WINDHOEK – The African Development Bank (AfDB) is considering increasing its direct funding of bankable projects of the continent’s private sector, given the sector’s propensity to drive economic growth, generate decent jobs and create increased opportunities for more inclusive and green growth. This was revealed by African Development Bank Executive Director, Mihe Gaomab II, who noted that private sector development is widely recognised by the international community as an engine of sustainable and inclusive economic growth.
Gaomab, a prominent economist and former chief executive of the Namibia Competition Commission, made the revelation yesterday during a lecture at the International University of Management (IUM) on Africa’s development agenda. Speaking to a packed hall at IUM, Gaomab said that the upcoming meeting of the Africa Investment Forum (AIF), scheduled to take place in Johannesburg next month, would be used as a platform to pool resources for private sector investment from institutional investors expected at the forum.
“The bank group therefore identifies private sector development as a core operation in the achievement of the five priority areas, referred as the high 5s. These are energy, industrialisation, agriculture, regional integration and improving quality of life for Africans,” said Gaomab.
According to the AfDB, the continent’s infrastructure requirements amount to between US$130 billion to US$170 billion a year.
“To address these challenges, the African Development Bank is championing the Africa Investment Forum (AIF) as a platform to actively engage the private sector and to facilitate projects that have the capacity to transform the continent. AIF is designed to enhance private-sector cooperation and drive investment in sectors of strategic interest within Africa,” said Gaomab.
During the launch of the AIF earlier this year, AfDB President, Akinwumi Adesina, said: “This is not a talk shop. There will be no political speeches. The AIF provides an open platform to organise efforts among multilateral institutions, governments and the private sector to improve a pipeline of projects capable of transforming the continent.”
The upcoming AIF is expected to harmonise processes among the bank and its partners, reduce intermediation costs, improve quality of project information and documentation, and increase action-oriented engagements between African governments and the private sector.
AfDB’s private sector vision is based on a conceptual framework for development impact that links entrepreneurship, investment and economic growth with the bank’s ultimate goal of poverty alleviation and sustainable growth.
This emphasis on the pivotal role of the private sector has also been reaffirmed in all AfDB policy documents, which show that in sectors such as agriculture, infrastructure, education and health, the related policies recognise that the development of a strong and dynamic private sector is crucial to sustainable economic growth and poverty reduction. In addition, the bank has identified private sector development as one of its fundamental areas of focus to reduce poverty and support sustainable growth on the continent.
The bank’s previous private sector interventions in 2016, which emphasised co-financing, syndication and strategic partnerships with the private sector, have strengthened its capacity to leverage and crowd-in third- party investors.
These interventions lifted the ratio of private co-financing to bank financing to 6:1, against the target of 5:1, which augurs well for the bank’s future engagement with the private sector.
To become involved in a project, AfDB needs to be satisfied that the project is consistent with a country’s economic development objectives, has sufficient comparative advantage and is likely to succeed in a sustainable manner.