Africa’s Unique Opportunity to Promote Inclusive Growth
Six years after the global recession began, many parts of the world are still struggling to achieve growth. For the last decade, Africa’s GDP has been growing quickly. According to the IMF, it’s likely to remain that way for the foreseeable future:
The question Africans ask of their leaders now is: Will we grow fairly?
Income inequality is challenging the credibility of institutions and leaders everywhere in the world and Africa is no exception. But with robust growth rates and economies unburdened by legacy structures of the last century, Africans can innovate beyond what others are doing.
The African Development Bank (AfDB) is the most visible organization tasked with shepherding that inclusive innovative growth. Based in Abidjan, the economic capital of the Ivory Coast, 60% of the bank’s shares are held by the 54 countries in Africa, and a minority stake is held by 27 partner countries, including the U.S., China, and most countries of Western Europe. The AfDB has the strongest credit rating of any organization in Africa and in 2008, it surpassed the World Bank in lending to Africa, a signal of Africa’s growing agency in its own development.
In the coming years, expect the AfDB to pioneer approaches to inclusive growth. In May, AfDB shareholders elected former Nigerian agriculture and rural development minister Akinwumi Adesina as AfDB President. Inheriting a strong institution astride a growing continent, few tasks rank higher for Adesina than achieving more equal, inclusive growth. “As I travel across Africa, I notice two things about how we’re growing,” Adesina told me recently. “I see the sparkle in the eyes of a few. I get a sense of disenchantment and exclusion from many, many more.”
Adesina competed for the AfDB presidency against several accomplished bankers and finance ministers. He prevailed, in part, because his background is well suited to the task at hand. Adesina grew up in modest surroundings (“in a building with fifty people using one toilet”). He earned his way to a scholarship in Nigeria and a doctorate in agriculture economics at Purdue University. Later, as a project officer at the Rockefeller Foundation, he channeled resources to risk mitigation schemes that allowed banks to better serve small farmers. Then as Nigeria’s agriculture minister, he implemented a new e-voucher program to directly connect farmers with fertilizer producers and distributors – making the process more efficient by removing government as the middleman. He also partnered with Nigeria’s central bank to create a $350 million risk-sharing fund to encourage more banks to lend to farmers. Agriculture as a share of total lending in Nigeria has since grown from nearly zero to 7% in three years. Adesina’s success in applying market mechanisms to create widespread opportunity lead Forbes to name him African of the Year in 2013.
As Adesina takes the helm of AfDB, he has a unique opportunity to lead inclusive growth in Africa, and influence a world looking for markets that better serve people. Three actions will amplify his impact:
Modeling a new collaboration with the corporate sector. The relationship between government and business is under suspicion everywhere. Each country I’ve been to in Africa has some cronyism. However, the trans-African economy that extends across national boundaries is new and lacks calcified relationships. It displays a healthier, more transparent dialogue that can advance public policy and catalyze investment. That’s a nascent trend in need of a champion. In setting AfDB strategy, Adesina has the opportunity to engage the finest business minds around the world in the task of building a more inclusive growth model from the ground up.
Innovating away from past exclusion. From infrastructure to consumer purchasing, the current global financial architecture has mostly been built by the Western economic powers of the last century, using Western technologies. Africa has begun to develop its own systems, and small startups play a significant role. The Kenyan venture Cellulant produces many of the solutions that power that country’s mobile revolution, not to mention the mobile fertilizer e-voucher Adesina deployed as minister. Senegalese start up Volo recently beat the world’s largest credit bureaus in a competition to establish the first consumer credit bureau across West Africa, using biometric solutions and credit algorithms to redefine who gets credit. Adesina can challenge such disruptors to multiply the impact of the AfDB, and model financial architecture that is more accessible and transparent.
Using the bully pulpit. For all the global rhetoric around inequality, the absence of credible global voices on the topic is notable. The World Bank, beset by internal struggles in the short term, is facing challenges to its influence over the long term. The IMF’s mandate is more financial stability than fairness, which often puts it at odds with those at the base of society. The U.N. suffers from neither of these, but also has scant financial resources to actually participate in growth.
In another era, the leader of the AfDB might not have an opportunity to shape global issues of the day. But today, when new models of capitalism are sought and legacy structures are widely questioned, the leader astride a growing, resilient Africa can be the central figure of great change.
The world is not used to looking at Africa as a pioneer, and it is only beginning to grasp the region’s importance as a locus of global growth. Inside Africa, leading change agents often decry African inequality, instead of seeing it as part of a global phenomenon that Africa is singularly suited to address. Overcoming those dynamics is a challenge fit for a great institution that’s properly led.