Akinwumi Adesina: the African Development Bank you see today is different

When Akinwumi Adesina began his tenure as president of the continent’s pre-eminent multilateral development bank in 2015, theAfrican Development Bank had a capital base of $93bn. Nine years later, with its capital base now at $318bn, Adesina can say with confidence that “the Bank you see today is different.” Arguably Adesina’s biggest achievement as president has been to bolster the Bank’s firepower by convincing regional and non-regional shareholders to strengthen its capital base, leaving it in good stead for years to come.

But in an exclusive, wide-ranging interview on the sidelines of COP29 in Baku, he argues there is much more to achieve – and many more challenges to meet.

Climate leadership

One of the most existential of these challenges is the climate emergency, on which the Bank has become a leader in the continent and beyond.

“I think that for Africa, it will be perhaps one of the greatest challenges that we have, because we lose $7bn to $15bn a year to climate change. And our estimation is that that will rise to roughly $50bn a year by 2030.” Under Adesina, the Bank has stepped up its response to the emergency, in particular by boosting lending to climate projects.

“When I came in as president in 2016,” he says, “the Bank was devoting 9% of its total lending to climate. I knew that climate finance would need to play a much bigger role, especially given Africa’s need for adaptation. By 2022, 45% of all of our financing was going toward climate. Now, at about 50-55%, we have exceeded 50-50 parity.”

These efforts have caught the attention of the United Nations and in 2021, secretary-general António Guterres singled out the Bank for its exemplary action on the climate agenda.

“The African Development Bank set the bar in 2019 by allocating half of its climate finance to adaptation. Some donor countries have followed their lead. All must do so,” Guterres said.

Adesina’s approach to climate efforts, he says, has been reflective of his general ethos – “every time that I see a problem, my approach is not to just complain that people aren’t giving you enough; you have to figure out some innovation that will allow you to address the problem. That is what we have done for climate change.”

One of the innovations is the Climate Action Win￾dow, a point of contact for funding to “climate-proof” smaller countries. Introduced as part of the African Develoment Fund’s 16th replenishment with an initial funding of $429m, it has since attracted over $4bn in subscriptions. Focused on climate adaptation (75%), mitigation (15%), and technical assistance, the initiative aims to benefit millions, providing climate data to 20m farmers, restoring a million hectares of degraded land, and improving access to renewable energy for 12m people and water sanitation for 9.5m.

Now, he says, the World Bank’s International Development Agency is thinking of creating similar funds; the International Fund for Agricultural Development has already done so. In collaboration with the Global Centre on Adaptation, the Bank has also launched the African Adaptation Acceleration Program, the largest climate adaptation initiative globally, with a $25bn budget. The programme focuses on scaling climate resilience across the continent through investments in critical areas such as green hydrogen, green ammonia, and energy efficiency. Additionally, the Bank has initiated the Alliance for Green Infrastructure, aiming to raise $10bn to fund sustainable projects. Adesina says he personally lobbied all the leaders of the G7, bringing them onboard to support the initiative with a $175bn project preparation facility.

Supporting agriculture

Agriculture on the continent is already suffering the consequences of climate change, with crop yields falling as a result of changing weather patterns. The Bank’s Technologies for African Agricultural Transformation initiative, Adesina says, is “the biggest thing we have done for global agriculture”. At the outset of his tenure Adesina was, he says, determined to boost food production. “I said, we’re going to invest $25bn in agriculture. I was mindful of the fact that for us to succeed and feed ourselves and also feed the world, we needed to more than double the productivity of African agriculture.”

The programme was a direct consequence of this determination, bringing together the global research and development network of the Consultative Group on International Agricultural Research, national agricultural systems and the private sector to deliver cutting-edge agricultural technologies to farmersacross Africa. Over the past four years the programme has benefited more than 22m farmers by deploying climate-resilient solutions, bolstering food security and introducing sustainable practices.

“In 2018-19, there was a massive drought in East Africa. Again, through TAAT [the Bank’s Technologies for African Agricultural Transformation programme]we supported them with water-efficient maize, reaching 5.8m households and 30m people, who were able to escape drought because of that,” he says.

The project has also yielded drought-tolerant rice, supplied to 3.2m households in West Africa. These concrete actions are a salve for the continuing pain of broken climate promises, notably the $100bn promised annually for adaptation by richer nations which for the most part was not delivered.

At this year’s Cop29, the failed target was replaced by the more ambitious goal of $300bn annually by 2035 – can it be met? Adesina’s view is that while the developed world does need to step up and make good on its promises, Africa cannot merely wait on that. “I think we all have a collective responsibility and accountability to climate and saving our world. It’s not the words we say that matter. It’s the things we do that matter. And hope is fine, but a hope delayed brings misery.”

Working with the MDBs

So multilateral development banks (MDBs), his included, are making funding available, and working together, he says, as never before. “We are simplifying procedures, we’re holding ourselves accountable in terms of how we report, we’re communicating, and we are also playing our part in the global commitments that have been made,” he insists.

“If you take, for example, the annual $100bn that the developed countries committed to. MDBs actually helped to make that happen. In 2022 we did $125bn of collective lending, exceeding the $100bn that was promised,” he points out.

