in societies, places without electricity, without water, without good hospitals; that is a well-paid miserable retirement. So, what we are working on at the African Development Bank is how we get the pension funds, the sovereign wealth funds to actually invest in Africa. Africa sovereign funds, I mean invested in other sovereigns, it should be invested in its own to create a better wealth, better environment and quality of life for its people. For me, that is very important.
The second thing is, in terms of stimulating growth is the role of capital markets. The African Development Bank is supporting strongly the development of capital markets to be able to mobilize domestic savings and to drive investments in the economy. The last thing that I may say is that when we talk about growth, nobody eats GDP. It’s just simply Gross Domestic Products, it’s just the value of goods and services produced in an economy.
But how you know that you are doing well is when you look at the quality of life of the people. So, the question that we continue to ask is growth at what cost? What kind of growth? What is the inequity in that growth process? Who are the ones that are benefitting from that growth process? So, at the end of the day, I am not just worried about the growth rate, you can grow at 5 per cent, you can grow at 6 per cent, but if you look at Africa today, for this year, we project 4.0 per cent growth.
That doesn’t tell you the story; we have countries that are growing at more than 8.5 per cent. When you look at Tanzania, 7.2 per cent; Senegal, 6.7 per cent, Cote D’ivoire, 6.5 per cent. There are economies that are actually growing faster than the global average of 3.3 per cent. Take a look at Africa’s growth and look at the rate of growth in Europe, 5.4 per cent; Latin America, 1.3 per cent. So, Africa is actually doing well. Today, 20 African countries are growing at 5 per cent and above; 21 countries growing at 3 to 5 per cent. So, I am very optimistic about Africa. I think we just need to drive a lot more of investments into the continent.