Your Excellencies, Ladies and Gentlemen,
Welcome to this Presidential Dialogue on the “Changing Global Financial Architecture and the role of Multilateral Development Banks.” I am delighted that several Heads of State, Governors, Ministers, and Heads of Global Financial Institutions will join us today to discuss this global issue.
Just few weeks ago, the United Nations Secretary General alerted the world that the Sustainable Development Goals (SDGs) are off-track. If the SDGs are to succeed globally, they need to succeed in Africa. We must tackle global food security, climate change, debt and health pandemic preparedness given the experiences with Covid-19.
In this regard, I would like to make seven points.
First: global financial architecture is failing Africa and developing countries as they face multiple global challenges.
The global financial architecture needs to be modified to tackle more effectively global challenges, and to accelerate the achievement of the Sustainable Development Goals (SDGs). Yet, with only eight years to the target date for the SDGs, the world is off-track of achieving them.
Basically therefore, we must question the ability of the global financial architecture to serve the needs of the world, especially the needs and aspirations of developing countries, and especially Africa.
Before the pandemic hit, progress to achieve the SDGs was mixed and financing was falling short, with a USD2.5trillion annual SDG financing gap for developing countries. Africa will need USD1.3trillion annually to achieve its sustainable development needs by 2030. In addition, Africa requires up to USD144billion a year to recover from Covid-19 pandemic effects and rebuild economies.
Today, Africa faces three major challenges, which I call the 3 C’s: Covid, Climate and Conflicts. The solution to these challenges is the same, what I call the 3 F’s: Finance, Finance, and Finance. Yet, the available financing is very limited to tackle these challenges.
Second: global financial architecture needs to decisively tackle climate change. Climate change is devastating the economies of Africa. The continent, which accounts for only 3% in terms of historical carbon emissions, suffers disproportionately from the effects of climate change. Africa loses USD 7–15 billion annually due to climate change. This is projected to rise to USD 45–50 billion annually by 2040. Africa needs an average of USD2.7trillion to implement the continent’s Nationally Determined Contributions (NDCs) by 2030.
Yet, the global financial architecture provides only 3% of global climate finance for Africa. Africa received only about USD18.3billion annually in climate financing between 2016 and 2019. At current trends, a climate financing gap of USD242.4billion a year will remain through 2030. This will no-doubt undermine Africa’s efforts to support climate resilience and a just energy transition.
We should make COP28 to be hosted by the United Arab Emirates a defining moment for mobilizing greater private sector financing for climate change.
Third: global financial architecture is ill-prepared to tackle rising debt crises, especially in developing countries and Africa. The global financial architecture must respond effectively to tackle the rising debt challenges of African countries in the wake of the financial stresses posed by Covid-19, climate change and the recent conflict between Russia and Ukraine.
While median public debt has declined to 65% of GDP from the 68% in 2021 due to positive effects of debt relief efforts, including the debt service suspension initiative, debt levels are still higher than pre-pandemic level of 61%.
The structure of Africa’s debt has also changed dramatically. While bilateral debt accounts for 27% of debt compared to 52% in 2000, commercial debt accounts for 43% of total debt, compared to 20% in 2000. The expansion and fragmentation of the creditor base complicates debt resolution by the Bretton Woods Institutions.
There is urgent need to reform the current international financial architecture to make it fit for orderly debt restructuring. Debt resolution in Africa, especially outside Paris Club processes, has often been disorderly and protracted, with costly economic consequences. To avoid high debt resolution costs and limit the likelihood that debt crises re-emerge, the international community needs to push for enhanced transparency and global coordination among creditors.
It is critical to make the G20 Common Framework of debt treatment work. Of the four African countries—Chad, Ethiopia, Zambia, and Ghana—that have so far requested debt treatment under the Common Framework, none has yet completed the process to benefit from the facility.
There is an urgent need to reform the global financial and debt architecture to reduce the costs, time and legal complications for debt restructuring for African countries.
Fourth, global contingency financing is not working well for Africa.
The Special Drawing Rights (SDRs) issued by the International Monetary Fund has provided significant resources to help countries to deal with their ever-shrinking fiscal space. But of the USD650billion of SDRs issued, Africa got only USD33billion or 4.5%. The African Union has called for a re-allocation of USD100billion of SDRs to Africa, with a portion of it going through the African Development Bank, as a prescribed holder of SDRs.
The African Development Bank has been spearheading the call for SDR re-channelling by developed countries to multilateral development banks. Multilateral development banks can leverage the SDRs. At the African Development Bank, we can leverage the SDRs by a factor of 3–4 times. It will also allow us to provide greater financing to regional and national development banks across Africa, as part of the Finance in Common, to accelerate achievement of the SDGs.
