New strategic plan to boost financing of Africa’s development agenda

NAIROBI, Kenya - The African Development Bank Group has today unveiled its new Ten-Year Strategy 2024–2033 blueprint.

This new blueprint seeks to confront Africa’s pressing challenges and to help put the continent firmly back on track toward sustained economic growth and prosperity.

Speaking during the launch of the strategy at the ongoing Bank Group’s Annual Meetings in Nairobi, African Development Bank Group President Akinwumi Adesina said, “As Africa’s premier development finance institution, and Africa’s solutions bank, we are acutely aware that the next decade will be decisive in transforming the continent. Therefore, as we celebrate 60 years of making a difference in the countries and lives of the people of Africa, we remain resolute in our determination to accelerate the support we provide to African countries.”

He also pointed out that despite the positive economic outlook in the continent, there are some challenges facing Africa.

“We have today, you seem to report 22 countries that are either at risk of high-density distress or are in debt distress. Today, we have payments this year of $ 74 billion last year African countries are going to make in terms of debt service payments. The debt to GDP ratio is probably about 65.3%,” says Dr Adesina. 

The continent is also recovering from the aftermath of the COVID-19 pandemic which resulted in heightened food insecurity and a burgeoning debt crisis across Africa. 

At the same time, the impacts of climate change are intensifying and accelerating, alongside a surge in conflict and political instability. Compounded by a youthful demographic outpacing job creation, Africa is witnessing a significant exodus of its future workforce seeking opportunities abroad.

The strategy, approved by the Board earlier this year, sets out decisive and urgent actions the Bank will take to support African countries navigate the unprecedented global and regional challenges.

These actions will build on Africa’s multiple unique assets and reignite momentum towards achieving the African Union A Africa’s vast potential for renewable energy, combined with China's technological expertise and investment capacity, presents a unique opportunity for mutual economic growth. This collaboration can drive sustainable development, alleviate energy poverty, and stimulate economic activities across the African continent. 

 “The Ten-Year Strategy outlines how the Bank will invest in Africa’s best asset: its vibrant young men and women. Africa’s population, which is the fastest growing in the world, presents the continent with an unparalleled demographic window of opportunity,” Adesina said.

The new strategy articulates a vision of a prosperous, inclusive, resilient, and integrated Africa, underpinned by two key objectives over the next decade: accelerating inclusive green growth and fostering prosperous and resilient economies. With an emphasis on sustainability, the Bank will strive to balance environmental concerns, equity, and economic advancement.

Building upon the past decade of successful High 5 implementation, the Bank aims to accelerate and scale up its efforts, focusing on transformative projects with far-reaching impacts. To optimize results while managing risks, the Bank will streamline its operational model for increased agility and effectiveness.

The report pointed out key areas for boosting economic growth in the continent.

·       Light up and power Africa: Promote universal access to modern and affordable energy.

·       Feed Africa: Ensure food security through agricultural transformation.

·       Industrialise Africa: Catalyse manufacturing as a critical driver of job creation.

·       Integrate Africa: Foster regional integration and value chains for a more cohesive economy.

·       Improve the quality of life: Enhance living standards, particularly for women and youth.

Key cross-cutting priorities include promoting gender equality, investing in young people, responding to climate change, investing in climate action, supporting fragile states, and promoting good governance and economic stability.

The Bank sees the pivotal role of the private sector in driving Africa’s transformation. Over the next decade, it will strengthen collaboration with the private sector, prioritising investments in firms, value chains, and micro, small, and medium-sized enterprises especially those led by women and youth.

The continental lender pledges to mobilize resources from diverse sources, including domestic revenues and private finance. It aims to triple private-sector finance by 2033 while bolstering its financing capacity through innovative mechanisms. In response to calls for Multilateral Development Banks (MDBs) to maximize the potential of their balance sheets, the Bank will pursue various options to boost its financing capacity over the life of the Ten-Year Strategy. Measures include the Sustainable Hybrid Capital, Risk Transfers, and re-channeling of significant portions of the International Monetary Fund’s Special Drawing Rights through Multilateral Development Banks.

The bank has also pointed out Key Highlights of the Strategy that will drive economic growth in the next decade.

Investing in women and young people

The new plan outlines how the Bank will invest in Africa’s best asset: its vibrant young men and women. Africa’s population, which is the youngest and fastest growing in the world, presents the continent with an unparalleled demographic window of opportunity.

The Bank will address disparities and promote inclusivity by empowering women and youth, enabling them to contribute meaningfully to sustainable economic growth and prosperous societies.

Climate change adaptation

Recognising Africa’s vulnerability to climate change, the Bank will promote low-carbon development pathways aligned with the Paris Agreement while safeguarding biodiversity and nature.

Supporting fragile states and building resilience: Amid rising conflicts, fragility, and political instability in Africa, the Bank will intensify efforts to assist fragile countries. Special attention will be given to tackling cross-border challenges and reducing the isolation of landlocked and remote areas.

Promoting good governance

The Bank emphasizes the importance of economic governance, including domestic resource mobilization, transparent financial management, and anti-corruption measures. Sustainable debt management practices will also be prioritized to ensure long-term economic stability. 

Africa 2024 Economic Performance Outlook

African economies remain resilient amid multiple shocks, with their average growth projected to stabilize at 4.0 percent in 2024–25, nearly a one percentage point higher than the 3.1 percent estimated in 2023. 

The average real gross domestic product (GDP) growth is estimated to have slowed from 4.1 percent in 2022 to 3.1 percent in 2023. This decline is attributed to a variety of factors, including persistently high food and energy prices on the back of sustained impacts of Russia’s invasion of Ukraine, weak global demand weighing down export performance, climate change, and extreme weather events on agricultural productivity and power generation, and pockets of political instability and conflict in some African countries.

Despite the continuing headwinds, 15 countries recorded a growth rate of at least 5 percent in 2023.

Although three of the continent’s largest economies recorded lower real GDP growth rates, more than 31 of African countries had higher real GDP growth rates in 2023 than in 2022, with 6 of them—Burkina Faso, Djibouti, Eswatini, Libya, the Republic of Congo and South Sudan posting real GDP growth rates of more than 2 percentage points.

Despite the global challenges that tested economies worldwide, the African continent is projected to remain resilient. Real GDP growth is projected to rise to 3.7 percent in 2024 and 4.3 percent in 2025, exceeding the 4.1 percent in 2022, as most of the effects of the above factors weighing on growth in 2023 fade away (figure 1 and annex 1.1A). 

The projected rebound in Africa’s average growth will be led by East Africa (up 3.4 percentage points) Southern Africa and West Africa (each rising by 0.6 percentage points). Crucially, 40 countries will post higher growth in 2024 relative to 2023, 17 economies are projected to grow by more than 5 percent in 2024, and the number could rise to 24 the following year, as the pace of growth accelerates.

This is remarkable and Africa will retain its 2023 ranking as the second fastest growing region after Asia, in 2024-25 with projected GDP growth exceeding the global average of 3.2 percent in 2024.

GAROWE ONLINE