AfDB pushes for inclusive growth

Kaberuka also sees deeper forces at work in the continent’s favour – megatrends, as he calls them – including major population growth (Africa’s population is expected to more than double to two billion by 2050) and the rising use of mobile phones.

Conscious that strong economic numbers alone are not enough, he also stresses the importance of inclusive growth, which has increasingly become an AfDB mantra since the organisation was founded in 1964 to promote sustainable growth and reduce poverty.

Among the keys to inclusive growth, says Kaberuka, who has a PhD in economics from Glasgow University and served as Rwanda’s Finance minister for eight years, is the management of natural resources, which have been a significant driver of economic prosperity. For the Inga dam site on Congo river in DRC the $20bn development could eventually have a capacity of 40,000MW.

Kaberuka also puts a premium on the importance of infrastructure, pointing out that no country has been able to maintain growth of seven per cent and above without solving the infrastructure bottleneck.

Of the AfDB’s active portfolio of $25 billion, 60 per cent is in infrastructure. Recent projects include a four-lane asphalt road between Bamako and Dakar, the Ouarzazate solar power generation project in Morocco, and a 1,000 kilometre electricity distribution line between Ethiopia and Kenya, which will connect 1.4 million people.

Spending on infrastructure in Africa stands at about $45 billion, but the total needed to fix or build roads that would spur regional economic integration is estimated at $93 billion.

African Finance ministers have signed off a new fund, Africa50, to unlock private money to help pay for major infrastructure projects. The AfDB will play a lead role in Africa50. There is also an urgent need for power. Together with the World Bank, the AfDB is backing the huge Inga III dam project on the river Congo, about 143 miles downstream of Kinshasa, capital of the Democratic Republic of the Congo. The $20 billion development could eventually have a capacity of 40,000MW, making it the largest hydro project in the world.

Inga III’s backers claim it could provide 40 per cent of Africa’s electricity needs. Kaberuka argues that Inga III and dams being developed by Ethiopia can benefit the whole continent. He rattles off numbers to justify the big push in hydropower: in Europe, average energy use is 12,000KWh per person annually; in a middle income country it is 5,000KWh; in Africa, it is 100KWh.

We need geothermal, coal, wind and solar.” Not that Kaberuka is unaware of the big impact of small investments. The awards given by the US Treasury last week were for relatively small-scale projects. One was to help rural farmers in Uganda by building thousands of miles of roads, establishing rural markets, and building agroprocessing production units.

Such projects show that aid can be effective, says Kaberuka, who believes the time is ripe for “smart aid”, which leverages further resources from the private sector. “Aid is not successful unless it has a sell-by date,” he says. “If aid does not stop, it will have failed.”

Kaberuka concedes that some countries recovering from conflict will need international help, but says those steadily “graduating” thanks to remittances, foreign direct investment and access to capital markets – Ghana is a prime example – should become independent of aid in the not-too-distant future.

The stars seem aligned for further progress in Africa, but Kaberuka strikes a note of caution befitting a banker, reiterating the need for the various factors to come together. “There is the quality of growth, it has to be inclusive,” he says. “There is the need for infrastructure and economic integration – and sound management of resources.”

Agencies