News and Views
African Development Bank (AfDB) to manage part of Africa’s $500bn foreign reserves
Obasanjo, Kagame, other leaders canvass inclusive growth in Africa
A PORTION of the $500 billion foreign reserves, being kept in the Western world and Asia by African countries, may from next year, come under the management of the African Development Bank (AfDB).
Specifically, AfDB, is expected to deploy the portion, that would be determined by African leaders, to high yielding investment platforms within the continent, as a means of resource mobilisation to cater for other pressing financial challenges.
The plan, which is at advance stage and awaiting the endorsement of the African Finance Ministers at the next Spring Meeting of the International Monetary Fund (IMF) and the World Bank in the first quarter of 2013, is part of strategies proposed by the AfDB to leaders of the continent, as strategic home grown option to address mounting external debt and other financial crises facing member nations of the African Union.
President of AfDB, Donald Kabureka, who revealed this in Kigali, Rwanda, at the on-going seventh African Economic Forum, said the proposal was presented to the African Finance Ministers at the last IMF/World Bank yearly meetings in Tokyo, Japan, and it only remained the fine-tuning of the legal frameworks and technical details to pave way for the plan’s implementation.
Kaberuka argued that it is more rewarding to invest part of the reserves in high interest yielding ventures back home in Africa than continuing to keep them in safe havens.
“This is part of our recommendations, which stressed the need to look inward for solution to our problems. These reserves, about half a trillion dollars belonging to about 54 African countries, are largely kept in low yielding but secured institutions because of the challenges we have in Africa.
“But can you figure out what impact this can have on Africa if we take a portion of this amount, say five per cent and invest them in high yielding returns infrastructure platforms.
“This plan is part an inclusive agenda by AfDB to the continent to begin to mobilise resources locally and solve her own challenges. The proposal was presented to the African Finance Ministers’ Forum in Tokyo, Japan at the last IMF/World Bank meeting and is expected to be ratified at the next Spring Meetings. The bank staff are at the moment working on legal and technical issues to pave way for the plan to take off,” Kabureka added.
The conference which has attracted over 500 papers by experts from academics and policy maker and implementation has in attendance, Nigeria’s former President, Chief Olusegun Obasanjo who called on African leaders to imbibe equality, transparency, popular participation in politics and the economy to succeed with the inclusive growth vision.
Obasanjo and the former Prime Minister of Sao Tome and Principe, Joaquim Rafael Branco, led discussions on a session on the impact of good governance on inclusive growth.