De-Risking Capital, Key to Scaling up Development Finance, Adesina Tells OPEC

Ugo Aliogo with agency report

The President, African Development Bank Group (AfDB), Dr. Akinwumi Adesina, has called for new ways of project preparation and de-risking in order to mobilise private sector investment for sustainable development.

The AfBD chief cited the Africa Investment Forum initiated by the bank and seven partners, as a leading continental platform that is aggregating bankable projects to reduce fragmentation and make it easier to attract institutional investments.

Adesina, who stated this yesterday, at the Organisation of Petroleum Exporting Countries (OPEC) Fund’s forum in Vienna, the Austrian capital, said the AfDB and its partners were also creating opportunities for the private sector to invest in agriculture through special agro-industrial processing zones, which are being established across the continent.

“We have got where the private sector is. We have got US$ 145 trillion of assets under management (and) by 2026 it’s going to be there… but the issue here is that we need new ways of aggregation to prepare the projects, to de-risk the projects and lower the transaction cost for those deploying capital.

“It [the Africa Investment Forum] has become today the premier investment platform to do anything on investment in Africa, and in the last four years, we have been able to leverage about US$ 142 billion of investment interest into energy, water and sanitation, infrastructure, and transport corridors,” Adesina said.

Adesina said the bank was bringing in private capital into agriculture that would create opportunities for the private sector “to go into rural areas close to where the farmers are producing, adding that they can buy, process, package food, and export food and have a greater competitiveness for various value chains.”

On his part, the Chairman of the Islamic Development Bank Group, Muhammad Al Jasser, cited the Desert-to-Power flagship renewable energy initiative led by the African Development Bank as a great pioneering project.

Al Jasser said the Islamic Development Bank was fully committed to financing green projects while balancing it with support for poverty reduction.

Chief Executive Officer, Agence Française de Développement, Rémy Rioux, called for a consensus in redefining development finance.

He said: “We need a new narrative. We need to work on a framework to finance what nobody is financing – the most vulnerable communities. This is our core mandate, and we must be allowed to allocate part of the precious concessional resources to mobilise, to lower emissions, to go the private way.”

Rioux said he looked forward to this week’s summit for a New Global Financing Pact to pin down a roadmap for easing the debt burden of low-income countries, while freeing up more funds for climate financing.

The Paris discussions would include the reallocation of International Monetary Fund special drawings rights (SDRs), Rioux said, acknowledging Adesina’s advocacy for the African Development Bank to be the conduit for redeploying the SDRs to Africa.

Global development financiers attending the event have pledged a strong commitment to remodel their investments to support green projects at scale.