Speaker 1: Welcome to zero I am Akshatarti this week, Green Africa,
Speaker 1: Rich Africa. Think about what climate change will do to
Speaker 1: the world for just a while, and you will come
Speaker 1: to a devastating realization. Those who have done the least
Speaker 1: to contribute to the problem are going to be the
Speaker 1: worst affected. Africa is home to some of the most
Speaker 1: climate vulnerable countries. One big reason is that it is
Speaker 1: also home to some of the poorest countries in the world.
Speaker 1: But combine those two adversities and you can turn it
Speaker 1: into an opportunity. Helping Africa grow economically can also make
Speaker 1: it more resilient to climate change. Bringing economic growth to
Speaker 1: developing countries is not a new problem for the past century.
Speaker 1: One of the ways that has happened is through multilateral
Speaker 1: development banks. That work began after the Second World War
Speaker 1: with the likes of the World Bank and other institutions
Speaker 1: which were founded by and still sit in rich countries,
Speaker 1: But very soon developing countries wanted to move away from
Speaker 1: the shadow of colonial powers, which is how the African
Speaker 1: Development Bank was founded in nineteen sixty four. It's now
Speaker 1: headquartered in Abijan.
Speaker 2: Quote the war.
Speaker 1: Today, the Bank's challenge is not just economic development, but
Speaker 1: also dealing with the impacts of climate change. At COP
Speaker 1: twenty eight in December, I sat down with akin Wumi Adishina,
Speaker 1: the President of the Bank, to talk about how fifty
Speaker 1: four African countries with enormous differences are dealing with this
Speaker 1: big common challenge. His main tool for finding solutions are
Speaker 1: the somewhat limited financial instruments that he has access to
Speaker 1: and which he deploys creatively, helping reshape wheat farming in Ethiopia,
Speaker 1: setting up solar panels across Burkina Faso, and funding cyclone
Speaker 1: recovery in Malawi. As he told me, Africa has huge
Speaker 1: potential to be green, but it can't be poor and green.
Speaker 1: It needs to be rich and green. What follows is
Speaker 1: a wonkier than usual conversation about the big puzzle Adishina
Speaker 1: is trying to solve.
Speaker 3: But stay with us.
Speaker 1: It is a perspective we rarely hear about or appreciate.
Speaker 3: Doctor ADISHENEV. Welcome to the show.
Speaker 2: Thank you, nice to be with you now.
Speaker 1: The African Development Bank is crucial for ensuring development goals
Speaker 1: in Africa, but these development goals are now being affected
Speaker 1: and perhaps sometimes reversed, by climate change.
Speaker 3: Across the world.
Speaker 1: Development banks have become more sensitive to climate risk. Is
Speaker 1: it played out for your bank?
Speaker 4: Well, you know, if you take a look at it today,
Speaker 4: Africa nine out of ten most vulnerable countries for climate
Speaker 4: change in the world in Africa, and therefore Africa, which
Speaker 4: only contributed no more than three percent of historical emissions,
Speaker 4: now suffers disproportionately from the negative consequences of that. And
Speaker 4: what that really means is Africa loses seven billion dollars
Speaker 4: to fifteen billion dollars a year because of climate change
Speaker 4: and if that currently continues, that's going to reach fifty
Speaker 4: billion dollars by twenty thirty. Obviously, if it didn't cause
Speaker 4: the problem, you have to find it way. The only
Speaker 4: solution you have is to.
Speaker 2: Adapt to it.
Speaker 4: And Africa is not receiving the resources that it needs
Speaker 4: for adaptation. And Africa gets today eleven billion dollars for
Speaker 4: climate adaptation when in fact it needs roughly ten times
Speaker 4: higher than that. But as Africa's premier financial institution, our
Speaker 4: role as African Development Bank is to respond to that.
Speaker 4: What we're doing right now is that we've devoted forty
Speaker 4: four percent of all of our financing as a bank
Speaker 4: to climate finance and also the world said we should
Speaker 4: do climate finance and do climate adaptation.
Speaker 2: Well, we passed that three years ago.
Speaker 4: Today we ad sixty seven percent of all of our
Speaker 4: climate finance go to adaptation, which is Africa's main challenge.
Speaker 4: So as Africa and Development Bank, we're putting our money
Speaker 4: where our maps are.
Speaker 1: And let's just talk through numbers. How much is it
Speaker 1: that you are able to land on an annual basis.
Speaker 1: You've talked to the ratio of what you're lending to
Speaker 1: when it comes to total projects, forty four percent going
Speaker 1: to climate, of that sixty seven percent going to adaptation.
