Africa must invest in its own healthcare and financial security, says AfDB president

In a detailed presentation to Heads of State at the AU Summit, Akinwumi Adesina said that Africa must improve its healthcare and financial security to defend against external shocks such as Covid-19.

Speaking at the 35th African Union Assembly in the Ethiopian capital city of Addis Ababa, Akinwumi Adesina, President of the African Development Bank (AfDB), said that the most important lesson to be learnt from the pandemic is that “investing in health is investing in national security”.

“African cannot afford to outsource the healthcare security of its 1.4bn citizens to the benevolence of others,” he said, addressing the African Union for the first time since his re-election to lead the AfDB in August 2020.

“This must be based on three strategic priorities. First, building Africa’s quality healthcare infrastructure. Second, building Africa’s pharmaceutical industry and third, building Africa’s vaccine manufacturing capacity.”

The bank chief said the continent needed $484bn over the next three years to address the socio-economic impacts of the Covid-19 pandemic and support economic recovery.

He reminded the audience that Africa needs $600m to $1.3bn yearly to meet its goal of attaining 60% vaccine production by 2040.

To help reach the target, Adesina added that the AfDB, one of Africa’s largest development finance institutions (DFIs), is planning to invest $3bn to support Africa’s pharmaceutical and vaccine manufacturing capacity.

Added to this, Africa will need $414bn-$784bn per year to eliminate extreme poverty by 2030; $7bn-$15bn a year to deal with climate change; and $68bn-$108bn per year to fix the infrastructure financing gap.

Your excellencies, we must drastically mobilise a lot more resources,” he stressed.

Mobilising resources

The head of the bank thanked the African leaders for continuing to support the AfDB, especially regarding capital increases.

The bank’s general capital was increased in 2019 by 125%, rising from $93bn to $208bn, the highest since its establishment in 1964.

“These resources have allowed the AfDB to scale up support to African economies to tackle the pandemic. The Board of Directors of the bank approved a Crisis Response Facility of up to $10bn. The bank also launched a $3bn Fight COVID-19 Social Bond on the international capital markets, which was the largest ever US-dollar denominated social bond in world history. The bank also provided $27m as grants to the African Centres for Disease Control,” he said.

Adesina said the African Development Fund, the bank’s concessional lending arm, had supported low-income countries with $8.5 bn over the last five years.

Calling on AU leaders to strongly support the Fund’s 16th replenishment in 2022, Adesina advised that a funding restructure of the African Development Fund would allow the Fund to go to market, leverage its $25bn in equity and raise an additional $33bn in financing for low-income countries.

In arguably his most important immediate call for action, Adesina reminded African leaders that they had asked for re-allocated IMF Special Drawing Rights (SDRs) to be channelled through the AfDB, a prescribed holder of SDRs.

“Passing the re-allocated SDRs for Africa through the AfDB will serve Africa very well, provide financial leverage, and help recapitalise other African financial institutions, many of which the bank helped to set up,” he said. Last August $33bn of SDRs were allocated to African countries but over $100bn have been allocated to developed nations which can be re-allocated to the AfDB and other multilaterals to assist developing countries with their development plans.

Energy and nutrition

Adesina continued his address by stressing that Africa’s energy and nutrition needs also remain a top priority.

He said that the bank’s Technologies for African Agricultural Transformation (TAAT) has provided drought tolerant technologies for 12m farmers across Africa.

The bank is also supporting the creation of special agro-industrial processing zones in 18 countries to help drive the transformation of agriculture as a major source of wealth and jobs, he added.

This continues to be a top priority, especially as 2022 is the Year of Nutrition in Africa.

“Your excellencies, the AfDB, the International Fund for Agricultural Development and the African Union Commission launched the Facility for African Food Security and Nutrition at the UN Food Systems Summit. Now dubbed Mission 1 for 200, this financing facility will help to mobilise $1bn, provide climate resilient and nutrition-rich technologies for 40m farmers, produce 100m metric tons of food, and feed 200m people. This will help to reduce food insecurity in Africa by 80%,” Adesina said.

The president added the Africa continues to face huge challenges vis-a-vis the green energy transition and climate change.

“Your excellencies, we must go beyond ‘a just energy transition’ to ‘a just energy system’. The bank is working to establish an African Just Energy Transition Facility that will support transition from coal and heavy fuel oil into clean energy. However, Africa will need an energy mix that includes natural gas, to ensure stability of its energy systems, power industries, and ensure competitiveness,” he said.

Some of the AfDB’s investments in renewable energy include investing in the world’s largest concentrated solar power system in Morocco and the Lake Turkana energy project, the largest wind farm in Africa.

It has also co-financed, together with Africa50, the 3,000 MW Ben Ban solar power project in Egypt.

The bank is also implementing a $20bn Desert-to- Power initiative to develop 10,000 MW of solar power for the Sahelian zone of Africa, in order to provide electricity for 250m people.

It will become the largest solar zone in the world.

To support Africa’s adaption to climate change, the AfDB and the Global Centre for Adaptation have also launched the African Adaptation Acceleration Program (AAA-P) with the goal of mobilising $25bn for climate adaptation for Africa.

Adesina also stressed that particular attention must be paid to fragile climate areas that are most at risk of a serious health and security fallout from climate change.

“We must save the Sahel from desertification. We must revive the Lake Chad basin. We must complete the Great Green Wall. The AfDB has committed $6.5bn towards the Great Green Wall. I would like to thank UN secretary General, António Guterres, and my dear sister, Amina Mohammed, Deputy UN Secretary General, for their exceptional support for this initiative,” he said.

The president added that as the world moves from COP26 in Glasgow to COP27 in Sharm El Sheikh, hosted by Egyptian president El-Sisi, developed countries need to meet their $100bn commitment on climate finance to support developing countries.

“This will help Africa. Promises made must be promises kept,” he said.

Women and youth

The AfDB president finished by saying that more support must be given to women and children in Africa as vulnerable members of society.

“We must build a better future for our youth. It is time to create youth-based wealth all across Africa. To boost financial support for the businesses of our youth, the AfDB Group is exploring with countries the establishment of Youth Entrepreneurship Investment Banks. They will be first-rate financial institutions run by the youth for the youth,” he said.

He added: “To unleash the business potential of women, the Bank’s Affirmative Finance Action for Women in Africa (AFAWA) is mobilising $5bn for women businesses. AFAWA is now working at scale. Over $425m was disbursed in 2021 to banks for lending to women businesses. This year, we will disburse $500m for women businesses. Our vision is clear: When women win, Africa wins!”