I am delighted that the innovative model for rechannelling SDRs to multilateral development banks, developed by the African Development Bank, with the collaboration of the Inter-American Development Bank, has been determined by the International Monetary Fund staff to meet the critical reserve asset status quality for SDRs. This means SDRs donor countries can now channel their SDRs through the African Development Bank and other Multilateral Development Banks, and still count them as reserves.
This is indeed highly transformational and will be a game changer for Africa at no cost to taxpayers in SDR donor countries. What we need now is to have five lead donor countries to form a group to provide SDRs through the African Development Bank.
Fifth: current financing instruments are far from being able to leverage the resources to tackle development challenges and calls for a change in the business models of multilateral financial institutions.
The global pension funds and institutional investors have over USD145trillion of assets under management. The global financial architecture should focus more on how to tap into these massive resources. This will require significant changes in the business models of the multilateral financial institutions, to deploy more risk guarantees facilities, expand the use of synthetic securitization to leverage their balance sheets, and transfer some of the assets on their sovereign and non-sovereign books to the private sector to free up more space for additional lending.
The African Development Bank has been leading globally in spearheading innovative approaches to stretch its balance sheet. Many of the recommendations of the G20 Capital Adequacy report are already being implemented by the Bank well before they were recommended.
The African Development Bank, together with the World Bank and the Inter-American Development Bank implemented the first exposure exchange between multilateral development banks which freed up USD10billion of additional lending room for our Bank.
We were the first and only multilateral development bank globally to implement a synthetic securitization program to transfer some of the portfolio on our non-sovereign loan books to the private sector. More importantly, the transaction brought new investors together that had never had an exposure on African risk before, to take their first credit exposure on the continent.
In 2022 with the support of the United Kingdom, we concluded another groundbreaking risk transfer transaction of USD2billion for our sovereign portfolio, to assist with scaling up climate finance. Once again, this is the first portfolio-based risk transfer by a Multilateral Development Bank to be concluded on a sovereign portfolio that includes private sector investors.
In July of last year, our Board of Directors approved the issuance of sustainable hybrid capital, which the African Development Bank first conceived and started working on in 2021. This will be leveraged 3 to 4 times through the issuance of green, social, and sustainable bonds. It is important to note that, the African Development Bank remains the largest Multilateral Development Bank issuer of social bonds to date. A planned sustainable hybrid capital issuance is on the horizon.
In all these efforts, the African Development Bank is moving beyond project-based financing towards a portfolio-based and system-wide approach to creating new asset classes for institutional investors to pool and diversify their risks.
Sixth: for multilateral financial architecture to be more effective, there is need for greater leverage of private sector financing for development.
However, asking the multilateral development banks to do more should come with additional resources. There must be a strong review of the capital adequacy of the multilateral development banks. Expanding work to leverage private sector will consume risk capital, yet available risk capital is extremely low.
The reality is that multilateral development banks depend largely on callable capital with only a small share of their capital being paid in capital. This limits its effective risk capital that it can use to de-risk and leverage private sector financing at scale, due to strict prudential limits that it and all other multilateral development banks must respect to keep their crucial triple A credit rating. There should be a significant increase in the capital of multilateral development banks, but more importantly, the share of their deployable risk capital if the idea of going from “billions to trillions” is to materialize.
The Africa Investment Forum (AIF), which the African Development Bank and its partners launched in 2018, has become the premier private investment platform for Africa. It has attracted over USD142billion of investment interests to Africa in just four years, covering 150 projects, from African and global private sector investors, as well as institutional investors. The Africa Investment Forum for 2023 will be held on 8–10 November in Marrakesh, Morocco.
The Alliance for Green Infrastructure in Africa (AGIA), launched by the African Development Bank, Africa50 and several partners, will help mobilize USD10billion of private sector financing for green infrastructure in Africa. It will contribute to the G7 Partnership for Global Infrastructure Investment goal of mobilizing USD600billion for financing quality infrastructure.
Seventh: regional efforts should be promoted to tackle systemic risks in Africa, with regional safety nets to address the myriad of exogenous shocks, to complement the global safety net of the International Monetary Fund.
Africa is the only region of the world that does not have liquidity buffers to protect it against shocks.
To protect Africa from future economic shocks, the African Development Bank and the African Union are working together to establish an African Financial Stability Mechanism.
During the 35th Ordinary Session of the Assembly of the African Union, Heads of State and Government called for the establishment of the African Financial Stability Mechanism and directed the African Union Commission and the African Development Bank Group to work with all relevant stakeholders to accelerate the operationalization of the mechanism and its growth. The African Financial Stability Mechanism will complement the global safety nets offered by the IMF to offer liquidity support for countries in times of crisis.
We need inclusive multilateralism with equity and fairness in representation in the Bretton Wood Institutions.
