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$4trn needed to salvage SDGs, says AfDB

By Stanley Onyeka, Lagos

$4trn needed to salvage SDGs, says AfDB

By Stanley Onyeka, Lagos

African Development Bank (AfDB) Group President, Akinwumi Adesina has emphasized the critical need for significantly increased financing to meet the Sustainable Development Goals (SDGs).

Speaking at the Islamic Development Bank’s 50th anniversary celebrations in Riyadh, Saudi Arabia, he highlighted a growing annual financial shortfall of $4 trillion, a gap that threatens to derail efforts to achieve the SDGs by 2030.

Dr. Adesina addressed a distinguished audience, including high-level officials, financial leaders and private sector representatives gathered to mark the occasion. 

The session focused on assessing the financial strategies essential for advancing global development amidst a landscape marked by economic instability and escalating environmental challenges.

The AfDB President noted that the current annual gap of $4 trillion, up from $2.5 trillion in 2015, has been propelled by recent global economic pressures and the lingering impacts of the Covid-19 pandemic.

He detailed the critical role of multilateral development banks in addressing these needs through increased collaboration and innovative financial solutions.

…the current annual gap of $4 trillion, up from $2.5 trillion in 2015, has been propelled by recent global economic pressures and the lingering impacts of the Covid-19 pandemic.

Strategic response to global issues

Mr. Adesina also spotlighted the AfDB’s strategic High 5 program as a cornerstone for progress, as underscored by an independent analysis by the United Nations Development Program. 

The High 5s—namely, Light Up and Power Africa; Feed Africa, Industrialize Africa, Integrate Africa, and Improve the Quality of Life for the People of Africa—are not just ambitious goals but a strategic blueprint for the continent. 

Achieving these High 5s, he pointed out, would mean accomplishing nearly 90% of the SDGs for Africa.

In this regard, Adesina highlighted five core areas where immediate action and innovative funding are crucial: Climate change, food security, energy access, health security, and mobilizing more resources for SDGs.

Climate Change: The AfDB President described climate change as the most significant challenge to achieving the SDGs, detailing the devastation it brings to economies through droughts, floods, and cyclones. Africa is the worst affected region in the world, yet it receives the least in terms of climate financing.

He said: “Africa will need $277 billion per year to address climate change, yet it receives only $30 billion annually. The AfDB has set a target to raise $25 billion for climate adaptation by 2025.”

Food Security: the AfDB committed $25 billion to support Africa become self-sufficient in food by 2030. This has recorded key successes in transforming agricultural productivity and food security across Africa. 

Energy Access: Highlighting the disparity in electricity access, where over 675 million people worldwide lack electricity with 80% of them in sub-Saharan Africa, and he underscored the Bank’s efforts through the Desert-to-Power initiative.

This project is developing 10,000 megawatts of solar power across the Sahel and will provide electricity access for 250 million people.

Health Security: With a significant gap in health services in Africa, Mr. Adesina advocated for increased investment in health infrastructure and local pharmaceutical capacities to prepare for future pandemics.

He pointed to the current annual investment of $4.5 billion in health infrastructure as significantly insufficient when measured against the actual need of $25 billion.

The AfDB Group also committed $3 billion towards quality health infrastructure and a further $3 billion for developing the pharmaceutical industry in Africa. 

This includes a substantial investment to facilitate the production of medicines and vaccines directly on the continent, bolstered by the creation of the Africa Pharmaceutical Technology Foundation, which aims to broaden access to vital technologies and intellectual property rights.

Mobilizing Resources: Addressing the need for innovative financing, Mr Adesina spoke of groundbreaking steps taken by the AfDB, such as the issuance of $750 million in landmark hybrid capital.

This financial instrument, a first for multilateral development banks, is intended to serve as equity, enhancing the Bank’s lending capacity.

He also said that in a joint initiative with the Inter-American Development Bank, the AfDB is pioneering the use of Special Drawing Rights (SDRs) as hybrid capital, subject to approval by the IMF’s board. 

This move could potentially quadruple the Bank’s leverage capacity, significantly amplifying the financial resources available for SDGs.

Additionally, Mr. Adesina underscored the pivotal role of the private sector in scaling up SDG investments from billions to trillions. 

He advocated for harnessing the power of the $128 trillion in global institutional investor assets through more extensive use of guarantees, development of investable projects, and addressing foreign exchange and currency risks.

In his introductory remarks, the IDB President, Mohammed Al Jasser, said crises such as climate change, the pandemic, and ongoing conflicts continue to threaten the hard-won gains achieved over decades.

In addition, Al Jasser said: “the stark reality we face is that the global financial system has not kept pace with the urgency required to realize the SDGs. We must collectively work towards a global financial system that fosters a more inclusive, equitable, and sustainable future.

“It is within this context that Islamic finance adds value – prioritizing not just financial returns, but the holistic well-being of individuals and our planet. Its principles of shared prosperity, risk-sharing, and ethical investment present a clear path toward bridging the SDGs financing gap.”

Mr. Adesina also signed a series of agreements with various Saudi agencies. These include with the CEOs of the Saudi Exim Bank, Saad Al-Khalb, a memorandum of understanding (MoU), to strengthen bilateral trade and cooperation between the Kingdom and the African continent, and with the Saudi Fund for Development CEO, Sultan bin Abdulrahman Al-Marshad.

Through the MoU, the two sides will work to exchange experiences and knowledge, promote best practices in co-financing, contribute to achieving sustainable development goals and maximize development impact, among others.

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