AfDB’s vice president envisions EU-like African integration
LONDON - The African Development Bank (AfDB) was established in 1964. Its current headquarters is in Abidjan, the economic capital of Ivory Coast. The objective of the AfDB group, according to its mission statement, is to “spur sustainable economic development and social progress in its regional member countries.” The Arab Weekly spoke via telephone with Khaled Sherif, the AfDB’s vice-president for regional development, integration and business delivery.
The purpose of the creation of the bank was to support development plans in African nations, especially at times when such projects did not receive sufficient support from organisations like the World Bank or the International Monetary Fund (IMF), said Sherif.
The AfDB’s largest shareholders are Nigeria, Egypt, South Africa and Morocco but the bank also receives investment from the Unites States, France, Germany and Nordic countries. “Western countries want to ensure there won’t be a huge flow of immigrants from Africa to Europe. They want to create the conditions where Africans stay where they are,” said Sherif.
The other concern for the West is security. “There are now hotbeds of terrorism in the Sahel region,” said Sherif, adding that conditions like youth unemployment would make the environment more vulnerable to radicalism.
Investment also comes from non-Western countries. China, South Korea, India and Japan all are shareholders in the bank. There is an economic rationale: If people have money, they can spend it on imports, explained Sherif.
With regards to African Arab countries, the biggest recipient of funds is Morocco, followed by Egypt and Tunisia. Less money goes to Mauritania. There are issues with Libya, which is unstable security-wise, and Sudan, which has debts that it needs to pay up first, noted Sherif.
Most of the money is given to governments, which often spent it on energy, water and sanitation, as well as general infrastructure projects. The rest goes to no-sovereign parties, which include lines of credit to businesses and entrepreneurs, according to Sharif.
The bank encourages businesses to trade or export in the same region, whether immediate neighbours or in the continent as a whole. The aim is to boost production in order to promote industrialsation.The bank is also keen on investing in vulnerable women, noted Sherif.
The loans are generally for 20-50 years, with 1-2% interest rates. “It’s free money,” said Sharif, if you take into account inflation. “The bank’s objective isn’t to make money. There are 600 million people without power in Africa; the bank’s primary mandate is to light up Africa, to feed Africa, to improve the quality of life for its people, agriculture and industry,” said Sherif.
The AfDB advocates what’s feasibly “the most sustainable,” said Sherif. “We suggest to countries to develop their ‘value addition’. For example, we want to see countries that export Coco make their own chocolate, countries that export coffee beans to produce their own coffee. We don’t like to see countries that export oil, import gas,” said Sherif.
By exporting crude or raw materials and importing refined products, the country not only loses out in the balance sheets but also misses out in improving its manufacturing industries or in offering more jobs, explained Sherif. “Exports [of crude materials] may lead to growth in the economy but not necessarily growth in GDP per capita,” said Sherif. When you manufacture products from your country’s own raw materials, it would benefit people more, he added.
The AfDB advocates the use of clean energy. “Africa has an abundancy of coal, which is cheap but it has devastating impact on environment. So we provide loans and grants to help projects use feasible alternatives,” said Sherif.
African integration, along lines of EU
The bank monitors how its funds are spent. “When we give assistance, we monitor [how it is spent], we don’t just write a check. We have to account for it to our investors,” said Sherif.
There are occasions when the bank does not fund certain project but nevertheless offers governments advice based on feasibility studies, noted Sherif. The AfDB also seeks to help direct businesses towards what the bank thinks are successful strategies.“The bank launched a ‘souk attanmia’ (market for development) campaign to help Tunisians make products that are unique to their market so that they won’t lose out to bigger companies,” said Sharif.
Sherif advocates regional integration in Africa, something along the lines of the European Union.“We push for freedom of movement and for having a common currency,” said Sherif. “We are working with the African Union for continental free trade.”