African Economic Outlook Supplement: Here is how African countries can deal with COVID-19, reopen economies and accelerate recovery.
July 8, 2020 | 0 Comments
Charles Lufumpa, the African Development Bank’s Acting Chief Economist and Vice President for Economic Governance and Knowledge Management speaks on the recent release of the African Economic Outlook 2020 Supplement. He shares policy recommendations to cushion the shock of COVID-19 on countries.
How has Africa’s economic trajectory changed since the 2020 African Economic Outlook launched in January?
Almost everything has changed since January. The outbreak COVID-19 pandemic has distressed the global economy, particularly African economies. At the time the projections for Africa’s economic growth and prospects were prepared in January 2020, no one anticipated the magnitude of disruptions that COVID-19 would cause.
Both the pandemic and the containment measures put in place by governments to limit its spread have had important economic implications. International travel restrictions, school and workplace closures, cancellation of public events, restrictions on public gatherings and closures of national borders and non-essential businesses have had an unprecedented impact on Africa’s economic, health and political landscape.
The direct and indirect consequences of the outbreak have upended the strong upward trajectory of many African countries through 2019. Our analyses, projections and forecasts in the AEO 2020 Supplement reflect this sharply changed landscape.
Why is the African Economic Outlook 2020 Supplement necessary at this time?
The pandemic has reversed the strong growth projections reported earlier in our 2020 African Economic Outlook due to the significant economic and health-related disruptions it is causing African countries.
To account for the impact of the pandemic on Africa’s socio-economic landscape, it was necessary to reassess the situation and revise our growth projections and outlook for 2020 and 2021.
The AEO 2020 Supplement presents revised projections for Africa’s economic growth and outlook for 2020 and 2021, assesses the impact of COVID-19, and offers policy prescriptions on safe strategies to reopen economies and accelerate recovery after the pandemic.
What are the main policy recommendations to spur 3.0 percent growth in 2021?
It is important to first underscore that projections of a 3-percent growth recovery in 2021 are subject to major downside risks arising from both external and domestic factors. For instance, there remains a non-negligible risk of a second wave of COVID-19 infection, which could necessitate that African countries reimpose physical distancing, lockdowns, and quarantines.
We should also not forget other natural catastrophes such as the locusts swarms in parts of East Africa that are hurting farmers’ yields and livelihoods. Other exacerbating factors such as subdued commodity prices, high debt burdens, and tightening global financing conditions are likely to increase the uncertainty of Africa’s projected economic recovery.
The AEO 2020 Supplement emphasizes a multi-pronged policy approach to addressing the pandemic that involves: a public health response to contain the spread of the virus and minimize fatalities; a monetary policy response to ease liquidity constraints and solvency risks, a fiscal response to cushion the impacts on livelihoods and to assist businesses; a labour-market response to protect workers and their jobs; and structural policies to enable African economies to rebuild and enhance their resilience to future shocks.
Actionable details on how to implement these policy responses are presented in Section 3 of the Supplement.
How can African countries build economies that are more resilient against future shocks?
The ongoing COVID-19 pandemic is certainly not the last major shock the continent will face. In the AEO Supplement, we emphasized the need to accelerate structural reforms to help African countries build more resilient economies and become better prepared to face future shocks.
By increasing productivity and addressing obstacles to the business environment, African countries could revive their productive base and increase levels of industrialization. These resilience-boosting reforms would require investment in human capital to build a workforce with the right skills for high-productivity sectors and bridging the infrastructure deficit to advance Africa’s industrial development.
Moreover, promoting economic diversification will help countries adapt to an increasingly volatile global economy and better shield their economies from future shocks. This will require targeted policies that boost agricultural productivity and move labor from low-productivity to high-productivity sectors as well as supporting competitive sectors such as agro-processing, digital technologies, or information and communication technology-based services, which have proved critical during the pandemic.
Other challenges that will need to be addressed in order to achieve faster-growing and more resilient African economies include: formalizing the informal sector; ensuring political stability, good governance and transparency, and stronger protections for property rights.
Post COVID-19: Africa’s growth stands to rebound to 3% in 2021, African Development Bank says in African Economic Outlook 2020 Supplement
July 8, 2020 | 0 Comments
-Governments and development partners must respond in a more coordinated, targeted, and rapid manner to be effective in limiting impacts
-An additional 49 million Africans could be pushed into extreme poverty by the pandemic and its aftermath; West and Central Africa stand to be worst hit
Africa’s economic growth could rebound in 2021, provided that governments manage the COVID-19 infection rate well, according to updated forecasts from the African Development Bank, released on Tuesday.
In a comprehensive socio-economic assessment of the pandemic’s impact, the Bank said growth was now projected to rebound to 3% in 2021 from -3.4% in the worst-case scenario for 2020.
The predictions are contained in a supplement to the Bank’s African Economic Outlook, which was released on 30 January. At the time, Africa’s growth was forecast at 3.9% in 2020 and 4.1% in 2021.
The supplement cautioned that the growth outlook for 2021 and beyond would depend largely on African governments’ effectiveness in flattening the curve of the outbreak and policies to reopen economies.