Speaker 1: But what is the total quantum and what is the
Speaker 1: gap that if you had more money you could be
Speaker 1: filling up.
Speaker 4: You know, if you take a look at the total
Speaker 4: amount of financing that we do roughly every year, it's
Speaker 4: about ten billion dollars and so we do forty percent
Speaker 4: of that straight goes to climate finance and then we
Speaker 4: split it up. It's quite significant for Africa, but we
Speaker 4: we need to mobilize more resources at scale, and that's
Speaker 4: why the African Development Bank launched what was called the
Speaker 4: Africa Adaptation Acceleration Program, which is to mobilize twenty five
Speaker 4: billion dollars for climate adaptation in Africa together with the
Speaker 4: Global Center not Adaptation, and that is the largest climate
Speaker 4: adaptation program in the world. Okay, And we've put down
Speaker 4: twelve point five billion dollars from the African Development Bank.
Speaker 4: Now we're trying to mobilize the additional twelve point five
Speaker 4: billion dollars.
Speaker 2: This is very crucial.
Speaker 4: That adaptation is a forgotten causing of mitigation, so we've
Speaker 4: got to do a lot more on that. But in
Speaker 4: addition to that, you know, countries also just like you
Speaker 4: and I have to buy insurance and ensure ourselves against
Speaker 4: catastrophe events. Were actually doing the same also for countries.
Speaker 4: So we were running a program called Africa Disaster Risk
Speaker 4: Insurance Facility, which is ensuring countries against catastrophargis events. We
Speaker 4: did in Madagascar when they had droughts, they were able
Speaker 4: to get a payout because as we were paid in
Speaker 4: short for them. They paid six hundred thousand farmers who
Speaker 4: lost their cross because of that. When Malawi had three
Speaker 4: years consecutive drafts and then a cyclone, we were able
Speaker 4: to pay them out to get a payment of fifty
Speaker 4: two million dollars which they used to pay for several
Speaker 4: millions of farmers. So these are the critical things that
Speaker 4: we are doing to protect Africa and allow you to
Speaker 4: be able to adapt to climate change.
Speaker 1: Now, those are payouts that are you able to recover
Speaker 1: them because they sound like grants, whereas in your case
Speaker 1: a lot of the money that you do to give
Speaker 1: out is through lending. So how do you recover some
Speaker 1: of this money which is absolutely crucial given out at
Speaker 1: the time that is needed.
Speaker 4: No, actually, we know we it's in our interest to
Speaker 4: help them to do that because if we don't and
Speaker 4: they have shocks that they don't recover from, they're going
Speaker 4: to default on other loans that we actually give them.
Speaker 4: So yes, they are grants that we have that we
Speaker 4: give to insure them, and we think that that also
Speaker 4: several benefits. First and foremost is that if physical space
Speaker 4: is so limited they don't have you know, they are
Speaker 4: responding to climatey and responding to debt, they are responding
Speaker 4: to pandemics and so on, that's not enough physical space
Speaker 4: for them to have additional money to ensure themselves.
Speaker 2: So we do that.
Speaker 4: And secondly, because we ensure them many CONTs at the
Speaker 4: same time, we pay fifty percent of the insurance. By
Speaker 4: the way premiums for them, we can crowd others in.
Speaker 4: We increase the size of the market and the unique
Speaker 4: price of Actually the premiums eventually will go down and
Speaker 4: they will be able to do that by themselves.
Speaker 1: Going forward, now on the Adaptation Acceleration program, twenty five
Speaker 1: billion dollars is the target, but I understand there are
Speaker 1: already projects that have been funded and worked on.
Speaker 3: Could you talk through a few examples.
Speaker 4: Well, first INFEMOST where we program called Technologies for African
Speaker 4: Adaptation AG Cultural Transformation. So in Ethiopia, for example, we
Speaker 4: were able to deploy heat tolerant what varieties to Ethiopian farmers.
Speaker 4: Heat a wit, as you know, is a it's a
Speaker 4: temperate crop. It's not a hat florian crop. But we
Speaker 4: were able to get the right technologies and we gave
Speaker 4: you to those farmers through the program. What happened They
Speaker 4: cultivated those hit tolerant wheat varieties on five thousand hectors
Speaker 4: in twenty eighteen. This year they grew them on two
Speaker 4: million hectors. So that made Ethiopy our self sufficient in
Speaker 4: wheat on that four years. Today they're a net exporter
Speaker 4: of wheat because of the program that we've done for them.
Speaker 2: I'll give you another example.
