The election of a new president to head the African Development Bank captured the headlines out of Abidjan last week, but the Annual AfDB Programme and meetings were more than electing Africa’s new leading voice on development and inclusive economic growth. Thousands of people attended this year’s Annual meetings from government, the private sector, and development institutions to witness or participate in discussions of the most important development issues on the continent. With the theme of “Africa and the New Global Landscape”, experts debated topics as diverse as “strengthening health systems to prevent the next outbreak” to more familiar themes of the Bank, such as regional integration and energy.
Outgoing President Kaberuka frequently says that Africa’s improving, yet still poor, infrastructure costs the continent at least two percent of Africa’s annual growth, and the Bank, while it cannot alone fill the infrastructure gap, it can and should play a leading role in mobilizing investment in infrastructure. New models for mobilizing this investment are needed, however. In the energy panel (“Energy: The Next Revolution”), Africa Finance Corporation’s Andrew Ali sparked some concern by declaring the current private power delivery model as unworkable and ineffective, with projects taking on average seven years to close and only two projects closing a year in Sub-Saharan Africa.
But more help is on the way. The “Africa50 Fund”, announced by the Bank only a year ago in Kigali, has raised more than $700 million and is expected to reach $1 billion before the end of this month. The new CEO, Alassane Ba, believes the independent structure of the fund will allow for quicker investments and with its own project development facility he expects project development lead times to be cut in half. The Indian government is entering into a novel partnership with the AfDB through the creation of the “Kukuza Project Development Company.” Kukuza, which means “to grow” in Swahili, will target and grow projects that are in early-stage development, and once grown will sell them off to developers. It uses a model that worked well in India, and according to Sanjay Ghag, Senior Vice President of Infrastructure Leasing & Financial Services Ltd (IL&FS), the facility will include a stable of proven experts who know the pitfalls of project development and will be able to fast-track projects. IL&FS will serve as the main sponsor , and other partners include India’s Exim Bank, State Bank of India, Allied Investment Partners (of Abu Dhabi), and the AfDB. And, Power Africa plans to deploy more transactions advisors to the continent to help with project development.
This year’s annual meetings opened on a positive but cautionary note with a discussion of the Bank’s recent research report “African Economic Outlook 2015”, which anticipates GDP growth in 2016 of 5 percent, but also lays out some of the top demographic challenges for the continent, such as growing gender inequality, a tripling of the population by 2050, and a commensurate rise in the youth population. As some 370 million youth are expected to enter the job market in the next fifteen years, governments will be challenged to turn the “youth problem” into a “youth dividend.”