Africa: Making Things Happen at the Bank - 'Not a Talk Shop' - Akin Adesina

Photo: AllAfrica
African Development Bank President Akinwumi Adesina
26 June 2017
interview

Washington, DC — Dr. Akinwumi Adesina is focusing on five areas to achieve the African and global goals for a prosperous continent since becoming president of the African Development Bank - Africa's largest public financial institution in September 2015. He was a keynote speaker at this month's Corporate Council on Africa's U.S.- Africa Business Summit in Washington D.C. and moderated a lively panel with five African government ministers. He also received the Gene White Lifetime Achievement Award from the Global Child Nutrition Foundation. This week, he was named the 2017 recipient of the World Food Prize, a prestigious honor that includes a $250,000 award. In an interview in Washington, DC, Adesina discussed the Development Bank's ambitious agenda and his vision for attracting the growth capital Africa needs. Posting questions for AllAfrica was Noluthando Crockett-Ntonga.

What are your top priorities at the African Development Bank?

At the African Development Bank, we have developed the fast-track ‘high fives’ - to light up and power Africa, to feed Africa, to industrialize Africa, to integrate Africa and to improve the quality of life for the people of Africa. An independent analysis by the United Nations Development Program found that, if Africa focuses on these high fives then Africa will achieve 90% of the sustainable development main goals and 90% of Agenda 2063 set up by the African Union.

We’ve got to light up and to power Africa. You cannot develop in the dark. The kids cannot study and the economies cannot be vibrant if you do not have access to electricity. We decided we’re going to do something about it.

Look, 138 years after Thomas Edison developed the light bulb, many African countries are still struggling to light the bulb. In Africa, you’ve got 645 million people that do not have access to electricity. Does it make sense that 600,000 people die every single year simply trying to cook a meal because [they] don’t have access to cooking energy? So we decided to focus on electricity – to put in $12 billion of our own resources and leverage $45 or $50 billion from the private sector to tackle this issue.

The same thing with agriculture. You have literally 250 million people that do not have access to food and therefore are malnourished. God has blessed Africa with a huge amount of land. You have great sunshine. You’ve got water. But we’re not getting wealth from that because we do not do agriculture as a business. At the African Development Bank, we decided we will invest $24 billion of our own resources in this sector to help to transform our economies, to create a lot of jobs, and to end Africa having to spend $35 billion a year importing food it should be exporting.

Why do you believe, as you have said on several occasions, that political leadership matters more than anything?

I firmly believe that leadership is the currency of development. Our leaders are leaders because people voted for them and they want them to change things. Leaders have to be accountable to the people. When a leader is connecting to the people and doing things that benefit the people, then that means they’re credible. At the end of the day, leaders have to face the challenges that are in front of them.

What do you see as the role of African leaders in creating the environment for investment and energy and agriculture?

Money goes to the place where money is not nervous. The investment environment has to be good for investors to put their money there. You have to have sanctity of contract. There must be peace and security, and there must be policy consistency.

I’m actually quite optimistic, because if you take a look at business regulation environments globally, in 2016 Africa accounted for 30% of all the improvements. The 2017 Doing Business report by the World Bank shows that 34 out of 47 African countries had at least an improvement in one area of business or regulatory environment last year, and five of the 10 countries are top performers.

Africa is a good place to invest because Africa is reforming very fast.

Why are investors here in the United States missing the boat?

When they go to Africa, they’re simply bringing their notebooks. The Chinese bring their checkbooks! Today, China is number one in terms of trade relationship with Africa. The amount of bilateral trade with China and India is about 250% of that of United States. I think that they’re seeing something there. Look at Japan: Japan promised to put 30 billion dollars into Africa. India put $10 billion on export funding towards Africa. South Korea put in $10 billion over five years towards Africa.

What are they seeing? They are seeing Africa from a different lens. They are seeing a continent not just in terms of a development lens, but in terms of an investment lens. They are seeing a continent where you're going to have the investments rise to $1.4 trillion in the next three years. Business-to-business investments will rise to

43.5 trillion in the next eight years. They're looking at a continent where the population is going to rise by 40 million young people by 2015. They are seeing Africa as an investment destination.

What is the role of training youth leaders, especially as it relates to agriculture and business?

The youth are the present, and they are also the future of our continent. Africa is going to be the youngest continent in the world by 2050. What we do for them today is going to make Africa ready. We need to prepare them not for the jobs of yesterday but for the jobs of the future.

The future is going to be digital - the fourth industrial revolution. It’s going to be about nanotechnology, robotics, artificial intelligence. It’s going to be about ability to manage knowledge. At the African Development Bank, we have launched ‘Jobs for Africa’s Youth’, and the goal is to help African countries create 25 million jobs in the next 10 years looking at two critical sectors – agriculture and the ICT industry.

I actually think agriculture is really, really cool. We rolled out our program last year with $800 million for a program that’s called ‘Enable Youth’ - to create a new generation of young entrepreneurial farmers. These are going to be the new millionaires and billionaires of Africa.

Sometimes people don’t think agriculture is a very profitable sector. But if it’s not profitable, why are we spending 35 billion dollars to import food? If it’s not profitable, why is it by 2030 that the [value of] food in Africa will be $one trillion? That’s a lot of money to be made. We just have to get people to understand that sometimes they pass gold by; they think gold is dirt. We have to create this new generation of young farmers.

While we’re on agriculture, could you explain the importance of nutrition for Africa’s development?