Speaker 4: When drought hit farmers in Malawi, Zambia and also in Zimbabwe,
Speaker 4: we deployed through our program water efficient maids. You know,
Speaker 4: the crop there is basically maize, and so we deployed
Speaker 4: that to them and they were cultivated by five point
Speaker 4: four million households, right, and that is what saped the
Speaker 4: entire region from a disaster doing that. So these are
Speaker 4: programs that are happening at scale. And that's why we
Speaker 4: as an African Development Bank created a facility that's called
Speaker 4: Climate Action Window under the African Development Funding. So we
Speaker 4: open up a window four hundred and twenty nine million dollars.
Speaker 4: These added things you're going to get. First, twenty million
Speaker 4: farmers will get crop insurance and livestock insurance. You have
Speaker 4: another twenty million farmers that will also be able to
Speaker 4: get access to the climate resident technologies. Roughly ten million
Speaker 4: people will have access to water and sanitation and health services.
Speaker 4: A million hectors of degraded land will be rejuvenated, and
Speaker 4: nine point five million people will have access to re
Speaker 4: eneable energy. And so this is really the key thing
Speaker 4: and what we are trying to do now is to
Speaker 4: take that to scale, because to adapt to climate change
Speaker 4: you don't need loans to do that. You actually need
Speaker 4: to mobilize cheap grants to allow you to adapt to
Speaker 4: climate change. And that's what we are trying to do.
Speaker 1: So this twenty five billion dollar program is that all
Speaker 1: grants towards adaptation.
Speaker 2: All these are all towards adaptation.
Speaker 3: Yes, but it's all grunts, yes, okay.
Speaker 1: And the remaining twelve point five billion dollars that you
Speaker 1: do need to still raise.
Speaker 3: Where do you think that can come from?
Speaker 2: Well, we are.
Speaker 4: Talking to quite a lot of philanthropies right now to
Speaker 4: help us raise the money for that. We are also
Speaker 4: talking to other development finance institutions, so join us so
Speaker 4: that we can syndicate around that.
Speaker 2: You know, it.
Speaker 4: Doesn't have to be all our money. It's just about
Speaker 4: how we work together to be able to.
Speaker 1: Do that, and the goal is to try and spend
Speaker 1: that money by twenty thirty. Have twenty five billion dollars
Speaker 1: worth of adaptation grants being given out between now and
Speaker 1: twenty thirty.
Speaker 4: That is absolutely correct. It's not all of that that's grant.
Speaker 4: Some of it also our loans that go into helping
Speaker 4: you to climate proof your infrastructure, for example, what's your
Speaker 4: water system, what's your energy system or buildings, or to
Speaker 4: even repair damage infrastructure, whether it's is your road or
Speaker 4: energy transmission system that's been damaged because of cyclones.
Speaker 3: Or plauds now.
Speaker 1: We talked a lot about adaptation, but Africa also has
Speaker 1: a tremendous potential for renewables. There is a goal about
Speaker 1: tripling global renewable energy capacity. Africa could probably do more
Speaker 1: than tripling. What is your focus on trying to enable
Speaker 1: mitigation projects, enable energy access projects through the deployment of renewables.
Speaker 4: You know, we are the largest investor right now in
Speaker 4: in Africa today as a bank, we devote eighty seven
Speaker 4: percent of all of our financing and energy to reenable energy,
Speaker 4: so that is wind, hydro, geotomo and of course solar,
Speaker 4: which we have in our bonders and a good example
Speaker 4: of that is what we are doing in the sahel Okay.
Speaker 4: We are financing right now a twenty billion dollar program
Speaker 4: that is called Deserto Power that is going to construct
Speaker 4: ten thousand megaworts of solar power across eleven countries of
Speaker 4: the sail that will provide electricity for two hundred and
Speaker 4: fifty million people right and when we're done, it's going
Speaker 4: to be the largest solar zone in the world. And
Speaker 4: it's already started. It's not something we're thinking about. We've
Speaker 4: already started at in Mali, We've started it in Nije,
Speaker 4: We've started it also in Bukina, Faso and child and
Speaker 4: so that is going to be a very major transformitted
Speaker 4: project that we are doing. But also we are investing
Speaker 4: heavily in hydro projects in other places. Take for example,
Speaker 4: we are the mandated Leida Ranger for the one thousand,
Speaker 4: five hundred mega words in Pandakua project, a hydro in Mozambique.
Speaker 4: If you take a look at Zambia, for example, they
Speaker 4: have what they call Batoka god A link Bozambique and Zimbabwe.
Speaker 4: We invested in that. And think of what we also
Speaker 4: invested in in Morocco you have what is called the
Speaker 4: New Wazata which is the world's largest concentrated solar power plant.
