The President of the African Development Bank (AfDB) Dr. Akinwumi Adesina has stated it is time to revalue African economies based on natural resources.
He stated this in an interview with the Voice of America (VOA) sequel to the global finance summit held in Paris which drew leaders from all over the globe.
- According to him, “I’ve been pushing that we need to revalue our countries based on their natural capital…This fundamentally for me is how we are going get a lot of capital going into Africa, by the greening of African economies, by the proper valuation of carbon”.
African countries should tax multinationals and stop the illegal capital transfer
He also argued for proactiveness on the part of African countries in galvanizing resources through taxing multinationals operating on the continent and curbing illicit capital transfer from the continent to fund its infrastructure projects.
Dr. Adesina’s comments explain his interest in focusing on opportunities in the continent- its young population, abundant natural resources, sustainable development etc rather than armed conflicts, and the negative effects of climate change in terms of floods and droughts.
He said Africa’s numerous natural resources such as its timber, wildlife, oil and gas, gold and diamond and rare minerals like cobalt would positively alter the balance sheet of the continent. He said “If that re-estimation were to be taken into account, the debt-to-GDP ratio would fall dramatically”
No to toxic loans
Dr. Adesina also touched on debt and expressed his disapproval of natural resource-backed loans which he termed “toxic loans.”
- In his words, “Natural resource-backed loans should stop completely, they should never be on the table. They are toxic, non-transparent debt, which mortgages the future of countries.”
According to the world bank, such resource-backed loans constituted 10% of new borrowings on the continent between 2004 and 2018.
He praised the debt restructuring deal agreed between China and Zambia and the importance of China’s role in any discussion about debt in Africa.
- He noted “There’s no way we can solve the challenges of debt in Africa without China at the table,”
He further lamented the failure of the global financial system to work towards achieving the sustainable development goals of the UN which include ending poverty, providing education for all as well as clean water and energy.
He noted that although Africa contributed little to the current climate crisis, the continent will need around $2.7 trillion to fight climate change but barely gets enough.
It’s true, African countries must desist from using commodities that they specialize as bargaining chips for manufactured goods that developed and some Asian countries produce.