The African Development Bank’s Live Transformation Circuits
On the eve of its annual meeting in Morocco and 50th anniversary in 2014, the African Development Bank tabled a 10-year strategy after numerous consultations emphasizing the environment, infrastructure, agriculture, and regional integration within the context of private-sector led growth and better official and corporate governance. Future financing will stress new methods and partnerships to solidify the continent’s “transformation” over the past decade as a world GDP increase leader and FDI recipient equal to individual BRIC countries. However may states remain fragile with high raw materials dependence, poverty and inequality, youth unemployment and food and water shortages. A “green” shift is overdue as ecological use will double in the next 25 years, and power, sanitation and transport upgrades could lift annual output 2 percent on $100 billion in investment needs. Intra-African trade has doubled to over $100 billion the past five years on $4 billion in Bank-backed cross-border projects, but regulatory barriers continue to impede physical linkages. Midsize firms comprise only one-fifth the workforce as the “missing middle” is pervasive in business and finance. Venture capital, leasing, bonds and equities, credit bureaus and export loans can help fill the gap, and the AfDB can offer its own guarantee and insurance facilities. Public financial management in such areas as debt strategy, fiscal decentralization, and natural resource negotiation should be a priority over the next decade along with skills, training and technology transfer to match global standards. Progress in attaining the 2015 Millennium Development Goals has been sporadic, with half the world’s poor now in Africa after more dramatic Asia breakthroughs. Economies like China can share their experience and also act as long-term investors for climate and social purposes. Sovereign wealth funds in a half-dozen places including Botswana, Mauritius and Nigeria can join efforts supported by the Bank’s AAA rating as other multilateral bodies including the UN and African Union collaborate.
The document was circulated as Ghana which was the pioneer sovereign bond issuer after getting debt relief previewed a $1 billion return in the coming weeks, despite fiscal and current account blowouts and a benchmark interest rate hike over 15 percent to bolster the crumbling cedi. The budget deficit will approach 10 percent of GDP in 2013 on double-digit inflation and a negative ratings outlook. Oil production has not met the original forecast and falling prices are also hurting nearby exporter Gabon, where dollar-denominated yields halved to 3.5 percent after late coupon payments. Growth and the current account surplus there remain strong, but the opposition continues to sporadically challenge the legitimacy and wealth of the Bongo regime. Nigeria too is expected to tap the external debt market soon as Zenith Bank listed London GDRs. Local paper has seen profit-taking after insertion in the JP Morgan index, and watershed power industry privatization has been overshadowed by the government’s emergency declaration in the north against Boko Haram militants trying to radically transform income and religious tolerance.