Speaker 4: It was also finance of the African Development Bank, so
Speaker 4: we are.
Speaker 2: Big on that.
Speaker 4: But the issue is how do you use energy to
Speaker 4: drive in dossualization. And I make the case that Africa
Speaker 4: needs to use is natural gas to be able to
Speaker 4: have a stable energy mix. See, the most important thing
Speaker 4: is access to energy. You have to have security of
Speaker 4: energy and stability of energy, and without having something like gas,
Speaker 4: we are not going to be able to do that.
Speaker 4: And when I say that, I also want to say
Speaker 4: that that's not going to contribute anything at all to
Speaker 4: global emissions. Because the analysis that was done shows that
Speaker 4: even if today Africa were to use all of its
Speaker 4: natural gas for energy, you know how much it will
Speaker 4: contribute to global emissions less than zero point six percent.
Speaker 4: And so therefore Africa, which has six hundred million people
Speaker 4: without electricity, will use all of its enable energy will
Speaker 4: optimize that. But I don't get carried away. There must
Speaker 4: be stable reach for which natural gas will play very
Speaker 4: significant roles without adding anything at all to global emissions.
Speaker 1: After the break, how the African Development Bank is enticing
Speaker 1: developed nations to invest in the continent. And by the way,
Speaker 1: if you like this episode, please take a moment to
Speaker 1: rate or review the show on Apple Podcasts and Spotify.
Speaker 1: Your bank also has a plan to figure out a
Speaker 1: way to increase your capitalization through rechanneling what are known
Speaker 1: as the special drawing rights now SDRs. Are a complicated beasts,
Speaker 1: but basically they are accessible to the largest economies in
Speaker 1: the largest amounts. Those economies, such as the UK, could
Speaker 1: try and give some of those rights that they get
Speaker 1: through the World Bank and give those two development banks
Speaker 1: like yours. This has been a conversation that has heated
Speaker 1: up over the past twelve months or eighteen months. Where
Speaker 1: do things stand today and do you have any countries
Speaker 1: that have committed to rechannel their SDRs.
Speaker 4: My first and foremost is that we have to start
Speaker 4: our conversation by recognizing that these are conditional financial instruments
Speaker 4: that were issued to help the world deal with COVID
Speaker 4: and all of the problems with climate change and all
Speaker 4: the others.
Speaker 2: But herece we had a challenges.
Speaker 4: At six hundred and fifty billion dollars were issued and Africa,
Speaker 4: a population size or one point four billion people, got
Speaker 4: only thirty three billion dollars.
Speaker 2: What of that?
Speaker 4: I applaud everything about especially doing rights. I applaud all
Speaker 4: the airports be made by IMF. I also applaud the
Speaker 4: airports of Secretary Yelling the United States who called for
Speaker 4: it to be used.
Speaker 2: But the faculty the matter is that it did not.
Speaker 4: Stave Africa well, but we know that we can get
Speaker 4: more juice out of the same oranges if you actually
Speaker 4: did things well. And so we came up with a model,
Speaker 4: the African Development Bank and the Inti American Development Bank
Speaker 4: to see how those rich countries that got the svs,
Speaker 4: which we actually don't need it right, can only channel
Speaker 4: those through banks like ourselves, the African Development Bank, the
Speaker 4: entire American Development Bank and why not or the most
Speaker 4: laterally development banks.
Speaker 1: Let's pause here to acknowledge that SDRs are very complicated,
Speaker 1: but here's what you need to know to understand how
Speaker 1: this financial instrument can unlock more money for Africa's needs.
Speaker 1: SDR is an international reserve asset which was created in
Speaker 1: nineteen sixty nine. SDR stands for special Drawing Rights. Special
Speaker 1: because it's only to be used in special circumstances, such
Speaker 1: as the economic crisis set off by the COVID nineteen pandemic.
Speaker 1: Drawing because it's drawing from a pool of money that
Speaker 1: sits with the International Monetary Fund. Rights because shareholders of
Speaker 1: the IMF have the right to draw on the money,
Speaker 1: but only as a proportion of their shareholding in the IMF.
Speaker 1: SDRs were created as a safety net for countries facing
Speaker 1: economic hardship, and what Ardishina is trying to do is
Speaker 1: find a way for countries that don't need that safety
Speaker 1: net to reallocate their SDRs to the African Development Bank.
Speaker 2: Three things are very critical in this.
