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Talking Policy: Akinwumi Adesina on Investing in Africa

While previous U.S. administrations have established signature foreign-policy initiatives in Africa, little news has emerged regarding the Trump administration’s staffing of Africa-related posts, much less its plans for engagement with the continent. World Policy Journal editor emeritus David A. Andelman spoke with Akinwumi Adesina, president of the African Development Bank and former Nigerian minister of agriculture and rural development, about considering the African continent from an investment perspective, rather than solely in terms of development. 

DAVID A. ANDELMAN: I'm interested in Africa's development challenges and in how you see the United States as meeting, or failing to meet, these challenges. Then, I want to talk a bit about the African perspective on what can be done globally to neutralize what is happening in the United States. 

AKINWUMI ADESINA: First and foremost, the most influential challenge that Africa faces is infrastructure, and on top of that agenda is electricity. Today, we have 645 million people in Africa who don't have access to electricity, and there's no way that a continent like Africa can develop in the dark. Electricity can allow people to go to school, hospitals, or functions, allow the financial side of things to work, or most importantly, allow industries to run, so that Africa can add value to what it produces and convert it into global markets. 

The African Development Bank, when I became president, developed five priorities for the continent. The first is to light up the power of Africa. We are investing $12 billion of our own money into electricity in the next five years, and we'll be leveraging $45-50 billion from the private sector. 

Second, Africa must feed itself. It makes no sense at all that Africa today spends $35 billion per year importing food. It has lots of land, great sunshine, cheap labor, and lots of water, so Africa must be able to feed itself. If we don't change that, by 2030, Africa will be spending $110 billion per year importing food. That is food that we should be producing. Agriculture could grow the economy, create jobs, and get millions of people out of poverty. That’s why the African Development Bank is investing in $24 billion in agriculture over the next 10 years, to help Africa make agriculture a business for wealth creation, not poverty maintenance. 

The third area is very critical for Africa: industrialization. Today, 75 percent of the global production of cocoa is in Africa. But Africa accounts for only 2 percent of the $100 million chocolate market globally. The same thing happens to cotton that Africa produces, and the same thing happens to coffee that Africa produces. The price of cotton will fall but never the price of apparel, and the price of cocoa beans will fall but never the price of chocolates. The price of coffee beans will always decline but never the price of coffee at Starbucks. Africa has to get to the top of global value chain, so industrialization is critical; that’s why the bank has invested in agriculture. 

The fourth area is to integrate Africa, or to create wider markets in Africa, by investing in infrastructure and so on. 

The fifth area will improve quality of life by improving human capacity, water, and sanitation, as well as creating jobs for young people. At the United Nations, everybody is talking about sustainable development, which is tied to plans to light up the power of Africa, feed Africa, industrialize Africa, integrate Africa, and improve the quality of life of the people of Africa. If Africa succeeds in these five priority areas, it will have achieved 90 percent of the sustainable development goals.

DAA: That’s all very encouraging, but what that suggests is that there is an ability to move toward a really consolidated vision of Africa, as an entity, such as, for instance, the European Union or ASEAN. The Sultan of Brunei in his message to the U.N. suggested that regional groups really start moving toward these enormously important priorities, rather than leaving it to the U.N. or the leadership of countries like the U.S., which doesn’t seem particularly interested in doing that anymore. Do you think there is enough will to bring together Africa, because of all of these disparities? 

AA: The most important idea is the lens through with which we look at Africa. For too long, people have looked at Africa with a development perspective. People should look at Africa from an investment perspective. The continent by 2050 will have the same population as China and India’s current population combined. In the next three years, expenditures will rise to over $1.3 or $1.4 trillion, and business-to-business expenditures will rise to over $3.5 trillion. This is a continent full of opportunities. 

Now we need a united Africa market. Between the African Development Bank and the African Union, we are working toward an African free-trade area, to ensure that all trade is tariff-free. That is important because the level of regional trade in Africa is very low. West Africa is about 8.9 percent, and Central Africa is about 2 percent. Meanwhile, Southern Africa and Eastern Africa are at about 18 and 17 percent. 

We have to encourage intra-regional trade. As president of the African Development Bank, when I look at the commodity crisis that Africa faces, the key to reducing the level of that shock is to expand regional trade. A country that trades a lot more intra-regionally is less susceptible to the global volatilities in commodity prices. So we absolutely have to expand that. When it comes to your point on regional integration, each of the regional economic communities already has a clear plan for regional integration. 

The East Africa Economic Community and Southern Africa Development Community are even more advanced. The African Development Bank, as part of our own investment in regional integration, is supporting the regional economic communities to do two things. First, we lead the Africa Visa Index. You cannot integrate if you don’t have legal mobility. The Africa Visa Index tells us the extent to which African countries open their borders to other Africans. In my view, all the walls in Africa have to come down. Second, we invest in power, electricity, ports, roads, and rails that will connect landlocked countries to coastal countries, to make it easier for goods to move. At the end of the day, it is really about investing in interconnectivity. 

DAA: You say that the walls have to come down, and that’s the principal question. Are these countries prepared to give up enough of their sovereignty to reach a level of integration that will be economically important? 

AA: Africa has no choice. Africa is made up of essentially poor countries, and many of the countries are very small on their own. To achieve economies of scale, in terms of your market, but also in terms of your investment, people want to invest in large areas, not in a bunch of very small locations. 