Charles Leyeka Lufumpa, Acting Chief Economist and Vice President for Economic Governance and Knowledge Management, at the African Development Bank, said: “To reopen economies, policymakers needed to follow a phased and incremental approach that carefully evaluates the trade-offs between restarting economic activity too quickly and safeguarding the health of the population. “
“Economic activities can be restarted incrementally on the basis of the transmission risks of different sectors,” Lufumpa said.
The spread of the virus in Africa depends largely on the preparedness of countries to separate and treat infected patients, the supplement stated, noting that only 21 out of 54 African countries are clinically prepared to deal with epidemics.
Executive Director of the African Economic Research Consortium and Former Governor of the Central Bank of Kenya, Njuguna Ndung’u described the African Economic Outlook 2020 supplement as “a very important and useful policy tool for African countries who actually need it at this time.”
“It will be useful now and in the future. It gives us important short, medium- and long-term strategies,” he added, stressing crises like COVID-19 present a good opportunity for innovative reforms in countries.
The supplement noted that the curve of the pandemic in Africa was flattening gradually. However, COVID-19 remains a serious threat to lives and livelihoods, given weak healthcare systems and limited social protection. The continent also remains vulnerable to other regional threats such as the locust swarms that have struck East Africa, as well as to extreme climate events.
Under projected scenarios for contraction of growth, Africa could lose between $145.5 billion and $189.7 billion of GDP in 2020, according to the publication.
Hanan Morsy, Director of the Macroeconomic Policy, Forecasting and Research Department at the African Development Bank, said “The African Economic Outlook 2020 Supplement shows that for the first time in the last half-century, Africa would be facing an economic recession as a fallout of the COVID-19 pandemic. This would affect the gains achieved in poverty reduction as an estimated 49 million Africans could be pushed into poverty, with about 30 million jobs at the verge of disappearing. Policymakers need to act fast to alleviate the impact of the crisis on vulnerable groups through well targeted social safety net measures.”
Urgent interventions required
The report called for urgent policy interventions to mitigate the impact of the pandemic: “Across Africa, the response must be well-sequenced and multipronged, involving a public health response to contain the spread of the virus and minimise fatalities, a monetary policy response to ease liquidity constraints and solvency risks, and a fiscal response to cushion the economic impacts of the pandemic on livelihoods and to assist businesses.”
Other proposed interventions included labour market policies to protect workers and their jobs, and structural policies to enable African economies to rebuild and enhance their resilience to future shocks.
The supplement warned that the tourism, transportation, and entertainment sectors may take longer to recover. Between 2017 and 2018, African travel and tourism grew by 5.6%, compared with the global average of 3.9%.
According to Morsy, the supplement projected that, in the worst-case scenario, an additional 49 million Africans could be pushed into extreme poverty by the pandemic and its aftermath. The number of people in extreme poverty in Africa (using the $1.90 international poverty line) could reach 453.4 million in 2020 as a result of the pandemic, compared to 425.2 million under the no-outbreak scenario.
People in West and Central Africa faced a higher risk of falling into extreme poverty due to the pandemic, but COVID-19 would also deepen poverty in East and Southern Africa.
Confirmed cases of COVID-19 in 54 African countries stood at 304,642, with 8,087 reported deaths as of 22 June 2020. According to the supplement, reported figures were likely to be higher in reality because of limited testing capabilities in most countries.
The authors said to reopen economies, policymakers needed to follow a phased and incremental approach that carefully evaluated the trade-offs between restarting economic activity too quickly and safeguarding the health of the population. They also must build public trust and buy-in and address structural bottlenecks that make the continent more vulnerable to future shocks.
Our journey to electrify the continent: Five years of the New Deal on Energy for Africa
July 1, 2020 | 0 Comments
By Dr. Kevin Kariuki*
The NDEA called for a substantial increase in investments to realize the Bank’s High 5 priority to “Light Up and Power Africa”
Five years into the African Development Bank’s ambitious New Deal on Energy for Africa (NDEA), the Bank’s investments are set to provide electricity access to around 13 million people and deliver about 55,000 km of distribution lines, and 6,700 km of transmission lines, of which 3,200 km are for regional interconnections.
The NDEA called for a substantial increase in investments to realize the Bank’s High 5 priority to “Light Up and Power Africa,” which aims to mobilize finance and expertise to expand access to reliable, sustainable energy for more than 200 million Africans through investments in power generation, inter-connections, transmission and distribution. This effort is critical to unlocking Africa’s vast economic potential, enabling the growth of value-adding industries and services, and, most importantly, unleashing the ingenuity of the continent’s 1.3 billion people.
The strategy was grounded in the recognition that partnerships are central to its success. In collaboration with African countries, the Bank’s interventions have ranged from setting up the right enabling policy environment, supporting utilities, to increasing the number of bankable energy projects. Additionally, the Bank is accelerating major regional projects and driving integration through the Program for Infrastructure Development in Africa, whilst also supporting bottom-of-the-pyramid energy access programs.
Priority was given to investments in low-carbon technologies, set to contribute to over 2 GW of additional generation capacity by harnessing the large, hydro, solar, geothermal and wind resources of the continent. Yet this is only the beginning, as much of the work to date has been centered on setting up the right frameworks to mobilize different partners and alternative forms of capital to tackle the various challenges in the sector at country, sub-regional and regional levels.