Speaker 4: First, it's great value for money because for every dollar
Speaker 4: of seis that's real channels. Let's say to the African
Speaker 4: Development Bank, we can leverage that by four terms. The
Speaker 4: second one is that if you take a look at
Speaker 4: the issue of what this means for taxpayers of those
Speaker 4: countries because the reserve assets, well actually they cause the
Speaker 4: taxpayers of those absolutely zero because the African Development Bank
Speaker 4: we will pay the fees right for using the seers
Speaker 4: to the IMF.
Speaker 2: So that's the second one.
Speaker 4: And the third one, which is actually quite important, is
Speaker 4: that you don't lose your reserve because the motel that
Speaker 4: we have actually preserves the reserve as a status of
Speaker 4: the SDRs, and so there's nothing lost. You can always
Speaker 4: claim your SDRs anytime you want, and just to make
Speaker 4: sure you can get it back anytime you want it,
Speaker 4: we created a liquidity support agreement to be attached to
Speaker 4: those who make the real location. So let's say they
Speaker 4: are five countries that make the real location that would
Speaker 4: be a liquidity support facility that's joined to that that
Speaker 4: should day for any reason have a balance of payment challenge.
Speaker 4: And these are no countries that are not only going
Speaker 4: to have the balance of payment challenge anyway, somebody is
Speaker 4: going to be able to ensure that you will get
Speaker 4: your money back. And so this is phenomenal. If we
Speaker 4: got ten billion dollars REA channel to the African Development
Speaker 4: Bank or the each American Development Bank, let's say for us,
Speaker 4: that will automatically become for Africa forty billion dollars. That
Speaker 4: is a lot of money to deal with water, education, sanitation, food, energy,
Speaker 4: and infrastructure, the kin that we also care quite a
Speaker 4: lot about. But you have also known that they've been
Speaker 4: asking us to think big and go from billions to trillions. Well,
Speaker 4: the fastest way you're going to go to trillions is
Speaker 4: if you are able. Let's say you issued SDRs what
Speaker 4: five hundred billion dollars through the Motilateral Development Bank, and
Speaker 4: they can use their business models triple areata financial institutions
Speaker 4: preferred creadial status to leverage that four times. That becomes
Speaker 4: two trillion dollars. Problem done.
Speaker 1: You know.
Speaker 4: So, I think that motilateral development banks are going to
Speaker 4: play critical role in how we take latent assets that
Speaker 4: are sitting there and we turn those into dynamic assets
Speaker 4: that can actually then begin to really drive development. Are
Speaker 4: climate and development at scale, And I feel that if
Speaker 4: we are able to get that done, maybe we might
Speaker 4: consider even calling that SDR supporting development revitalization. Then you
Speaker 4: really making it to work for the ordinary person on
Speaker 4: the street.
Speaker 1: Rebranding done right, Well, talk me through the last point
Speaker 1: you made. It sounds like it's a win win win.
Speaker 1: You figured out a way in which countries that have
Speaker 1: large amounts of SDRs available can rea channel those to you.
Speaker 4: If we change the world here, we change the world.
Speaker 4: It will support how we deal with climate issues, de
Speaker 4: we water issues, de we health issues, prepare the world
Speaker 4: for the next pandemic. We allow us to be able
Speaker 4: to support programs that allow young people to be able
Speaker 4: to have jobs. The impacts are quite significant, you know, so,
Speaker 4: I think the beauty of this is that we finally
Speaker 4: have a tool we are asked to have, the matilateral
Speaker 4: development banks and the globe of financial architecture to change
Speaker 4: the architecture. Okay, fine, change the architecture but you got
Speaker 4: to change the plumbing. You've got to change also the
Speaker 4: use of your instruments. If the instruments are still the
Speaker 4: same and the building is different, we haven't done much.
Speaker 2: So I'm really.
Speaker 4: Excited with how closely the African Development Bank and ENTI
Speaker 4: American Development Bank are working with the imail from this,
Speaker 4: because you need a world that is climate resilient, but
Speaker 4: the bread and butter issues of development.
Speaker 2: Cannot wait for that.
Speaker 4: People have to eat, people have to drink, kids have
Speaker 4: to go to school, people have to have good health,
Speaker 4: you know, so you can't say, look, I'm dealing with
Speaker 4: the climate and everybody is dying.
Speaker 1: Who do you need to convince to make the rechanneling
Speaker 1: of SDRs happen.
Speaker 2: Yeah, we need to convince the countries.
Speaker 4: I think politically we have the support of the African Union,
Speaker 4: the G seven is very supportive of it, Indian statement,
Speaker 4: so is G twenty. But we just need to have
Speaker 4: a few countries, no more than five countries to come
Speaker 4: to the table and help us make it happen. We
Speaker 4: are talking to a few of them right now and
Speaker 4: I think that those are the ones that you have
Speaker 4: to convince that can put the money down and make
Speaker 4: it happen.
