The African Development Bank Provides an African Perspective on Regional Integration and Growth
Monday, 17 June 2019
The headquarters of the African Development Bank (AfDB) in Abidjan, Ivory Coast.
Regional integration in Africa is fast becoming one of the driving forces for economic growth with the African Continental Free Trade Area (AfCFTA) agreement entering into force next month. Regional integration is also one of the key issues for the African Development Bank (AfDB), and one of its “high 5s” priority areas along with energy, food, industrialisation and improving quality of life.
The AfDB provides loans to higher-income African countries as well as concessional financing through grants and loans to African countries with lower per capita income through its African Development Fund (ADF). The ADF is replenished every three years by its 28 donor countries with the intention that the ADF will become increasingly self-sufficient. For the current 3-year cycle, the ADF has an annual budget of $2.2 billion. For the EU, the AfDB is also a key partner in the implementation of the EU-Africa Infrastructure Trust Fund.
The AfDB thus plays an important role in the economic development of Africa as a homegrown multilateral development bank. As highlighted by Mr. Gabriel Negatu, Director General for the East Africa Regional Development and Business Delivery Office at the AfDB, in a recent meeting in Nairobi with The Brussels Times: the AfDB is an African bank and as such “its first interest is Africa”.
As a development bank focused solely on investing in what is often a politically difficult region, there are evident challenges but Mr. Negatu is clear that the AfDB does not get involved in political matters. He says however that they cannot continue investing in countries with severe human rights violations. AfDB has a cherished triple-A rating and making risky investments in politically unstable countries might jeopardise that.
With its research and network of collaborators on the African continent, the AfDB is also increasingly active in propagating understanding, research and statistics on Africa and supports African governments in making evidence-based policy decisions. All the more relevant in the context of the AfCFTA agreement for which there will be an increasing need for data and analysis of its impact on African integration and trade.
The recent AfCFTA agreement, being the world’s largest free trade area with a market of 1.3 billion consumers, will also be a major step forward when entering into force next month. As summed up by Mr. Akinwumi Adesina, President of the AfDB, at the bank’s Annual Meetings last week in Malabo, Equatorial Guinea: “if we get our integration right, Africa will be more competitive, will be able to create a massive amount of jobs and, more importantly, Africa can develop in dignity and confidence”.
Regional integration offers the opportunity to increase economic growth but there is also an understandable concern associated with increasing mobility: 70% of African migration is within the African continent. Creating economic opportunity in all regions of Africa is thus a key priority, not only in Europe but also in Africa, for addressing unmanaged migration. As Mr. Negatu, having himself once migrated, empathetically explained “you move because it’s the last resort” and he insists that development is the only solution.
While managing migration is not specifically a priority issue for the AfDB, it is nonetheless working actively to address negative issues associated with large-scale migration. Primarily by focusing on creating economic opportunities as well as through specific programmes such as its “Jobs for Youth in Africa” programme which aims to offer employment opportunities for young Africans.
Economic growth is a key factor for creating opportunities and thereby addressing unmanaged migration but with Africa’s population set to increase fourfold in the 21st century, a quadrupling of economic output will achieve nothing without a change in demographic trends. While the AfDB tries to stay out of politics, Mr. Negatu admits that demographic growth also needs to be controlled through family planning initiatives.
Family planning is often a sensitive political issue and AfDB’s reluctance to adress such issues generally might hinder it from initiating family planning projects, but as a uniquely African bank it has the potential to play a key role through its research and policy recommendations to encourage national governments to develop practices that addresses excessive population growth and the burden that it places on quality of life improvements on the African continent.