….urges IMF to increase Africa’s SDRs from $33 bn to $100bn
Dr. Akinwumi Adesina, President, African Development Bank(AfDB) has revealed that Nigeria would require total financing of $759 billion to tackle the crippling issue of lack of energy to power the economy, including power generation, transmission and distribution infrastructure, water and sanitation, and transport infrastructure.
The AfDB Group President made this known in a statement obtained by EnergyDay on the sideline of the Nigeria International Economic Partnership Forum, at the recently concluded United Nations 77th General Assembly, New York, USA.
He noted that Nigeria with a total debt level of N 42.84 trillion or $103 billion, with an external debt level standing at N16.61 trillion or about $40 billion, has been finding it difficult to source finance to address its infrastructure deficit.
The AfDB President said that Nigeria and other African countries are battling with huge debt challenges, primarily caused by a confluence of factors, including Covid, climate, and the Russia-Ukraine conflict.
According to him, Africa is suffering, Africa is choking, and Africa is distressed by climate change. Africa can no longer wait for climate financing.
He said, “Africa countries especially Nigeria will need concession and debt bail in order to solve all of these crises.
Adesina further noted that Nigeria’s growth will be conditional on its ability to fix its massive infrastructure deficits, but noted that this is not possible because the country is currently battling with the risk of debt distress due to unsustainable debt levels.
He said, “Nigeria for instance, has a total debt level of N 42.84 trillion or $103 billion, with external debt level standing at N16.61 trillion or about $40 billion.
“The National Integrated Infrastructure Masterplan shows that Nigeria will need total financing of $759 billion to support infrastructure over a 23-year horizon (2020-2043).
“These cover tackling the crippling lack of energy to power the economy, including power generation, transmission and distribution infrastructure, water and sanitation, and transport infrastructure.
“Nigeria is Africa’s largest country with a population of 208 million people. It is a well-endowed nation, with huge natural resources, including oil and gas for which it is mostly known, mining, but also in agriculture, the blue economy, banking and financial services, digital and creative industries, and industrial manufacturing.
“You cannot talk of investing in Africa without thinking of Nigeria. With its rapidly growing population, estimated to be the third largest in the world by 2050, Nigeria is an investor’s dream, with the market pull, rapidly growing middle class, and burgeoning youth that can create demand, but also spark and spur entrepreneurship,” the AfDB President said.
Adesina stated that the African Development Bank, having seen the potential of Nigeria, together with the Islamic Development Bank and the French Development Agency are investing $618 million in the Digital and Creative Enterprises Program (I-DICE) in Nigeria.
This intervention, according to him, is expected will create 6.1 million jobs and add $6.4 billion to the economy.
He said, “The newly constructed $19 billion Dangote petrochemical and fertilizer complex (the world’s largest ammonia plant) in the free trade zone, with new deep seaport, is exactly the kind of massive infrastructural and industrial manufacturing that is needed to make Nigeria a regional and global player in gasoline, diesel and aviation fuel, and fertilizer value chains.
“Yes, Nigeria has several challenges, but Nigeria remains an attractive investment destination.
“That’s why the African Development Bank has invested $4.5 billion in Nigeria. To help unlock its huge agricultural potential, the African Development Bank, the International Fund for Agricultural Development, and the Islamic Development Bank have provided $540 million to develop Special Agro-industrial processing zones.
“This financing will boost food and agribusiness value chains across Nigeria and make Nigeria more competitive. That is the power of international partnerships working for Nigeria.
“African countries are facing a huge debt challenge, due to a confluence of factors, especially Covid, climate, and the Ukraine Conflict – what I call the 3 C’s. The solution to them is simple: 3 F’s: Finance, Finance, and Finance.
“Financing is critical because the debt to GDP ratio of Africa has increased to 70%.
“Several countries are at risk of debt distress due to unsustainable debt levels. Nigeria’s total debt level is N 42.84 trillion or $103 billion. The external debt level stands at N16.61 trillion or about $40 billion. Nigeria needs help to tackle its debt burden.
“International partnerships on debt are helping Africa and Nigeria. The issuance of special drawing rights by the International Monetary Fund of $650 billion helped to provide liquidity support to countries, with Africa receiving only $33 billion. African countries need more,” the AfDB President said.
Adesina disclosed that the request of African Heads of State and Government for developed countries to rechannel an additional $100 billion in SDRs to Africa will go a long way in helping to reduce the debt burden.
According to him the allocated SDRs through the African Development Bank, as called for by the Heads of State and Government, will be leveraged by 4 times by the Bank.
He revealed that the increase in SDRs for Africa will deliver more financial resources for Nigeria and other African countries, insisting that Nigeria and other African countries need debt relief.
He said “They(Nigeria and other African countries) cannot run up the hill carrying a backpack full of sand.
“African countries, including Nigeria, need international partnerships to tackle climate change. Africa, which only accounts for 3% of total carbon emissions suffers more from the negative effects of climate change.
” Africa loses $7-15 billion a year due to climate change, which will rise to $50 billion per year by 2030. Africa needs at least $125 billion annually to tackle climate change but receives only $28 billion a year.
“Climate change has devastated the Lake Chad Basin, affecting the livelihoods of millions of people, sparking serious conflicts between farmers and pastoralists and insecurity. Nigeria will need about $247 billion between 2020 and 2030 to tackle climate change. And Nigeria must revive the Lake Chad Basin.
“International partnerships are being developed on climate change. The African Development Bank and the Global Center on Adaptation have launched the African Adaptation Acceleration Program to mobilize $25 billion for climate adaptation for Africa.
Adesina noted that Nigeria is an investment destination in Africa, but noted that in order to attract greater foreign direct investment to the country, we(the international community and the Nigerian Government) must fix the security situation.
He said, “Capital does not like to be troubled. Ultimately, investment capital must be made comfortable. Only then can it be attracted.”