Speaker 1: Now, let's talk through the idea of hybrid capital or
Speaker 1: blended capital.
Speaker 3: There is.
Speaker 1: A lot of expectation for private capital that is interested
Speaker 1: in investing in emerging economies, but they remain shy. They
Speaker 1: say there are too many risks, political risk, currency risks,
Speaker 1: sovereign risks, all kinds of risks to make it possible
Speaker 1: for us to invest in those countries. Can you please
Speaker 1: help de risk some of these projects? And they want
Speaker 1: to bring that money either from development banks or from
Speaker 1: philanthropies or directly from develop country governments. Have you seen
Speaker 1: any of those blended finance projects working in Africa? Have
Speaker 1: you participated in any of those? And what have you
Speaker 1: learned that could be applied to try and scale this idea.
Speaker 4: Well, we have the largest blended finance facilities in Africa
Speaker 4: because that's what we do as African Development Bank. We
Speaker 4: deploy significant amounts of partial risk guarantees and partial credit
Speaker 4: guarantees to ensure transactions with governments in which the counterparty
Speaker 4: is the government and you want to do risk it,
Speaker 4: we give you a partial.
Speaker 2: Risk guarantee instrument.
Speaker 4: If your counterparty here is a private sector, then we
Speaker 4: give you a Pastia credit guarantee instrument. They work at
Speaker 4: scales significantly. We use a partial credit guarantee facility of
Speaker 4: about three hundred and fifty million dollars to support Egypt
Speaker 4: to issue a five hundred million dollar Panda bond on
Speaker 4: the on the Chinese capitol markets, which it is using
Speaker 4: now to support water, sanitation and other clean energy. Were
Speaker 4: support in Code de Vore to also issue five hundred
Speaker 4: million euros through a guarantee that we provide as a
Speaker 4: triple A erated financial institution. We've done that in beIN
Speaker 4: In they raise four hundred million dollars. We're doing that
Speaker 4: in Senegal now, and we do it for Tanzania. That's
Speaker 4: a big project. That is a three point six billion
Speaker 4: dollar project railway that links Tanzania to DRC Congo and
Speaker 4: to Burundi, and they needed to derisk that and so
Speaker 4: we are putting together a risk guarantee facility for that.
Speaker 4: Let me also say that sometimes people exaggerate the issue
Speaker 4: of risk of investment in Africa.
Speaker 2: You know, just believe what the fact says. Take a
Speaker 2: look at.
Speaker 4: The Moody's analytics need an assessment looking at the risk
Speaker 4: of the fault on infrastructure loans globally and guess what
Speaker 4: they found that the risk of the fall on infrastructure
Speaker 4: in Africa is probably about two point five percent.
Speaker 2: It's much more lower.
Speaker 4: Is the lowest in the world compared to Latin America,
Speaker 4: compared to Europe, and compared to the Caribbean, Pacific and Asia,
Speaker 4: and so Africa is not as risky as people think.
Speaker 2: Just last month, we have what's called.
Speaker 4: The Africa Investment Forum, which is a forum that the
Speaker 4: African Development Band put together that brings bank abook projects
Speaker 4: to the table that de risk those projects and therefore
Speaker 4: attract investors.
Speaker 2: From around the world.
Speaker 4: In less than seventy two hours, we had secured investment
Speaker 4: interest for projects in Africa what party four point eight
Speaker 4: billion dollars in less than seventy two hours. So that
Speaker 4: ranges from infrastructure to transport, to energy, to water, sanitation,
Speaker 4: agriculture and also ai a whole range of things. So
Speaker 4: I think what I'm saying to you is that the
Speaker 4: instrument exists, the platform exists to reduce your transaction costs,
Speaker 4: your risks, and we have the facilities to do blended
Speaker 4: finance at scale for energy today reneable energy in Africa.
Speaker 4: We have a fund that's caused or s enabled Energy
Speaker 4: Fund for Africa. It's a blended finance facility that brings
Speaker 4: down the cost of capital la stage capital for those
Speaker 4: that are in the reneabled energy space. And also we
Speaker 4: just launched what's called Alliance for Grain Infrastructure in Africa,
Speaker 4: which will mobilize ten billion dollars with a lot of
Speaker 4: blended finance to bring down the cost of developing grain
Speaker 4: infrastructure in Africa.
Speaker 1: So as you stand at this moment with a number
Speaker 1: of reason which you can deploy capital for development issues
Speaker 1: that will we'll also make the continent resilient to a
Speaker 1: lot of climate impacts that are sadly going to come
Speaker 1: its way. What are your greatest needs, What is the
Speaker 1: case that you need to make and to whom to
Speaker 1: ensure that you can keep doing this work and at
Speaker 1: a greater scale than ever before.