Indeed, mobilizing partnerships and rolling out countrywide energy transformation are continuous works in progress. In 2019, as testament to the Bank’s efforts in enhancing dialogue and consensus, the G5 Heads of State endorsed the Bank’s Desert to Power initiative, intended to build the world’s largest solar zone across the Sahel by adding up to 10 GW of solar generation capacity through public and private interventions. The Yeleen Solar Program in Burkina Faso – the first of dozens of similar projects expected to flourish across the Sahel region – will provide energy to 150,000 households in rural areas through solar mini-grids and solar home systems, and an additional 52 MW of grid-connected solar generation, enough to power 30,000 new households.
Achieving the objectives of the New Deal on Energy for Africa will require a significant increase in private sector investments. The Bank catalyzes more private investments into independent power producers and off-grid projects through partnerships with project developers, commercial banks, private equity funds, institutional investors and other development finance institutions. Over the past five years, the Bank’s interventions reached $1.5 billion in private sector operations, corresponding to 1.7 GW additional generation capacity through independent power producers.
In addition to mobilizing concessional resources through bilateral and multilateral sources – notably from the European Union, Green Climate Fund and Climate Investment Funds – the Bank hosts the Sustainable Energy Fund for Africa (SEFA), one of the largest multi-donor technical assistance and concessional capital funds in the continent, designed to catalyze private sector participation in renewable energy.
In 2019, the Bank converted SEFA into a special trust fund to widen its interventions into green mini-grids to accelerate energy access to underserved populations; green baseload to support clean generation capacity; and energy efficiency to optimize energy systems and reduce energy intensity. SEFA is expected to contribute to the electrification of more than 7 million households by 2030.
The Bank is also actively supporting the mobilization of commercial capital through blended finance solutions. The Facility for Energy Inclusion, which was operationalized in 2019, is a $500 million investment platform organized around two funds – off-grid and on-grid – to provide flexible debt products, including in local currency, to emerging business models in the small-scale renewable energy space. The Facility for Energy Inclusion will contribute to more than 3 million new connections by 2030.
To enhance institutional performance and improve the enabling conditions to attract much needed investments, the Bank has also implemented initiatives such as the Electricity Regulatory Index to monitor and benchmark regulatory performance against best practices, the Sustainable Utilities Transformation Agenda, to build sustainable utilities and energy institutions, and the Africa Energy Portal to provide accurate, up-to-date data on Africa’s energy sector.
In 2019, the African Development Bank reported that an additional 96 million African households had gained access to electricity between 2015 and 2019, with countries like Rwanda on track to achieve universal access by 2025. Despite this encouraging progress, close to 600 million Africans still lack electricity access and achieving universal access goals under SDG7 still requires greater and swifter efforts to meet the demands of Africa’s growing population.
Addressing electricity access remains a costly enterprise, with the International Energy Agency placing the price tag at around $120 billion annually through 2040, four times higher than current levels .
While our direct financial contribution is modest by comparison, we are confident that its judicious application to catalytic power projects, innovative financial structures, sector reform processes and acceleration of decentralized solutions will get us far in our mission.
*Dr. Kevin Kariuki is the Vice President, Power, Energy, Climate Change & Green Growth, at African Development Bank.
African Development Fund approves COVID-19 Response grants for six Southern African countries and São Tomé & Príncipe
June 27, 2020 | 0 Comments
The Board of Directors of the African Development Fund on Tuesday approved nearly $8.9 million in grant funding to bolster COVID-19-related control measures in six Southern African Development Community (SADC) countries. Separately, the Board approved $683,000 in grants to São Tomé & Príncipe, to support the two-island nation’s response to the pandemic and its impacts. The grant funding comes under the Bank’s COVID-19 Response Facility.
The funds will facilitate the procurement of laboratory and medical supplies, including testing kits, personal protective gear and non-invasive ventilators in Lesotho, Malawi, Madagascar, Mozambique, Zambia and Zimbabwe, all SADC nations. The SADC Secretariat is the recipient and the implementing agency of the grant.
The financing will reinforce the SADC ’s capacity to coordinate pandemic response measures, including surveillance and sensitization in the six beneficiary countries.
The SADC countries and São Tomé & Príncipe have inadequate resources and capacity to effectively manage the COVID-19 pandemic, which has put a strain on already fragile health systems in the countries. “As a result, these countries are now struggling to respond effectively to the fast-evolving situation posed by the COVID-19 pandemic,” the Bank noted.
Although the spread of COVID-19 has been slow in Africa, it continuous to steadily spread through the continent, leaving in its wake disruptions and hardship caused by economic lockdowns.
The pandemic is projected to have a substantial economic impact on the SADC member countries. For instance, real GDP in all the SADC countries, except Zimbabwe, is forecast to contract in 2020.
The approved project aligns with two of the Bank’s High Five priority areas: improving the quality of life for the people of Africa and integrating Africa, as well as the SADC Disaster Preparedness and Response Mechanism to fight disasters and pandemics.
