AfDB chief fears "social crisis" in Africa

Audio 05:05

By: David Baché

The African Development Bank announced Thursday, April 9, the creation of a $ 10 billion fund to help the continent cope with coronavirus. Even while its president, Akinwumi Adesina, is facing internal accusations of patronage. Charges, African debts, confinement and appeal to mining companies: exclusively, Akinwumi Adesina agreed to answer RFI's questions.

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RFI: Akinwumi Adesina, hello. You are the subject of an internal investigation at the African Development Bank. Employees reproach you for " preferential treatment " granted to Nigerian compatriots, appointments to important positions that would not have followed the recruitment rules. How do you respond to these accusations ?

Akinwumi Adesina : I am very proud to be president of the African Development Bank. These accusations are just accusations. These are lies, things that people say. They attack me because we are in a period of re-election, of all these policies… These are lies.

Do you therefore reject any accusation of favoritism? Have you always respected the internal rules of the African Development Bank?

I follow the rules 100%, and I reject these charges 100%.

On the coronavirus pandemic and its economic consequences in Africa, the African Development Bank has just announced that it was providing $ 10 billion in emergency response to the coronavirus. Under what conditions will African States be able to access these funds and to carry out what type of action?

There will be US $ 5 billion for countries that can qualify for the bank window. 3.1 billion for countries that have access to another window, the African Financing Fund, a window that we use to finance the poorest and fragile countries. In addition to that, we will make available to the entire private sector an amount of $ 1.4 billion. We implemented this system with very rapid decision-making. Because we are in an exceptional situation, the Bank's decision will be taken in five days.

Five days only to examine the requests, this is the commitment that you are making Mr. Adesina… Have you ever been asked by African States to finance action plans?

Yes, we already have a lot of countries that have filed requests. Even before the announcement of this fund. West, North, Central African countries… everywhere! All countries are in the same conditions.

African countries have taken, in turn, more or less strict quarantine or even containment measures to limit the spread of the coronavirus. But these countries do not have the same safety nets as the countries of the North: no exceptional partial unemployment, nor extended unemployment benefits, as in France for example. How do you convince people to stay at home if they have to go out to work to feed their families?

Take the case of developed countries: we block everything and people cannot get out. It is the same for African countries. We have to do this to reduce the contagious effect of the coronavirus. But there are the effects that this produces: in Africa, the people who work are mostly in small or medium-sized enterprises, in the informal sector ... They work every day an hour here, an hour there ... so it is something that is very difficult for them. It can become a social crisis! And unfortunately, Africa does not have the resources to compensate, to compensate people's wages, as developed countries have done. That is why it is very important that we provide social protection for all the strata that are most affected.

Second, in Africa today, there is another crisis that may arise from the coronavirus. It's the food crisis. In the agricultural sector, it is very difficult today to have access to seeds, fertilizers, inputs. If people cannot produce, there will be another crisis, which will be a food crisis. This is why, at the African Development Bank, we have just started the creation of a platform for African countries to be able to help them import in bulk (in a grouped manner, editor's note).

Could we imagine exceptional economic support systems, intended for households or businesses, in African countries? Knowing that these devices are already abyssally indebting the richest countries on the planet…

We will make $ 1.4 billion available to the private sector to finance small and medium-sized businesses. We have also postponed paying their debt until next year. So we do our best to relieve the public sector as well as the private sector.

The idea is to save small and medium-sized businesses on the continent, or can large international groups also claim it?

No, for us it is about small and medium-sized African companies. Today, up to 90% of the private sector in Africa is made up of these SMEs. So these are the ones we need to protect. The rest have the resources.

With the coronavirus crisis, an old question sprang up, that of the debts of African countries. NGOs like Oxfam but also economists, like those of UNCTAD, the United Nations conference on trade and development, demand their outright cancellation. You, Mr. Adesina, at the AfDB, are simply proposing a moratorium, a temporary suspension, a postponement. Why ?

Today, with the coronavirus, Africa's debt will increase by $ 1.8 trillion in 2019, or about 61% of GDP. It will increase to 2,100 billion US dollars, or 65% of the GDP. In the most extreme coronavirus scenario. So it is very clear that there will be an over-indebtedness of African countries.

To relieve it, there are two approaches. There are the poorest countries: for them, the debt must be canceled. Yes I agree ! But what is most important for African countries, and I have already spoken about this with several heads of state, is that they have fiscal space (budgetary room for maneuver, note). If we make a moratorium on all debts, this will not only concern bilateral debts, but also the debts of multilateral development banks as well as commercial debts. And if we work closely with the rating agencies, all together, we can find a solution that can work for Africa. This is why I say that there are debt cancellations, for the countries which are really very poor, and the approach of the moratorium with a global coordination which is necessary.

Many African countries are very dependent on their raw materials: oil, whose prices have already plunged, or many minerals, whose demand is also falling. For these States, whose incomes are falling and with them the capacity to import foodstuffs, what response is possible?

Today, Brent is around $ 33 a barrel. But countries like Congo, Angola, Nigeria or Chad have made their financing (worked out their budget, note) with a reference price of 50 to 60 dollars per barrel! You can imagine the massive impact in their economy. Second, even for countries that export other raw materials, agricultural or mineral, the demand for all of these resources has already declined. So there are massive impacts for all of these savings.

How can I help them? As I said, we have to combine debt cancellation for the poorest countries, the debt moratorium, there is also all the funding from the African Development Bank, the International Monetary Fund, the World Bank, the French Development Agency ... We work together.

Could the mining or petroleum groups which exploit the raw materials of these countries be or should be involved?

Yes, they should contribute. When times are good, they benefit, so when times are worse, they have to contribute too. For difficult times, they have savings. They must contribute to help the countries in which they are located. It is a mark of responsibility that they must take.

Some economists believe that this health crisis reveals the flaws in the world economic system, and unequal exchanges between countries of the North and countries of the South. Do you share this analysis, do you think that once the worst is over, there will be systemic lessons to be learned?

I don't like to oppose one region of the world to another. We are all in the same problem (the coronavirus, editor's note). It is clear that the inequalities between the countries are very large. When we look at the announcements in the United States, with 2000 billion dollars to stimulate the economy, African countries do not have these possibilities. Inequality therefore contributes to the difficulty of developing countries to react quickly.

Second, the approach to industrialization around the world must change. Today, everyone depends on China. So I think that Africa - at least - must learn a very important lesson: we must accelerate the industrialization of Africa. We must also accelerate the development of the pharmaceutical sector in Africa. Today, there are 375 pharmaceutical companies in Africa, for 1.2 billion people. In China, there are more than 6,000 for 1.4 billion people, and in India, there are almost 10,500 for 1.4 billion people. So we have to change that. This is why the African Development Bank has started an internal reflection, to see how to help African countries to produce everything they need. It's a security issue. This time, things will change, because it is the defense of people's health that counts.

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