Speaker 4: Well, first, it's I think it's very important for the
Speaker 4: shareholders to support us very strongly and their do to
Speaker 4: be able to squeeze more from the lemon that we have.
Speaker 4: And so the African Development Bank we deploy all types
Speaker 4: of financial innovations to do that give value for money.
Speaker 4: We freed up a billion dollars which again gave us
Speaker 4: a headroom to lend more. Then we did another one
Speaker 4: last year which is a two billion dollar syntetis scretization,
Speaker 4: again the first in the world by a multilateral financial institution,
Speaker 4: where we took risks of our portfolio of private sovereign
Speaker 4: portfolio to government and we transfer that to the private
Speaker 4: sector which support from the UK government a one point
Speaker 4: six billion dollar guarantee and also insured as on the
Speaker 4: insurance market for four hundred million dollars and that freed
Speaker 4: up two billion dollars for us. So all I'm saying
Speaker 4: is the African Development Bank we need a lot of
Speaker 4: support to be able to do more of that, so
Speaker 4: that we can get a lot more guarantees to be
Speaker 4: able to leverage more and also to support a lot
Speaker 4: of support for the hybrid capital through the SDR would
Speaker 4: be fantastic. And finally, it's callible capital. You know, if
Speaker 4: you have a lot more calible capital, you can do
Speaker 4: a lot more.
Speaker 1: To pause here, you heard Ardishina say the word capital
Speaker 1: a lot of times. That's because there are different types
Speaker 1: of capital that enable the African Development Bank to do
Speaker 1: its work. The two main types at play here are
Speaker 1: paid in capital, also known as paid up capital, which
Speaker 1: is money that the bank's being given by its shareholders,
Speaker 1: which in this case is many many countries. The other type,
Speaker 1: callible capital, is money that is not yet in hand
Speaker 1: but can be made available from these same shareholders in
Speaker 1: case the bank really needs it. Having more paid in
Speaker 1: capital means that the bank can do a lot more,
Speaker 1: which is why I wanted to know if AFP anticipates
Speaker 1: getting more paid in capital.
Speaker 4: But even in general capture increase of the bank, all
Speaker 4: of the most laterally development banks, you want us to
Speaker 4: do more, we will squeeze as much as we want
Speaker 4: in terms of room to run or in terms of
Speaker 4: sweating as balance sheet as we say it.
Speaker 2: But you know, if you sweat.
Speaker 4: So much and you are not drinking water, you're going
Speaker 4: to get your head with it at one point.
Speaker 2: So we need a lot more water.
Speaker 4: And that water is actually for us to have paid
Speaker 4: in capital, which allows us to use that risk capital
Speaker 4: to leverage the private sector that has one forty five
Speaker 4: trillion dollars of assets on the management. We need to
Speaker 4: be able to leverage a lot of that into infrastructure
Speaker 4: in Africa, energy, into all the things that will enable
Speaker 4: energy and also food production and all of that in Africa, and.
Speaker 1: We didn't talk about paid in capital, but do you
Speaker 1: see any movement? I know you said your shareholders are
Speaker 1: very supportive of the work you're doing and clearly or
Speaker 1: they're squeezing the lemon as hard as they can. But
Speaker 1: have you made the case for more paident capital and
Speaker 1: will that come through?
Speaker 4: Well, you know, the innovations that we actually have right
Speaker 4: now that ranges from whether we're using balance sheet optimization
Speaker 4: models or whether we are doing stetic secretization colible capital
Speaker 4: or temporary colible capital or general capital increase all the
Speaker 4: SR hybrid capital. We model that that will allow us
Speaker 4: to be able to raise about seventy one billion dollars additionally,
Speaker 4: which is very very significant. But also we have another innovation.
Speaker 4: You know, I was telling you Alia in the show
Speaker 4: about the list developed countries that depend on the African
Speaker 4: Development Fund.
Speaker 2: Those ones the only ones.
Speaker 4: That actually need a lot more money because you know,
Speaker 4: the j Chad Mali all these countries. And so we
Speaker 4: have a fund that's called the African Development Fund and
Speaker 4: we have equity in it, what twenty five billion dollars
Speaker 4: And so now part of the financial innovations we're doing
Speaker 4: is taking that equity now going to the capitol markets
Speaker 4: to raise an additional twenty seven billion dollars of low
Speaker 4: interest rate money, long term money to support their development.
Speaker 4: So these are the kind of instruments that we need.
