Since Akinwumi Adesina took on the presidency of Africa’s foremost multilateral development bank in 2015, the African Development Bank has seen its capital base grow from $93 billion to an impressive $318 billion. Adesina asserts with confidence, “the Bank you see today is different.” A highlight of his tenure has been reinforcing the Bank’s strength by encouraging both regional and non-regional shareholders to enhance its capital, thereby securing its stability for the foreseeable future.
Nonetheless, in a candid and comprehensive interview conducted during COP29 in Baku, he acknowledges that there is still much to do and several challenges remain unaddressed.
Climate Leadership
A foremost challenge is the climate crisis, where the Bank has claimed a leading role both on the continent and internationally.
“For Africa, the climate crisis poses one of the most significant challenges, with potential losses estimated between $7 billion and $15 billion annually. We predict this will rise to about $50 billion per year by 2030.” Under Adesina’s stewardship, the Bank has heightened its focus on this emergency, particularly by increasing its financing for climate-centric projects.
“When I became president in 2016,” he explains, “the Bank directed only 9% of its total lending towards climate initiatives. Recognizing that climate finance needs to play a more crucial role, especially in Africa’s adaptation efforts, we escalated this commitment. By 2022, 45% of our financing targeted climate, and now we are at about 50-55%, beyond the 50-50 benchmark.”
These efforts have attracted recognition from the United Nations; in 2021, Secretary-General António Guterres commended the Bank for its exemplary contributions to climate matters.
“In 2019, the African Development Bank set a landmark by allocating half of its climate finance to adaptation initiatives. Some donor countries have mirrored this action. Everyone else must follow suit,” stated Guterres.
Adesina attributes his strategy towards climate initiatives to his core principle: “Whenever I face a challenge, my approach is not to merely lament about the lack of support; instead, I focus on crafting innovative solutions to address the problem. That is exactly what we have done regarding climate change.”
One of these innovations is the Climate Action Window, a funding channel created to “climate-proof” smaller nations. This initiative began with $429 million in initial funding as part of the African Development Fund’s 16th replenishment and has since attracted over $4 billion in subscriptions. With a focus on climate adaptation (75%), mitigation (15%), and technical support, this program aims to benefit millions by delivering climate data to 20 million farmers, restoring a million hectares of degraded land, and enhancing renewable energy access for 12 million people, alongside improved water sanitation for 9.5 million.
Now, he mentions, the World Bank’s International Development Agency is considering establishing similar funds; the International Fund for Agricultural Development has already initiated such measures. Together with the Global Centre on Adaptation, the Bank has introduced the African Adaptation Acceleration Program, the largest climate adaptation effort globally, with a budget of $25 billion aimed at bolstering climate resilience across the continent through investments in critical sectors like green hydrogen, green ammonia, and energy efficiency. Additionally, the Bank has launched the Alliance for Green Infrastructure, targeting $10 billion for sustainable project financing. Adesina has actively sought support from all G7 leaders for this initiative, which has culminated in a $175 billion project preparation facility.
Supporting Agriculture
Agriculture in Africa is already feeling the effects of climate change, with diminishing crop yields attributed to altering weather patterns. Adesina argues that the Bank’s Technologies for African Agricultural Transformation initiative represents “the most critical action we have undertaken for global agriculture.” At the start of his presidency, he committed to boosting food production. “I asserted that we would invest $25 billion in agriculture. I understood that to achieve self-sufficiency and support global food demands, we needed to more than double African agricultural productivity.”
The initiative was born from this commitment, integrating the global research and development framework of the Consultative Group on International Agricultural Research with national agricultural systems and the private sector to deliver advanced agricultural technologies to farmers throughout Africa. Over the last four years, this program has positively influenced over 22 million farmers by providing climate-resilient solutions, improving food security, and promoting sustainable practices.
“During the 2018-19 drought in East Africa, we provided assistance through TAAT [the Technologies for African Agricultural Transformation program] with water-efficient maize, reaching 5.8 million households and aiding 30 million individuals who avoided the drought,” he recounts.
The initiative has also produced drought-resistant rice, which has been distributed to 3.2 million households in West Africa. These concrete efforts counter the ongoing disappointment stemming from unmet climate commitments, particularly the $100 billion annually promised for climate adaptation by wealthier nations.
At this year’s COP29, the prior target was replaced with a more ambitious goal of $300 billion annually by 2035 – is this feasible? Adesina believes that although developed countries have to enhance their commitments and deliver on their promises, Africa cannot afford to wait passively. “We all share a collective responsibility to tackle climate challenges and protect our planet. What matters is not just the words we speak, but the actions we take. Hope is crucial, but postponed hope leads to suffering.”
Collaborating with MDBs
Consequently, multilateral development banks (MDBs), including Adesina’s institution, are making funds available and cooperating more than ever before. “We are refining our processes, ensuring accountability in our reporting, improving communication, and fulfilling our obligations under global commitments,” he emphasizes.
“For example, the annual $100 billion commitment from developed countries was facilitated by MDBs. Last year, we collectively lent $125 billion, surpassing the promised $100 billion,” he points out.
