AfDB Plans Youth Entrepreneurship Investment Banks For Africa

(AFRICAN EXAMINER) – African Development Bank (AfDB) has said that it is currently working with African governments and international partners to set up entrepreneurship investment banks for the benefit of young people in Africa.

President of AfDB, Dr Akinwumi Adesina disclosed shortly after he rounded off his four-day official visit to Kenya, where he held meeting with African diplomatic envoys and international development partners in Nairobi.

During the visit, Dr. Adesina also met with President Uhuru Kenyatta, senior government officials, including Cabinet Secretary for Transport, Infrastructure and Housing, James Macharia, Cabinet Secretary for Energy and Petroleum, Monica Juma, and Principal Secretaries of various other line ministries.

He said the proposed banks will provide support to businesses run by young people, who he described as the Bank’s biggest partners.

“The future of Africa’s youth is not overseas but in an Africa that is thriving in a sustainable and equitable manner. Young people do not need handouts or what is often referred to as ‘empowerment.’ Show me one young person who can readily tell you they have been empowered. Young people need investment”, he said.

He also cited some of the projects financed by the African Development Fund (ADF), the Bank Group’s concessionary arm, which he said were transforming lives. He gave the example of the Thwake Multipurpose Water Development Program in Kenya, explaining that this project will uplift millions of lives in the country’s semi-arid eastern region, adding that it would do so through electricity generation, water supply and irrigation of 40,000 hectares of land.

The bank chief told the envoys that the majority of countries that were most vulnerable to the impact of climate change were beneficiaries of the ADF, adding that development partner financing, however, remained low and in decline.

He added that Africa was the continent being impacted the most from climate change, noting that as the world prepared for the next global climate summit (COP27) in Egypt in November, many African countries could still not access green climate financing because they had not developed required national determined contributions and long-term strategies.

“So far, only three African countries, Benin, Morocco and South Africa have developed long term strategies”, he further explained

He stressed that ADF must be financially sustainable to meet the growing development needs of its beneficiaries. He also asked international development partners to support the case for the ADF to be allowed to go to the capital markets with its $25 billion equity to raise an additional $33 billion.

Dr. Adesina sought to allay their fears that this could lead to an even bigger debt burden for the Fund’s beneficiaries. He equally expressed concern that countries were already resorting to commercial borrowing at very high interest rates.

He also called for joint collaborative support to help accelerate Africa’s development. “Africa’s pace of development must be accelerated. We must work together for the continent to prosper, be competitive, and address the challenges facing it”, he added. He also observed that the Covid-19 pandemic has caused Africa’s commercial debt to increase, adding that debt is expected to worsen because of the impact of Russia’s war in Ukraine. The war, according to him, has already produced an increase in energy and food prices. Dr. Adesina also spoke about the dangers of governments resorting to commercial borrowing at exorbitant interest rates.

He said the AfDB has been pushing for the channeling of International Monetary Fund Special Drawing Rights to African countries through the Bank, noting that in this manner, they could be leveraged by a factor of four on the international capital market. He further stated that this could help African countries deal with debt issues and allow them to invest more in transformative developments.

The president also hinted that insecurity remains a big concern in Africa, which he said had recently seen military expenditure rise while financing for development was declining. “As a result, poverty levels are rising, particularly in rural areas, which have become zones of misery and fertile recruitment grounds for terrorists” he stressed,

While highlighting the importance of security indexed investment, he cited the Bank’s initiative to introduce security indexed bonds linked to investment, growth and development. He said the Bank and the Africa Union Commission were working together to support countries as they built their own security defense architecture.

At his wrap-up media briefing, Dr. Adesina commended President Uhuru Kenyatta’s government for developing what he called ‘world class infrastructure, particularly the expansion of the country’s roads network.’ He also applauded the speed with which road projects were being implemented and the quality of work.

Adesina also gave high marks to ongoing construction of the AfDB-funded Kenol-Sagana-Marua Road, which he toured at the start of his visit. The 84-kilometre road, which will connect Nairobi with commercial and agricultural towns of central, upper eastern and northern Kenya, is expected to be completed in six months, two years earlier than planned.

It is part of the Great Trans-Africa Highway that runs from the Egyptian capital of Cairo to Cape Town, South Africa. The highway will also facilitate regional integration by linking Kenya with Ethiopia and Somalia.

He also spoke of the 454-kilometer Malindi – Mombasa – Lunga Lunga/Horohoro and Tanga – Pangani – Bagamoyo Road connecting Kenya and Tanzania. He said this is a highway that will provide a big boost for regional integration. Lastly, he cited the 894-kilometer Nairobi-Addis Ababa Road, which has, among other things, expanded trade between Kenya and Ethiopia by up to 400%.

He said the last seven years had seen the AfDB invest more than $40 billion in infrastructure in Africa, adding that quality infrastructure spurs economic activity. “Infrastructure is the backbone of any economy”, he stressed,

Dr. Adesina said he had urged the Kenyan government to seriously consider a zero-slum policy that would clear the country of slums, with the introduction of quality and decent low housing programme.

“As we develop infrastructure, we must ensure that we do not create inequalities between rich and poor areas. We should use infrastructure to transform all the slum areas. We must reduce inequity and we must create new hope and new opportunities for the poor”, he further advised.