Unlocking opportunities for Africa
Africa is home to nine of the 10 most vulnerable countries to climate change, but receives just 3% of global climate finance. With support from the G7, the African Development Bank Group is ready to address this lack of support
Since its establishment 60 years ago, the African Development Bank Group has been a major leader supporting Africa’s economic growth and development. It can rightly take pride in the progress to date.
The G7’s Apulia Summit is a crucial opportunity for global leaders to reflect on this progress and focus on the next steps along the road to a sustainable, developed and wealthy Africa.
Our High 5 priorities (Light up and power Africa, Feed Africa, Integrate Africa, Industrialise Africa and Improve the quality of life of the people of Africa), launched in 2016, have affected over 400 million people. According to the United Nations Development Programme, if Africa achieved the High 5s, it would achieve close to 90% of the Sustainable Development Goals and the African Union’s Agenda 2063.
The AfDB is responsive to geo-political shocks, mitigating their effects on African economies. When the Russian war in Ukraine erupted and posed great food security risks to Africa, we launched a $1.5 billion emergency food production facility, to support Africa in producing its own food and reducing dependency over a two-year period. As of April 2024, we have approved loans and grants of $1.496 billion for emergency food production in 35 countries. With $323 million of additional support from Japan, the United States, Norway, Germany and the Netherlands, we have committed over $1.8 billion. So much has been achieved: the initiative has reached 10.5 million farmers and supported the production of 23 million tons of food, valued at $10.79 billion – or 90% of our target market value of $12 billion worth of food after less than two years.
Recognising that Africa has nine of the 10 countries most vulnerable to climate change and receives just 3% of global climate finance, the AfDB set out to address this challenge. We now devote 54% of our total approvals to climate finance, surpassing our target of 40%. We have rolled out a $25 billion African Adaptation Acceleration Program to support large-scale adaptation efforts, together with the Global Centre on Adaptation. It is the world’s largest climate adaptation programme.
Action on climate
Moreover, the AfDB has established a Climate Action Window under its African Development Fund, to mobilise and channel resources efficiently for climate action. This initiative aims to provide accessible climate finance to the most vulnerable African countries and invest in climate adaptation, mitigation and technical assistance.
With initial funding of $429 million from international partners and plans to increase this to $13 billion, we are poised to significantly enhance support for Africa’s climate action strategies. The CAW will remain a building block of the African Development Fund’s 17th replenishment in 2025. The objective will be to triple the fund’s resources and mobilise $25 billion of additional concessional funding for African low-income countries.
The AfDB is spearheading the energy transition in Africa. Our $20 billion Desert-to-Power project will harness the solar energy of 11 Sahel countries and provide renewable electricity for 250 million people. When completed, it will be the largest solar zone in the world. In April, Ajay Banga, president of the World Bank Group, and I launched a bold effort to connect 300 million Africans to electricity by 2030.
In response to the G20 capital adequacy report’s call for multilateral development banks to scale up financial innovations to raise more resources in support of countries, the AfDB pioneered the issuance of $750 million in hybrid capital, the first by a multilateral development bank globally. We have helped to create a new asset class for institutional investors. The AfDB is also the only multilateral development bank to do synthetic securitisation, transferring the risks on its sovereign and non-sovereign portfolios to the private sector. We recently did a $2 billion synthetic securitisation of our sovereign operations, facilitated by a guarantee from the United Kingdom, freeing $2 billion to support finance in Africa.
The AfDB is also at the forefront of efforts to rechannel special drawing rights to multilateral development banks, which holds the greatest promise to leverage more resources. This allows SDRs to be leveraged by three to four times to deliver greater development outcomes for the continent. For example, a $10 billion SDR rechannelling to the AfDB will deliver $40 billion of additional lending resources to Africa.
The AfDB and the Inter-American Development Bank are working closely with the IMF to make this a reality. The IMF Executive Board recently approved the use of SDRs for hybrid capital, based on the framework model jointly developed by the AfDB and the IADB. G7 members can help turn this into reality by rechannelling SDRs to the multilateral development banks.
With other African and non-African partners, we have launched the Alliance for Green Infrastructure in Africa, a $10 billion initiative to address the lack of bankable green infrastructure projects, to accelerate Africa’s just and equitable transition to net zero, and to bridge the continent’s infrastructure gap in a low carbon and climate resilient manner, extensively leveraging the private sector.
Support from the G7
The AGIA, which has already benefited from support from G7 members and other partners, will make transformative investments, such as in renewable energy or green hydrogen projects; sustainable transport projects, including e-mobility solutions; solar and hybrid energy for heavy industry; logistics companies; energy storage; water and sanitation; and new technologies.
Through G7 support, the AfDB is accelerating women’s access to finance through the Affirmative Finance Action for Women, in partnership with the Africa Guarantee Fund, working with 122 financial institutions in 36 countries. AFAWA is the first gender-focused collateralised significant risk transfer, with counter-guarantees provided by France and the Netherlands, in support of scaling up finance for women. So far it has approved $1.7 billion and financed over 8,000 women-owned businesses. By the end of 2024, AFAWA will reach $2.4 billion in support for 13,000 women-owned small and medium-sized enterprises.
The Africa Investment Forum, established in 2018 by the AfDB and several partners, has so far mobilised over $180 billion in investment interest in projects in Africa, and it has closed $10 billion in investment deals from around the world. It proves that Africa is a great investment destination.
As Africa’s solution bank, the African Development Bank Group will continue to innovate constantly and provide thought leadership for Africa’s development. We stand fully ready to work with the G7 and deliver more impressive results for Africa.
