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International finance institution

“Africa’s youth must be employed in Africa”

by Akinwumi Adesina

In depth

Africa's future depends on jobs for the young generation: street vendor in Nairobi.

Africa's future depends on jobs for the young generation: street vendor in Nairobi.

Akinwumi Adesina took office as president of the multilateral African Development Bank (AfDB) last summer. In an interview, he told D+C/E+C about his aspirations.

Your predecessor Donald Kaberuka did a lot to make the AfDB more professional and effective. How do you assess its current performance and what are the most important institutional challenges you must rise to?
Indeed, Dr Kaberuka’s tenure was commendable. His accomplishments include the scaling-up of the Bank’s private sector operations, from $ 200 million to $ 2 billion per annum, the maintenance of the Bank’s triple AAA credit rating even in the midst of the global financial crisis and the establishment of the Africa50 investment platform for infrastructure development financing in Africa. My administration is poised to build on these achievements. At my inauguration, I spelled out a five-point vision – the High 5s:

  • Light up and power Africa,
  • feed Africa,
  • integrate Africa,
  • industrialise Africa and
  • improve the quality of life for African people.

The AfDB is only one of several players, and not even the biggest one, in the five fields you highlight. Can it really make a difference?
Africa’s current structural challenges are so multifaceted and deep-rooted that they cannot be addressed by just one institution. As a leading financial institution in Africa, the AfDB certainly has the responsibility to pave the way and catalyse financing and support from other development partners. For greater impact, we need to build strong partnerships, not only within the continent but also globally. And in each of our five priority areas, the Bank has already made significant footprints. At the Paris climate summit in December, for example, we launched the ambitious African Renewable Energy Initiative (AREI) which seeks to generate 300 gigawatts (GW) of electricity for the continent by 2030. We are rising to key challenges. Africa cannot just remain in the dark, 137 years after the light bulb was invented.

Many young people from Africa are taking the dangerous route through the Sahara and across the Mediterranean Sea in the hope of better living prospects in Europe. How do you address this issue?
This migrant problem is essentially an African problem, and African governments and institutions like the AfDB must take bold steps to contain it. No effort must be spared. The international community can play its part, but Africa must take the lead. The industrialisation of Africa will be critical to unleash African entrepreneurship, build skills and create opportunities. There is no silver bullet, but industrialisation is certainly a step towards addressing Africa’s migration problem. We’ll have to ensure that our young people are prepared for the jobs that Africa’s industrialisation will create. Rather than migrating to Europe at great risk, Africa’s youth must be employed in Africa and rewarded by African industries. We are developing an initiative on Jobs for Youth in Africa jointly with the African Union and the UN Economic Commission for Africa. It will be a game changer, especially in the sense of creating rural jobs for young people and women. On the other hand, migration can be useful in the sense of restoring the global labour market equilibrium. Migrants, especially those with skills, must not be frowned upon.

So far, however, African economies still tend to be commodity exporters. What can – and should – the AfDB do to drive diversification?
Yes, the overwhelming majority of African countries still rely on raw materials, with limited diversification of their productive structures. For example, commodity exports account for an average of about 60 % of merchandise exports in 41 commodity-dependent countries in Africa. This has led to increased vulnerability to external shocks, chief among them the recent decline in commodity prices, which has sharply reduced fiscal revenues and led to rapid depreciation of exchange rates in most countries. To increase their resilience and achieve sustained and long-term economic growth, African countries need to promote economic diversification. Last year, the Bank approved loans and grants amounting to $ 6.33 billion in 2015 to support economic diversification.

African economies also tend to be geared to exporting to Europe, Asia and North America, but do not have much exchange with their neighbouring countries. How does this issue figure on your agenda?
Regional integration is among the Bank’s top priorities. The focus is on creating larger, more attractive markets, and supporting intra-African trade to foster the continent’s development. Indeed, recent estimates show that intraregional trade accounts for only 12 % of Africa’s total exports, compared to 52 % for Asia and 26 % for Latin America. Regional integration can help African countries exploit economies of scale, improve economic efficiency and reduce the high costs of doing business on the continent. In 2015 alone, the Bank’s support for regional integration amounted to $ 2.1 billion, a 33.3 % increase on 2014. AfDB-supported projects included the Kenya-Tanzania Power Interconnection Project, the Tanzania Transport Sector Support Program and the Chinsali-Nakonde Road Rehabilitation Project in Zambia.

International Financial Institutions, including the World Bank, the Asian Development Bank or the International Monetary Fund, are often criticised for being too donor-driven, with developing countries having too little say. How does the AfDB ensure African ownership?
Following the Paris Declaration on Aid Effectiveness and the Accra Agenda for Action, the Bank has continuously strived to ensure and uphold African ownership. The Bank encourages governments of regional member countries not only to take a lead role in their policy processes, but also to engage more with their parliaments and citizens in articulating those policies. The Bank maintains very close ties with its 54 African member countries, which are the real owners, through policy dialogue, advisory services, regular project supervision and field offices. More than two-thirds of the shareholders are African, only 26 member countries are not African. The agreement establishing the African Development Bank requires that the president, who is also the chairman of the Board of Directors, is an African.

Donor governments want African countries to use more of their own resources for development. What is your take?
Africa certainly has untapped potential to generate the resources needed for its structural transformation. Or course, we don’t eat potential resources; we have to turn them into actual resources. The AfDB will encourage African leaders to think differently. We need to leverage private capital markets, increase resource and tax mobilisation, unlock the potential of the agriculture and help peasants to move on from subsistence to commercial farming. We must invest in young people’s skills and entrepreneurship. In other words, we must use natural wealth to create physical and financial wealth.

A precondition for economic development is stable statehood. How does the AfDB contribute to strengthening statehood and good governance?
Poor governance and lack of public accountability have always been among the main causes hindering Africa’s structural transformation. Corruption is one of the most blatant manifestations of bad governance, costing Africa about $ 150 billion per annum. This haemorrhaging of scarce resources is depriving Africans of decent livelihoods. Revenues needed for development are lost. AfDB takes the issue of governance and accountability very seriously, particularly in fragile states, not only because they are home to more than 200 million Africans but also because their instability might reverberate to neighbouring countries. The Bank is fully engaged to enhance transparency in resource use and management, governance in the public sector, the rule of law and building institutional capacities and frameworks for investment.

You are Nigeria’s former minister of agriculture and a development economist. Your predecessors tended to be former finance ministers and central bankers. Is your outlook different?
Well, the Bank’s mission is not simply to finance projects and programmes, we must broaden and deepen the process of Africa’s transformation mainly by ensuring that growth is shared and not isolated, for all African citizens and countries, not just for some. Africa must take a broad and holistic approach to tackling its problems. Financing is one issue, planning is another and execution is probably even more critical. I believe I can make my own contribution, and I am happy to tell you that alongside me there are many committed men and women at the Bank with a real passion to address Africa’s development challenges.


Akinwumi Adesina is the president of the multilateral African Development Bank.
http://www.afdb.org

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