Sharm El-Sheikh – Egypt President Abdel Fattah Al-Sisi has called on multilateral financial institutions to reconsider the criteria and conditions that qualify countries to obtain soft loans, so that they could be available to low- and middle-income countries alike, especially in light of the escalating cost of borrowing, and the increase in debt service burdens.
This came in the speech delivered by the President during the opening of the Annual Meetings of the African Development Bank Group in Sharm El-Sheikh on Tuesday.
Several heads of African states and regional institutions participated in the inauguration ceremony, led by Ghazali El Othmani, President of the Comoros Republic and President of the African Union; Emmerson Mnangagwa, President of Zimbabwe; and Moussa Fakih, Chairperson of the African Union Commission. There were also a large number of heads of government and finance ministers, central bank governors, a group of representatives of the private sector, academics, and development partners from 81 regional and non-regional member countries of the African Development Bank Group.
Al-Sisi said that Egypt’s hosting of the event, for the third time, is an affirmation of its deep interest in strengthening international and regional endeavours in support of development efforts in all parts of the African continent.
He said that the escalating and intertwined challenges facing the countries of the world are well known. With the emergence of signs of recovery from the negative effects of the “Covid-19” pandemic on the global economy, the “Russian-Ukrainian” crisis and international political tensions have added to the global scene, whose effects appear in severe disruptions in global supply chains, and waves of sweeping inflation.
President Al-Sisi added that this scene was reflected more strongly on the economies of developing countries, especially the economies of the countries of the African continent, which are already suffering from several internal challenges that require unconventional ideas to search for financing solutions that contribute to advancing more projects, especially urgent in the areas of facing the challenges of climate change and sustainable development.
He referred to the size of some financing needs for the countries of the African continent, according to the estimates of the United Nations and the African Development Bank, reaching no less tha $200bn annually to achieve the goals of sustainable development, and $144bn annually to address the negative effects of the coronavirus pandemic, along with $108bn annually to finance projects to prepare and upgrade the level of infrastructure.
Al-Sisi said: “Here the importance of these meetings, and the role of the African Development Bank, in providing appropriate financing solutions, to the needs of the countries of the continent that achieve the difficult equation, between providing the huge funds necessary to achieve development aspirations on the one hand, and reducing the risks of these funds on the other hand.”
He added that the problem of climate change and its negative repercussions is not limited to one country or a specific region, but rather an existential issue that should be at the top of the strategic priorities for all countries of the world.
President Al-Sisi added that, contrary to what some might think, the negative repercussions of climate change are increasing on the least developed countries, which is evident in the countries of the African continent, where these changes lead to high rates of drought, widening desertification, and a decline in agricultural crop productivity.
He added that estimates indicate that the risks associated with drought only, in the countries of the African continent, have led to losses exceeding $70bn in addition to causing a reduction in the growth of the agricultural productivity of the continent by about 34%, which adds up, in Africa, to about $3trn in required financing.
President Al-Sisi explained that in this regard, it is worth noting the positive results of the outputs and recommendations of the United Nations climate summit COP27, which Egypt chaired last year, foremost of which is the agreement to establish a fund, dedicated to providing the necessary financing, to compensate for losses and damages, for countries affected by the climate crises, such as floods, droughts, and other weather disasters.
Moreover, Hassan Abdullah, Governor of the Central Bank of Egypt and Chairperson of the Board of Governors of the African Development Bank Group, said that in light of the pressures that most of the continent’s countries suffer from, the situation forces encouraging the private sector to direct more of its investments to environmentally friendly projects, and to shift from Investments based on debt instruments to actual investments in capital, and strengthening partnership between the public and private sectors. The meetings this year coincide with many challenges, the most prominent of which is the disruption of the performance of the financial sectors, the rise in inflationary pressures, the geopolitical turmoil, and the challenges of the Coronavirus crisis.
He explained that all of this led to a confinement in the ability of the governments of African countries to implement their plans for the environmental dimension, sustainability and community development.
He stressed that the African Development Bank plays a pivotal role in maximizing the confidence of private sector investors, which requires the existence of new and innovative financing mechanisms aimed at strengthening the capacity of African countries in facing these challenges of achieving stability and development.