According to Adesina, the Bank plans to continue playing its part. “Here at COP29, we’ve reaffirmed our commitment to climate finance as an MDB. By 2030, we [as MDBs] aspire to support $170 billion annually, with $120 billion dedicated to low-income and middle-income countries. Furthermore, we aim to leverage $65 billion for private climate finance and about $45 billion specifically for climate adaptation.”
Nevertheless, other stakeholders must also step up for the overall benefit.
“What I am conveying is that the newly established collective quantified goal requires participation from all. It’s essential to acknowledge the principle of collective but differentiated responsibility. Developed nations, which contribute the majority of emissions, must honor their commitments. They need to contribute,” Adesina stresses.
“Firstly, there’s only so much juice you can extract from an over-squeezed orange. Eventually, you must find more oranges to extract from. While multilateral development banks will do their part, increased capital is crucial. More paid-in capital is necessary to take greater risks for private sector engagement. Additionally, addressing climate challenges cannot rest solely on additional loans—many countries need grants as well.”
Adesina views debt as yet another major issue, with around 22 countries on the continent facing moderate to high risks of debt distress.
“We have to find a solution to this. This year, debt service repayments are estimated to reach approximately $74 billion, compared to just $17 billion in 2010.”
Moreover, African nations often face what is widely considered an unjust risk premium on loans. This is why Adesina calls for the creation of an African credit rating agency, one that would possess superior data and insights into the continent to improve evaluations of countries’ fiscal situations.
“Some may think it’s just the African Union establishing an agency for itself. In reality, it would be a professionally managed, independent entity providing credible assessments,” he clarifies. “When you consult a doctor and undergo tests, you have the right to seek a second opinion, don’t you? It’s time for that to happen.”
The Bank is also consolidating its investment guarantee mechanisms into a single organization, the Africa Investment Guarantee Agency, further facilitating investment de-risking throughout the continent.
Tapping into Africa’s Rights
One approach that Adesina views favorably is the reallocation of the International Monetary Fund (IMF) Special Drawing Rights (SDRs), supplementary foreign exchange reserve assets established by the Fund, which he identifies as a potential “magic bullet to resolve global financing challenges.” SDRs were allocated during the 2008 financial crisis and following the Covid-19 pandemic, with Africa receiving $33 billion, or 4.5% of the total global allocation of $650 billion.
Adesina is not alone in believing that unused resources from the Fund should be directed to countries in need, but he has taken it upon himself as a personal mission. “I have always believed that SDRs could be maximized because in a world with diminishing concessional financing, leverage is vital. We need to achieve leverage at minimal or no cost to taxpayers.”
To maximize their impact, the Bank has established a framework that allows SDRs to be redirected to multilateral development banks, complementing existing IMF mechanisms like the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust.
“The beauty of this arrangement lies in its potential for four-fold leveraging; however, since it’s hybrid capital, coupled with co-financing from our triple-A rated financial institution, the actual leverage could escalate to eight times.”
The framework designed by the Bank also ensures that SDRs maintain their status as reserve assets and includes provisions for retrieving funds should beneficiaries face liquidity challenges. Adesina asserts that these solutions have received backing from both the staff and the board. “We are zealously pursuing this, and I’m truly pleased… we must remain adaptable with instruments and leverage them to maximize global benefits,” he emphasizes.
The Optimist-in-Chief Addresses Insecurity
Adesina, who refers to himself as Africa’s “optimist in chief,” states that the Bank will persist in leveraging its position to promote the continent’s interests.
“I have high hopes for Africa, as I am optimistic about the continent’s ability, potential, and the necessity for Africa to assert its identity on the global stage and unlock its vast assets. The aim is to keep accelerating and delivering more,” he asserts. Yet, Adesina admits to worries about threats to peace and security. Recent years have seen a rise in instability across the continent, highlighted by devastating conflicts in Ethiopia and Sudan, as well as coups and turmoil in the Sahel.
Many of the underlying political tensions relate to the lack of jobs and opportunities for Africa’s burgeoning youth population. While allocating resources to address some immediate impacts and causes, the Bank is also seeking long-term and sustainable solutions to youth unemployment.
“We cannot have 477 million young individuals aged 15 to 35 without offering them financial support. This is why we are implementing what we call Youth Entrepreneurship Investment Banks.”
These institutions will provide financial assistance, technical support, and incubation services for youth-led businesses, offering equity, debt, and other financial instruments while guiding them through their business growth phases. An initial allocation of $16 million for Liberia and $100 million for Nigeria has been approved by the Bank’s board, with plans for expansion to Côte d’Ivoire, Togo, Kenya, and Tunisia. Six decades following its inception, the Bank continues to unearth new and innovative pathways to achieve its foundational mission amid the constantly changing global and local economic landscape. Adesina remains confident that the Bank will keep contributing to Africa’s resurgence.
“I assert that the African Development Bank must continue to enhance its ability across all these areas. We’ve achieved success up to now, but I believe there is much more to accomplish as we move forward,” he pledges.
