The African Development Bank plans to invest $35 billion over the next ten years to boost industrialization in Africa. The bank's industrialization strategy is designed to help Africa raise its industrial GDP a little over $700 billion today to over $1.72 trillion by 2030, making it possible for Africa’s GDP to rise above $5.6 trillion, while moving GDP per capita to over $3,350, President of the African Development Bank Group Akinwumi A. Adesina at the 53rd Annual Meetings of the Board of Governors.
"Africa is truly blessed. From vast and yet untapped agricultural lands that currently account for 65% of the arable land left in the world, to rich deposits of natural gas, oil, minerals and metals, the continent brims with natural resource potential. However, Africa simply exports mainly raw unprocessed commodities. Little wonder that its economies are often subject to global commodity price volatilities.
African farmers work hard every to deliver 75% of global cocoa production but Africa reaps than 5% of the profits the $120 billion annual market for chocolate, he said.
Africa accounts for 50% of the world’s gold production but receives only 4% of the $300 billion revenues in global gold earnings.
The formula for the wealth of nations is clear; rich nations add value to all they produce while poor nations simply export raw materials. Africa needs to industrialize and add value to everything that produces – from agriculture, to minerals, oil, gas and metals. Africa needs to move up the bottom to the top of the global value chains.
"To drive its industrialization process, Africa must quickly build a globally competitive, well-educated, highly skilled workforce for the future. And the future already here. We cannot afford to waste any more time," he said.
The fourth industrial revolution has already begun and is changing the nature of jobs very rapidly. Africa must prepare its people for the jobs of the future, not those of the past.
Africa must accelerate higher education, and vocational and technical training in building the skills of the future. In particular, greater emphasis should be placed on digitalization, mathematics, material sciences, biotechnology, engineering, artificial intelligence, robotics, and quantum computing. These areas will dominate the industrial revolution in the near future. And Africa must not be behind.
The African Development Bank a demonstrable record of commitment to skills development and supporting innovation including the establishment of Centers of Excellence in several African Universities in Nigeria, Kenya, and Rwanda;and investments of more than $200 million in technology parks in Ethiopia, Cape Verde and Senegal.
Africa must take greater advantage of the digital economy. The continent leads the world on mobile online payments and its digital revolution set to continue. By 2021, over one billion smartphones expected to be in regular use in Africa. With greater investment in digital infrastructure, the continent can make a quantum leap in digital industrial development.
This is why the Bank has been investing heavily in building digital backbones continent-wide, including the Central Africa backbone linking , Congo, and Central Africa, and the Trans-Saharan fiber optic backbone to connect Chad Niger. ICT infrastructure and connectivity will open up landlocked countries to the digital world.
To help Africa on industrialize, the African Development Bank will focus on a few critical areas.
First, the Bank will drive agricultural industrialization, with a focus on supporting countries to develop staple crop processing zones that will help agribusinesses and agro-allied industries to locate in rural areas. Integrated infrastructure, including roads, power, water, and ICT, will support these staple crop processing zones in creating zones of economic prosperity across the continent.
Second, the Bank will invest in the new skills required for industrialization. Skill-enhancement zones will help young graduates connect to industries and exposed to the broad range of skills they need. We will provide more support for establishing technology parks and business incubation and accelerator programs to connect small and medium-size businesses to industrial growth poles.
Third, the Bank will continue its support for the private sector in critical industries through private equity investments, including small and medium-sized enterprises.
Fourth, the Bank will continue to support development of the capital markets to deepen access to finance for businesses so that they can grow and thrive on the continent.
Fifth and finally, the Bank will work with partners to encourage North-South and South- South cooperation in industrial development, especially for special economic zones, so that Africa learns from the best lessons and avoids some of the mistakes made by others.
One of the downsides of the industrial approach of developed countries has been the reliance on polluting technologies. These may be good for growth but they are bad for the environment and for human health. Industrialization should pay careful attention to less polluting energy pathways.
"Africa needs to promote green growth. At the African Development Bank, we are extremely conscious of our climate and environmental responsibilities and leadership role and are tripling our climate finance to 40% of our portfolio by 2020," he said.
"The African Development Bank is leading on renewable energy. When I was elected President two years ago, the share of renewable energy in our total power portfolio was just 14%. By 2016, we increased it to 74%. In 2017, we achieved a record-breaking 100% of our new lending in renewable energy. However, we also recognize that many African countries must diversify their energy mix to support industrial development, just like the rest of the world," he added.
Industrialization should not be only about large companies. We must also focus on small and medium-sized enterprises, especially those run by youth. This is for good reason; youth are the present and future of Africa.
To industrialize, Africa must mobilize greater domestic resources and direct them to help close the infrastructure gaps and financing needs for critical industries.
The African Development Bank and its partners have created the Africa Investment Forum, a transactional platform to leverage global pension funds and sovereign wealth funds and other institutional investors to significantly invest in Africa. This platform is a new investment marketplace for Africa that will set sail on November 7-9, 2018 from Johannesburg, South Africa.
As the Bank pushes for Africa’s faster industrialization, it will continue to accelerate delivery on its other High 5 priorities for Africa, including Light up and power Africa; Feed Africa; Integrate Africa; and Improve the quality of life of the people of Africa.
"The African Development Bank is doing all it can to support a brighter future for Africa in all these areas. But we need more gas in the car to travel the full distance for Africa’s economic development," he said.
Last year, the Bank achieved the highest disbursement in its history since 1964 of $7.4 billion. The Bank’s net operating income has been turned around; it had declined in 2014 but increased by 63% compared to 2016, reaching record levels.
Last year, 4.4 million people benefited from the bank's electricity connections, 8.5 million people benefited from improvements in agriculture,14 million people benefited from improved access to transport, and 8.3 million people benefited from access to improved water and sanitation.
The bank also provided 210,000 businesses with access to finance
In the next three years, the African Development Bank plans to provide 31.5 million people with access to electricity, have 45.8 million people benefit from improved agriculture, provide 50.3 million people with improved access to transport and provide 36.8 million with improved access to water and sanitation.