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AfDB Mobilizes Funds for Projects Via Integrated Platforms

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AfDB President Akinwumi Adesina

By Kester Kenn Klomegah

The African Development Bank (AfDB), which sets its primary tasks of contributing to the continent’s economic and social development by providing the necessary concessional funding for projects and programmes, as well as offering and coordinating assistance in capacity-building activities, has now embarked on various post-COVID-19 initiatives throughout the continent, especially in the least developed African countries.

In the latest was the mid-March event where potential investors have examined more than $50 billion of curated bankable projects in key priority sectors identified in the Africa Investment Forum’s 2020 Unified Response to COVID-19 initiative.

The sectors include agriculture and agro-processing; education; energy and climate; healthcare; minerals and mining; information and communications technology and telecommunication; and industrialization and trade. Nine of these projects are women-led, with a potential value of $5 billion.

The AfDB has secured $32.8 billion in investment commitments for projects in Africa. The largest deal secured at the three-day Africa Investment Forum was $15.6 billion for the Lagos-Abidjan mega highway of about 1,200 km (745 miles) will have four to six lanes, connecting West Africa’s two major cities in Nigeria and Ivory Coast, said AfDB President, Mr Akinwumi Adesina.

“Africa is a very bankable continent. We’ve gone through hard times because of the Covid-19 situation but here we are on a rebound,” said Adesina. “Africa is back for investments.” The projects, part of the bank’s Covid-19 response, touch on sectors including agriculture and agro-processing, education, energy and climate, healthcare, minerals and mining, and information and communications technology.

Adesina said that on the health side, projects include a new medical city in Accra, Ghana, a fund for health services for low-income populations in South Africa, and two platforms for manufacturing pharmaceutical products: one in West Africa and one in Kenya.

The African Continental Free Trade Area (AfCFTA), launched under the African Union, provides unique and valuable access to an integrated African market of over 1.3 billion people. In practical reality, it aims at creating a continental market for goods and services, with free movement of business people and investments in Africa.

The bank together with health giants has also set eyes on capitalizing on the advantages and conditions to push for healthcare issues. It, as well, is expected to advance the integration of African markets and standards for pharmaceuticals and other goods.

As a result, the Africa Investment Forum is curating several investment-ready transactions that align closely with the three healthcare pillars outlined by the AfDB President.

The investor boardroom sessions feature a $49 million transaction involving the construction of a pharmaceutical and biomedical hub in West Africa. The hub will incorporate a logistics platform, research and development facilities and an academic institution that could serve the region and the wider continent in vaccine manufacturing and drug and medical development.

A second vaccine-related transaction is a $45 million production plant in East Africa, which the World Health Organization (WHO) has pre-qualified. The plant will routinely produce three vaccines, including one for COVID-19.

It was no surprise that the WHO recently announced that Kenya, Senegal, Tunisia, South Africa, Egypt and Nigeria would be the first participants in its mRNA technology transfer hub initiative. The initiative paves the way for the manufacture and licensing of a range of pharmaceuticals in these six countries. It is likely to trigger strong investor interest in Africa’s burgeoning pharmaceutical sector.

The Africa Investment Forum and AfDB have championed two initiatives that are driving trade integration and regulatory harmonization throughout Africa. These are the African Medical Agency and the Africa Continental Free Trade Area.

In order to realize further its set goals, the AfDB has approved funding of $127.8 million to Niger. The funds approved by the Board of Directors of the African Development Fund, the Group’s concessional arm, will be used for a project to open up access to farming and pastoral lands in the east of the country, along its border with Nigeria.

It has also approved a $125.3 million loan to finance the first phase of the Dodoma Resilient and Sustainable Water Development and Sanitation Program in Tanzania.

Specifically, the loan from the African Development Fund will cover the construction of a dam and water treatment plant to address supply challenges in Dodoma City and the towns of Bahi, Chemba and Chamwino.

As a lead partner of the 9th World Water Forum, it plans to earmark more than $5.6 million to support the forum, billed as the world’s largest international water-related gathering. The event will be an opportunity for attendees to gain a deeper insight into how the bank provides technical and financial support to regional member countries to ensure water security for sustainable development in their territories through its Water Development and Sanitation Department.

“As one of the leading financing institutions on the continent with a commitment to the development of Africa’s water and sanitation sectors, it is a natural fit for the African Development Bank to support the Government of Senegal in co-hosting this Forum,” said Beth Dunford, the Bank’s Vice President for Agriculture, Human and Social Development. “Failure is not an option when it comes to mitigating the imbalance between water needs and water availability to boost economic development and stability,” she added.

Last month, for instance, it approved a $1.4 million grant for enhancing private sector engagement and capacity building for refugees and internally displaced persons in fragile areas of northern Mozambique.