For example, in West Africa, the African Development Bank is helping all West African countries, with the support of the Bill and Melinda Gates Foundation, to have what we call intra-operability. We’re linking all accounts across every bank and every financial institution. In East Africa, if you roam with your mobile phone, you pay a lot of money for data and roaming charges. We are currently working to have an African digital market in which you will not pay any of those charges, because any call in any part of Africa will be like a local call. We are also integrating stock exchanges from Casablanca to Johannesburg to Lagos, all the way to Cote d'Ivoire, so that people can invest in stocks across countries. It is not about whether these walls are coming down; they are coming down, and faster than people think. I have a plan, too, for investment of infrastructure, in terms of investing in transnational highways from Cape Town to Cairo, and that will open up Africa.

DAA: Do you see this African free-trade area negotiating, for instance, with China, or with the EU for continent-wide free trade agreements?

AA: Yes, the FTAs are happening. The European Union is engaged in economic partnership agreements with a number of countries, but we have to think about what Africa gains today. When Africa negotiates as a bloc, the continent gains more than African countries individually negotiate. Europe, the NAFTA area, and the Trans-Pacific Partnership are all about negotiating as a bloc. A stronger economic integration of Africa will give it the strength, the muscle, and the scale of market it needs to make membership strongly in its own interest, not just in the interest of others. 

DAA: There was a great deal of respect and understanding for that in the previous U.S. administration. But I don’t have the sense that the current administration understands the value of the region. Are you concerned that these challenges may not be appreciated by the U.S., or even accepted by them? There’s hardly anybody in the African division of the State Department who has been appointed by the new administration. Does this trouble you?

AA: Well, it’s a young administration, and they’re still putting their teams together, so we will wait and see. I’ve received congressmen and senators recently at the African Development Bank. But three things are very important in terms of the U.S. 

First, I was at the U.S.-Africa Business Forum, based in Washington. I was there with Secretary of Commerce [Wilbur] Ross, and I said that the United States has to wake up in terms of how it looks at Africa as an investment destination. In 2008, U.S. exports to Africa were $113 billion, and in 2015, they had declined to $26.5 billion. China’s exports to Africa in 2015 alone were $102 billion. China has become the main trading partner with Africa. The United States has to begin to look at how it engages with the private sector in Africa, and not just take a development perspective. I heard an American businessman say that the difference between Chinese and American investors is that when Americans look at Africa, they come to Africa with their notebooks, but those from China only come with their checkbooks. 

Second, in terms of U.S. engagement in Africa, there is the triangle of disaster, which consists of three factors: high levels of youth unemployment, high levels of extreme rural poverty, and high environmental and climate degradation. These three factors produce terrorists. Whether it’s al-Shabab in northern Kenya or Boko Haram in West and Central Africa, it is always present, so to solve the security problem in Africa you have to deal with the fundamental challenges of rural economies by transforming agriculture and creating hope, prosperity, and opportunities for people in rural areas. You also have to create jobs for young people, because without work, they become easy targets for terrorists. 

The third part is climate change and environmental degradation. This is not theory at all. The whole of eastern and southern Africa has been affected by drought; farming has been greatly affected in South Sudan, Ethiopia, Kenya, and other places. U.S. policy has to look very closely at these three pieces of the triangle of disaster. At the end of the day, United States engagement is very important in the private sector, and at the African Development Bank, we are open to working very closely with the U.S. administration to advance this agenda. 

DAA: I think you’re going to be receiving the World Food Prize very soon. Tell me a bit about what that means to you. 

AA: When I was announced as the winner of the World Food Prize this year, I was absolutely elated. It’s a great honor, referred to as the Nobel Prize for agriculture. It’s great to have the work that I’ve done for over 25 years, always pushing for African agriculture, recognized. It’s very fulfilling, but for me, the work is not yet complete. I want Africa to feed itself. I want rural areas to transform from zones of economic misery to zones of economic prosperity.  

DAA: When it comes to competing for the hearts and minds, and the pocketbooks, of the African people, who do you think is winning right now? Is it China, or is it Europe, or is it America?

AA: Today, when you look at Africa, I think the opportunities are immense. But I think China is ahead of everybody else in Africa.

DAA: Does that worry you?

AA: No, I don’t have any worries about it, because Africa has development partnerships and investment partnerships all across the world, just like everyone else. It is important to continually ensure that Africa deals with varied investment partners and regions. We work with China, we work with the U.S., we work with Europe, and the opportunities are there for who are willing to work with African governments. 

DAA: Any final words as we wind up?

AA: One thing that is very important is investment. China, for example put out a $60 billion initiative for Africa. Korea put up a $10 billion initiative for Africa. India put up $10 billion, and Japan $30 billion—$6 billion of which is just for energy. These parts of the world are quite interested in expanding their investment in, and support for, Africa. 

DAA: You didn’t mention how much America has put up. Has it put up anything?

AA: Well, it’s a new government. In the past, President Obama started the Power Africa Initiative. President George Bush put in place the PEPFAR initiative. I’m sure the new government is looking at development areas for its Africa policies.

DAA: We have our work cut out for us, and lots of competition for Africa’s hearts and minds.

AA: Absolutely, and as I said, there’s a lot of competition, but it all comes down to the lens through which we look at Africa.

*****

*****

This interview has been edited and condensed for clarity.

Visit the Talking Policy archive page for more World Policy interviews.

[Photo courtesy of Eric Roset/Africa Progress Panel

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