Ride the wave of the AfCFTA –    AfDB president Adesina urges UK investors

Africa is on the cusp of unmatched economic transformation, and the UK must engage in a “partnership of change”, African Development Bank, President Akinwumi Adesina said on Tuesday in a keynote address at a UK Parliamentary Symposium. “The Africa of the 21st century is very different. The Africa of the 21st century is new and more confident,” he said.

The Symposium was co-organised by the All-Party Parliamentary Group for Africa with the Royal African Society, Oxford Brookes University, and the Trade Justice Network under the theme UK-Africa Trade and Brexit. 

The Bank’s chief argued that Africa and the UK should be significant trading partners. “The reality, however, is that UK’s trade with Africa is trending downward. From a US$49billion peak in 2012, trade decreased to US$30.6billion in 2018,” he noted.

The decline of UK trade and investment in Africa is against a backdrop of projected business-to-business and consumer-to-consumer expenditures of US$5.6trillion by 2020, and a food and agriculture market worth US$1trillion by 2030.

“The fact that we are having this conversation in the UK Parliament is a great start. The convening of this Summit by Prime Minister Boris Johnson is an even greater start,” he acknowledged.

President Adesina used his engagement at the House of Commons to share Africa’s investment opportunities, “which speak for themselves”. Trading under the African Continental Free Trade Agreement, which represents a market of more than 1.3billion people and a gross domestic product of US$2.5trillion and is the world’s largest free trade area since establishment of the World Trade Organisation, starts in July.

Speaking earlier in the morning at the UK-Africa Investment Summit Sustainable Infrastructure Forum, the Bank’s chief said: “Investing in quality and sustainable infrastructure can spur Africa’s economic transformation”.

The Forum, organised by the Department of International Development (DfID) and Her Majesty’s Trade Commissioner for Africa, seeks to facilitate new investment and commercial opportunities for the UK and promote quality infrastructure to deliver better services for African citizens.

The Bank has been a forerunner in the race to rapidly close the continent’s infrastructure gap, which Adesina suggested be renamed ‘Africa’s infrastructure demand opportunity’. Investors who tapped into information and communications technology infrastructure in Africa early have seen those investments become game changers for Africa, he noted.

“Just under two decades ago, Africa had fewer telephones than Manhattan in New York. Today, Africa has over 440 million cellphone subscribers. Returns on digital infrastructure are very high as the continent expands broadband infrastructure to boost connectivity and improve services,” Adesina said.

The African Development Bank has been a major investor in infrastructure development for the electricity, transport, and water sectors across Africa. Cumulative Bank funding for infrastructure on the continent rose by 22% from US$66.9billion in 2016 to US$81.6billion in 2017. During the same period, the value of infrastructure projects with private sector participation has increased from US$3.6billion to US$5.2billion.

To meet Africa’s unmet infrastructure needs, project preparation is critical, the Forum heard.

The Bank has established several project preparation facilities to address the lack of bankable projects and ensure a robust pipeline of projects. These facilities collectively provide US$30-50million annually in support for project preparation.

The African Development Bank and DfID are collaborating on exploring how to better support fragile states, which are facing huge financing needs. DfID has been the Bank’s key strategic partner since it joined the Bank group in 1983. And its “strong and consistent” support for the African Development Fund has helped development of low-income states, especially the fragile ones.

Instruments such as the Private Sector Credit Enhancement Facility, a credit-risk participation vehicle from the African Development Fund’s (ADF) concessional window to support Non-Sovereign Operations in low-income countries, are showing tremendous results.

With US$500million in credit guarantees, provided through ADF, the Bank has leveraged US$2.5billion of financing into fragile states – with a zero default rate.

“We are committed to quality infrastructure and ensuring that no one is left behind!” Adesina concluded.

The Bank’s chief is on a three-day visit to the UK. On Monday, he joined African Heads of State at a reception in Buckingham Palace after taking part in a presidential panel at the UK-Africa Investment Summit convened by British Prime Minister Boris Johnson.

 

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