The project will be implemented by the global refugee agency UNHCR, collaborating with the Government of Mozambique. The grant is from the Transition Support Facility Pillar III.

Mozambique is host to 28,000 refugees and asylum seekers and over 735,000 people displaced by ongoing violence in Cabo Delgado Province. The majority of the internally displaced people remained in the province. An estimated 69,000 people moved to Nampula, and the remaining moved to the provinces of Niassa, Sofala, and Zambezia.

As the United States and European sanctions broadened due to the “special military operation”, largely directed at “demilitarization” and “denazification” in Ukraine, there are, undoubtedly, terrible impacts on the African economy: increase in the price of gas, oil, agricultural raw materials…et cetera.

There is also some African ambiguity about Russia, with the public seeing Putin as a strongman who would therefore have the right to decide on a country’s future security alliances while being very concerned about their sovereignty.

The Russia-Ukraine crisis that started on February 24, to a considerable extent, has affected a number of African countries. The AfDB plans to raise $1bn (£759m) to support agricultural production in Africa and shield the continent from potential food shortages arising from the Russia-Ukraine crisis.

Agricultural trade between the continent’s countries and Russia and Ukraine is significant. African countries imported $4 billion worth of agricultural products from Russia in 2020.

About 90% of these products were wheat, and 6% were sunflower oil. The main importing countries were Egypt, which accounted for almost half of the imports, followed by Sudan, Nigeria, Tanzania, Algeria, Kenya and South Africa.

The UN also says at least 15 African countries get more than half their wheat from the two warring nations. Somalia, Benin, Egypt and Sudan are the most dependent. “The AfDB sees these increases in prices of wheat, maize and soya beans as potentially going to worsen food insecurity and raise inflation,” Mr Adesina said.

The bank intends to organize a meeting of African finance and agriculture ministers to roll out that plan. Through the fund, AfDB wants to increase the production of wheat rice, maize and soya beans using climate-resilient technologies, including heat-tolerant and drought-tolerant crop varieties. The heat-tolerant wheat variety has already been experienced in Sudan and Ethiopia.

The Africa Investment Forum, launched in 2018, is a multi-stakeholder, multi-disciplinary platform that advances private and public-private partnership projects to bankability. It raises capital and accelerates deals to financial closure.

The Africa Investment Forum is an initiative of the eight founding partners including the African Development Bank; Africa 50; the Africa Finance Corporation; the Africa Export-Import Bank; the Development Bank of Southern Africa; the Trade and Development Bank; the European Investment Bank; and the Islamic Development Bank.

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EU, IFC Launch €25m Fund to Rebuild Ukraine

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IFC Market Integrity

By Adedapo Adesanya

A new agreement between the International Finance Corporation (IFC) and Ukraine’s Energy Efficiency Fund will channel up to €25 million in EU funds to help homeowners’ associations restore war-damaged residential buildings, the organisations announced on Monday.

The effort will support Ukrainian families amid the ongoing war and boost the resilience of Ukraine’s residential sector. Since February 24, the conflict in Ukraine has substantially damaged or destroyed the homes of 2.4 million Ukrainians, according to the Ministry for Communities and Territories Development of Ukraine.

The Kyiv School of Economics estimates that the total number of the affected housing stock in Ukraine is up to 136,000 buildings or 40 per cent of the total number of residential buildings, including almost 16,000 multi-apartment buildings. As it stands, there is not enough public and private financing to rebuild the sector.

IFC will support the Energy Efficiency Fund’s Restoration Program by channelling the EU grants to homeowners’ associations across Ukraine, covering the costs of restoring multifamily buildings that did not suffer structural damage.

The programme will cover the replacement of windows, doors, roofs, and walls, among other elements, and IFC will also help the Fund with a pipeline of reconstruction projects as well as support beneficiaries with the application process.

A €5 million pilot phase is being rolled out in Kyiv, Zhytomyr, Sumy, and Chernihiv, larger cities in northern and central Ukraine that have come under increased attacks over the last two months.

Speaking on this, Mr Yehor Farenyuk, director of the state-owned Energy Efficiency Fund, said, “This programme launched by the Energy Efficiency Fund provides vital support to homeowners’ associations to help them restore buildings damaged by Russia’s military aggression.

“This is substantial support for many war-affected Ukrainians since the program will cover 100 per cent of the cost of all construction materials and work. We are very grateful to our partners — the EU and IFC — for their engagement and support, and we hope to continue our fruitful cooperation in this area.

“Rebuilding efforts in war-torn Ukraine cannot and should not be stalled,” said Ms Rana Karadsheh, IFC’s Regional Director for Europe. “We are grateful to the EU for their ongoing assistance, enabling us to provide vital support to Ukraine during these challenging times. We are committed to supporting Ukrainians and their efforts to restore residential and other economic sectors devastated by the war.

