Okpanachi: Africa Must Mobilise Internal Capital to Drive Development

Managing Director/Chief Executive Officer of the Development Bank of Nigeria, Dr. Tony Okpanachi, on the sidelines of the just-concluded African Development Bank annual meetings in Abidjan, emphasised the critical need for the continent to mobilise internal capital to finance its progress. He noted the growing role of national development financial institutions in catalysing local investments. Nume Ekeghe presents the excerpts:  

Can you tell us your experiences and the outcome of the meetings you’ve been attending?

 As you are aware, this is going to be the last annual meetings for Dr. Akinwunmi Adesina, the President, who is exiting. So, it was an opportunity to also review what has been done in the last 10 years. We had the opening ceremony where he told us his achievements over the past decade and some of the challenges encountered. So, I think it’s an opportunity for Africa to reset. We see the conversations around how to mobilise capital across Africa to ensure that the continent mobilises internal capital to provide for and develop Africa. That’s very important, and the African Development Bank (AfDB) is at the forefront of that effort. But we also have several other national development financial institutions that will play a role in mobilising capital within their economies, so Africa as a whole can achieve the impact-driven development we envision. Now, part of what we see is also working with the private sector—how we collaborate with them to mobilise capital and make the desired impact. Another point coming out clearly, is identifying the sectors that will create the most impact in Africa.

 So, we know that if we want to talk about food security, then agriculture is very important. We have to talk about infrastructure—how do you link Africa? How do we ensure that infrastructure works? We need to ensure that people can move freely across Africa. We must improve trade between African countries. Those are important things we all need to work on at different levels, across different sectors, and through various interventions. It is quite important that African institutions work with international organisations and multilateral Development Finance Institutions (DFIs) to collaborate and move the agenda forward.

What role can the capital market play in unlocking long-term private sector financing?

Yes, we see that the capital market is deep and rich. Its potential has not been fully explored in Africa. Different countries on the continent are at different stages in the development of their capital markets. That’s one point, and it’s a transparent way of mobilising capital. Given that trend, are you aware that most African countries have pension funds that hold significant long-term capital? Most of those funds can only be accessed through the capital market, which, as I mentioned earlier, provides a transparent mechanism for capital mobilisation. So, it’s a good way to go, especially for long-term investments like infrastructure and broader development. But there is also capital to be mobilised through financial institutions. This includes commercial banks that can provide syndicated loans and similar instruments. So, they too can provide much-needed funding.

And like I said, the capital market can also support smaller enterprises. Even micro and small businesses can tap into the capital market to raise funds. So it’s definitely a viable and inclusive pathway.

 As commercial banks move toward higher capitalisation, do you see this strengthening their ability to support economic development and increase financing for key sectors?

Yes. Let me give you an example from what we do at DBN. The Development Bank of Nigeria provides wholesale funds to commercial banks, microfinance banks, and other financial institutions. These funds are longer-term, so they act as a catalyst for these institutions to also mobilise and deploy their funds for developmental purposes.

We see that happening. While their regular deposits tend to be short-term in nature, funding from institutions like DBN and multilateral development agencies provides long-term capital. Blending that with their short-term funds give them deeper liquidity.

Now, consider commercial banks in Nigeria. With their growing size and increased capitalisation, their balance sheets are becoming very large. So, the question becomes: where do they deploy those resources? They must channel them into ventures and sectors that not only offer commercial returns but also support developmental goals. And both objectives, developmental and commercial, can align. They’re not mutually exclusive; they can work together.

So, while pursuing their commercial objectives, banks can also support government priorities. I believe that with a strong capital base, in addition to mobilised deposits and funding from institutions like DBN and other DFIs, they will have access to the long-term capital required to invest in those key areas.

What’s your assessment of Akinwunmi Adesina’s tenure?

Well, I’ll borrow a phrase from the scorecard he presented to us. The data he shared points to a strong performance over the past 10 years. If you look at how he has grown the capital base of AfDB from about $92 billion to over $300 billion, that’s significant. There have also been landmark projects executed under his leadership. He told us that the bank’s disbursements over the past 10 years almost match the cumulative disbursements of the previous 50 years. These are impressive figures. Based on that scorecard, the bank has performed very well. Of course, as he admitted, there’s still a lot more to be done. Are we there yet? No. But we’ve made meaningful progress.

So, we believe that his successor must continue along that path to ensure Africa meets its pressing development needs.