Akinwumi Adesina, the PresidentPresident of the African Development Bank (AFDB), said on Wednesday, April 24, 2024, that the $824bn resource-backed loans are responsible for Africa’s slow economic growth.
The AFDB president released this statement at the Semafor Africa Summit, tagged “Rising Global Middle Class: Is Rising Developing Nation Debt a Blessing or a Curse?” The summit is currently in session at the sidelines of the International Monetary Fund and World Bank 2024 Spring Meetings.
Adesina further said the moment has come to an end to the opaque natural resource-backed loans and the need for transparent and debt-free accountability to avoid further debt complication issues.
Adesina highlighted the threat posed by the rising Aftican debt, which amounted to $824bn in 2021. Countries invest 65 per cent of their GDP in meeting these obligations.
He further compared the difference and sharp increase of the past debt services payment from $17bn in 2010 to $74bn in 2024 due to the global COVID-19 pandemic, rising inflation, and infrastructural needs. However, he emphasized the need to respond to the structural issues in Africa’s debt.
The AFDB president pointed out additional expenses and commercial debt alongside Eurobond debt, which currently claims 44 per cent of Africa’s debt.
Adesina also condemns the “Africa Premium” enforced on countries that increase borrowing costs regardless of Africa’s low default rate compared to others.
In response, the World Bank Group urged investors to explore fresh opportunities in emerging markets and provide data to prove that default is rare for sovereign borrowers.
The African Development Bank has initiated partial credit guarantees, hybrid capital, and synthetic securitization to reduce project risk and encourage investors.
The AFDB president, Adesina, looks ahead with hope and optimism about the opportunities that African countries will derive from the renewable energy sector due to the partnership of the Africa Investment Forum with foreign investors.
Notable participants present at the submission include Andrew Steer, CEO of the Bezos Earth Fund; Xavier Becerra, U.S. Secretary of Health and Human Services; Raj Shah and Brent Neiman, PresidentPresident of the Rockefeller Foundation; and the Assistant Secretary for International Finance and U.S. Treasury.