Achieving the reform of the global financial architecture requires that Africa’s voice be strengthened on the Board of the IMF, where the continent has just two seats.
At the end of the day, the global financial architecture should be more responsive, inclusive, accountable and re-engineered to support the accelerated development of the world, especially Africa.
We must ensure that the priorities and challenges of Africa are on the front burner of the reform of the global financial architecture.
Africa’s needs must never be forgotten.
Thank you very much.
Who are the leaders of Africa Development Bank? ›
L-R: UK's Minister of State and AfDB Governor Andrew Mitchell; African Development Bank Group President Akinwumi Adesina; Egypt's Acting Central Bank Governor Hassan Abdalla; Hassatou Diop N'Sele, African Development Bank Vice President for Finance and Chief Financial Officer; and Prof. Kevin Urama, Chief Economist and ...Who is the Nigerian heading Africa Development Bank as MD? ›
Akinwumi A. Adesina is the 8th elected President of the African Development Bank Group.Who is the chief of staff to AfDB President? ›
Maria Mulindi as Chief of Staff to the President and Director of Cabinet.Who owns the African Development Bank? ›
The AfDB is controlled by a Board of Executive Directors, made up of representatives of its member countries. The voting power on the Board is split according to the size of each member's share, currently 60%-40% between African (or "regional") countries and “non-regional” member countries (“donors”).Who owns Bank of Africa? ›
|SHAREHOLDERS' NAMES(All the Shareholders are foreign)||% OF BOA KENYA SHARE HOLDING|
|BMCE Bank of Africa||72.41%|
(DBN) was established in September 2014 by the Federal Government of Nigeria (FGN) in partnership with several International Finance Institutions namely the World Bank, African Development Bank (AfDB), KfW Development Bank (Germany), Agence Fran aise de D veloppement (AfD) and the European Investment Bank (EIB), to ...What is the Bank of development of Africa? ›
The African Development Bank (AfDB), headquartered in Côte d'Ivoire, is an international entity established in Africa during the 1960s with the objective of supporting the economic development and social progress of countries in Africa by promoting investment of public and private capital in projects and programmes ...Which country the African Development Bank is located? ›
The African Development Bank Group (AfDB), located in Abidjan, Côte d'Ivoire, is a multilateral development finance institution established to contribute to the economic development and social progress of African countries.What role does chief of staff play? ›
A chief of staff is a professional who helps the chief executive officer (CEO) oversee operations within a company. The role is a partnership with organisational leaders, where the chief of staff ensures they manage their time effectively and advises them on making important decisions.Who has a chief of staff? ›
The chief of staff is a political appointee of the president of the United States who does not require Senate confirmation, and who serves at the pleasure of the President. While not a legally required role, all presidents since Harry S. Truman have appointed a chief of staff.
Who is the chief of staff of Inter American development Bank? ›
Jamal A. Khokhar. Distributor / Agent - Saudi Arabia - Head of Business Development & IT Dept. & HR Dept.Does African Bank still exist? ›
African Bank Limited, is a retail bank in South Africa, that offers financial products and services.How many countries are in African Development Bank? ›
As of 31 December 2018, the African Development Bank's authorized capital is subscribed to by 81 member countries made up of 54 independent African countries (regional members) and 27 non-African countries (non-regional members).Who is the largest shareholder of ADB? ›
- However, India is not the largest shareholder of ADB. As of 2021, Japan is the largest shareholder with a 15.6% stake, followed by the United States (15.6%), China (6.4%), and India (6.3%). Headquarters: - The statement that ADB is headquartered in Thailand is incorrect.What is the Bank of Africa scandal? ›
Bank of Africa's name has recently been associated with a scandal involving an investigation into fraud and falsification of banking documents as part of the Babour Sghir case, the member of parliament accused of defrauding people of €30m through loans and overdraft facilities, but the bank intends to continue its ...Which bank is richest in Africa? ›
OneUnited, the largest Black-owned bank in the U.S., manages around $625 million in assets.Which Nigerian bank is the richest? ›
Let's take a closer look at Zenith Bank. It's the richest bank in Nigeria, with total assets of over $34 billion. Zenith Bank was founded in 1990 and is one of the largest banks in Africa. It has a network of over 1,000 branches and offices in Nigeria and other African countries.Which bank is owned by a Nigerian? ›
Zenith Bank Plc was founded in 1990 by Jim Ovia. The bank now has more than 10,000 staff globally and presently operates from over 500 branches and business offices across all states of Nigeria. Its African subsidiaries are in Ghana, Sierra Leone, Gambia, and South Africa.How to borrow money from bank of Industry? ›
- Completed loan application form.
- Certificate of Incorporation.
- Memorandum and Articles of Association.
