African leaders join African Development Bank’s call for action to reform the global financial architecture

With $200 billion invested in development projects across the continent since its establishment in 1964, the African Development Bank Group is leading the charge in transforming Africa’s development landscape, as a solutions bank.

At the institution’s 2024 Annual Meetings in Nairobi, six African Presidents joined the Group’s President Dr. Akinwumi Adesina’s call for action to reform the global financial architecture to unlock more resources to scale up Africa’s economic transformation.

The Annual Meetings bring together the Bank Group’s governors representing 54 African countries and 27 non-African shareholders.

Kenya’s President William Samoei Ruto emphasized the need for change, saying, “Today, we assert that transforming the international financial architecture is imperative to give Africa a fair chance to turn its immense potential into opportunities to overcome multiple challenges and develop inclusively and sustainably.”

In a show of support for the Bank’s efforts, President Ruto announced that Kenya will spend $100 million over the next three years to increase its shareholding in the African Development Bank, Afreximbank and Trade Development Bank. Additionally, he announced a commitment of $20 million to the African Development Fund, the Bank Group’s concessional window, “as a demonstration of Kenya’s confidence [in the Fund].”

President Ruto praised the commitment of the Bank Group to infrastructure development in Kenya, saying, “Kenya is among the beneficiaries, in a very big way, of the African Development Bank’s financial might, and its innovative financing of projects.”

He cited four Bank Group-financed projects as testament to this commitment: the construction of the Nairobi–Thika Superhighway; the construction of the Thwake Multipurpose Dam, Kenya’s biggest; the completion of water and sanitation projects in 28 Kenyan cities, and a last-mile connectivity project that has provided electricity to more than 10 million households.

Vote of confidence

President Ruto also expressed Kenya’s support for the channeling of IMF Special Drawing Rights (SDRs) through multilateral development banks, a move that the African Development Bank together with the Inter-American Development Bank has championed, with success.

Several heads of state attended the opening ceremony of the Annual Meetings on Wednesday and participated in subsequent presidential dialogues. They included President Denis Sassou Nguesso of the Republic of Congo, Rwanda’s President Paul Kagame, Zimbabwe’s President Emmerson Dambudzo Mnangagwa, the President of the Presidency Council of the Government of National Unity of the State of Libya Mohamed Younis al-Menfi, Somali President, Hassan Sheikh Mohamoud, and African Union Commission Chairperson Moussa Faki Mahamat.

Close to 5,000 delegates are attending the Bank’s Annual Meetings, including heads of multilateral development banks, diplomats, development partners, representatives of civil society organizations and the private sector.

In his keynote address, Adesina highlighted the impact of the Bank’s investments across Africa through its High 5 priorities of Light up and Power Africa; Feed Africa; Integrate Africa; Industrialize Africa and Improve the quality of life for the people of Africa. Over the last eight years, the Bank’s investments have impacted more than 400 million people

Record investments

“In 2023, our financing totalled over $10 billion, across all our High 5 priorities,” he said, adding, “In the past nine years, we have invested well over $50 billion in infrastructure projects on the continent, by far the largest investment of any multilateral development bank or institution.”

Adesina listed several innovative initiatives to demonstrate the Bank’s role as a catalyst for change, driving Africa’s transformation through record investments and partnerships. He highlighted the $10 billion Alliance for Green Infrastructure in Africa (AGIA), a groundbreaking partnership with Africa50 and the African Union, aimed at accelerating the development of sustainable infrastructure projects. This initiative is set to drive the continent’s transition towards a greener and more resilient future.

Adesina also emphasized the Bank’s commitment to supporting the digital economy, citing the $618 million i-DICE program in Nigeria, that will create 6 million jobs and add $6.4 billion to the economy.

Catalyzing Inclusive Development

The Bank’s Affirmative Finance Action for Women (AFAWA), in partnership with the Africa Guarantee Fund, has financed more than 18,000 women-owned businesses, providing them with the capital and support needed to thrive in their respective markets. “By the end of this year, AFAWA would have reached $2 billion in support for up to 30,000 women-owned small and medium sized enterprises,” Adesina said.

Last year, the Bank established Youth Entrepreneurship Investment Banks to provide financial and technical support to businesses owned by youth. The Bank’s Board of Directors has already approved $16 million for Liberia and $12 for Ethiopia to set up Youth Entrepreneurship Investment Banks. More countries have applied to join the initiative.

In eleven African countries—Côte d’Ivoire, Ethiopia, Guinea, Kenya, Mali, Mozambique, Nigeria, Senegal, Tanzania, Togo, and Zambia—the Bank, together with partners, is establishing Special Agro-Industrial Processing Zones (SAPZs), designed to transform Africa’s agricultural sector by creating value-addition hubs.

Mobilizing Financing, Deepening Reforms

Dr. Muhammad Sulaiman Al Jasser, Islamic Development Bank Group President, outlined the benefits of a longstanding cooperation with the African Development Bank. “Between 2017 and 2023, we achieved a record co-financing volume of $2.9 billion with the African Development Bank, enabling us to co-finance 22 operations across diverse sectors,” he said, adding that both banks have recently set new co-financing targets, to deliver greater impact.

African Development Bank Group Boards of Governors’ Chairperson and Cabinet Secretary of the National Treasury of Kenya, Prof. Njuguna Ndung’u urged Governors to “deepen discussions” on growing the Bank’s callable capital. “This will protect the Bank’s triple A rating on sustainable basis against recurrent external shocks, including downgrade of its triple A rated shareholders [and] enable the Bank maintain its lending trajectory and preserve its position as a strategic lender and the premier development finance institution in Africa.”

The African Union Commission Chairperson Moussa Faki Mahamat described the 2024 Annual Meetings as “an appropriate forum” for kickstarting “the process of formulating and working out the African common position on strategic issues” such as the reform of the Bretton Woods system, debt management, climate change financing, and the international tax system.

Leaders also stressed the urgency of mobilizing financing to build climate-resilient African economies. The Bank, Adesina said, “is well on its way to reaching its goal of mobilizing $25 billion in climate finance, and last year we devoted 45% of our total lending to climate finance.”

Strong financial position for greater impact

The only AAA-rated financial institution in Africa, the Bank’s financial records for 2023 put the Bank in an optimal position to better serve Africa and create more significant impact in the continent’s development. Its income from loans and treasury investments increased by 123% from $775 million in 2022 to $1.73 billion in 2023. The Bank also achieved its largest-ever net income before distributions, amounting to $545 million, and allocated a record-high $335 million to reserves.

Source: Norvanreports