The Bank, Adesina says, will continue to play its part. “Right here at COP29 we have put forward our commitment to climate finance as an MDB. By 2030 we [asMDBs] will support $170bn annually, and out of that $120bn will be for low-income and middle income countries. In addition, we will leverage $65bn for private climate finance, and about $45bn for climate adaptation.”

But other stakeholders need to step up for the collective good.

“All I’m saying is that the new collective quantified goal that’s been set requires everybody to play their part. We must not forget the principle of collective but differentiated responsibility. Those developed countries which are actually responsible for most of the emissions need to do what they have to do. They are the ones that have to pay,” Adesina says.

“First, there’s only so much you can get out of an over-squeezed orange. Then you have to get more oranges and squeeze some more. The multilateral development banks will play their role, but they need to have significantly increased capital. They need more paid-in capital to be able to take more risk for the private sector. And third, because you cannot deal with climate issues by just doing more loans. A lot of what is being done today is more loans. Countries need more grants.”

The other big challenge, in Adesina’s estimation, is debt. As many as 22 countries on the continent are at high or moderate risk of debt distress.

“I think we have to figure out how to solve this. This year, debt service repayments will amount to about $74bn. In 2010, the figure was $17bn.”

Part of the challenge stems from the fact that Afri￾can countries have to pay what many on the continent regard as an unjust risk premium when borrowing. This is why Adesina is backing the creation of an African credit rating agency. Such an agency would have superior data on and insight into the continent to enable it to make better assessments of countries’ fiscal positions.

“Some people think that it’s just the African Union going to set up some agency for itself. Actually, it would be an independently-run, top-notch professional agency that provides the counterfactuals,” he explains. “When you go to the doctor and run tests, you have the right to ask for a second opinion, don’t you? Yes, so it’s time to do that.”

The Bank is also moving to consolidate its investment guarantee instruments into a single entity, the Africa Investment Guarantee Agency, which will also help to further de-risk investment in the continent.

Drawing on Africa’s rights

One prospect that Adesina regards with hope is the reallocation of the International Monetary Fund (IMF) Special Drawing Rights (SDRs), supplementary foreign exchange reserve assets defined and maintained by the Fund, which he describes as potentially a “magic bullet to tackle global financing issues”. SDRs were issued during the 2008 financial crisis and in the Covid-19 pandemic, with Africa receiving $33bn (4.5%) of the global total of $650bn.

Adesina is not alone in his conviction that unused resources from the Fund can and must be allocated to needy countries, but has adopted it as something of a personal mission. “I have always felt that the SDRs can be stretched because in a world in which you have declining concessional financing, the name of the game is leverage. You have to be able to leverage at low or no cost to the taxpayers.”

To maximise their impact, the Bank has developed a framework that will enable SDRs to be re-channelled to multilateral development banks, complementing existing IMF mechanisms such as the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust.

“Now the beauty of this arrangement is that it can be leveraged up to four times, but because it is hybrid capital and the co-financing that we would get as a triple-A rated financial institution, the actual leverage would be up to eight times.”

The framework designed by the Bank also ensures that the SDRs retain their reserve asset status and provides a mechanism for retrieving funds should beneficiaries have liquidity problems. These solutions, Adesina says, have received both staff and board level approvals. “We are working on this very actively and I’m very delighted with that… we need to be flexible with instruments and use them to the maximum benefit of the world,” he argues.

Optimist-in-chief fears insecurity

Africa’s “optimist in chief,” as he describes himself, says the Bank will use its position to continue advancing the continent’s interests.

“I have high ambitions for Africa because I believe n Africa’s capacity, potential and the imperativeness of Africa to define itself globally and to unlock its own assets. The key is to continue to accelerate and deliver more,” he says. However, Adesina admits that he is concerned about threats to peace and security. In recent years, there has been rising instability in parts of the continent with devastating wars in Ethiopia and Sudan and coups and instability in the Sahel.

Some of the underlying political tensions can be attributed to the lack of jobs and opportunities for Africa’s growing population of young people. While committing resources to address some of the effects and immediate causes, the Bank is also looking at a longer term and sustainable solutions to the issue of youth unemployment.

“We cannot have 477m young people between the ages of 15 and 35 and not put financial power behind them. And that is why we are rolling out what we call Youth Entrepreneurship Investment Banks.”

These banks are to provide financial backing, technical assistance, and incubation services for youth-led businesses, offering equity, debt, and other financial instruments while supporting them throughout their business lifecycle. Initial funding of $16m for Liberia and $100m for Nigeria has been approved by the Bank’s board of directors, and there are plans to expand to Côte d’Ivoire, Togo, Kenya, and Tunisia. Sixty years after its formation, the Bank is finding new and innovative ways to pursue its founding mandate, even as global and local economic conditions continue to evolve. Adesina remains confident that the Bank will continue to play its part in Africa’s revival.

“I would just say that the African Development Bank will need to continue to build its capacity in all these areas. We’ve done that so far, but I think going into the future we need to do even more,” he vows.