The 2020 Annual Meetings of the African Development Bank are taking place virtually, with the election of the Bank’s president and how to build back better after Covid-19 as their central focuses. Neil Ford reports
The 2020 Annual Meetings of the African Development Bank (AfDB) Group (26-27 August) are being held virtually because of the physical constraints imposed by the Covid-19 pandemic. The host country is Côte d’Ivoire.
The meetings comprise the 55th annual meeting of the Board of Governors of the Bank and the 46th annual meeting of the African Development Fund, the Group’s concessional arm. Representatives of the 54 African regional member countries and 27 non-regional member states will attend online.
Top of the agenda will be the the election of the President of the Bank Group, who also serves as Chairperson of the Board of Directors.
At time of writing the sole candidate is the incumbent president, Akinwumi Adesina of Nigeria. According to a recent report by Bloomberg, Nigeria has doubled its voting rights in the Bank to 16.8%, making it the Bank’s biggest rights holder by far, in a move that may help to keep Adesina in the post for another five-year term.
The Meetings will also provide government representatives and other key stakeholders with the opportunity to discuss the big issues concerning Africa’s development. This year, the focus will be on the impact of the coronavirus, with discussions around ‘Building Resilience for a Post-COVID-19 Africa’.
The AfDB is seeking to both minimise the human cost of the pandemic and help African economies recover from the crisis. It is financing its efforts through the Covid-19 Response Facility of up to $10bn, which the Board of Directors approved in April. The threat is huge because of weak healthcare systems and limited social protection.
The Bank is well placed to support the continent in building a sustainable recovery. In July, credit ratings agency Fitch confirmed the Bank’s AAA Long-Term Issuer Default Rating with a stable outlook and its liquidity profile at AAA, reflecting an “excellent” liquidity buffer and quality of liquid assets.
Adesina commented: “We will continue to strengthen our policy relevance to support regional member countries, especially during and after the period of Covid-19, while ensuring that we maintain our prudential ratios with adequate buffers. The Bank will continue to apply strong risk management.”
Outlook for growth
In its updated African Economic Outlook 2020, the AfDB argues that Africa’s GDP could shrink by up to 3.4% under its worst-case scenario, costing 30m jobs. This could push another 49m Africans into extreme poverty, using the $1.90 a day minimum income international poverty standard. However, it says that the impact can be limited if governments and development partners can respond in a coordinated, targeted and rapid manner.
It also states that continental economic growth could reach 3% next year, depending on African governments’ effectiveness in flattening the curve of the outbreak and their success in reopening their economies. The curve has slowly started to flatten, although it is difficult to be sure because of limited testing and data collection in some parts of Africa. The Bank’s original growth forecasts for 2020 and 2021 were 3.9% and 4.1%.
The report says that urgent policy interventions could mitigate the impact of the pandemic if they involve a public health response to contain the spread of the virus and minimise fatalities; a monetary policy response to ease liquidity constraints and solvency risks; and a fiscal response to cushion the economic impacts of the pandemic on livelihoods and to assist businesses.
“We are positive that African countries’ economies will recover as the pandemic subsides and Africa returns to a positive GDP growth trajectory,” Adesina noted, although some sectors, such as tourism and transport, will take longer than others to bounce back.
The AfDB has also called for new labour market policies to protect workers and their jobs, and structural policies to enable African economies to rebuild and enhance their resilience to future shocks, partly by addressing structural bottlenecks. Governments must also build public trust.
AfDB acting chief economist and vice president for economic governance and knowledge management, Charles Leyeka Lufumpa, commented that policymakers needed to follow a phased and incremental approach to reopening their economies “that carefully evaluated the trade-offs between restarting economic activity too quickly and safeguarding the health of the population”.
He added: “Economic activities can be restarted incrementally on the basis of the transmission risks of different sectors.”
Regional differences
The AfDB has also prepared regional analysis to update its African Economic Outlook 2020. In its baseline forecast, the Bank predicts growth of -4.9% for Southern Africa this year, as a combination of South Africa’s lockdown and the fall in commodity prices hit the region hard.
This would make it the most affected region, which could be expected because Covid-19 infection and death rates are worse here than anywhere else on the continent. However, this could also be the result of better detection rates in South Africa.
The AfDB argues that the region needs more economic diversification, led by commodity-driven industrialisation, to boost resilience during downturns. It has also called for more broad-based and pro-poor growth to address poverty and inequality.
However, the Bank believes that rebuilding African economies could also bring long-term structural benefits. For instance, West Africa would benefit from bringing far more young people in the workforce as different sectors of the economy are opened up.
Marie-Laure Akin-Olugbade, director general, Regional Development and Business Delivery Office for West Africa, commented: “West Africa is endowed with a burgeoning youth population that can strategically be harnessed for employment and economic growth.”
Yet the Bank noted that the region’s outcomes in science, technology, engineering and mathematics are particularly low. Improving educational standards in these areas is vital to equipping young people for the labour market.
Source:africanbusinessmagazine.com