Despite Africa’s low contribution to carbon emissions, it bears greater burdens resulting from climate changes, as a large number of Africa’s population suffers from water shortages, for example due to climate changes, which threatens to decrease the volume of water-dependent agricultural output by half.
He pointed out that during the year 2020, the volume of domestic and international financial flows allocated to the climate in Africa amounted to $30bn, representing only 12% of the volume of funding required, which reflects the size of the financing gap faced by the countries of the continent.
He added that in light of the pressures that the continent’s budgets suffer from, it is necessary to encourage the private sector to direct its investments to environmentally friendly projects, to shift from investments based on debt instruments to actual investments in capital, and to strengthen the partnership between the private and public sectors.
Abdullah said that with regard to international and regional financing institutions, it is appropriate to consider adopting a new approach to support African countries so that their role is not only in providing loans, but by encouraging the flow of investments in the field of sustainable development and the environmental dimension.
He called for the need for these institutions to adopt a clear message to avoid the expansion of high-cost lending and to direct their financing programs to investments.
President of African Development Bank Group Akinwumi Adesina praised President Al-Sisi’s courageous decisions to accelerate the pace of achievements in the field of renewable energy.
In his speech at the conference, Adesina said that the achievements made in Egypt prove that change can happen quickly when there is a real will.
He pointed out that Egypt launched the linkage initiative between water, food and energy, which is an attempt to mobilize $1.4bn in order to deal with the effects of climate change, led by the African Development Bank.
Adesina added: “We have exceeded this goal, and we have succeeded, with our partners, in mobilizing $2.2bn in the development path.”
He called out developed nations for not honouring the $100bn-a-year climate finance pledge they made to developing countries.
“Africa is being short-changed in climate finance. Africa is choking,” he told the journalists.
“Your role as the media is very important to help carry the news – the news of efforts being made, challenges being faced, and the fierce urgency of now in getting much-needed climate finance to Africa,” the Bank chief said.
According to the bank’s estimates, Africa will need $2.7trn by 2030 to finance its climate change needs.
Adesina said: “If Africa had that money, the Sahel would have electricity. If Africa had that money, we would recharge the Chad basin, which has provided livelihoods for millions of people in Chad, Nigeria, Niger and Cameroon. Everything will change in all those countries; we will green the Sahel. We will ensure every single African country against catastrophic weather events.”
And he touched on the fact that the African Development Bank plays its role well and positively, saying the African Development Bank is spearheading climate adaptation efforts across the continent and has devoted 63% of its climate finance, the highest among all multilateral development banks.
He added that the Bank and the Global Center for Adaptation have launched the African Adaptation Acceleration Program (AAAP) to mobilize $25bn to support Africa’s adaptation to climate change. It has also established Alliance for Green Infrastructure (AGIA), in partnership with other institutions, to mobilize $10 billion in private investment for green infrastructure in Africa.
The head of the African Development Bank Group said that developed countries must fulfil their commitments to provide $100bn annually to developing countries to support them in facing climate change.
He pointed out that developing countries need more financing, and the role of the private sector must be activated to address the repercussions of climate change, pointing out that the African Financial Climate Alliance was launched to bring together various financial institutions and stock exchanges in Africa in order to ensure an integrated environmental system.
For his part, Moussa Fakih, Chairperson of the African Union Commission, affirmed that the annual meetings of the African Development Bank Group, hosted by Egypt in Sharm El-Sheikh, are an opportunity to finance climate change to facilitate the green transition in the African continent, stressing Africa’s need for financing for development.
Fakih said: “The agenda of the annual meetings currently held in Sharm El-Sheikh focuses on issues of utmost importance, which are the problems that impede development in the African continent, including confronting the effects of climate change and the transition towards a green economy,” describing the effects of climate change on the African continent as ” implicit.”
The Chairperson of the African Union Commission stressed the need to look at the reality of needs in a comprehensive manner in the medium and long term, stressing the need to unify collective action efforts to attract foreign capital investments.
Fakih explained that the African continent is subject to taxes in a way that he described as “unfair” as a high-risk region, calling on senior officials responsible for financing to take concrete and specific positions and actions towards achieving development in the African continent.
