President of the African Development Bank (AfDB), Dr Akinwunmi Adesina, has disclosed that the AfDB was planning to spend 40 per cent of its total financing on climate finance by 2021.
He made this known at the Bloomberg ABMI20 Innovator Chat 2020. Adesina said Africa must begin to move away from funding growth and development with debt, even as he stressed the need to help African countries reduce their debt burden and give more room for growth and development.
According to him, two million infections and 45,000 deaths from the COVID-19 pandemic has pushed African countries to upgrade their health facilities, including diagnostic and isolation centers to purchase essential personal protection equipment and to pay for rising cost of health workers as well as to provide social protection for the most vulnerable.
He said, “These efforts as significant as they are, they pale in comparison to the massive stimulus packages that the developed countries have deployed in their economies. United States and Europe have spent over $10 trillion with spending in Western Europe being 30 times more than the national spending.
“These are stark inequalities which would affect the speed at which different economies recover from this pandemic. While social distancing is essential to preventing the spread of the virus, fiscal distancing must be avoided”.
Noting that inequalities in the stimulus packages in developed and developing countries would affect the speed at which different economies recover from the COVID-19 pandemic, he said African countries need stronger support to help reduce their debt burden to have the fiscal space to grow back their economies.
Adesina continued: “This represents only about four per cent of the total bilateral debt of Africa. The lesson for Africa is clear. Africa simply cannot accelerate its development by relying solely on debt, especially expensive bilateral debt. Africa must grow by mobilising domestic resources, especially by unlocking its over $1trillion pension funds, sovereign wealth fund and insurance funds.
“These should be better harnessed to help close the annual infrastructure financing gap as estimated by the bank to be anything between $64 billion to $108 billion annually. Africa will build back faster by also harnessing and better managing the revenue streams from its abundant natural resources including minerals metals, biodiversity, low economy forex resources, agriculture, oil and gas in order to boost domestic savings”
Going forward, he called for more transparent governance over natural resources that must form a key component of financing Africa’s growth, noting that as Africa builds back, priority should be on quality of growth not just the quantum of growth, adding that, growth must be more focused on sector that are better able to create jobs, youth and the women must be given priority.
Meanwhile, he said AfDB will continue to support Africa’s recovery in several ways to help create a more conducive environment for the youth in the continent.