Akinwumi Adesina, the President of the African Development Bank, who took up his job in September this year, has warned African countries to manage their finances carefully to repay dollar debts raised in recent years.
In an interview with Reuters in Addis Ababa, he pointed out that African nations have taken advantage of historically low yields and strong investor appetite to issue Euro bonds or raise other funds on international markets.
Africa’s foreign currency bond issues between 2000 and 2014 totaled US$20.5 billion, with US$7.4 billion of that raised in 2014 alone.
He emphasized that this meant they were financing high-cost debt using a devalued currency, “it just means it is more difficult to finance the debt with weak currencies push up servicing costs and oil and commodity revenues tumble”.
He added it was necessary to make sure that the debts were within sustainable limits: “We have to manage our finances well,.
The expected interest rate rise by the U.S. Federal Reserve has strengthened the dollar globally and hit emerging market currencies, including in Africa, where many governments are also feeling the squeeze from low commodity and oil revenues.
The AfDB President urged African states to manufacture more. He said “I personally believe that the way to address this is to first and foremost make sure that African countries stop exporting primary commodities.”
He added “African countries need to develop value chains whether it is in oil and gas, minerals or metals, or whether it is agriculture – everything that Africa has.” He also called for greater internal African trade to help reduce exposure to global fluctuations.
President Adesina was in Addis Ababa for talks with the head of the African Union Commission, Dr. Dlamini-Zuma and Ethiopian Prime Minister Hailemariam Dessalegn.
In his talks with Prime Minister Hailemariam, President Adesina noted the Bank was supporting Ethiopia in agriculture, water sanitation, infrastructure, and particularly energy. It had allocated some US$1.2 billion this year for these sectors.
He welcomed Ethiopia’s plans for allied industrial zones to be developed in the country, describing these as very important for job creation as they would create many jobs.
He said the Bank would provide support to help youth settle in agricultural business, he added. President Adesina also praised Ethiopia’s remarkable economic growth.
Prime Minister Hailemariam thanked the Bank for its efforts in supporting the development of the country and noted that the nation had effectively utilized the finance allocated for the projects that AfDB supported.