The 16-nation SADC region had recorded around 120,000 COVID-19 cases out of a continent-wide total of 325,000 cases as of 24 June 2020. Reported cases in São Tomé and Príncipe stood at about 700, in a population of around 211,000 people.
Gabon: African Development Bank approves 100.5 million euros budget support for COVID-19
June 27, 2020 | 0 Comments
The Board of Directors of the African Development Bank has approved a 100.5 million euros loan to the government of Gabon as budget support to mitigate against the effects of the COVID-19 outbreak.
The loan will support the central African nation’s Budget Support Programme in Response to the COVID-19 Crisis or PABURC, which aims to strengthen the health system and mitigate the socio-economic impact of the pandemic on households and businesses.
“The response is focusing on containing the spread of the virus, increasing public resources allocated to the health sector, and boosting the resilience of the most vulnerable communities, as well as to maintain livelihoods and shore up domestic business and industry in order to maintain the production system and pave the way for rapid recovery,” said Abdoulaye Coulibaly, Bank Director, Governance and Public Financial Management.
The novel coronavirus is exerting strong pressure on a national health system that is not equipped to deal with major pandemics. Faced with a high risk of community transmission and the re-emergence of infectious and parasitic communicable diseases, health facilities in Gabon are insufficient.
The country has four recently constructed hospital centres, 9 regional hospitals, 47 departmental hospitals, 34 health centres, 413 dispensaries and 157 health huts, but only has 58 intensive care beds.
The drop in global demand and the sharp fall in oil prices has hit the oil-rich nation, contributing to a sharp deterioration in Gabon’s terms of trade and a significant drop in budget revenues. Given the limited budgetary margins, and the insufficient human and financial resources allocated to health, the country faces a crisis. The national social security system and family benefits scheme, which has been mobilized to respond to the crisis, requires improvement.
Bank analysts warn that Gabon, like much of the globe and the rest of the continent, could fall into recession in 2020, and estimate a negative real GDP growth rate of -1.7% for the country, due to the pandemic.
Gabon recorded its first confirmed case of COVID-19 on 12 March 2020. As of 24 June 2020, the number of cases stood at 4,849, with 39 deaths and 2,107 recoveries. The hotspot of the pandemic remains the capital Grand Libreville and Port-Gentil.
African Development Bank ranks 4th on global index of transparency
June 24, 2020 | 0 Comments
Publish What You Fund has ranked the African Development Bank fourth out of 47 global development institutions on its Aid Transparency Index. The Index is the only independent measure of aid transparency among the world’s major development agencies. The index places the Bank in the highest category of transparency along with other world class institutions such as the World Bank, the Asian Development Bank and UNDP.
“We congratulate the African Development Bank – Sovereign Portfolio on achieving 4th place in the 2020 Aid Transparency Index. As large quantities of aid are being reallocated to deal with the COVID-19 emergency, the transparency of international aid is more important than ever,” said Gary Forster, CEO of Publish What You Fund, which has produced the index each year since 2011.
Publish What You Fund ranked the Bank ‘very good’ — The highest of the five categories used to assess organisations’ transparency. The ranking is based on several criteria, including finance and budgets, basic information data, organisational planning and performance.
In the new Index, which covers the 2019 year, the African Development Bank scored 95.5 out of 100 on transparency — A significant improvement on its score for 2018.
“It is promising to see an increase in the quantity, quality and timeliness of aid data now being shared by a broad cross section of the world’s major aid agencies. As we work together to fill the gaps in the aid data landscape, we look forward to exploring how we can best meet the demand for data and data engagement,” said Gary Forster, CEO of Publish What You Fund.
The institution’s commitment to total transparency is illustrated by MapAfrica — A web-based platform that maps all of the Bank’s investments across the African continent.
“I am absolutely delighted with this achievement!” said Swazi Tshabalala, Acting Senior Vice President for the African Development Bank Group. “It crowns this institution’s commitment to transparency at a time when it has never been so important. With such large volumes of funding now being assigned to combat the Covid-19 pandemic, it is crucial for our citizens to know how much, where and when the African Development Bank is investing in Africa’s development.”
Infrastructure Symposium “is laying a path for South Africa after coronavirus, but also way into the future.” – President Ramaphosa
June 24, 2020 | 0 Comments
South African President and African Union Chairperson, Cyril Ramaphosa today hosted a historic conference to spur infrastructure investment in his country and inspire similar efforts in the rest of the continent.
“South Africa, within the AU family, has been given responsibility for championing infrastructure development. It is through these objectives we will be able to attain the objectives and aspirations we have set out in Agenda 2063. This is truly a historic moment for South Africa, the continent and the world.”
President Ramaphosa made these remarks in his opening keynote address at the inaugural Sustainable Infrastructure Development Symposium of South Africa (SIDSSA) to discuss the government’s revised Infrastructure Investment Plan – a public-private initiative to accelerate major built projects.
“The coronavirus pandemic will likely lead to the deepest global recession in the post-World War II era, possibly as deep as the Great Depression in the 1930s. This symposium is laying a path for South Africa after coronavirus, but also way into the future,” Ramaphosa said.
“It represents a new beginning for infrastructure development – a new beginning that promises inclusive growth, development, transformation and, above all, hope for a better tomorrow for all our people.”