“The EU stands with Ukraine as it fights off Russia’s aggression and supports its people. We are happy to join forces with our trusted partners Ukraine’s Energy Efficiency Fund and IFC to help rebuild Ukrainian’s homes that were destroyed by Russia,” said Ms Katarína Mathernová, Deputy Director General of the Directorate General for Neighbourhood & Enlargement Negotiations and Head of the Support Group for Ukraine at the European Commission.”

Since October 2019, the original Ukraine Energy Efficiency Fund Program, led by IFC in partnership with the EU, has channelled grants worth nearly €15 million into energy-efficient renovations of 229 residential buildings in Ukraine, of which 109 are fully completed, with the remaining 120 projects continuing to implement the energy efficiency modernizations amid the war.

As part of IFC’s broader response to the war in Ukraine, in October, IFC launched another €25 million EU-supported programme to help municipalities to renovate municipally owned buildings to host internally displaced people.

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The Role of African Export-Import Bank in AU Agenda 2063

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African Export-Import Bank AU Agenda 2063

By Kestér Kenn Klomegâh

At the 12th Extraordinary Summit on Industrialization and Economic Diversification and the Extraordinary Session held in Niamey in late November, the African Export-Import Bank offered an instrumental report about the pace of economic diversification and industrialization across Africa. It was one among several review reports dealing with the present and the future of Africa.

In the first place, the African bank offers strong financial support, engages in external fundraising campaigns and collaborates with the African Union and the AU members. Beyond that, the bank gives advisory services relating to the development of various economic sectors, all these in attempts to improve the conditions, as espoused in the shared “Agenda 2063: the Africa We Want” in Africa.

With several initiatives and programmes, Afreximbank has pursued, with courage and determination, using the necessary high-level platforms within Africa and outside Africa to drum home the necessary funds for development. What is required here for African leaders to exhibit good governance, design and implement the best policies and speak with one voice to realize the set AU Agenda 2063.

While the bank has done a lot during the past few years, not many African leaders have achieved what was expected. That Afreximbank intervened strongly during the COVID-19 pandemic, disbursing over $8 billion to central and commercial banks to avert looming trade debt payment defaults and support the procurement of test kits, PPEs and other COVID-19 containment materials.

The Afreximbank supported the first ever pooled procurement by African Union members in an emergency when it provided a $2 billion financing towards the procurement of 220 million doses of Johnson and Johnson vaccines.

And as the Russia-Ukraine crisis rages on, the bank has also stepped up and already disbursed over $5 billion towards the procurement of food, fertilizer and grains. Beyond that, the bank is closely working with UNECA, the AU and the AfCFTA Secretariat to create a pooled procurement platform called the Africa Trade Exchange (ATEX), which is helping African countries to procure grains, edible oils and fertilizers at a much-reduced cost.

It continues to support the implementation of the African Continental Free Trade Agreement (AfCFTA). During the five years to 2021, Afreximbank disbursed over $20 billion in support of intra-African trade and investments and plans to double this to 40 billion US dollars during the five years of 2022 to 2026.

Afreximbank is helping African economies to manage the exodus of international banks by financing African-owned financial institutions to acquire those banks, helping to build a strong interconnected African financial system. It is re-creating banking systems so that they can serve Africa better. It has also onboarded about 500 of the continent’s 600 regulated commercial banks into Afreximbank Trade Finance Facility (AFTRAF) and provided them with Trade Credit Confirmation lines.

The goal is to grant an aggregate of $8 billion in Trade Confirmation lines to these African banks and ensure that every country on our Continent has at least one bank that has a dedicated credit line to support intra-African trade. Afreximbank sits today at the centre of the most extensive messaging network, with connections to almost 500 banks. It has built a web that will form the architecture for an integrated African banking network.

These mentioned above are the bank’s efforts to support Africa’s economic development prospects defined by the extent of control the continent wields over its financial system, that it is access to and control of capital that defines the future of the continent.

As partners, Afreximbank, the African Union Commission and the AfCFTA Secretariat have launched the commercial operations of the Pan-African Payment and Settlement System (PAPSS). It has now become possible to conduct intra-African trade payments in African national currencies. The bank is proud to be backing settlements under this system with a facility, thanks to the leadership of the African Union and the Commission for their strong support towards this transformative initiative.

Afreximbank is working with the AfCFTA Secretariat and Council of Ministers for Trade to establish the AfCFTA Adjustment Fund. The Fund is expected to help countries to adjust in an orderly manner to AfCFTA tariff removals and prepare them to participate in the new trading regime. The Bank was earlier this year appointed the Fund Manager of the $10 billion Fund, which it is supporting with a $1 billion facility and a $10 million grant directed at the Base (Compensation) Fund.

