Akinwumi Adesina, President of the African Development Bank (AfDB), has made a clarion call for transparency and accountability in addressing Africa's staggering $824 billion debt burden.
Speaking with journalist Yinka Adegoke at Semafor Africa Summit during the International Monetary Fund and World Bank 2024 Spring Meetings, Adesina underscored the detrimental impact of non-transparent loans on debt resolution and future growth prospects for African nations.
Adesina emphasized the urgent need to dismantle the opacity surrounding these loans, asserting that their complexities exacerbate debt resolution challenges and jeopardize Africa's future growth trajectory. He urged stakeholders to prioritize debt transparency and accountability to safeguard the continent's financial stability and sustainable development.
Highlighting the gravity of the situation, Adesina revealed that African nations currently allocate a staggering 65% of their GDP to service external debt obligations. Moreover, he cautioned that the continent is slated to pay a staggering $74 billion in debt service payments this year alone, marking a drastic escalation from $17 billion in 2010.
Adesina's impassioned plea shows the pressing need for concerted efforts to address Africa's debt crisis through enhanced transparency, prudent financial management, and sustainable debt restructuring mechanisms.
He stressed the importance of putting in place an orderly and predictable way of dealing with Africa's debt, urging for faster implementation of the G20 Common Framework.
The AfDB boss also highlighted the need for increased concessional financing, particularly for low-income countries. “What's particularly interesting in Africa is that the level of concessional financing itself has actually gone down, has shrunk significantly,” he said, adding that the African Development Fund—the Bank Group’s concessional lending arm to low-income countries—is providing long-term financing at low interest rates to the 37 most vulnerable countries.
Adesina discussed various instruments and initiatives employed by the African Development Bank to de-risk projects and attract institutional investors, such as partial credit guarantees, hybrid capital, and synthetic securitisation.
Looking ahead, Adesina expressed optimism about the opportunities in Africa, particularly in renewable energy, given the continent's vast solar potential. He also highlighted the Africa Investment Forum, a platform created by the Bank and its partners, that brings together investors from around the world to facilitate large-scale investments in key sectors like infrastructure, digital, and renewable energy.
"Africa is the best investment destination in the world," Adesina concluded, emphasizing the African Development Bank's commitment to creating an enabling environment for investments to thrive.
The Semafor summit session —titled “Rising Global Middle Class: Is Rising Developing Nation Debt a Blessing or a Curse?”—brought together a range of participants for conversations on the increasing debt burden faced by developing countries as borrowing costs have risen.
Other notable participants included Xavier Becerra, U.S. Secretary of Health and Human Services; Raj Shah, President of the Rockefeller Foundation; Andrew Steer, President and CEO of the Bezos Earth Fund; and Brent Neiman Assistant Secretary for International Finance, U.S. Treasury.
Shah emphasised the importance of balancing developing countries economic needs with the need for climate action. He said that to assist the South African government in efforts to decommission the country’s coal-fired Komati power station, the Rockefeller Foundation, through the Global Energy Alliance for People and Planet, had developed a plan that would retrain workers at the plant while also creating new jobs and upgrading transmission infrastructure so that renewable energy could empower local businesses. “It's an unrealistic conversation to just ask people to shut down their only real source of prosperity and cause job losses," Shah said.
Neiman addressed the U.S government’s efforts to assist African countries in reducing debt loads. He noted that Côte d'Ivoire, Benin, and Kenya, had issued almost $5 billion in bonds since the beginning of 2024, at interest rates ranging from 8 to 10 percent. He said this was evidence that emerging economies remain able to tap capital markets. He also cited the Global Sovereign Debt Roundtable as instrumental in bringing together creditors and debtors to tackle rising debt burdens in developing countries.
Adesina is in Washington to attend the 2024 International Monetary Fund/World Bank Spring Meetings.
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