Daniel Magnowski Abuja
The next president of the African Development Bank (AfDB) will take over an institution entering a much tougher economic environment than the one Donald Kaberuka inherited when he won the job a decade ago.
Kaberuka’s successor, who will be elected on May 28 during the AfDB’s annual meeting in Abidjan, Ivory Coast, faces a slowdown in some of Africa’s biggest economies after a plunge in oil prices and rising political risk.
“There’s uncertainty about the commodity price outlook and there are security challenges in some more prominent markets like Kenya and Nigeria that weren’t there ten years ago,” Ridle Markus, a strategist at Barclays’ Africa unit, said. “There are a lot more medium-term challenges they’ll have to overcome.”
While sub-Saharan Africa has grown faster than any region in the world except developing Asia in the past ten years, an almost 40 percent slump in the price of oil in the second half of last year and declining metal prices are clouding the outlook for economies such as Nigeria, Angola and Zambia. The International Monetary Fund last month lowered its economic growth forecast for sub-Saharan Africa by 1.25 percentage points to 4.5 percent.
In West Africa, where the worst outbreak of Ebola has crippled Sierra Leone, Guinea and Liberia, a 53 percent plunge in iron ore prices since the beginning of last year has hampered growth.
Economic growth on the continent can return to levels recorded before the global financial crisis in 2008-2009 if commodity prices stabilise, the AfDB yesterday said in its African Economic Outlook report. The bank is estimating 4.5 percent expansion in Africa this year and 5 percent in 2016.
Candidates for the AfDB presidency say the bank must increase efforts to keep wealth on the continent and share it more equally among citizens if it wants to stay relevant and meet its aim of reducing poverty.
“The biggest challenge facing Africa today is to transform the tremendous wealth of Africa for the benefit of Africans,” Jaloul Ayed, one of the eight contenders for the position and a former finance minister in Tunisia, said in a debate in Washington last month.
The AfDB’s financing in Africa is overshadowed by lenders such as the World Bank and China’s government. Loans and grants totalled $7.8 billion (R92.65bn) in 2014, 22 percent more than the previous year. The World Bank committed a record $15.3bn to sub- Saharan Africa projects in the fiscal year ending June 2014.
AfDB lending is “fairly small in the context of Africa’s overall investment needs, and it has grown less quickly than the wider African economy,” Alan Cameron, an economist at London-based Exotix Partners, said in an interview in Abuja, Nigeria’s capital. “It will take a higher-profile president to really make the bank relevant.” – Bloomberg