Akinwumi Adesina Organizes $3bn To Boost Technology In Nigeria, Other African Countries
You have a very interesting mandate as a bank, which is to support Africa in areas that constitute a critical part of the continent’s development strategy. How has the AfDB approached this mandate so far?
”We are adopting a selective focused approach away from the shotgun approach. We have identified five elements that we believe if dealt with appropriately will allow the developmental potential of the continent to run free. Coined “The High Fives”, these five priority areas within the context of the bank’s Ten-Year Strategy—to light up and power Africa, feed Africa, integrate Africa, industrialize Africa, and improve the quality of life for the people of Africa— represent the bank’s blueprint for African countries to embark on a course of sustainable transformation”.
You have worn many different hats at global institutions in the course of your career. Your appointment as President of the AfDB is your first outing in a financial institution. What do you think you will enjoy most about being a development banker?
”What does being a development banker symbolize or mean to you? My mandate as President of the African Development Bank affords me the opportunity to work with highly trained and qualified professionals on some of the continent’s most challenging development goals (i.e access to clean energy for all). At the end of my tenure, it will mean a lot to me, if the general sentiment on the continent is that there has been in improvement of the quality of life of African women and men as a result of the operations and projects led by the African Development Bank”.
By any measure, you are successful in your chosen endeavor. I’m sure there are several reasons for your success, but why do you believe that you have so been successful?
”I think I have been successful for two main reasons. First, I have always believed in myself- I always set very high targets for myself and I firmly believe that if I can think of something, then I certainly can do it. Second, I believe in excellence. My father was a farmer and so we lived with limited resources. My father only went to school at the age of 14 and upon completion of his education, he joined the civil service at a very low level and made his way to the top. I therefore believed in my father, who served as my role model”.
Under your leadership, how will the bank encourage entrepreneurship on the continent? What have been the biggest challenges of helping to establish a culture of entrepreneurship in Africa?
”The bank will have a strong focus on job creation for the youth. After all, Africa has a very young population and these youngsters need to become entrepreneurs to create growth for themselves and for others. Africa has a legacy that does not promote entrepreneurship amongst young people seeking white collar jobs instead of entrepreneurship opportunities. And small businesses are often driven by survival needs rather than through entrepreneurial drive. The bank is spearheading an initiative that will boost African entrepreneurs, by channeling both ‘patient investments’ and technical assistance through a wide range of funds, incubators and other agencies that support early stage and start-up SMEs. The bank will also support education systems that prepare students for life as entrepreneurs. And the bank will have a strong focus on agriculture and agribusiness, and in particular on smallholder farmers, to enhance productivity and value chains. After all, agriculture remains the mainstay of many Africans, but it is not commonly viewed from an entrepreneurial perspective”.
The AfDB has come to adapt to Africa’s growth and focus –to what extent will you look at the world’s other development banks as models to follow?
”In addition to the 40/50 year old+ Multilateral Development Banks (MDBs) such as the World Bank, the Inter-American Development Bank (IADB) and the Asian Development Bank (AsDB), other development banks have been created in the last two years- these include the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB). There are, therefore, many more partners from which we can learn. There is indeed more complementarity between our bank and other MDBs than ever before. Just in 2015, we signed an MDB- risk exposure exchange with the Inter-American Development Bank (IADB) and the International Bank for Reconstruction and Development (IBRD), which is expected to increase our lending headroom by over $10 billion”.
What degree of inter-continental partnership is appropriate for the AfDB, and how will the prevailing macroeconomic situation affect your assessment of partnership moves?
”The size of investments needed to take the continent from where it is today to where the bank wants it to be at the end of my tenure is very ambitious. And this will not be attained with the bank’s own resources alone. Therefore, the bank is gearing itself to play a leading role in bringing together all partners sharing the same development objectives and vision for the African continent. The current mobilization of partners has scaled up to a level never reached before but this was not at the expense of quality. The current economic downside fueled by depressed commodity prices should not be a big deterrent to our mobilization effort. As a matter of fact, this is an opportunity for the continent to boost its growth by the supply of services”.
How does the AfDB’s strategic partnership with the AFRICA CEO FORUM factor into the bank group’s strategy?
”The fact that the Africa CEO Forum offers the Bank another platform to connect with CEOs and leaders of main African businesses and enterprises is very important. Large businesses have the moral responsibility to support the growth and development of the continent. The sharing of ideas and exchanges that happen during the Africa CEO Forum allows us, at AfDB, to better implement our strategies”.
In what way is the AfDB shifting Africa’s industrial base into more technologically oriented enterprises?
