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AfDB President pushes African agenda at World Bank-IMF meetings in Washington
“People who enjoy meetings shouldn’t be in charge of anything”, said US economist Thomas Sowell, but he may not have had the World Bank-IMF Spring Meetings in mind. Leaders manage to enjoy their meetings, as part and parcel of the role of leading major international organisations, like the African Development Bank, with its US $8 billion a year turnover.
For AfDB President Akinwumi Adesina, Thursday, April 14 began with an address to a meeting for government, business and civil society organisations convened by the Global Business Coalition for Education.
It continued with a meeting at the US Senate with Senator Johnny Isakson (Republican-Georgia, Member of the Foreign Relations Committee). President Adesina discussed the Bank’s stall in seeking further US support for the work of the African Development Fund, its programme of providing concessional loans to poorer countries, which is currently in its 14th Replenishment. Senator Isakson commended the Bank’s work and set out his own twin priorities for the continent: meeting the challenges of energy supply, and providing water and sanitation.
In the middle of the day, the President brought together the ‘Africa caucus’ – the African Governors of the Bank, their Alternates and their assistants. “In my 6 months in office to date,” he said, “I have visited 14 of your countries – I hope that before too long I can make that 54.” He said that he had primarily come to Washington with a story of African economic resilience in the face of strong regional and global headwinds, not least the decline in commodity prices. “Africa grows at 4.4% while the rest of the world grows at 3% – we are doing remarkably well.”
He repeated his own vision enshrined in the so-called ‘High 5’ priorities: to light up and power Africa, to feed Africa, to industrialise Africa, to integrate Africa, and to improve the quality of life of the people of Africa. He outlined progress on each, and particularly on Light up and power Africa (the New Deal on Energy for Africa and its accompanying Transformative Partnership on Energy are launched), Feed Africa (a new strategy will be launched at the Bank’s 2016 Annual Meetings in Lusaka in May), and Improve the quality of life of the people of Africa (with the imminent launch, also in Lusaka, of the US $5 billion Jobs for African Youth Initiative). He presented the outlines of the Bank’s new Business Development Model, designed bring it closer to its clients and to raise its income which has been adversely affected by falls in global interest rates. “We approve a lot of projects in the Bank, but we don’t disburse them quickly enough”, he said. “We must close that gap.”
Several African Ministers responded, articulating their own reactions to the High 5s and applying them to their own national situations. A number were grateful that the President had been to their countries, to see for himself the problems they face. Last week, Adesina visited drought-affected Southern Africa and announced a US $549-million support programme.
During the afternoon, Adesina met the Spanish Alternate Governor, Jorge Dajani Gonzalez. Spain’s joint initiatives with the AfDB focus on the private sector, infrastructure and water sectors. Among others, the country has financed Kenya’s Lake Turkana Electricity Transmission Line project, the African Water Facility and the Microfinance Capacity Building Trust Fund. Potential areas of collaboration may include co-financing of projects in countries of special interest to Spain, such as Morocco, Cape Verde, Niger, Ghana, Equatorial Guinea, Ethiopia, Kenya and Mozambique.
The day concluded with media interviews. Journalists naturally seek headlines, often related to specific countries and their fiscal and economic challenges. Their overriding interest is in the way Africa rides out rough global economic times, and falling commodity prices. For countries facing debt issues, Adesina underlined the importance of macroeconomic discipline and the policy advice that the Bank and others can give. He reiterated the story of African resilience, with its growth in 2015 topping rest of the world’s by 50%, and overtaking Europe’s by more than 200%. FDI continues to grow, he said, and Africa remains a strong frontier market for investment. Africa’s best prospects lie in wholesale diversification, in moving inexorably up global value chains to capitalise on the full value of its commodity resources, and in looking again at its financing development model. The best financial resources, he said, lie within the continent in increasing tax revenue, and deploying the billions tied down in sovereign wealth funds and pension funds.
Journalists asked about the Chinese slowdown and its effects on Africa. The global economy grew on the back of Chinese growth for 10 years, said Adesina. Africa-China trade grew from US $10 billion a year in the 1990s to over US $200 billion a year now. The Bank and China run their own $2 billion Africa Growing Together Fund. But much of the Africa’s trade with China constitutes the export of its raw materials, and the prices and demand for those have now fallen. All the more reason, said Adesina, for Africa to do two things: first, to strengthen its regional markets and intra-regional trade, thereby lessening its dependence on external markets and factors (“I am convinced that the future is inside, not outside, Africa”); and, second, to step up and take some of the 85 million manufacturing jobs China is forecast to shed. With African wage costs some 20% of China’s, or 30% for skilled workers, the opportunity is there.
But not, he said, if Africa does not have the electricity to power itself and its new economic aspiration. The President set out the Bank’s New Deal for Energy on Africa, and the Transformative Partnership that goes with it. The Bank will invest a further US $12 billion in Africa’s energy sector over the next 5 years, with the intention of leveraging a further US $45-50 billion from the private sector, both African and non-African. Adesina has received broad World Bank-IMF energy support for the New Deal in discussions this week.
A day of meetings. Even at the World Bank and IMF, not all economists’ theories are taken as read. Leaders can not only enjoy meetings, but make them productive.