Wednesday, April 22, 2015

What Africa needs now: Transnational infrastructure, Transparency in systems, Using and developing all her people, ...

Akinwumi Adesina is running for President of AfDB. He was a Most-Valuable Player on the Nigerian Federal Cabinet, so I say yes, hope he gets the job.
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Speech by Dr. Akinwumi Adesina, Nigerian Minister of Agriculture and Rural Development and candidate for President of the African Development Bank 
Delivered at the Business Council for Africa’s Annual Debate
21 April 2015

Africa is experiencing a never-before-seen economic and political transformation. Five of the world’s ten fastest-growing economies are located here. It has rightfully created tremendous excitement not only within our borders, but around the world.

 While there are many reasons to celebrate the improved economic performance, daunting challenges remain and troubling trends have emerged.

We are facing widening economic and social inequalities that have resulted from non-inclusive growth. Africa’s poverty rates are still the highest in the world. Despite gains that have been made, the reality is that 44% of Africans still live on less than $1.25 per day.

These are struggles I know. I grew up in poverty, the son of a farmer who worked for less than 10 cents per day. I was one of the lucky few to attain education and opportunity. I don’t want my story to be the exception, I want the cycle of poverty to be broken across Africa. Our economic success needs to be shared – with prosperity for all – creating a more equal, stable, and peaceful continent. Nothing is more important than putting an end to poverty.

We are also facing rapid urbanization that will determine the resilience of the growth process.

We have exceedingly high levels of unemployment – which leads to social, political, and economic fragility.

Fragility is on the rise. 53% of Africa’s nations are fragile states. Fragility, joblessness, and economic and political exclusion breed terrorism. We need to tackle the fundamentals of fragility.

We are on the receiving end of climate change. Although Africa has done little to contribute to the damage, we are suffering heavily from the effects of it. We are paying a disproportionate price for climate change.

While we should celebrate our achievements, we also need to recognize that these key challenges must be tackled head-on by the African Development Bank. We need to renew our commitment to addressing these together – with both regional and non-regional members. As we do so, the Bank will grow into its role as the premier finance institution on the continent.

That is why I am running for president of the African Development Bank.

To make progress, the next President must not only understand the merits of a policy or strategy, but how to translate it into action on the ground. This is something I have done over the course of my career.

I’ve implemented innovative finance schemes in several African countries – from Uganda to Tanzania, Kenya to Mozambique, Ghana to Nigeria. I’ve helped to leverage over $4 billion from commercial banks to finance agricultural SMEs. And I launched an electronic wallet program which helped to end corruption in the fertilizer sector in Nigeria, and has reached 14.5 million farmers and impacted 50 million people. These are programs that have real impact on the ground.

Having lived and worked in 15 African countries, including 10 years in francophone countries, I have experienced firsthand the complexities of what our continent needs.

Too often our decisions are driven more by our own political interests or policy preferences, when it should be driven by the needs of those we are seeking to empower. This is particularly important when speaking about a continent so ecologically, socially, and economically diverse as Africa. There is no one solution or quick fix.

First and foremost, the question is: what kind of Africa do we want?

 I want an Africa with inclusive and sustainable growth, and one that is globally competitive. As President, I will focus on five strategic priorities: integrated infrastructure, private sector growth, increased employment opportunities, reviving the rural economy and regional integration.

The focus, across the board, will also be on scaling programs that have delivered results —tangible outcomes, not merely outputs.

Across all the priority areas, we need to strengthen integrity, transparency and accountability. We will demand of ourselves the same thing as we demand of our countries. We must manage our resources well, and we must always examine our actions from the perspective of the public. We must put people first, because ultimately we are investing in a better future for them.

Let me speak briefly to the priority areas.

We need to minimize the global widening of the infrastructure gap. There’s no lack of ideas about what Africa needs to do on infrastructure – the key is how you turn them into bankable projects. We need smart projects.

 In infrastructure, the players are many but they are not coordinated. The Bank can play that role effectively: funneling money to the right priority areas. The Bank should engage all domestic, regional and international partners – including established partners, like the World Bank, and newly emerging players, like BRICS’ new development bank. I will also lead the bank to focus on rapidly building infrastructure for small and fragile states.

We need to mobilize greater resources to finance infrastructure in Africa. To manage that effectively will require $93 billion per year and will require mobilizing domestic resources, private sector funds, and multilateral financing. Leveraging capital markets is crucial to improving our approach to infrastructure.

We need to prioritize the kind of infrastructure projects that will help us deliver “power-for-all” – universal access to electricity. Access to power is absolutely vital to Africa’s development. Africa has 50% of the world’s renewable energy, but it remains largely untapped. Developing energy infrastructure will drive rapid economic and social development. We should target investment toward renewable energy – solar, hydropower, geothermal, wind. And we should have a two track approach - supporting a combination of large, transformative regional power projects and smaller projects that can be implemented more quickly to create immediate impact in local communities.

Africa’s private sector accounts for 70 percent of investment, 70 percent of output and 90 percent of employment. The private sector can drive industrialization in Africa and unlock wealth at all levels of society. The Bank needs to develop its private sector operations.