”Technological progress offers Africa opportunities to leapfrog its development and have its own kind of industrial revolution. For instance, mobile phone-based technological innovations are changing the service delivery landscape in Africa in a number of sectors such as mobile-money, pay-to-go energy payment, health care and agricultural services. Not only are these innovations leapfrogging traditional service delivery constraints, they are also expanding the service delivery frontier—making more and better services available with any given level of resources. They also provide budgetary relief/savings for government and improving service delivery and efficiency gains. The potential of Africa’s technology innovation is evident with the likes of enterprises such as Mpesa, Jumia, Iroko TV, etc, and the bank is powering these opportunities to new record levels – transforming Africa to an Innovation continent. Technology and innovation parks have been financed by the bank to support technology oriented enterprises in Senegal, and Cape Verde, while Nigeria, Rwanda, Zambia are soon to follow. In addition to building innovation ecosystem capacity in our member-countries, the bank is also facilitating access to finance these businesses via the development of Africa’s venture capital markets. A pan-African Fund – Africa Innovation Fund-is in process, which will mobilize over US$ 3 billion for technology enabled ventures, while innovation funds in Rwanda (US$100 million), Cote d’ Ivoire (US$120 million) and Nigeria (US$150 million) are being established”.
Are there certain sectors in which SMEs have the potentials to play a more active role in AFRICA’s development? SMEs are crucial for Africa’s development.
”More than 90% of businesses in Africa are SMEs. SMEs make a huge contribution to GDP. This is not only so in Africa, this is globally the case. In Africa, a lot of SMEs are still operating in the informal sector, often for good reasons, but it hinders their growth. There are challenges in the enabling environment that must be overcome that will assist SMEs to reach their growth potential. You asked me earlier about entrepreneurship. I believe SMEs and entrepreneurship are essentially the same. Entrepreneurially-driven SMEs are the drivers of growth in our economies. We need to create such growth- oriented SMEs and assist them, through a level playing ground, to grow, prosper and create jobs. It is true that growth opportunities may be more abundant in some sectors compared to others; agribusiness, health, education, clean energy offer tremendous opportunities. But there are also lots of opportunities in many other sectors, and if we can get small businesses to innovate and industrialize, they can also play important roles in local and internal value chains”.
How do you go about scaling up the AfDB’s trade finance activities to channel critical trade support to companies across the African continent?
”AfDB has always recognized the importance of access to trade finance for businesses, especially SMEs, as a means of promoting trade and hence economic development. In the past, the Bank worked through regional Development Finance Institutions (DFIs) such as Afreximbank, PTA Bank and Africa Trade Insurance Agency (ATI) to provide critical trade support to businesses on the continent. However, the recent global financial crisis and the dislocation that followed revealed deep structural issues in the market that required a different approach from the bank. And we responded by setting up a dedicated trade finance operation to intervene directly in the market. In just over 2 years our program has supported more than 80 local banks in 25 African countries. We have catalyzed approximately USD 3 billion of trade in vital sectors such as agriculture, manufacturing and construction. More than 60% of the transactions supported are on account of SMEs. In recognition of these achievements in such a short period of time and cognizant of the estimated large and growing trade finance gap in Africa, currently projected at USD 130 billion, the bank plans to considerably scale up its trade finance operations. My team is currently preparing an updated trade finance business plan to consolidate our role as a major provider of trade finance on the continent. When this plan is implemented, we will support at least USD 10 billion of trade in 5 years. We will provide greater financing where it is needed including to regional DFIs active in trade finance and strengthen our engagement with other Multilateral Development Banks such as IFC, EBRD and International Islamic Trade Finance Corporation (ITFC) to build the capacity of local financial institutions to improve access to trade finance for local businesses across Africa. It is therefore important that we scale up our trade finance activities and remain meaningfully engaged in this space for the benefit of our Regional Member-Countries”.
You have identified poverty as a scourge that “the continent must not simply manage but eradicate”. What do you think is the best way to address this problem, and with what resources? How has the AfDB approached this scourge since its inception?
”The best way to address this problem is by financing SMEs which constitute over 80% of the continent’s private sector, and, as you know, the private sector is the creator of wealth and veritable engine of economic growth in Africa. We have launched several programs, such as the Africa SME program the Trade Finance Program, the Private Sector Credit Enhancement Facility, to increase financial support to the private sector in Africa with the aim of eradicating poverty”.
What could be your challenges managing an African Bank Group, in a continent where the global economic crisis meets an ongoing local crisis of poverty and unrest?
”The main challenge is that of a slowdown in the global economy. But I must state that Africa is a resilient continent- expected to grow by 4.4% in 2016, above 3.5% for the global economy and slightly behind the 6% for Asia. However, at the back of challenges lie opportunities. And in the case of Africa, the opportunities are the need to increase energy production, build infrastructure and diversify our economies”.
What lessons did you learn on your way to becoming the President of the AfDB?
”I leant one main lesson. That we have to believe in ourselves and in whatever we do. I wanted to be the President of the AfDB. I believed in myself and I worked hard towards achieving this”.
What are the key success factors for a President of the AfDB?
”I believe there are four main success factors. First, the ability to set ambitious targets. Second, the need to be reform-minded: to change the Bank’s processes from “business as usual” to those that are more efficient and faster. One needs to be close to his clients and respond adequately to their needs. Finally, one needs to strengthen strategic partnerships with all stakeholders- the private sector, civil society, non-governmental organizations (NGOs) and philanthropic organizations, amongst others”.
If you had to define the AfDB in one sentence, what would it be?
”The African Development Bank: The engine of the winning Africa”.