According to Akinwumi Adesina, president of the African Development Bank Group, the institution secured $31 billion in investment commitments for projects during the Africa Investment Forum.
According to Adesina, the secured funding raises the overall investment for the year to nearly $64 billion. At a prior meeting in March, the bank raised $32.8 billion.
The bank’s president did not provide many details about the upcoming projects. He mentioned, however, that agricultural processing zones would be among the areas of concentration.
Projects from industries like agriculture and agro-processing, education, energy and climate, healthcare, minerals and mining, and information and communications technology were previously announced earlier in the year.
Earlier this week on the forum’s platform, Adesina urged the financial organizations and private investors to plow money into Africa, cautioning that many impressions of the continent’s investment climate is biased.
He cited research from Moody’s Analytics, showing that the continent of Africa has the lowest global rate of infrastructure project defaults (5.5% against Western Europe with 5.9%, North America with 7.6%, Eastern Europe with 8.6%, Asia with 8.8% and Latin America at 12.9%).
African development finance organizations have advised governments against using their nation’s natural resources as security for infrastructure loans because doing so would be equivalent to “mortgaging their future” to lenders, the African media reported.
The finance expert advised that states look into public-private partnerships to fund their development initiatives, noting that the majority of the continent’s states had become heavily indebted and that the instability of the global economy was making their debt situation worse, so it was necessary to take it slow when borrowing in order to look into less expensive methods of financing development.
“So, we must not be de-risking bias risk. In other words, perception risk is not what we should be de-risking. But we don’t want countries taking too much debt to do infrastructure, it will only make the debt situation worse for them,” the African Development Bank Group’s chair said. “So they need to open up the space to the private sector and I believe strongly we must have, at the very minimum, public-private partnerships: allow the private sector in energy, transport, medical, infrastructure and so on. Let the private sector space be expanded for infrastructure.”
Apart from that, the lenders have reportedly pledged to work with African countries to increase the capacity of the continent for agriculture, renewable energy, and the production of electric vehicles.
“We will put our resources together, technical resources in terms of technical assessment, our project development capacity here, our co-financing capacity here with others to be able to develop value chains for the batteries on the continent and attract investors to manufacture the cars,” Adesina said.
Additionally, the participants pressured the International Monetary Fund to use them as a conduit for the Special Drawing Rights (SDR) funds that will be used to build infrastructure on the continent. The IMF issued the most special drawing rights it has ever issued in 2021, totaling $650 billion. However, just $33 billion of the total amount went to Africa.