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Dear friends, colleagues and partners with Africa, I wish to thank you for inviting me to speak at the Standard Chartered Bank Africa Summit. When I was approached to consider delivering the keynote speech, I did not hesitate. How can someone known as “Africa’s Optimist in Chief” not accept to speak on Africa!
While it has sold down several of its retail banking operations, with many of them bought by Access Bank Holdings, while shifting its focus more towards areas of comparative advantage in commercial banking, investment banking, corporate finance and wealth management, Standard Chartered Bank will continue to be strategic for financing Africa’s growth.
That is why the African Development Bank launched its High 5 strategic programs ten years ago: to Light up and power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the Quality of Life of the people of Africa.I am delighted that in the past ten years under my Presidency, the High 5s of the African Development Bank impacted on the lives of over 565 million people.
The size of the food and agriculture market in Africa is estimated to rise to $ 1 trillion by 2030. Vast opportunities exist for agribusinesses and Agri-tech companies to apply digital tools to raise productivity and incomes. Equally vital is expanding their access to digital services.
The flow of capital to Africa, however, has not matched its huge potential compared to other emerging markets. According to UNCTAD, while foreign direct investment flows to Africa reached an all-time high of $94 billion in 2024, a 75% increase from the previous year, this represents 6% of global FDI flows. There is still lots of scope to expand FDI inflows into Africa given its huge needs.
The African Development Bank is investing massively in the development of Special Agro-industrial Processing Zones across Africa, enabled with infrastructure to support the establishment of industries to process and add value across a wide range of agricultural products. I am pleased that in Nigeria, the African Development Bank and its partners have supported the launch of the special agro-industrial processing zones in the first 8 States of the Federation and the Federal Capital Territory. The African Development and partners have already mobilized $2.2 billion to implement the phase two of the special agro-industrial processing zones to expand into 24 more States in Nigeria.
To maximize benefits from its abundant minerals and metals, Africa must end the export of raw minerals and metals and establish processing facilities to allow it to capture higher share of the value, create jobs and support local businesses through skills and technology transfer via local content laws.
A good example is the case of Dangote Petrochemicals Complex which at $24 billion, is now supplying petroleum and petrochemicals to the Nigerian market, other African and global markets. To further promote market-based platforms for developing infrastructure, the African Development Bank established Africa50, for project development and project finance, to deliver market rates of return. Africa50 is becoming one of most diversified asset managers in the infrastructure space with verticals in project development, early-stage equity investments, private equity funds and mezzanine funds.
I would now like to turn to the role that private capital, including private equity funds, venture capital funds and institutional capital can play.: Private equity firms are showing long-term confidence in African markets. Private equity fundraising in 2024 saw an increase to $4 billion, compared to $1.9 billion in 2023, an impressive 117% surge.
To expand the growth of these funds it will be critical to improve exits for investors, develop and deepen domestic capital markets, expand the listings of small and medium sized businesses through IPOs, the establishment of small and medium-sized equity boards on stock exchanges, improved regulatory environment and investor protection.
Institutional investors facing capital allocation decisions will want to see bankable projects with sufficiently high risk adjusted returns. Developing large pipelines of such bankable projects is challenging, although progress is being made, such as through Africa50 and other infrastructure funds. Risks will need to be reduced, including project and market risks, and political risk.
This ‘Africa risk premium’ costs Africa $75 billion annually in debt service costs, according to the United Nations Development Program. An IMF study shows that African governments pay an average of 50 basis points above global peers during “normal times” and up to 120 basis points during periods of global stress, simply for issuing the securities from Africa.
There are several instruments available for reducing risks to capital investment in Africa. The African Development Bank, relying on its AAA global credit rating, provides partial credit and partial risk guarantees to de-risk financing. These have been very successful in leveraging private capital investments, as well as supporting sovereigns to access global capital markets with lower coupon rates, while securing longer maturities for their debt securities.
The guarantee allowed Standard Chartered Bank to extend the tenor of the loan and optimize its pricing in support of Africa’s development. I am delighted that this transaction was awarded the Sovereign Loan Deal of the Year at the lender’s conference on Bonds and Loans in Cape town. The GEMS reports, which covers private and public lending and sovereign and sovereign guaranteed lending, can be used to complement the rating agency data pools to inform a better assessment of risk. The GEMs database shows that the risk of default in emerging markets, including Africa, are within the boundary of what global capital allocators face elsewhere.
Since the initiation of the Bank’s Social Bond Issuance Framework in 2023, the African Development Bank has risen to the top of the rankings of social bond issuance by multilateral development banks, issuing a total of $14 billion of social bonds in the past eight years. The African Development Bank has been a long-term issuer of global benchmark bonds in US dollars and more recently in Euros market.
The African Development Bank broke new ground again last year with the execution of its first ever private sector hybrid capital transaction by a multilateral development bank. The $750 million hybrid capital was a huge success, with over 275 investors participating with a book order of $5.1 billion, the largest ever book order achieved by the African Development Bank.
In today’s environment with declining aid, the rechanneling of the SDRs for use as hybrid capital is transformational. It will be at zero costs to taxpayers in the countries allocating their SDRs. African Development Bank, over the past ten years, has transformed itself into a global financial institution with reputation and capacity to help tilt global capital to Africa. It is Africa’s only financial institution with AAA credit ratings, which under my leadership we maintained for the past ten years.
I am proud to be leaving behind a global financial institution that will be able to work with global partners, powered by financial and institutional innovations, to further tilt global capital to Africa. Third, by mainstreaming best practices on Environmental, Social and Governance and climate proofing into your corporate clients’ portfolio.
First, a more stable macroeconomic and fiscal environment as well as more predictable regulatory environment for investors.
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