The African Development Bank (AfDB) has expressed worries about the increasing debt burden of African States which has not enhanced developmental challenges, stressing that it is higher than the combined total annual government revenues.
The Bank added that it plans to invest $3 billion to support Africa’s pharmaceutical and vaccine manufacturing capacity.
Dr Akinwumi Adesina, President, African Development Bank Group (AfDB) stated this at the 35th AU Summit in Addis Ababa, Ethiopia over the weekend, while speaking about other critical areas for the continent, such as managing debt.
Adesina said: “Africa’s public debt, currently estimated at $546 billion, represents one-quarter of the continent’s GDP and is higher than the combined total annual government revenues of $501 billion.”
He pointed out that the African Development Fund, the Bank Group’s concessional lending arm, had supported low-income countries with $8.5 billion over the last five years.
Calling on African Union leaders to strongly support the Fund’s 16th replenishment in 2022, Adesina advised that funding restructures of the African Development Fund would allow the Fund to go to market, leverage its $25 billion in equity, and raise an additional $33 billion in financing for low-income countries.
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The Bank Group chief reminded African leaders that they had asked for re-allocated IMF Special Drawing Rights (SDRs) to be channelled through the African Development Bank, a prescribed holder of SDRs.
“Passing the re-allocated SDRs for Africa through the African Development Bank will serve Africa very well, provide financial leverage, and help recapitalise other African financial institutions, many of which the Bank helped to set up,” he explained.
Adesina repeated his earlier calls for an African Financial Stability Mechanism to provide liquidity buffers to protect the continent against financial and economic shocks, noting that while other continents have such mechanisms, Africa was the only one that does not.
He explained that this led to widespread regional spill-over contagion effects and instability from Covid-19-induced financial shocks. “African economies must be protected,” he stressed.
According to Adesina, the most important lesson of the Covid-19 pandemic for Africa is the need to build a defence mechanism against external shocks, especially in healthcare and financial security.
“Investing in health is investing in national security,” Adesina told African leaders, stressing that “Africa cannot afford to outsource the healthcare security of its 1.4 billion citizens to the benevolence of others.”
The Bank chief said the continent needed $484 billion over the next three years to address the socio-economic impacts of the COVID-19 pandemic and support economic recovery.
Adesina outlined three strategic priorities for an African healthcare defence system: building quality healthcare infrastructure; developing the continent’s pharmaceutical industry; and increasing the capacity of vaccine manufacturing.
The AfDB boss called for accelerated action to advance Africa’s rapid development and sounded a note of optimism. “With your bold and visionary leadership, a new Africa is emerging. Just as the eagle soars above the storms, so will Africa soar and achieve its destiny. Africa is destined for greatness,” he emphasised.
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Africa’s $546bn public debt, higher than total annual govt revenues ― AfDB
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Africa’s $546bn public debt, higher than total annual govt revenues ― AfDB
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