African Development Bank Group: Setting a vision for Africa’s future

The challenges of creating an economically vibrant and sustainable African Continent are many; with infrastructure, skills shortages, investment funding and corruption among the many hurdles that need to be overcome. Add to that list the need to be adaptable and to prioritise and make quick decisions.

In October of 2015, the African Development Bank’s (AfDB) new president Akinwumi Adesina outlined that he believed Africa should diversify from exporting raw materials – but to accomplish this, it needs energy – so he aims to help fix Africa’s structural energy shortage.

shutterstock_107627981For the African Development Bank Group, this represents an immediate challenge, with the organisation committed to nearly tripling its annual climate financing to reach $5 billion annually by 2020.

AfDB’s climate spending would increase to 40 per cent of its total new investments by the targeted date.

“Climate change is both an urgent threat and a unique opportunity,” Dr Adesina said in the Climate Finance Ministerial Meeting co-hosted by Peru and France in Lima as part of the World Bank and the International Monetary Fund’s (IMF) annual conference.

“The Bank is significantly stepping up its support for African countries, not only to meet that threat but also to seize the opportunity to drive low-carbon, climate-resilient growth.”

Half of the $5 billion would be dedicated to reducing Africa’s greenhouse gas emissions by unlocking Africa’s enormous potential for renewable energy, especially solar, hydro, wind and geothermal power.

The remaining half would assist African economies adapt to climate change through measures such as investing in climate-resilient crops, building sustainable infrastructure and improving irrigation and access to water.

To this end, the Bank would also be integrating climate resilience into all of the infrastructure projects it finances.

The Bank has committed almost $7 billion to support climate-resilient and low-carbon development in Africa in the past 4 years. Dr Adesina said AfDB would pursue public and private co-financing opportunities to help augment change:

“The Bank will be seeking, for instance, to mobilise concessional financing from the Green Climate Fund. It will also issue more green bonds as a way of funding its climate investments.

“The current climate financing architecture is not providing the finance Africa needs. Africa is short-changed by climate change, and Africa is short-changed by the lack of sufficient climate financing. This must change.”

Dr Adesina added that climate change hurts Africans in a number of sectors, citing how rising temperatures are putting smallholder farmers in the Sahel at risk from frequent droughts that damage crops and livestock including fishermen when sea levels rise.

“Keeping the rise in temperatures below 2 degrees Celsius is non-negotiable.

“The reality is that while Africa contributes less than 2 per cent of the total greenhouse gas emissions, its populations suffer disproportionately from negative impacts of climate change,” the AfDB President said.

AfDB was established with the primary aim to assist in the development of the African Continent and its core areas are described on the corporate website:

“The African Development Bank (AfDB) Group comprises 3 distinct entities under one management: the African Development Bank (ADB) which is the flagship or parent institution, established on August 4, 1963 in Khartoum, Sudan, by the then 23 newly independent African countries; as well as 2 concessionary windows – the African Development Fund (ADF), established on November 29, 1972, by the African Development Bank and 13 non-African countries, and the Nigeria Trust Fund (NTF), set up in 1976 by the Federal Government of Nigeria.”

Today AfDB has authorized capital in excess of $43.5 billion; the United States joined the Group in 1983, and is the bank’s largest non-regional shareholder.

October proved a busy month for AfDB, which announced news that an airport, new road transportation projects and electricity generating plants will be among the beneficiaries of its investment package.

A $120 million corporate loan for Ghana Airports Company Limited’s (GACL) capital investment programme marks the first private sector investment in Ghana’s transport sector financed by the bank, the AfDB said.

The airport programme “entails the construction of a new terminal at Kotoka International Airport (KIA) in Accra, and rehabilitation of other airports managed by GACL including Kumasi, Tamale, Ho and Wa”, the AfDB said. “The total loan facility for the programme is $400m to be financed with corporate loans from AfDB and other development financial institutions as well as commercial banks.”

According to the AfDB, the financing will support Ghana’s ambitions of “modernising vital infrastructure… through upgrading the airport to a gateway for West Africa and a regional aviation hub”. The programme will also increase air passenger handling capacity and “improve airport safety standards and efficiency” at KIA and the regional airports, the AfDB said.

shutterstock_111187286Two loans amounting to a total of more than $141 million have also been approved to finance the second phase of the Dar es Salaam Bus Rapid Transit (BRT) System Project in the commercial hub of Tanzania. A $97.42 million loan from the AfDB and a $44.29 million loan from the Africa Growing Together Fund, a Chinese trust fund managed by the AfDB, “will support Tanzania’s efforts to decongest the city”, the bank said. “The bank’s contribution to the project represents 88.9 per cent of the total estimated cost of $159.32 million while the government of Tanzania will provide the remaining 11.1 per cent.”

The BRT is eventually expected to carry up to 495,000 passengers daily and reduce travel time, the AfDB said. “In addition, the use of modern BRT buses, which use cleaner fuels, will significantly reduce roadside concentration of greenhouse gas emissions thereby improving air quality and subsequently safeguarding people’s health.”

Meanwhile, a package of financial support worth the equivalent of more than €121 million has been approved for the Gambia River Basin Development Organization (OMVG) and will “improve electricity access and provide renewable, clean and affordable energy in The Gambia, Guinea, Guinea-Bissau and Senegal”, the AfDB said.

The Sambangalou hydro-electric dam, with an installed generating capacity of 128 megawatts, is being built under the ‘OMVG Energy Project’ to boost power supplies in the region, the AfDB said. The project will also see construction of an interconnection network comprising 1,677 kilometres of 225 kilovolt lines, 15 high/medium voltage transformer stations, and two load dispatch centres.

AfDB energy, environment and climate change director Alex Rugamba said: “This project will help establish not only the backbone infrastructure necessary for the regional Gambia River Basin power industry, but the major regional electricity market covering the larger West African region as well. The progressive integration of isolated national grids into a unified interconnection system will help make electricity more accessible, reliable and affordable for those living in the region.”

Developing Africa’s infrastructure in an economically and environmentally sustainable manner takes vision and time; AfDB continues to fund the bricks to build the Continent’s future.