- Note a need for collaboration with global partners
- Recognise poor infrastructure as a major hurdle to economic growth
- Afreximbank specifically mentioned for trade and export credit facilities
The CEO Forum of the Association of African Development Finance Institutions (AADFI) has rethought the approach to resource mobilisation in order to increase the capacity of African national DFIs to promote the UN 2030 Agenda to end poverty, protect the planet and bring peace to the world.
In 2015, the global community signed and adopted the 2030 Agenda for Sustainable Development. Opening the forum recently, the Chairman of AADFI, Thabo Thamane, said the outbreak of the COVID-19 pandemic two years ago has set the clock back in efforts to achieve Sustainable Development Goals (SDGs) of the UN.
“As we emerged from the impact of the pandemic, the global economies got entangled with another crisis: the Russian-Ukraine conflict,” Thamane, who is also the CEO of CEDA, said. As a result of the war, inflation is skyrocketing in most countries while climate change is making the food situation for Africa far worse. “We face numerous development challenges as a continent, both internally and externally induced,” he pointed out.
Thamane said because of that, achieving some of the key components of the 2030 Agenda, focusing on green and quality infrastructure, health and social protection, climate adaption and resilience, and human rights and inequalities, is challenging for Africa. He was referring to how inadequate infrastructure remains a major hurdle to Africa’s full economic growth potential. The massive extent of the problem is such that it is estimated that about US$93 billion will be needed annually over the next decade to overhaul infrastructure in Sub-Saharan Africa.
About two-thirds of this amount, or $60 billion, is needed for entirely new infrastructure and the remaining $30 billion for maintenance of existing infrastructure. Thamane told the forum that Africa urgently requires increased adaption funding to strengthen health systems. “It also needs bold, measurable climate adaption responses that are gender-sensitive,” he said. But the need to respond to climate change is also an opportunity to drive the economic transformation that Africa needs, he asserted. For achieving the SDGs, genuine collaboration with global partners and key stakeholders will be required.
“This year’s CEO Forum of African DFIs provides a unique opportunity to help rethink the approach to resource mobilisation that will increase the capacity of African national DFIs in promoting the 2030 Agenda in Africa,” said Thamane. “Time is not on our side.”
He proposed a few areas of consideration that include regional and continental partnerships with relevant stakeholders like Afreximbank for inter-trade and development of export credit and guarantee facilities to develop production capacity throughout the continent to stimulate economic growth. “Financing products should therefore take into consideration these changes, longer repayment periods, lower interest rates and development of appropriate business development services,” Thamane said.
He noted that trade agreements like the Africa Continental Free Trade Agreement (AfCFTA) bring about immense opportunities which could contribute significantly to achievement of the 2030 Agenda. But in order to harness these opportunities, Thamane said, there is a need to develop infrastructure, such as one-stop border posts between member states, to ease trade within and between African countries. The Minister of Entrepreneurship, Karabo Gare, who delivered the keynote address at the forum, challenged DFIs to reposition themselves to raise the necessary resources to assist governments.
Acknowledging that DFIs are already threatened by shifts in societal needs and demographic and economic and market conditions, the minister said the theme for this year, “Building Partnerships for Resource Mobilisation in Financing SDGs in Africa,” tasks DFIs to tackle ‘the how’ by redefining their objectives, building better linkages, optimising systems, and aligning and accelerating their goals towards meeting SDGs. Gare called for debate on how DFIs assist governments and acknowledged that “there is evidence that DFIs have an important role to play in the development of our economies”.
“DFIs are now generally expected to address broader developmental policy objectives, including employment creation, income distribution, import substitution and developing new industrial sectors or boosting weak ones,” he said. Based on this, the minister said, it is clear that the role played by DFIs in developing countries has gone beyond addressing developmental failures. “This challenges you to reconsider your countries’ financial systems and regulatory regimes and comply with international best practices in corporate governance and risk management,” he said.