Nutrition is very, very important for the future of any economy. When people don’t eat well, in particular when children don’t eat well, they become stunted. Stunted children today lead to stunted economies tomorrow. If you look at Africa, the stunting rate is just ridiculously high - 58 million kids are stunted. It means that you're losing people’s capacity that will affect their life earnings and ability to be competitive in a global world. So we’ve taken all the challenge.

I'm a member of the Global Panel on Food Systems and Nutrition. There must be accountability for the malnutrition and stunting that we have on the continent today. And that’s why the African Development Bank together with Bill Gates and Kofi Annan and former President Kufuor of Ghana launched what is called African Leaders for Nutrition.

We want to get nutritious food to all the kids. We want to make sure that mothers have access to basic things like vitamin A and iron that will reduce the level of anemia that they have. We want to make sure that kids have access to vitamin A that will allow them not to have night blindness.

In addition to humanitarian concerns, you are viewing nutrition as an economic investment to boost GDP.

Absolutely. It’s all about the economy.

The most important infrastructure that you can build is gray matter infrastructure – that is brain cells. When that’s damaged, you can't repair it. It’s the people that boost your GDP. When kids stay in school, when kids learn and they can perform, they are going to grow up and do great things, right? They become the great innovators. When I was a grad student here in the United States at Purdue University in the early 80’s, I saw what the supplemental nutrition program did for people. The so-called the ‘food stamp program’ reached roughly about 45 million people - half of those children.

I believe that God made stomachs to be filled, not to go empty. We’ve got to make sure that kids are fed because the future of economies depend on it.

You mentioned innovation. What do you see as the role of innovation in positioning Africa?

Innovation drives development. When people have creativity, they have ideas and they are able to make economies grow. Whether you're looking at innovation in agriculture, bio sciences, or in ICT communications, they are all very, very important. Investment in research and development is critical, and many African countries are spending less than 1% of their GDP on research and development. Most of the countries that have done well spend 3-4% of their GDP on research and development.

The second thing which is very important for the future is the digital economy. The innovations will come from those that have solid grounding in science, technology, education and mathematics. At many African universities, the level of ICT enrollment is only about 2%. People like to study law and economics and social sciences. I don’t have anything against those areas. But the big jobs are going to come from the ICT industry. So, we want to make sure that we are preparing students in Africa for the science, technology, engineering and mathematics that will drive innovation of the future.

That’s why the African Development Bank launched a world-class program for ICT training with the Kigali Institute of Technology. We’re also helping set up centers to train 230,000 Africans to be computer coders so they can take advantage of the cloud technology and actually add a lot of value in terms of ICT industry. That’s what drives innovation.

Tell us about the investment conference you are planning to convene.

We’re launching the Africa Investment Forum this year. Africa needs a lot of private capital to develop. In developed countries where global savings is about $5 trillion, the real rate of returns are negative. In Africa, the rate of return can be high. We’re trying to attract the global pension funds, the sovereign wealth funds and similar institutional investors to invest in infrastructure in Africa. And to do that, the African Development Bank is using its convening power as Africa’s trusted bank to bring other partners - the World Bank, the International Finance Corporation, the European Investment Bank and European Bank for Reconstruction and Development and several others - to be on an investment platform.

It’s not going to be a talk shop. Who has time for talking? We just want things done. We want deals done that would make things happen in Africa.  The forum is structured to be totally transactional - to make sure that we can develop the right projects. We want to make sure investors have the right returns for the risk that they are going to be taking. We want to work with governments to offer the right environments for the private sector.

What role do you see for the African diaspora in bringing the investment Africa needs?

The diaspora has a big role. The African American community here plays a big role. If you look at the diaspora community, my goodness, there is a lot of money. Total remittances - well over $65 billion - far exceeds official development assistance.

The issue is how we get people in the diaspora to own a share in companies in Africa, to be able to securitize their remittances and invest in infrastructure and make money. The opportunities are limitless and we are looking very big time into the diaspora.

At the Power Africa Summit in DC early this year, we were told there is a ‘wall of money’ ready to invest in energy. What is holding it back?

People sometimes have the wrong information. Our role is getting people to have the right information. Look at Africa’s GDP growth rate this year - 3.4%. At the African Development Bank, we project it will rise to 4.3% - well above the global averages. But that doesn’t tell you whole story: 12 African countries grew at above 5% last year, and 20 African countries grew at 3% to 5%. The opportunities are there all across Africa

Secondly, when you want to invest, you want to be sure your risks are going to be covered. The African Development Bank works with countries to make sure that they do the right things in term of the regulatory and investment environment. To respect the sanctity of contract; to have arbitration systems and good judicial systems in place. And finally, the African Development Bank also helps to ‘de-risk’ projects.

I’ll give you two quick examples. The largest wind farm in Africa is at Lake Turkana in Kenya. The African Development Bank helped to de-risk that project, as the lead arranger. Today it is going to be putting in roughly 310 megawatts to light up roughly a million households in Kenya. Look, the world’s largest concentrated solar power plant – in Ouarzazate, Morocco, with over 500 megawatts. We help make that happen. That tells you the role that we play in intermediation when it comes to investment.

Africa is already behind. Africa has no time to lose. Everything has to be fast tracked.

We want to go fast, but we need gas in the tank. And so the African Development Bank needs to recapitalize and get the resources that are needed to do more for Africa.

We’re ready!

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