African Development Bank, AfDB, President, Akinwumi Adesina, has revealed that Africa’s public debt, currently estimated at $546 billion, represents one-quarter of the continent’s GDP and is higher than the combined total annual government revenues of $501 billion.
Speaking , weekend at the African Union Summit in Addis Ababa, Ethiopia, Adesina said the African Development Fund, the Bank Group’s concessional lending arm, had supported low-income countries with $8.5 billion over the last five years.
Calling on African Union leaders to strongly support the Fund’s 16th replenishment in 2022, Adesina advised that a funding restructure of the African Development Fund would allow the Fund to go to market, leverage its $25 billion in equity, and raise an additional $33 billion in financing for low-income countries.
The Bank Group chief reminded African leaders that they had asked for re-allocated IMF Special Drawing Rights (SDRs) to be channeled through the African Development Bank, a prescribed holder of SDRs.
“Passing the re-allocated SDRs for Africa through the African Development Bank will serve Africa very well, provide financial leverage, and help recapitalize other African financial institutions, many of which the Bank helped to set up,” he said.
Adesina repeated his earlier calls for an African Financial Stability Mechanism to provide liquidity buffers to protect the continent against financial and economic shocks.
He said that while other continents have such mechanisms, Africa was the only one that does not.
He explained that this led to widespread regional spill-over contagion effects and instability from Covid-19-induced financial shocks.
“African economies must be protected,” he stressed.