With industrialization, the bank is working with various African governments to develop and expand Industrial Parks (IPs) and Special Economic Zones (SEZs) to deal with infrastructural constraints to industrialization. These parks are ongoing across ten African countries, including two parks in Malawi and one in Cote d’Ivoire under development. It has also commenced discussions for the creation of industrial parks in DRC, Zambia, Rwanda, Kenya and Botswana.

In the first-ever Africa-Caribbean Summit in 2021, Afreximbank has taken steps to accelerate the integration of the two regions. In early September, the first-ever Africa-Caribbean Trade and Investment Forum which attracted over 1,000 participants from Africa and the Caribbean.

Since then, about 9 of 14 CARICOM countries have signed a Partnership Agreement, a treaty instrument akin to the Afreximbank Establishment Agreement, thereby opening up the region for bank interventions. This partnership creates an opportunity for Afreximbank to facilitate and promote trade and investment flows between the two regions and attract African investments into the Caribbean and Caribbean investments into Africa.

In that regard, it has conducted successful trade and investment missions to the Caribbean with African corporates and banks to explore opportunities in that market. Plans are advanced towards opening an Afreximbank office in the Caribbean so that it can support Africa-Caribbean trade and investments better.

With the mandate to forge greater partnerships, Afreximbank is seriously working jointly to push ahead with the pan-African trade and industrialization agenda. These dynamic collective efforts are directed towards the realization of the shared developmental goals with Agenda 2063. Afreximbank remains alive to that responsibility with African Union.

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Rosatom Plans Small Nuclear Power Plants For Africa

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Rosatom power solar power

By Kestér Kenn Klomegâh 

At least 600 million people in Africa without access to electricity and inadequate funding for power generation, Russia’s Rosatom state nuclear energy corporation now proposes to provide, over the next several years, mini nuclear plants for generating reliable and affordable power in a number of African countries.

According to the latest information obtained at the Atomexpo-2022, Rosatom is discussing, as part of the energy mix, the use of small nuclear power plants (SNPP) and floating nuclear plants for African countries. The African Energy Chamber reports say Africa expects to achieve universal access to affordable electricity by 2030. Many countries are finding ways to expand access to electricity.

President of Rusatom Overseas (part of Rosatom state corporation) Yevgeny Pakermanov said at the Atomexpo-2022 forum that his company is holding a series of dialogues with African colleagues. “We continue to work with Rwanda, Nigeria and other countries of the region. A floating NPP may be very promising in this region, and we are also discussing the use of floating nuclear heat and power plants for the African region,” he said.

According to figures provided by the International Atomic Energy Agency (IAEA), there are around 50 projects and concepts for small nuclear power plants, or small modular reactors (SMRs), as the IAEA defines them, throughout the world. The majority of them are at various stages of development.

Leaders of African governments are keenly interested in adopting nuclear energy to end chronic power deficit, but some may be forced either to keep on postponing or completely abandon the project primarily due to lack of finance or credit guarantees.

Usually, Russia does not grant concessionary loans and has not publicly allocated a budget for Africa. But in this exceptional case, Russia and Egypt signed an agreement, and the total cost of construction is fixed at $30 billion. Russia provides Egypt with a loan of $25 billion, which will cover 85% of the work. The Egyptian side will cover the remaining expenses by attracting private investors. Under the agreement, Egypt is to start payments on the loan, which was provided at 3% per annum, in October 2029.

Foreign Minister Sergey Lavrov has reiterated that Rosatom is considering a number of projects that are of interest to Africans, for instance, the creation of a nuclear research and technology centre in Zambia. Nigeria has a similar project. There are good prospects for cooperation with Ghana, Tanzania and Ethiopia.

Foreign and local Russian media reported that Russia wanted to turn nuclear energy into a major export industry. It has signed several agreements with as many as 14 African countries with no nuclear tradition, including Rwanda and Zambia, and is set to build a large nuclear plant in Egypt.

Nuclear is too high an economic risk for countries that cannot afford to make big mistakes. However, they must be guided by Chernobyl disaster in Ukraine and Fukushima in Japan; millions of people are still suffering from radiation and radiation-related diseases today.

Currently, many African countries are facing an energy crisis for both domestic and industrial use. Energy poverty affects millions of their citizens. Over 600 million in Sub-Saharan Africa, out of more than one billion people, still do not have electricity. The industrial sector needs power for its operations and production for the newly established single continental market.

The international forum Atomexpo-2022, held November 21-22, is one of the most important events in the global nuclear sector. Leading experts and specialists from over 50 countries participated in the forum under the theme Nuclear Spring: Creating a Sustainable Future.

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