Nigeria, Others Should Look Inward for Resources to Avoid Debt Trap, Says AfDB

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Osinbajo: We must prioritise devt of natural resources over climate change concerns
Kunle Aderinokun in Lusaka, Zambia
Since income accruing from crude oil and others commodities, currently dwindling, would always be subjected to the volatility of prices at the international market, African Development Bank (AfDB) has advised Nigeria and other African countries to look inward to mobilise resources for development.

According to the bank, in so doing, the risk of falling into debt trap, would be at he barest minimum.
AfDB President, Akinwunmi Adesina, gave this advice yesterday at the formal opening of the 2016 Annual Meetings of the bank, which was attended by heads of state, ministers, business leaders and captains of industry, and the  civil society, in Lusaka, Zambia.

Adesina, who acknowledged that despite the  challenges being faced by countries occasioned by the plummeting prices of oil African economies  remained resilient, sounded a note of caution that, governments across the continent, must  not get into a debt crisis in a bid to continue to remain resilient. “Increasingly, many African countries, taking advantage of the low global interest rates, have rushed to the international capital markets by issuing bonds. Between 2006 and 2014, African nations issued $26 billion in Eurobonds.

In 2015 alone, a total of $12 billion of Eurobonds were issued. With rising interest rates, African countries now face a challenge of high cost of financing the foreign currency denominated debt,” he pointed out.  He believed “an indebted Africa cannot be a rising Africa.”

Given this scenario, he urged African countries to “look inward and mobilise domestic resources for development,” pointing out the “need for urgent measures to ensure macroeconomic stabilisation, fiscal consolidation, broadening of the tax base, and deepening of the domestic capital markets.”

According to him, “they should find better ways to securitise remittances which reached $62 billion in 2014 – an amount that exceeds official development assistance. They should leverage Sovereign wealth funds which stand at $162 billion, domestic tax revenue estimated at $500 billion annually, private equity funds which stand at $20 billion per year, and pension funds estimated at $334 billion.

“We must also end the illicit capital flows that deny Africa over $60 billion a year. Money belonging to the citizens should not be found in personal accounts. These are all significant financing sources that should be effectively channeled for development.”

Adesina noted that, “by doing so, we will help to drive Africa’s readiness for industrial development.
“Just last week we were all in Kigali at the World Economic Forum, hosted by President Paul Kagame, discussing the 4th industrial revolution. Africa must improve its readiness index for the digital revolution. We must rapidly build skills, scientific capacity, especially in sciences, technology, mathematics and engineering.

“Africa has missed on the earlier industrial revolutions. We cannot miss the 4th industrial revolution. To avoid this, Africa needs energy, to power its industries. Like blood is to the body, so is power to industrial growth and development.”
Speaking on the ‘New Deal on Energy for Africa’, Adesina reiterated that to deliver on the deal, AfDB would invest $12 billion in the energy sector over the next five years and leverage $45-50 billion into the energy sector.

Already, he pointed out that, “In 2015, the Bank provided $1.3 billion for energy projects. The bank has continued to lead the way and financed renewable energy projects, including the 300 MW Lake Turkana wind power station – the largest wind power plant in Africa. We supported the Noor complex, the world’s largest concentrated solar power plant in Morocco with capacity to provide power for over one million homes by 2018. The bank financed the power interconnection to link Ethiopia, Kenya and Zambia, expanding regional power pools. In December 2015, we provided $138 million to finance the Ruzizi III 147 MW power plant, to provide el ectricity to Rwanda, Burundi and Republic of Congo.”

Speaking at  ‘African Leaders  Roundtable of Energy and Climate Change’, Vice President Yemi Osinbajo urged African leaders to exploit and prioritise development of the abundant resources including coal and fossils, in the continent  and bother less about the concerns of climate change.

According to him, if the governments do not adopt this kind of approach, they risk losing millions of their citizens to poverty and hunger at faster rate than climate change. But he was quick to add that, consideration should be given to  the two issues as it is possible to work both together.

Essentially, Osinbajo who stressed that African governments must take development seriously, posited that, even though climate change concerns were important, African countries  must not allow such burden to be greater than developing power for the continent. The vice president who said, “we are faced with dire situation in most of the countries without power,” however, stated that, “we really need the help of the western world, in particular, in deploying their technology and expertise.”