Mozambique has highest debt to GDP ratio in Africa says S&P
The president of the African Development Bank (AfDB) has praised Mozambique’s transparency performance after the public debt crisis and has called the country “Africa’s Qatar” in terms of natural gas.
“I commend the government for transparency and for knowing that they have to enter into dialogue with the International Monetary Fund (IMF) in terms of ensuring that reforms continue and that they can clear the debt,” Akinwumi Adesina told Lusa in Lisbon at the end of a working visit to the Portuguese capital this week.
“We have an investment of more than one billion dollars in Mozambique and we are confident that the macroeconomic reforms are taking effect. We have been very supportive of the country in analysing the accounting system to see the level of debt they really have,” Adesina said, adding that “the country is taking the right steps and has enormous potential”.
Asked about IMF’s criticism on the lack of transparency the country has shown by not disclosing the entire report of Kroll’s international audit of $ 1.4 billion in hidden debt, Adesina said that he has “great confidence” over the country’s ability to recover.
“For us, Mozambique is very, very important. We will continue to give great support and have great confidence that it will recover from the impact of the shock” motivated by the disclosure of secret debts contracted by two public companies in 2013 and 2014, with the government’s endorsement.
“Mozambique may be the gas Qatar of Africa, it has incredible potential in agriculture and energy, and the AfDB is helping it to invest in the modernisation of agriculture,” said Adesina.
Since the country joined the organisation in 1977, AfDB has lent Mozambique about $2.4 billion, with a current portfolio of 29 projects in eight sectors and ongoing investments of almost U$700 million, of which more than US$200 million is committed to the Nacala Corridor.
Transport accounts for more than half of the projects, followed by agriculture, energy and mines and industry.
According to documentation made available to Lusa by the institution, “due to debt sustainability issues, Mozambique is not currently accessing AfD’s window for operations involving government financing,” and “the Bank is involved in a dialogue to improve the country’s ratings for accessing AfDB’s medium-term sovereign debt”.
— AfDB_Group (@AfDB_Group) November 14, 2017
What is the African Development Bank Group?
The African Development Bank (AfDB) Group is a regional multilateral development finance institution established to contribute to the economic development and social progress of African countries that are the institution’s Regional Member Countries (RMCs). The AfDB was founded following an agreement signed by member states on August 14, 1963, in Khartoum, Sudan, which became effective on September 10, 1964. The AfDB comprises three entities: the African Development Bank (ADB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).
As the premier development finance institution on the continent, the AfDB’s mission is to help reduce poverty, improve living conditions for Africans and mobilize resources for the continent’s economic and social development. The AfDB headquarters is officially in Abidjan, Côte d’Ivoire.
What is a development bank’s mission?
A development bank’s mission is to promote the investment of public and private capital in projects and programmes that are likely to contribute to the economic development of its stakeholders. The bank therefore finances projects run either by the government or the private sector. The AfDB is one of the five major multilateral development banks in the world that provides assistance to its regional member countries with a view to helping them achieve their development goals.
Why was the African Development Bank Group created?
The AfDB’s primary objective is to assist African countries – individually and collectively – in their efforts to achieve economic development and social progress. To this end, the institution’s main challenge is to reduce poverty on the continent.
Combating poverty is at the heart of the continent’s efforts to attain sustainable economic growth. The Bank therefore seeks to stimulate and mobilize internal and external resources to promote investments as well as provide RMCs with technical and practical assistance. In partnership with various international and development organizations, including the United Nations, the World Bank, and the International Monetary Fund, the AfDB has, since 2000, undertaken to support RMCs in their efforts to attain the Millennium Development Goals (MDGs).
To whom does the Bank Group belong and why does it have non-regional members?
The Bank Group has 80 member countries, comprising 54 regional member countries (RMC) and 26 non-regional member countries (NRMC). The non-regional member countries are primarily from Europe, America and Asia. Initially, only independent African countries could become members of the Bank. However, due to growing demand for investments from African countries and because of the Bank’s limited financial resources, membership was opened to non-regional countries.
The admission of non-regional members in 1982 gave the AfDB additional means that enabled it to contribute to the economic and social development of its RMCs through low-interest loans. With a larger membership, the institution was endowed with greater expertise, the credibility of its partners and access to markets in its non-regional member countries. The AfDB enjoys triple A ratings from all the main international rating agencies. However, the AfDB maintains an African character derived from its geography and ownership structure. It exclusively covers Africa. It is also headquartered in Africa, and its president is always African.
What types of projects does the Bank Group finance?
The African Development Bank Group finances projects, programs and studies in the areas of agriculture, health, education, public utilities, transport and telecommunications, the industry and the private sector. The Bank Group has, since 1968, also sought to finance non-project operations, including structural adjustment loans, policy-based reforms and various forms of technical assistance and policy advice. The AfDB Group has also widened the scope of its activities to cover new initiatives such as the New Partnership for Africa’s Development (NEPAD), water and sanitation as well as HIV/AIDS. The Bank Group is also involved in important initiatives on debt reduction, to the tune of US$ 5.6 billion under the Highly Indebted Poor Countries (HIPC) Initiative, which aims at reducing the debt stock of 33 eligible countries to sustainable levels. In 2006, the AfDB Group also made a commitment to cancel nearly US$9 billion owed by the countries concerned in order to help them attain the MDGs.
Akinwumi Ayodeji Adesina is the 8th elected President of the African Development Bank Group. He was elected to the position on May 28, 2015 by the Bank’s Board of Governors at its Annual Meetings in Abidjan, Côte d’Ivoire.
He took office at the Bank’s headquarters in Abidjan on September 1, 2015 and will serve an initial five-year term.
Adesina, 57, is a distinguished development economist and agricultural development expert with 25 years of international experience. He is the first Nigerian to serve as President of the Bank Group.
Adesina served as Nigeria’s Minister of Agriculture and Rural Development from 2011 to 2015, during which time he implemented bold policy reforms in the fertilizer sector and pursued innovative agricultural investment programs to expand opportunities for the private sector.
He was previously Vice-President (Policy and Partnerships) of the Alliance for a Green Revolution in Africa (AGRA). He was also Associate Director (Food Security) at the Rockefeller Foundation in New York, where he worked for a decade (1998-2008) in senior leadership positions, including as Regional Office Director and Representative for Southern Africa.
Adesina was Principal Economist and Social Science Research Coordinator for the International Institute of Tropical Agriculture (IITA), Principal Economist and Coordinator of the West Africa Rice Economics Task Force at the West Africa Rice Development Association (WARDA) and an Assistant Principal Economist at the International Crop Research Institute for the Semi-Arid Tropics (ICRISAT). From 2008 to 2010, Adesina was the President of the African Association of Agricultural Economists.
Adesina has received a number of global awards for his leadership and work in agriculture. In 2010, United Nations Secretary General Ban Ki-moon appointed him as one of 17 global leaders to spearhead the Millennium Development Goals, along with Bill Gates, the Spanish Prime Minister and the President of Rwanda. He was named Person of the Year by Forbes Africa magazine in 2013.
Adesina earned a first-class honours Bachelor’s degree in Agricultural Economics from the University of Ife, Nigeria in 1981. In 1988 he completed a PhD in Agricultural Economics at Purdue University in the United States, where he won the Outstanding PhD Thesis Award for his research work. He also won the prestigious Rockefeller Foundation Social Science Post-Doctoral Fellowship in 1988, which launched his international career in global agricultural development.
Born on February 6, 1960, Adesina speaks fluent French and English.
Source: Lusa / afdb.org
— Finanças PT (@pt_financas) November 13, 2017