Development lenders in Africa can seize the current global crises as an impetus to help the continent significantly increase food production. This was a common conclusion of panellists at this year’s Finance in Common summit in Abidjan.
Participants agreed that development partners should work with governments and other policymakers to bolster the resilience of private businesses, especially those led by women.
The panellists included Beth Dunford, vice president for agriculture, human and social development at the African Development Bank; Ijeoma Ozulumba, executive director and chief financial officer of the Development Bank of Nigeria; James Mwangi, group managing director and CEO of Kenya-based pan-African Equity Group Holdings; and Admassu Tadesse, CEO of Trade and Development Bank.
The panel discussion on unlocking smart and inclusive recovery in Africa through the private sector was one of several at the three-day summit that looked at how multilateral development banks can bring tangible solutions to Africa’s development challenges.
Ensuring financial inclusion for women
The African Development Bank and the European Investment Bank co-organised the summit under the theme “Green and just transition for a Sustainable recovery” to highlight the role of public development banks in Africa’s recovery as the continent faced impacts from the Covid-19 pandemic, climate change, and Russia’s war in Ukraine.
The meetings are taking place less than a month before the UN climate conference, COP27, gets underway in Sharm el Sheikh, Egypt.
Dunford highlighted various initiatives by the African Development Bank to enhance financial inclusion, particularly by empowering women through digitisation and capacity-building to make their activities bankable.
She said many women in business in Sub-Saharan Africa find it challenging to obtain affordable credit because of a misconception that their gender makes them high-risk borrowers. Dunford said the African Development Bank was working to change the mindset that categorises women as not being creditworthy.
“At the African Development Bank and in our gender strategy, we’re looking into women’s economic empowerment across everything we do,” Dunford stressed. She added: “With every operation at the bank, there is the recognition that women’s empowerment is the key for delivering on growth. The strategy is paying off by reducing poverty among families.”
Dunford said that the bank’s Affirmative Finance Action for Women in Africa (AFAWA) programme maintained its goal to bridge the $42 billion financing gap for women.
She said the African Development Bank was also making sure there is space for the private sector as governments turn to the domestic market to mobilise credit amid tightening global conditions.
Tadesse said Africa must use climate action to spur agriculture and climate-resilient infrastructure to rapidly boost food production.
He said: “What really needs to be done now is refocusing on supply-side measures because climate change, the Covid-19 pandemic and the new shocks coming from the war in Ukraine have left behind serious supply problems. That’s what is driving inflation, food insecurity, and energy insecurity and all fronts.”.
The Trade and Development Bank CEO said that the current food losses represent 8% of greenhouse emissions and that addressing them would be climate action. “If we’re just to invest in agriculture, storage, and cold chains, just to stem the losses, that will significantly contribute to addressing climate change.”
Tadesse reiterated the call for channeling more International Monetary Fund Special Drawing Rights to Africa. “We want to see more SDRs flow through Africa, and if it doesn’t flow, then it will be an opportunity lost.”
Mwangi called for a stronger collaboration between countries and development partners for rapid recovery. “I am seeing us moving more and more into scenario planning, and as the situation evolves very quickly, working together and learning with each other will see us grow,” he said.
Panellists also discussed current exchange rate volatilities, increasing costs of credit, and good governance in managing the development of financial institutions. Drawing from the Development Bank of Nigeria’s experience, Ozulumba said: “Governance is central to building a development bank, and Nigeria is a good role model with efficiency in operations.”
European Investment Bank vice president Thomas Östros moderated the panel.