AfDB invests $12bn on energy, warns against foreign loans

The African development Bank (AfDB) is to spend $12 billion in budget support for infrastructure projects on energy in some African countries, including Nigeria in the next five years.

It also warned the countries against a rush for international instructions’ loans

Disclosing this, the AfDB President, Akinwumi Adesina, said the foreign loans cannot help in real economic growth of the continent.

Adesina, who spoke to foreign reporters on Friday, said the countries can still steer clear of international borrowing, despite their grappling with worst economic slump in more than a decade, if they focused more on management of tax revenue and exploring other resources.

This is simply because most of the countries in the continent have untapped resources and tax-base, estimated at about $500 billion per annum that could make huge capital available for development.

Read also: Nigeria begs AfDB for $1bn lifeline for 2016 budget

He said African pension funds had a pool of $334 billion, sovereign wealth funds $164 billion and there was some $56 billion of foreign direct investment looking for bankable projects.

Citing Nigeria with its worst case study, he said efforts should be made to boost tax revenue with which to survive its economic downturn, triggered by the slump in commodity prices and the slowdown in China economy, expected to last for another three years.

Apart from Nigeria, he hinted, many nations are struggling with dwindling revenues, rising debt and wide budget deficits in the low growth environment after taking on foreign debt during the boom years.

He illustrated how Zambia, Ghana and Mozambique were among foresighted of African states that took advantage of low global interest rates and high commodity prices to issue billions of dollars of debt as international investors hunted for yield.

It will be recalled that a total of $12 billion of eurobonds were sold last year by African countries, with a sharp drop compared with about $26.5 billion between 2006 and 2014, according to the AfDB.

The International Monetary Fund forecasts that sub-Saharan Africa’s gross domestic product will grow at 1.6 per cent this year, a sharp decline from 3.5 per cent in 2015, and well below the average of 5-7 per cent over the past decade.

By Emma Eke….

RipplesNigeria …without borders, without fears

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now