- Business plan.
- Feasibility study.
- Quotation for the supply of equipment and/or machinery.
- Quotation for the supply of raw materials.
How many countries are in Africa? ›
There are 54 countries in Africa today, according to the United Nations. The full list is shown in the table below, with current population and subregion (based on the United Nations official statistics).What is the purpose of African Bank? ›
African Bank is dedicated to creating relevant products that help to uplift South Africans, including loans, investment and insurance products.Is African Bank a government bank? ›
African Bank Holdings is 50% owned by the Reserve Bank, with the Government Employees Pension Fund (GEPF) owning 25%. A consortium of five South African banks holds the other 25% on a pro-rata basis: Capitec (1%), Investec (2%), Nedbank (4%), Absa Trading and Investment (5%), Standard Bank (6%) and FirstRand (7%).Is China a member of African Development Bank? ›
China has been a long-standing Bank partner. It became a member of the African Development Fund (ADF) and African Development Bank in 1985.
Serving Africa since 1949
United Bank for Africa, or UBA, is the leading sub-Saharan African bank with over 20 million customers, 20,000 employees, and 1,000 branches across 20 African countries.
Head Office: 57 Marina, Lagos Island, Lagos, Nigeria.How much does a chief of staff make in NY? ›
|Annual Salary||Monthly Pay|
A chief of staff will help you maximize your time, improve your decision-making, make the flow of information to you more efficient and help you reduce your costs. A chief of staff will have a direct positive impact on your business, particularly in areas that fall outside of scope for your other executives.How much does White House chief of staff make? ›
According to the Wall Street Journal, Reince Priebus and John Kelly, President Trump's first two chiefs of staff, earned $179,700 each. The maximum salary allowed for any White House aide is $183,000.Is chief of staff higher than CEO? ›
“The chief of staff role is an intensely personal one. This is a position scoped for the CEO, and it has elements of both an executive assistant and a COO. Like an EA, a chief of staff works only for the CEO and doesn't have direct reports, except maybe an intern or executive assistant.
Is chief of staff a high rank? ›
A Chief of Staff or Executive Assistant is a high-ranking professional who typically has extensive experience in administrative work.Is chief of staff a real position? ›
The chief of staff is an executive position that supports other, more senior, executives in their roles. The chief of staff will often support the top executive and assist in overseeing the internal operations of a company.What does the Inter American Development Bank Group do? ›
ABOUT US. We work to improve lives in Latin America and the Caribbean. Through financial and technical support for countries working to reduce poverty and inequality, we help improve health and education, and advance infrastructure. Our aim is to achieve development in a sustainable, climate-friendly way.Which country is member of Inter American Development Bank? ›
|Argentina* ^||Ecuador* ^||Nicaragua* ^|
|Croatia||Korea, Republic of* ^||United States* ^|
|Denmark*||Mexico* ^||Uruguay* ^|
|Dominican Republic* ^||Netherlands* ^||Venezuela* ^|
Objectives of the IDB
Reducing poverty and social inequality, addressing the needs of small and fragile countries, fostering development through the private sector, promoting renewable energy and environmental sustainability to combat climate change, and promoting regional cooperation and integration.
The New Development Bank (NDB) is a multilateral development bank established by Brazil, Russia, India, China and South Africa (BRICS) with the purpose of mobilising resources for infrastructure and sustainable development projects in emerging markets and developing countries (EMDCs).Who owns EBRD? ›
Shareholders and the Board of Governors
The EBRD is owned by 71 countries, the European Union and the European Investment Bank.
Established in 2015 by BRICS countries, the New Development Bank is a multilateral development bank aimed at mobilising resources for infrastructure and sustainable development projects in BRICS and other EMDCs.What is the mission of the New Development Bank? ›
Shaping a Sustainable Future
At NDB, we prioritise infrastructure and sustainable development projects that propel economic growth and improve the lives of people in our member countries.
What is BRICS? BRICS is an acronym for the powerful grouping of the world's leading emerging market economies, namely Brazil, Russia, India, China and South Africa. The BRICS mechanism aims to promote peace, security, development and cooperation.
Is Russia a shareholder at the EBRD? ›
Russia and the EBRD
Russia continues to be a shareholder of the Bank.
The United States of America is a founding member of the EBRD and an important contributor to the Bank's work. Since 1991, the country has contributed €1 billion to the EBRD's technical cooperation and investment programmes.Who is the largest shareholder of EBRD? ›
The EBRD funds come mainly from bilateral donors, from the Climate Investment Funds (CIF), the European Union (EU), the Global Environment Facility (GEF), and the Green Climate Fund (GCF).Are development banks government owned? ›
They are usually majority-owned by national governments and source their capital from national or international development funds or benefit from government guarantees.