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Investment in agriculture, energy sure way to activate Africa economy

Saturday May 28 2016
adesina

African Development Bank President Akinwumi Adesina. PHOTO | CYRIL NDEGEYA |

In his inaugural speech after taking office on September 1, 2015, the African Development Bank president Akinwumi Ayodeji Adesina laid out the five priority areas that the Bank will focus on to advance Africa’s transformative agenda in the next 10 years.

He spoke to The EastAfrican’s Berna Namata about the “High Fives” at the 51st annual meeting of the board of governors of the AfDB in Lusaka, Zambia.

READ: High 5s Africa must achieve to realise new global development goals

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Many African countries are increasingly facing the risk of hunger due to the impact of climate change. How is the AfDB planning to help countries cope with these challenges?

The two pillars of the Bank are inclusive growth and green growth. We have been at the forefront in climate financing in Africa. At the CO21 in Paris, I announced that the Bank will triple climate financing to $5 billion a year by 2020, to allow countries to have a climate resilient energy and agriculture sector to cope with climate change but also to allow them to adapt to climate change.

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I have seen the floods and droughts in a number of countries including Kenya, Malawi and Rwanda.

What this tells you is that Africa is at the receiving end of climate change — the economies are badly affected, the agriculture sector has been hit by drought and in the energy sector, the water levels of hydropower stations, have also come down.

The Bank has decided to support countries to deal with the current problem of El-Niño. The bank will provide $549 million as immediate support to countries that are going through problems of drought.

How do you plan to transform African agriculture?

It is inconceivable that a continent with abundant arable land, water, diverse agro-ecological richness and sunshine is a net food importer.

A continent that has 60 per cent of the arable land left in the world is spending $35 billion a year importing food. If we do nothing, that level will rise to $110 million by 2025 and this is unacceptable.

Secondly, Africa faces economic headwinds and needs to take advantage of its agriculture. We must transform the perception of agriculture so that it is seen as wealth- creating and a viable business option.

We are launching an agriculture strategy to help African countries to rapidly transform their agricultural sector, and push for food self-sufficiency and moving up the value chain in the things that we produce.

Through the development of agro-allied industrial zones, Africa can move away from exporting primary commodities, and make the transition to producing value added products.

Africa will expand its ability to export processed cocoa, not cocoa beans, processed coffee not coffee beans and textiles instead of cotton.

Our strategy is also going to help with the problem of malnutrition. I find it unacceptable that today in Africa, we have 54 million children who are stunted and another 14 million who are underweight. This reduces at least 11 per cent of the GDP of African countries.

We want to drive Africa to be self-sufficient, create opportunities for our farmers. The majority of them are small holder farmers and women. We need to make sure Africa industrialises the agriculture sector in addressing the problem of malnutrition. This is going to be important in helping Africa to unlock the potential it has in the agriculture sector

There are several initiatives geared towards bridging the energy deficit on the continent. What are you planning to do differently under your energy programme?

We have decided that we have to take the issue of energy to the centre of African development. When I became the Bank’s president, I looked at all things I could do differently — one thing I thought we could differently was increase the scale of investment in the energy sector.

But also set for us a clear timeline within which we have to work in a transformative way to solve the problems.

As am African it is shameful that 138 years after Thomas Edison developed the electric bulb, we cannot light a bulb in Africa.

Lack of electricity is the number one reason why Africa’s growth has been hindered: If Africa had universal access to electricity today, its industries would be working, small and medium-size industries would be working, children will be able to learn better in school and productivity and learning would go up. And Africa’s industrial competitiveness would rise.

Obviously, energy is the most important thing. We have launched what we call the New Deal for Energy, which aims to light up and power Africa by 2025. What is different about the new deal is that we are specific in terms of what we want to achieve.

It has four targets of which is the first to increase on-grid generation by adding 160GW by 2025.

Second we are investing $12 billion in the energy sector over the next five years, which will be used to leverage private sector investment of between $45 billion and $55 billion.

We also want our partners to scale up what they are doing with us: We are working with the United States government initiative called Power Africa, with Sustainable Energy for All, the Africa Leaders Energy Group, China and other development partners.

In other words, we are forming a transformative partnership that will allow us to do these things together in a co-ordinated manner.

Third, we have also succeeded in a very short period in raising the level of political awareness and commitment of our leaders in solving that problem.

How can African countries tap into these resources to bridge their respective energy deficits?

We want governments to look at the policy environment in the energy sector and reform it.

In particular, it is very important to have cost reflective tariffs. For instance, the mobile revolution that we have seen in Africa was because of reforms in the telecoms sector.

When we have cost reflective tariffs and better managed energy utilities, you will see massive investments into the energy sector.

Governments also have to increase the level of their own investment in the energy sector. Today, only 0.3 per cent of the GDP of African countries goes into the energy sector. But if you increase that to about 3.4 per cent, it will make an available additional $53 billion dollars.

And the allocation of more resources to the energy sector is really very critical. Finally, it is not just about individual countries, we must have a regional approach to the energy sector. For instance, the case of Ethiopia and Kenya tackling connectivity, the Bank is investing heavily in regional interconnectivity between regional countries transmission lines.

Africa currently accounts for just 1.9 per cent of global manufacturing, yet the continent must industrialise to reduce its susceptibility to volatile commodity prices. What will it take?

We must build the African private sector to create wealth. By developing financial markets and leveraging private capital markets, businesses will be able to access long-term financing crucial to invest in the machinery, equipment and working capital we need.

Unlocking the potential of small, medium businesses and large businesses, Africa will fast-track industrial growth and development.

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