Over 681 delegates from 263 funding institutions across the globe attended the symposium, including African Development Bank President Akinwumi Adesina, AU Commissioner for Infrastructure and Energy, Amani Abou-Zeid, and World Bank Vice-President for Infrastructure, Makhtar Diop.
“We at the Bank are boldly bullish about South Africa. We need to continue to invest in critical areas, and energy is a big one. We have invested $3.1 billion in the energy sector,” Adesina said.
Adesina insisted on the need to invest in a way that was environmentally sustainable and commended the government of South Africa for its efforts on the renewable energy front.
The African Development Bank has invested in a number of these areas, including the 100 MW Sere wind project connected to the national grid and the 100 MW Xina solar energy project.
As at 20 June 2020, the Bank’s total portfolio in South Africa comprised 21 operations valued at $4.74 billion. About 75% of the portfolio is in the infrastructure sector, mainly through loans to state-owned enterprises, Eskom and Transnet. The current portfolio includes 16 private sector operations, valued at around $2.93 billion.
President Adesina underscored the need to promote syndication. The Bank has channeled $1.3 billion in syndicated loans for South Africa to provide capital for the energy utility, Eskom, to invest in power transmission infrastructure.
Infrastructure tends to be concentrated in urban areas, the Bank’s President noted. “The rural areas are left out. So we need to make sure that we have density infrastructure in rural areas and allow food and agribusinesses to transpose into those areas, and create…a new economy, so that will turn those rural areas from being zones of economic misery into zones of economic prosperity.”
The symposium follows weeks of consultations to garner support for the revised Infrastructure Investment Plan. President Ramaphosa said the plan had preceded the coronavirus pandemic, but was now even more urgent.
In her welcome remarks to the Presidential Round Table Discussion, South Africa’s Minister of Public Works, Patricia de Lille, called for “less talk and more action”.
The SIDSSA projects that will be gazetted after the symposium have been selected from an initial 177 that were subjected to a due diligence process.
African Development Bank approves EUR 88 million loan to Cameroon to finance COVID-19 response
June 24, 2020 | 0 Comments
The Board of Directors of the African Development Bank on Monday approved a EUR 88 million loan to Cameroon as direct budget support to finance the country’s COVID-19 crisis response.
The loan, to the country’s COVID-19 Crisis Response Budget Support Programme (PABRC), falls under the framework of the Bank’s COVID-19 Rapid Response Facility (CRF) of up to $10 billion, the institution’s main channel to cushion African countries from the economic and health impacts of the crisis.
In Cameroon, the pandemic has revealed the structural weaknesses of the country’s health system and economy, particularly the limited human and financial resources allocated to the health sector.
The PABRC’s goal is to check the spread of the coronavirus, to save lives and to mitigate its adverse socio-economic effects on the Central African country, particularly on households and businesses. The programme also involves longer-term actions to build the resilience of the economy as a basis for recovery.
It will support the implementation of a health response plan to improve testing and ensure early detection and rapid management of the virus, thus reducing case fatality and improving the recovery rate. It will also support the most vulnerable in society by paying family allowances to staff of companies unable to pay social security contributions as well as distributing health kits.
“Women play a key role in the fight against the spread of COVID-19 as wives, mothers, caregivers and community resource persons. The social protection and economic resilience actions under this support will particularly target women and the households and businesses headed by them,” Bank Acting Director General and Country Manager for Cameroon, Solomane Kone said.
Measures to sustain economic activity and safeguard employment will include value-added tax (VAT) credits to restore the cash position of enterprises as well as procuring inputs to support strategic agricultural value chains including poultry, fish, seeds and cereals. It will also support key small and medium-sized enterprises in the agribusiness, health and education sectors.
This operation complements the Bank’s $13 million special emergency project for Economic and Monetary Community of Central Africa(CEMAC) member countries and the Democratic Republic of Congo, to fight the COVID-19 pandemic, which was approved earlier this month.
COVID-19 has broken out at a time when the Cameroonian economy, the largest and most diversified in the Central Africa, is recovering from the 2014 shock caused by a sharp fall in the world prices of the country’s main export products – oil, cocoa and timber. Without support, the spread of COVID-19 in Cameroon could compromise the reform drive and jeopardise the progress made in recent years.
The first confirmed case of COVID-19 in Cameroon was identified on 6 March 2020. By 22 June, the Central African country had more than 12,041 confirmed cases, including 308 deaths and 7,740 recoveries. The Centre (Yaoundé) and Littoral (Douala) Regions have the highest number of cases, representing about 55.8% and 32.2% of the total, respectively.
S&P Global affirms African Development Bank’s AAA rating, with stable outlook
June 22, 2020 | 0 Comments
|The rating agency’s report further noted that the AfDB will play a key role supporting the region, particularly in the context of COVID-19.|
Ratings agency S&P Global on Friday affirmed its ‘AAA/A-1+’ long- and short-term issuer credit assessment of the African Development Bank (AfDB) with a stable outlook.
The rating agency positively assessed the Bank’s very strong financial risk profile, very strong capital adequacy, strong funding and liquidity, extraordinary shareholder support and adequacy of its governance and management.
