African countries should look within to the private sector to fund their own infrastructure rather than borrowing from international markets to plug financing gaps, Akinwumi Adesina, president of the African Development Bank (AfDB), has said.
Nigeria’s former minister of Agriculture, Adesina gave the piece of advice at the Fourth African CEO Summit in Abidjan, Ivory Coast, last week.
Motivational speaking is a strong point for Adesina, who was named 2013 Forbes African of the Year. In his acceptance speech, he urged young Africans to see agriculture as a business rather than a development tool and predicted that Africa’s future billionaires will get rich from agriculture.
Speaking at the same forum, Aliko Dangote, Africa’s richest man, said he was rolling out an investment plan with hopes of expanding Nigeria’s sugar sector to make the country self-sufficient. “These are hard times, but hard times bring opportunities,” Dangote said at the summit.
Financial experts worry that African countries could slip back into debt crisis as local currencies depreciate demand for Africa’s natural resources sink and global interest rates rise.
“What we have to see now from Ghana, Nigeria and South Africa is austerity, cutbacks in government spending and budget cutbacks,” said Martyn Davies from Deloitte.
African countries issued bonds worth more than US$25 billion in the last 10 years. Adesina called on the private sector to double its efforts to help transform African commodities locally, and diversify African economies, particularly in tourism and service industries.
The private sector accounts for 90 per cent of jobs, 80 per cent of total production, and 66 per cent of total investments, Adesina said in an AfDB press release.
“Africa can finance its own development, and doing so enables it to decide its own direction and pace of growth,” Adesina said.
He described efforts to deepen financial integration and increase liquidity, citing an AfDB project to link four African stock exchanges, and a joint venture with Bloomberg to facilitate the issuance of sovereign and corporate bonds on African markets. He pointed to a growth in remittances and a rise in sovereign wealth funds in Africa.
“In the face of global economic challenges, it is those African countries with diversified economies that are succeeding in weathering the economic storm,” he said. “While the current situation is challenging, it also presents great opportunity, especially for resource-rich countries, to diversify their economies away from the export of raw commodities …. Now is the time, the time for Africa to move up the value chain.”
Africa produces about 70 per cent of the world’s cocoa but only accounts for a two per cent of global cocoa revenue, Adesina said.
“It is time to industrialize Africa and diversify its economies … Africa must become a global powerhouse in food and agriculture” Adesina said. “But to do that, we must solve our energy problem. Business can’t be done in the dark.”
At the African CEO Summit, Adesina set out the vision of the African Development Bank. Its “High 5” priorities through 2022 include the following: Light up and power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the quality of life for the people of Africa.
“We will only succeed in realizing the objectives of the High 5s if we work in public-private partnership,” Adesina said. “Let us think big, act big and deliver big for Africa.”
Africa is adjusting to falling commodity prices and creating new opportunities out of economic diversification, said Amir Ben Yahmed, vice president of Paris-based Groupe Jeune Afrique and founder and president of the Africa CEO Forum. He introduced the theme of the conference — “New reality, new priorities.”
Africa is resilient, and needs to add economic value to its commodities, said Alassane Ouattara, president of the Republic of Côte d’Ivoire. “It is you — it is the private sector — which will do the most to create jobs for the young people of this continent,” he said, calling on the private sector to step up and fund Africa’s growth, and to make concrete proposals at the Africa CEO Forum.
“We should look inside. We should mobilise our own capital and we should have our own macroeconomic stabilization, fiscal consolidation and expandable taxable base. The future of Africa lies not outside; the future of Africa lies in Africa,” Adesina said, according to SABC.
AfDB said it plans to invest US$12 billion in the next five years on electricity in Africa.
The Africa CEO Forum drew 500 CEOs from 43 African countries and 20 elsewhere in the world, according to the bank.