Juliana Taiwo-Obalonye, Abuja
The President of the African Development Bank (AfDB), Dr Akinwunmi Adesina, said on Tuesday that, with Africa’s $1.8 trillion in pension and sovereign wealth assets, the continent has no business borrowing from overseas sources to fund its projects.
According to him, investing in other countries’ sovereign wealth funds and going back to borrow “your own money” does not make a lot of sense.
The AfDB President, who met with Nigerian President Muhammadu Buhari at the Presidential Villa, Abuja, to discuss security issues as well as how to address the country’s infrastructure gaps, among other matters, advised governments on the continent to invest the $1.8 trillion in pension and sovereign wealth assets on the development of infrastructure in Africa.
He noted that Africa has an infrastructure gap of $68 billion to $108 billion which could be adequately addressed by utilising the $1.8 trillion accrued pension and sovereign wealth funds.
Adesina, a former Minister of Agriculture, reiterated the need for African leaders to invest in infrastructure development.
According to him, doing so would be a case of “charity begins at home,” instead of going elsewhere to seek funds for development.
The AfDB head explained that with good infrastructure, Africa would be better positioned to compete favourably with trading partners from other continents.
“Today, Africa has an infrastructure gap of about roughly $68 billion to $108 billion infrastructure financing gap. At the AfDB, we have been working so hard to close that particular gap,” Adesina stated.
“When it comes to the issue of attracting capital to do that, there are three things that I will say; first, we have to also look at home. Today, in Africa, the size of the sovereign wealth fund and pension fund and insurance pull of fund (mutual funds) is about $1.8 trillion.
“If we can just tap a little part of that, we will close very quickly the infrastructure gap that we are talking about. But, you see a lot of sovereign investment funds being invested in other sovereigns outside the continent.
“So, they become the sovereign wealth of others and then you go back and borrow back your own money; it doesn’t really make a lot of sense. I say that charity always begins at home.”
The AfDB President assured that the Bank would continue to support development on the continent, especially now that its shareholders had strengthened it with $115 billion.
Speaking on the proposed single currency for the Economic Community of West Africa sub-region, the Eco, Adesina described it as a good development for West African countries.
He noted that with the African Continental Free Trade Area Agreement (AfCFTA)coming on board, a common currency for the sub-region means it would be better placed to compete with the rest of Africa.
“I support the Eco fully,” he said, adding that the AfCTA is “the biggest thing to happen to Africa.
“That free trade area itself is worth over $3.3 trillion in terms of trade. Obviously, it’s not optimum to trade in so many currencies.
“So, it makes common sense to have a unified currency… I support Eco greatly. I think it’s a great idea…
“But, obviously, there are a number of convergence criteria that will have to be met and I am sure that our President is talking with other presidents to be sure that they can meet those criteria and the region can be fully integrated,” he said.