“We are therefore affirming our ‘AAA’ long-term issuer credit rating on the AfDB,” S&P Global stated.
The rating agency noted the Bank’s $115 billion capital increase, approved by shareholders in October 2019, and the replenishment to the African Development Fund, the Bank’s concessional window, in December 2019.
“The stable outlook reflects our expectation that, over the next two years, AfDB will prudently manage its capital while maintaining solid levels of high-quality liquidity assets and robust funding,” S&P Global said in a statement.
S&P expects that “shareholders will remain supportive by providing timely capital payments”; the Bank “will continue benefiting from preferred creditor treatment (PCT); and “prudently manage growth in private-sector lending in a way that’s aligned with its mandate.”
The rating agency’s report further noted that the “AfDB will play a key role supporting the region, particularly in the context of COVID-19. The institution approved an up to $10 billion relief package for 2020, of which $6.9 billion will be financed by AfDB and the remainder through its concessional lending window.”
The President of the Bank, Akinwumi A. Adesina, said: “We are delighted with and welcome S&P Global’s decision to affirm the Bank’s AAA/A-1+ rating. It reflects the Bank’s very strong financial position and risk management, as well as our sound governance. We will continue to maintain these standards, with the strong support of all our shareholders, as we deliver much needed financial, knowledge and policy support to our regional member countries during and after this period of the COVID-19 pandemic.”
African Development Bank approves $4 million grant to bolster South Sudan’s COVID-19 response
June 19, 2020 | 0 Comments
|As of June 15, 2020, the country had reported 1,693 cases, 27 deaths and 49 recoveries.|
The Board of Directors of the African Development Bank (www.AfDB.org) on Wednesday approved a UA 3 million ($4.16 million) grant to South Sudan to support the emergency response to COVID-19 and strengthen the country’s fragile health system.
The grant, from the Transitional Support Facility of the Bank Group’s African Development Fund, will provide funding for the project to enhance the capacity of South Sudan’s health facilities and to bolster the country’s capacity to detect cases and curb the spread of the virus.
The world is facing an unprecedented challenge of containing the COVID-19 pandemic and mitigating its impact on people’s lives, livelihoods and economies. South Sudan reported its first case of COVID-19 on April 5, 2020, followed by increasing numbers of cases daily. As of June 15, 2020, the country had reported 1,693 cases, 27 deaths and 49 recoveries. The country remains at high risk. With limited hospital bed capacity, gaps in health workers’ skills and competencies and a lack of functioning medical equipment, South Sudan is ill-prepared to respond to the pandemic.
Currently, the small number of confirmed cases are being managed at the country’s sole infectious disease facility, the Dr. John Garang Infectious Diseases Unit. However, the current capacity of the facility is only 24 beds. There are limited facilities and capacities for isolation and management of COVID-19 cases at the state level as all samples from suspected COVID-19 cases have to be brought to Juba by air for testing. There are a limited number of isolation facilities outside the capital and no Intensive Care Unit (ICU) capacity.
The bulk of activities under the Bank-funded project will focus on improving facilities for the management of COVID-19 cases, including the procurement of oxygen cylinders and vital signs equipment and the recruitment and training of health workers. It will improve capacity for the detection of cases and the tracing of contacts.
African Development Bank Country Manager for South Sudan, Benedict Kanu noted that while too early to estimate the full economic impact of the coronavirus pandemic on South Sudan’s growth performance, given the disruptions to businesses in South Sudan’s key trading partners including China, Uganda, Kenya, and Italy, a notable economic impact of COVID19 is likely to be felt in the medium to long term.
The project will be implemented by a team at the World Health Organisation (WHO) in close coordination with South Sudan’s Ministry of Health. It falls under the framework of the Bank’s COVID-19 Response Facility (CRF) of up to $10 billion, which is the institution’s main channel to provide assistance to African countries to cushion the economic and health impacts of the crisis.
African Development Bank joins Nasdaq Sustainable Bond Network
June 18, 2020 | 0 Comments
By joining the Nasdaq Sustainable Bond Network, socially responsible issuers are provided a unique opportunity to bring attention to their concrete actions
Nasdaq (Nasdaq: NDAQ) on Wednesday announced the inclusion of the African Development Bank (www.AfDB.org), one of the world’s largest issuers of social bonds, in the Nasdaq Sustainable Bond Network (NSBN). The NSBN is a global and publicly available platform designed to improve transparency in the market for green, social and sustainability bonds.
Ten Bank bonds were added to the platform, including its landmark $3 billion Fight COVID-19 Social Bond launched in March 2020, the largest Social Bond ever launched at the time in international capital markets. Fight COVID-19 remains today the largest dollar-denominated Social Bond. It aims to help alleviate the economic and social impact of the pandemic on livelihoods and Africa’s economies.
By joining the Nasdaq Sustainable Bond Network, socially responsible issuers are provided a unique opportunity to bring attention to their concrete actions in terms of financing climate change and green growth.
“Nasdaq welcomes the inclusion of the African Development Bank on our Nasdaq Sustainable Bond Network especially with its Fight Covid-19 Social Bond, launched to alleviate the impact of the pandemic on African economies and livelihoods,” said Ann-Charlotte Eliasson, VP, Head of EU Bond Listings and Sustainable Debt.
