By Timo Shihepo
Pretoria – The African Development Bank (AFDB) has said that it is ready to be at the forefront of SADC’s quest for industrialisation and has urged the region to resist any shocks such as that of global commodity prices.
The banks says there is no doubt that these are tough times for the SADC region, with commodity price declines and other external shocks slowing down growth.
The SADC region faces significant challenges, as real GDP growth declined from 4.3% in 2010 to 1.8% by 2016 and it’s only expected to recover to 2.6% this year. SADC’s external debt to GDP has also increased and debt ratio percentage of GDP has increased from 18.7% in 2012 to 34.7% in 2016.
The AFDB says it strongly support the structural reforms to spur greater growth of South Africa, especially, for in its growth lies the accelerated economic recovery of the entire SADC region.
Speaking at the 37th SADC Summit of Heads and State here on Saturday, AFDB’s president Akinwumi Adesina said there was a need to turn the downtrends around. At the top of this, Adesina, said, is electricity. He said this is the reason why the AFDB is investing heavily in the power sector. Through their new deal on Energy for Africa, AFDB was investing $12 billion over the next five years in the energy sector.
“Africa cannot develop in the dark. While recovery of commodity prices has helped, and stronger macroeconomics reforms are needed, we must address fundamental structural challenges that have continued to hamper growth in SADC and Africa as a whole,” he said.
Investments in the power sector accounted for 35% of all the Bank’s financing in the southern Africa region.
Apart from investing in the power sector, AFDB was investing in promoting economic corridors that would enhance regional trade and competitiveness.
The Bank had invested in projects such as the North-South corridor, Nacala, Walvis Bay and Mtwara, among others at a cost exceeding $1.2 billion.
The African Development Bank also felt that the SADC region would develop much faster with greater investments in the agriculture sector. The region had what was called Agricultural Policy and Investment Plan, to transform agriculture. The Bank, said Adesina, was in full support of this plan.
Agriculture was Africa’s biggest asset yet it remained largely untapped, said Adesina. The size of the food and agriculture market on the continent was expected to rise from the current $330 billion to $1 trillion by 2030.
Adesina said based on this, there was a need to change the lenses used to look at agriculture. He said agriculture was not a way of life and it was high time Africans turned it into a business.
“Agriculture must be treated as a business for wealth creation. Africa must feed itself, instead of spending $35 billion a year on importing food. That is why the African Development Bank is providing $24 billion to support agriculture in the next 10 years.”
Adesina added that Africa must work for itself, its people, and not exporting wealth to others.
He then said it was because of this that AFDB strongly applauded and supported the agenda of industrialisation of SADC. The bank would provide support for the development of special economic zones and industrial parks and equity financing, where appropriate, for major industries.
“The resources to fast track Africa’s development are immense, but I firmly believe Africa will develop faster and with pride if it mobilises domestic resources. Africa has over $334 billion in pension funds, $164 billion in sovereign wealth funds. The size of Africa’s pension funds is estimated to rise to $1 trillion by 2030. What is needed is for Africa to mobilise these institutional investments into much needed infrastructure,” said Adesina.
The AFDB would help to integrate the stock exchanges in Africa, to mobilise savings pools and deepen the capital markets, he added.