Back in 2005, the Bank was lending $250 million. By 2013, it was lending $2.1 billion. Clearly, a lot is being done in private sector, but it is still not meeting the needs. For inclusive growth, we have to direct financing to empower entrepreneurship for those that impact the majority of the population – SMEs in the private sector. As President, I will work to build the financial intermediaries needed to deliver affordable financing to African companies. We will establish business development advisory services targeted at positioning SMEs to secure venture capital and private equity funds.

The equity capital market accounts for $1.5 trillion per year, but these funds are heavily concentrated in just three countries: South Africa, Nigeria, and Namibia.  We need to deepen the market to mobilize financing – we need to get these funds to smaller and fragile countries. It can’t all go to the same three places, that’s not real progress.

We also need to mobilize domestic resources. Non-regional donors must have a leveraging effect. There are a lot of domestic resources in Africa: such as pension funds, sovereign wealth funds, and diaspora funds – and we have to unlock them. We have $158 billion in sovereign wealth funds alone. We need to put it to good use.

And we need to prioritize blended finance - combining public and private financing - to reduce risk exposure to the private sector.

We need to work with governments to lower the cost of doing business across Africa. Currently 18 out of the 25 least competitive countries are in Africa. This needs to change. Enabling the private sector will increase the opportunities in the job market. Changes need to be made to address the fact that the economic growth we have today is jobless growth. And we need to pay special attention to unemployment among two populations: youth and women.

30 million youths enter the market annually, and we need to create jobs for them. This is not just an economic priority. It is a security investment. Without jobs, we face economic, social, and political risks. As many of you know, the majority of youth who turn to violence have no job—and seemingly no options. 50% of young fighters in Sierra Leone and Liberia participated in the violence because they didn’t have jobs.

And we’re facing a migration crisis – largely due to an absence of jobs for our young people. I want to build an Africa that keeps and attracts talented, hardworking people. Our people should not be boarding ships, putting themselves at incredible risk, in search of hope and a chance to make something of their lives. That’s why I believe we must build a more prosperous continent that will give hope and opportunities to tens of millions of our youth. We want an Africa where they want to stay, not an Africa they want to move away from.

You can’t develop without women. Investing in women is not just the right thing to do, but also the smart thing to do. Women are the primary source for growth in local economies. Yet today, 64 million more women than men are unemployed in Africa. And if we don’t address women’s unemployment, we’re not going to make a dent in the broader unemployment crisis. Women need access to education, technology, jobs, and financing.

As president, I will lead the African Development Bank to implement an Annual Gender Score Card and an African Women Empowerment Index, because we shouldn’t just talk about women empowerment – we should actually do it and measure that we’re doing it well.

And with 50% of Africa’s farmers being women, we must commit to reviving the rural economies for their benefit as much as anyone else’s.

We need to change the way we see agriculture – it’s not merely about development, it’s an economic driver. If you use agriculture as an engine to revive rural economies you create new prosperity zones for the people and that will have an impact on reducing insecurity problems.

Africa has 65% of all the arable land left to feed the 9 billion people in the world by 2050. Transforming the agriculture sector will have the largest impact on inclusive growth on the continent, given that 70-80% of the labor force is engaged in the sector but are locked into poverty.

We must provide innovative financing instruments and direct private equity funds toward agribusiness investment. By reviving rural economies and empowering them with tools to connect their goods to viable markets, we will unlock incredible opportunities for growth, ensure equitable growth and realize the promise of a shared prosperity—as we lift millions out of poverty.

We need to diversify the economies in African countries that are rich in natural resources, to shield them from over-exposure to volatilities in global markets (as we saw recently with falling oil prices). Focusing on unlocking agriculture’s potential will go a long way toward diversification and building "soil wealth" rather than relying on oil and mineral wealth.

Much of Africa’s growth is due to commodities and high extractive rates. Focusing on exporting our abundance of raw commodities makes African economies vulnerable to volatilities in commodities prices. Unless this is changed, Africa is like a giant with feet of clay. We need to lead these countries toward diversification. And agriculture is key.

We also need to improve management of those natural resources – transparency and accountability must be enforced. Africa is not poor, but its people are poor because money disappears. That needs to change. Africa is rich in natural resources, with $85 trillion in discovered resources, but it loses $60 billion per year in illicit outflows. We need to work on all levels to enforce transparency and accountability. This money should be going to development – to advancing healthcare and education in our communities. Imagine what that $60 billion could do for our people each year. Africa’s resources should not belong to the few, but should be for the benefit of all.

We need to reduce inequalities in economic prosperity among countries in the region. We should integrate our region. Economies that focus on regional markets are less vulnerable to price fluctuations.
 The world’s most prosperous trading blocs are heavy on interregional trade.

Landlocked countries need to be connected to coastal ports through investment in transnational infrastructure, especially highways, trans-boundary water basins, and railway, maritime, and air transport systems. We must deliver integrated infrastructure and eliminate barriers – this will expand the size of the regional markets and reduce the cost of movement of goods, services and people, creating a more open Africa.

I know the roadmap toward that vision for Africa is challenging, but we are already seeing tremendous progress, and we now have the confidence to achieve even greater results.

We need to build a Bank with a pulse for Africa’s people. A Bank that is more impact-oriented, efficient and responsive to the needs of its clients in a rapidly changing, multilateral economic landscape. A Bank that will be the partner of choice for all things African development.

We must build an Africa that will unlock greater opportunities with hope and prosperity for all. An Africa that all Africans can be happy to call their home. Together, we can achieve this.

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