“We are proud to offer visibility to an issuer with such a strong social mandate, which the world needs more than ever, especially in these challenging times.”
Since the launch of Nasdaq Sustainable Bond Network (https://bit.ly/2N2BuNN) in December last year, more than 40 issuers from 13 countries have added over 4,000 bonds to the platform, including the Nordic Investment Bank, HSBC and Fannie Mae.
“The Nasdaq Sustainable Bond platform allows us to showcase our work in combating poverty and in helping move the African continent forward. Our Fight Covid-19 social bond is about saving lives and livelihoods,” said Hassatou Diop N’Sele, Treasurer of the African Development Bank.
The African Development Bank established its Social Bond framework in 2017 and has raised the equivalent of $5.5 billion through five transactions supporting 89 eligible social projects in 28 African countries as of 31 December 2019. In 2018, the Bank was designated “Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards and the Bank’s NOK 1 billion 3-year Social Bond issued in 2019 was awarded “Social Bond of the Year” by Environmental Finance.
Second Term For Adesina At AFDB Will Deepen Ties Between Brazil and Africa- IBRAF President João Bosco Monte
June 17, 2020 | 0 Comments
By Ajong Mbapndah L
The re-election of Dr Akinwumi Adesina to second term of office as the President of the African Development Bank-AFDB will greatly deepen and broaden ties between Brazil and Africa says Prof João Bosco Monte ,President of the Brazil African Institute- IBRAF .
In an interview with Pan African Visions, Prof João Bosco Monte lauded the great achievements of Dr Adesina including his whole hearted endorsement of partnership with the IBRAF on hugely successful exchange programs on Agriculture that have benefited many African countries.
“I am optimistic about the possibility of Adesina being re-elected to the presidency of the African Development Bank, especially when we see Brazil as a country that can work very closely with Africa, not only at the government level, but also with the private sector,” says Prof João Bosco Monte in the interview which also discusses the IBRAF, racism , and the future of relations between Brazil and Africa.
Prof Joao Monte thanks for granting this interview, could we start this interview with an introduction of the Brazil -Africa Institute that you lead?
The Brazil Africa Institute, when was founded, I had the idea to put together Brazilians and Africans from many perspectives. The collaboration and the partnership that we can see between Brazil and some African countries are very obvious. But Brazil doesn’t know much about Africa, on the other hand, Africa doesn’t know everything about Brazil. So, the genesis of the Brazil Africa Institute, when we created it, was to put together both sides of the Atlantic and have mutual and respectful Knowledge and understanding about each other.
And now, after ten years of the conception of IBRAF we can see many opportunities that we can put together between the two sides, African and Brazilian. Not only the government, and I could say mainly the private sector can understand the potential of collaboration and opportunities that we can see from both regions.
The agenda of the Brazil Africa Institute brings many possibilities for interactions. One of the activities that we have annually is the Brazil Africa Forum, which brings leaders, Heads of States, Ministers, diplomats, private sector, the civil society, in order to discuss one important topic for Brazil, Africa, and for other regions. And this gives me the opportunity to emphasize that when we talk about Brazil and Africa, we should include all the latitudes on the agenda.
Could you also shed some light or put historical perspective on relations between Brazil and Africa, how important are the ties between your country and Africa?
Since 2006, when I started to visit Africa, I saw clearly, a very important connection between Brazil and some African countries. Actually, when I visit Africa, in many countries I feel just as I am in Brazil. On the other hand, whenever I see Africans in Brazil they say “Well, this is just like home. This is just like Africa”. In this regard, there is a very particular relationship between the two sides of the Atlantic.
And it’s important to emphasize the historical ties that Brazil has with Africa. Not because of slavery, and I can say, very sadly, Brazil is one of the places that had many slaves from Africa. But besides this, Brazil has a historical connection with Africa, and now we can see the roots of Africa in Brazil, in the gastronomy, in the music, in the clothes and the way that we dress, and I can see that Brazil is very connected with the continent.
We are doing this interview at a time when racism has also taken centre stage with world protests following the killing of Floyd Georges in the USA…what are race relations like in Brazil?
The killing of George Floyd in the US brought to the international arena a discussion about racism and how countries, how organizations, how governments, how people are acting about this theme. It’s a bit very unique. We can see demonstrations in many parts of the world, not only in the US, against racism, that are asking the governments to bring the new policies to eradicate racism from the face of the world.
In Brazil, we do have problems with racism, and some demonstrations, some protests, also came to this discussion here essentially to highlight that historical inequalities are behind the great disparities faced by black people in the labor market. Less access to education is one of them, as well as more precarious living conditions. The governments of Brazil, I’m talking about Federal and State governments, should start to discuss what kind of argument we can bring to the table, to bring to poor people, and also black people as well, the possibility to have a better life. So, the agenda that we have to include now in Brazil, and also in some parts of the world, should include the discussion about racism, but also how can we bring dignity to people who don’t have the eyes of the state.
One of the partner institutions that the Brazil -Africa Institute works with is the African Development Bank, what do you make of the recent standoff between with external partners notably the USA? How has it been like working with current AFDB President Dr Akinwumi Adesina, and what do you think a second term for him is deserved?
