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Speech by Dr. Akinwumi A. Adesina, President, African Development Bank Group, at the North America Launch of the Africa Investment Forum, Toronto - September 19, 2018
Ladies and Gentlemen
Good morning - and thank you for joining us.
I am delighted that many chief Executives of major companies in Canada and numerous institutional and private investors are here with us today. We could not have asked for a better company.
It’s great to be in Canada. I have always been a great admirer of Canada: its entrepreneurial spirit, its determination, its openness, and its relentless pursuit of human dignity. There is no better way to assure human dignity than through unlocking our God-given potentials.
Canada shares a few things in common with Africa: both have very vast land mass and natural resources. You speak both English and French. Canada did not colonize Africa – rather it has always been a partner of Africa. The ties between Africa and Canada remain very strong and are unbreakable.
I will like to very much thank Prime Minister Justin Trudeau and his government for their leadership on global matters and for their strong support for the African Development Bank and the continent of Africa.
Let me be very clear from the beginning: I am an optimist on Africa. My optimism does not imply non-awareness of the challenges facing the continent, but stems from a conviction that the best of Africa lies ahead of us.
Just think of the numbers. Africa’s population will rise to over 2 billion people by 2050, which will be the size of China and India taken together today! The continent at that time will have the highest number of youths in the world – all brimming with ideas, creativity and skills, which will make the continent the workshop of choice in the world.
Consumer spending will reach $2.5 trillion by 2030, while business-to-business investments will reach over $3.5 trillion in the same period. With rising middle class and rapid urbanization, consumer demand will lift the continent to a prime market that cannot be ignored.
Some talk of whether or not “Africa rising” is over. Well, Africa was never down. Yes, like other regions of the world, it was affected by global commodity price shocks. Africa, despite the commodity price shocks that it has had to cope with, is showing impressive growth rates. GDP growth rates are projected to reach 4.1% this year, up from 3.6% last year and 2.2% in 2016. These averages do not give the full picture. Indeed, last year 32 countries posted growth rates of 3-5%. And 18 countries grew at above 5%. There’s no doubt: African economies are resilient.
This year, six of the world’s 10 fastest growing economies are located in Africa. Similarly, Africa has become the second most attractive investment destination in the world, with FDI inflows rising from $ 10 billion in 2010 to over $ 60 billion in 2016. Now, that is remarkable!
Let’s talk of the potentials of Africa for a moment. Sub-Saharan Africa has undiscovered and technically recoverable energy resources estimated at about 115.34 billion barrels of oil and 21.05 trillion cubic meters of gas. Africa’s renewable energy opportunities are boundless, especially for solar, hydro and geothermal energy sources.
To feed the world, we must also look at the potential of Africa. Africa has 65% of the uncultivated arable land left to feed the world. So the future of food will depend on what Africa does with its agriculture potential.
I know that it’s not been easy of late, here at home, with your trade negotiations. Well, let me remind you that you have friends further south! You need to change the lenses with which you look at Africa, away from “development lenses” to “investment lenses”. Development lenses tend to be short term. Investment lenses see far into the future. With its continental free trade area, Africa’s market will have a combined GDP of $3.4 trillion – making it the largest free trade zone in the world.
But potential is not enough. Africa must unlock its potential. You did just that here in Canada, unlocking your potential in your oil sands, attracting $34 billion in investments in 2014 alone, creating enormous wealth for Canada and Alberta.
The world is shifting investment focus to Africa – and Africa is looking for investment partners, those who will take the bold steps to see opportunities. Just two weeks ago, China committed to invest $60 billion in Africa. China is seeing opportunities, where others see challenges.
Canada should invest more in Africa.
Allow me to put things in perspective. Between 2011 and 2016, Canada’s direct investment in Africa declined from $4.3 billion to $2.7 billion. In relative terms, Canada’s total direct investment in 2016 represents just 4% of direct investment by China in Africa, and 5% of the USA.
The declines are also evident in trade. Over the past 5 years, Canadian exports to Africa declined from approximately $4 billion to $3 billion in 2017. On the flip side, the same applies to imports from Africa which over the same period declined from $13 billion to just $4 billion.
This trend needs to change: we must move up, not down. Canada should take greater advantage of the enormous trade and investment opportunities that Africa offers.
I am not seeking aid. I am seeking investments in Africa.
The African Development Bank has launched major investments to help accelerate the development of Africa. The Bank is investing $12 billion in the power sector to leverage $45-50 billion to provide universal access to electricity. The electricity sector provides a market of 645 million people, waiting to be tapped.
This alone is an investment opportunity of $60-90 billion annually to help Africa achieve universal access to electricity, with major opportunities in renewables (solar, hydro, geothermal and gas) energy generation, as well as transmission and distribution of power.
The Bank is investing $24 billion in the food and agribusiness sector, to help unlock the agricultural potential of the continent. The size of the food and agribusiness market on the continent will reach $1 trillion by 2030 – a huge market for investors.
Africa’s needs for infrastructure, including rail, ports, roads and ICT, presents a $68-108 billion annual investment finance gap opportunity.
Let’s connect the investment dots and make big things happen. And, I am convinced we can.
The Canadian pension funds have over $1.78 trillion of assets under management – and Canada’s pension funds are known to be global leaders in investments of those assets in real, concrete, projects. Due to their size, long term investment horizons, diversity of investment strategies and stability of member contributions, they offer great potential to invest in alternative asset classes such as infrastructure.
The allocation of pension funds to alternative asset classes such as infrastructure, private equity and real estate has grown from just 2% to 25%. This presents a huge opportunity for global pension funds such as those in Canada to consider infrastructure and other alternative investment opportunities in Africa.
To attract global pension funds, sovereign wealth funds and other investors to invest in Africa, the African Development Bank has launched the Africa Investment Forum. The Forum, which will launch its inaugural session in Johannesburg, South Africa on November 7-9, 2018, will be Africa’s premier investment market place.
The Forum will be 100% transactional. The focus is on developing bankable projects, structuring deals, screening and enhancing projects, attracting co-investors, and facilitating transactions to unlock Africa’s multi-billion dollar investment opportunities.
For most investors, your concern is about risk. This Forum has set up a co-guarantee risk sharing platform to de-risk and credit-enhance projects.
The African Development Bank is joined on the platform by some of the world’s leading financial institutions, including the International Finance Corporation, the World Bank, Inter-American Development Bank, European Bank for Reconstruction and Development, the Asian Infrastructure Investment Bank and the Multilateral Investment Guarantee Agency.
Like the excellent Air Canada flight I took today from Paris – and our smooth landing right here in Montreal - we want investors to land their investments on “smooth investment runway” in Africa. The Africa Investment Forum is “Africa’s smooth investment runway for investors”!
Ladies and gentlemen, this is a time for game changers! The time is now and Canada can and must take advantage of the opportunity.
So, join us at the Africa Investment Forum in Johannesburg, South Africa from the 7th – 9th of November 2018.
As astute investors, you always strike the iron while it is hot. I invite you to make the commitment here and now, to register for the 2018 Africa Investment Forum. Our teams are right here in the room. Let’s make it happen.
Let’s unlock, let’s invest, and let’s prosper together, as Canada and Africa.
I look forward to welcoming you in Johannesburg! Thank you all very much.