OCTOBER 11, 2013 —
Poor infrastructure is shaving off 2 per cent GDP annually from African growth, according to Donald Kaberuka, president of the African Development Bank.
Speaking at Brookings Institutions, Kaberuka said time has come for African countries to take charge of their own development.
“The colonial powers left us with the huge gap in infrastructure, but because economies were declining or growing slowly, we didn’t see those gaps then,” said Kaberuka.
However, Kaberuka said, since then, conditions have changed dramatically, noting four megatrends shaping all 54 countries of Africa today.
They include emergence of new economic opportunities for investment, technology and exports; demographic dynamic - a young continent, with one billion people, increasingly urbanized, and growing disposable income driving domestic demand; the discovery of large amounts of natural wealth, including 122 billion barrels of proven oil reserves and 500 trillion cubic feet of gas reserves and opportunities to leapfrog in some technologies, such as the mobile phone.
“I do believe that the emphasis of power…on connectivity is the right one, whether you want to promote education, health, agriculture…,” said Kaberuka.
He emphasized that Africa needs to invest in itself, manage debt and invest wisely.
“Money will not solve all the issues we have inside Africa, [but w]e need to get Africans to invest in instruments of their own development, using their own resources,” said Kaberuka.
“For a long time, the premium between perceived risk and real risk was very high. Now it is narrowing.” He noted that people have started to understand that risks in Africa are no different from the risks in Asia, Latin America or the Pacific region.
“That is why you see all these investors coming to different parts of Africa,” said Kaberuka. “We need to continue along these lines to ensure that internally we can sustain what we have achieved so far.”
For Africa to vanquish poverty, Kaberuka said it needs to grow at a minimum of 7 per cent annually, up from the current 5 per cent rate of annual growth.
He said the bank he heads commits 60 percent of its lending to infrastructure.
Last month, the African Development Bank and Made in Africa Foundation officially launched fundraising for the Africa 50 infrastructure fund at the NASDAQ Stock Exchange in New York City.
Kaberuka described Africa 50 as a way African countries can mobilize their own savings.
“We consider this an incredible opportunity for African countries to take charge of their own development at the time when global conditions no longer allow them to depend purely on resources from elsewhere,” said Kaberuka.
He added that Africa 50 would be a credible African vehicle to invest in transformational projects.
In spite of what is going on the global economy, Kaberuka said Africa is “holding up well.”
“Something has happened since the time of the millennium. For the first time, all countries in Africa—except four or five who are having special problems—the economic growth is above population increase,” said Kaberuka.
“This is a good first step.”