Speaker 4: But when it comes to the issue of general capital, yes,
Speaker 4: you know, our shareholders are fantastic African Development Bank. Our
Speaker 4: shareholders gave it a significant increasing general capital, moving us
Speaker 4: from ninety three a billion dollar bank to become a
Speaker 4: two hundred and eight billion dollar capital bank, which is
Speaker 4: massive for US. But I think they are also mindful
Speaker 4: that it challenges are big. We're looking now towards the
Speaker 4: ten year strategy of the bank and as we talk
Speaker 4: about bigger, better Boulder Bank, I will expect that our
Speaker 4: shareholders at the right time will also have to look
Speaker 4: at the issue of genera capital increase.
Speaker 1: There's a lot of conversation about getting more funds to
Speaker 1: developing countries. Are you finding it any easier to get
Speaker 1: private capital interested in investing in Africa? Is there action
Speaker 1: to match the rhetoric that's being made in general from
Speaker 1: private capital to invest large amounts of money towards African countries.
Speaker 4: No, I think there are challenges for those that want
Speaker 4: to invest. General perception, as I said, the passive risk
Speaker 4: is much higher than the real risk of investing in Africa.
Speaker 4: I just told you that in four years of having
Speaker 4: the Africa Investment Forum, we've been able to mobilize one
Speaker 4: seventy seven billion dollars of investment interest to various projects
Speaker 4: in Africa. I don't want to minimize the issue of risk,
Speaker 4: you know. Our job is to make capital comfortable, you know,
Speaker 4: and to make it comfortable. Whether it is market risk,
Speaker 4: we can actually help with that, whether it is countries
Speaker 4: that want to invest, but currency exchange risk problem exists.
Speaker 4: We lend quite a lot also in local currency for that.
Speaker 4: And also the issue is when you talk about private sector,
Speaker 4: they ask the question where are the projects? Where are
Speaker 4: the bank cable projects? And that's why the African Development
Speaker 4: Bank invests in another vehicle which is called Africa fifty.
Speaker 4: It's a private equity type vehicle. That is job is
Speaker 4: to help to develop bankable projects and also to be
Speaker 4: able to finance those bankable projects. You know, right now
Speaker 4: it is capital is about one billion dollars in being
Speaker 4: able to do that.
Speaker 2: And we also at the.
Speaker 4: African Development Bank have our own project preparation facility which
Speaker 4: is called Neper Infrastructure Preparation Facility, where we use roughly
Speaker 4: twenty six million dollars to prepare projects that are bankable
Speaker 4: which have been able to mobilize more.
Speaker 2: Than fifty billion dollars downstream.
Speaker 4: So the point I'm basic basically saying is that the
Speaker 4: capital is there, but that capital needs to be matched
Speaker 4: with bankable projects. That capital has to be derisked, and
Speaker 4: also there has to be supportive more supportive let me say,
Speaker 4: policy and regulatory environments and political stability that reduces the
Speaker 4: political risk of private capital moving to those markets. And
Speaker 4: I think that Africa clearly is the place to be,
Speaker 4: you know, for anybody wanting to make investment. You know,
Speaker 4: the numbers are staggering. You take a look at it.
Speaker 4: A population of one point four billion people that will
Speaker 4: grow to two point four billion people by twenty fifty.
Speaker 4: They actually would consume quite a lot as a big market.
Speaker 4: You cannot ignore the largest population of youth in the world.
Speaker 2: It's in Africa.
Speaker 4: If you're looking at how to feed the world, sixty
Speaker 4: five percent of all the uncultivated ariblel and left in
Speaker 4: the world is in Africa. So what Africa does with
Speaker 4: agriculture all the time in the future of food, and
Speaker 4: everybody is talking about energy transition. Well for that, you
Speaker 4: actually need electric vehicles, you need battery energy story systems.
Speaker 4: Well for that, you need platinum, you need copper, you
Speaker 4: need cobalt, you need lidium. Africa dominates in access to
Speaker 4: all of this, and so again the issue is Africa
Speaker 4: is going to play very critical role in that energy
Speaker 4: transition drive. But what I don't want to make sure
Speaker 4: Africa doesn't do. Again's Africa simply exporting it's raw metals,
Speaker 4: just like it has always been exporting its raw agricultural commodities.
Speaker 4: Because when you export raw commodities, it's the door to poverty.
Speaker 4: But when you actually add value with good value change
Speaker 4: and you are integrated into global value change, that is
Speaker 4: the high way to wealth. And Africa cannot be poor green.
Speaker 4: Africa needs to be rich.
Speaker 3: Great, wonderful.
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