We have many partners around the world. One of the key partners of the Brazil Africa Institute is, indeed, the African Development Bank, and this was emphasized in the last years, and I’m very proud to say that this partnership is because of the confidence and the vision of President Adesina. I had the opportunity to discuss with him, in many occasions the potential of collaboration between African countries and Brazil, and he’s very familiar with the possibilities of collaboration. Now, when we see countries like the US bringing issues about the leadership of President Adesina, we should understand what, specifically, are the reasons that the bank is being attacked by the US Government. We need to see the details, but we also need to see a concrete reason and the objective that the government of the US is bringing to damage the reputation of president Adesina. My personal opinion is that he’s doing a very good job, and this is important for the bank and for Africa.
Watching the situation from outside I can see that many African leaders, many former Head of States, are now supporting Adesina and what he’s doing at the bank. This is important to emphasize because the leaders who are dealing with him, who had the opportunity to deal with him, are bringing to the table a very strong message that he’s doing the job very well. And this emphasized that he needs to have the opportunity to have a second turn. My feeling is that, in five years, is not possible to change the whole situation, and what he was doing in the last five years was bringing a discussion, a dialogue, among many people, many organizations, and bringing the flag of the bank, and the demands of the continent to partners around the world, including Brazil. That’s why I emphasize and defend the possibility of President Adesina to be reelected.
What did you make of the allegations levied against him and were you satisfied with the defense he put up to deny any wrongdoing?
It is very relevant to mention that the Ethics Committee of the African Development Bank received the response from President Adesina in a very positive way. So, I don’t think we need to go any further to make this clear and I particularly feel very satisfied with the answers given by him.
In 2017 the AFDB and the Brazil Africa Institute launched the Youth Technical Training Program to train young African professionals in research and technology, how is the program working out?
Three years ago, the Brazil Africa Institute started a very important program, bringing young Africans to Brazil to receive training in areas that the country achieve great results. And the African Development Bank actually was the first door that we knocked to start the talks, to show the evidence, and the possibilities of bringing these young Africans boys and girls to Brazil. This was a valuable moment for us, and the Bank received it very well, and the voice of President Adesina, followed by his team, was very helpful and proactive. And we started with agriculture, which is related to the mind of President Adesina. This was in 2017, and after this activity that we have launched with the bank, we started to develop other initiatives with some other international organizations. I’m sure that the beginning of this program, with the African Development Bank, was a crucial moment for us to reach other areas, other activities and to amplify our partnerships around the world.
I am sure that the start of the Youth Technical Training Program in partnership with the African Development Bank, was a crucial moment for us to reach other areas, other activities and expand our connections around the world.
After 3 years of the program, we are very pleased to identify that many young Africans – now with more knowledge and skills – are applying some successful Brazilian experiences in many parts of the African continent, which clearly demonstrates the importance of south-south cooperation.
What expectation would you have for a second Adesina term at the AFDB especially with regards to prospects of more projects and partnerships with IBRAF and Brazil as a whole?
I am optimistic about the possibility of Adesina being re-elected to the presidency of the African Development Bank, especially when we see Brazil as a country that can work very close to Africa, not only at the government level, but also with the private sector. And I see President Adesina’s vision as something that we can have coincidences with the activities of the Brazil Africa Institute.
How is the agenda of IBRAF going to look like for the rest of the year especially with the challenges posed by COVID-19? We will like to end this interview with your perspective on the future of ties between Brazil and Africa, in what areas or sectors do you see potential for additional cooperation and what needs to be done on both sides to make the bonds stronger?
Like all organizations in the world, we are adapting to this situation of isolation and remote work, which of course is not an easy task. As an international organization, it is very necessary to be close to people in many parts of the world, participating in meetings or activities organized by us or our partners.
I think the Brazil-Africa agenda for next year is very positive and I am very optimistic about the future of these relations. Many areas can be addressed, and Brazil is already doing things with Africa in various activities, in many fields. I see agriculture, again, as a possibility for Brazil to become more and more involved with Africa, especially in the context of transfer of technology. But it is important to emphasize that Africa must know more about Brazil and African leaders must be open to seeing Brazil as a potential partner. On the other hand, Brazilians must look for the possibilities to get involved with Africans, and we need to understand more and more the potential that we have before us.
The role of the Brazil Africa Institute is to emphasize that the moment that we have now is very appropriate for Brazil and for Africa. Not only because we see the market potential to sell and buy things, but also because the partnership we see between the two sides is very unique and can last for a long time.
For the second half of 2020, we are still planning some activities, such as the YTTP, with an edition in September and the other in October. We are bringing Africans, from West Africa, to receive training in Brazil, as we have done in the last 3 years. In addition, we are starting the IBRAF Fellowship Program for South-South and Triangular Cooperation, with the objective of facilitating the dialogue between African researchers and local professionals, enabling the exchange of knowledge in various fields, through a platform for expanding contact with the top sustainable development practices in Brazil.
Certainly, our desire is that the result of all the activities that we are developing can somehow contribute so that Brazil and Africa are better prepared for the post-COVID era.