Africa: AIF – Africa’s Pathway Out of Covid-19 Economic Quagmire?

In 2018, the African Development Bank (AfDB), under the forward-thinking leadership of its President, Dr. Akinwumi Adesina, founded the African Investment Forum (AIF).

This it did with the African Development Bank, African Export-Import Bank (Afreximbank), European Investment Bank, Development Bank of Southern Africa, Africa Finance Corporation, Islamic Development Bank, Trade and Development Bank, and Africa50 as founding partners.

The historic move was informed by the need for a premier multi-stakeholder and multi-disciplinary transactional platform for accelerating the closure of Africa’s investment gaps and ultimately transform the African continent.

It was informed by the need for a platform for leveraging investments from the private sector, African and global financial institutions, global pension funds and sovereign wealth funds, and other institutional investors for Africa’s development.

It was also informed by the need to manage perception and change the negative African narratives. This includes reduction of perception risk and branding the Africa market along its strengths, not weaknesses.

The Africa Investment Forum’s vision is anchored on building a premier platform that tilts the balance of capital towards the continent’s critical sectors with the aim of achieving the Sustainable Development Goals (SDGs), Agenda 2063, as well as the AfDB’s High 5S, namely, Light up and Power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the Quality of Life for the People of Africa.

Thus, the AIF is very central to Africa’s quest to emerge from a perpetually poor and aid-seeking continent to a flourishing one living the dreams of the nationalists who championed the continent’s independence from their various colonial masters.

True to the founders’ dream, the AIF has continued to power from strength to strength, as its Market Days events clearly show.

The maiden edition of AIF’s Market Days attracted $39 billion in investment interests for bankable deals in Africa.

It equally attracted 1,943 participants from 87 countries, including the Presidents of South Africa, Nigeria, Ethiopia, Ghana, Cameroun, Senegal, Guinea, and Rwanda. In attendance were 277 Direct Foreign Investments (DFI) and it recorded 169 official bilateral meetings, while 63 deals were discussed.

The second edition, which held in 2019 attracted several Heads of State and recorded 2,291 participants, 57 boardroom deals valued at $67.7 billion, and 400 official bilateral meetings attracted investment interests of $40.1 billion. The three-day event with its dynamic boardrooms truly lived up to its billing as Africa’s preeminent investment platform.

Unsurprisingly, African leaders and private sector giants like the continent’s richest, Aliko Dangote, are all keyed into the visions of AIF.

They see in the AIF an emerging a true flagship of investment in Africa and are enthusiastic to partner with it in regard.

For instance, to President of South Africa, Cyril Ramaphosa, the AIF is “a significant milestone in our quest to reshape the fortunes of the African continent”.

At the maiden edition of the annual Market Days in 2018, a highly impressed President of Ghana, Nana Akufo-Addo, vouched the commitment of African governments “to be facilitator for the development of the private sector” in line with AIF’s drives.

Unfortunately, while the world was upbeat to converge in Africa again for the third annual Market Days event then scheduled for November 2020, in Johannesburg, it was put off owing to the Covid-19 pandemic. This became unavoidable after a painstaking evaluation of the impact and evolution of the Covid-19 global pandemic, the attendant risk of a possible second wave, and its associated effects on global travel, investments, as well as social distancing rules.

Nevertheless, since the AIF is not an event, but indeed a veritable and institutionalised platform for the economic redemption and transformation of Africa through investments, it has continued to facilitate the acceleration of deals towards financial close.

Beyond the Boardroom Sessions, it has not relented in supporting project sponsors, vide its unique Deal Tracker mechanism which monitors the conversion of investment interests to financial commitments.

Africa and COVID-19 Pandemic

The coronavirus pandemic came upon the world like a thief in the night, and Africa was not left out. Although it is still spared of the worst of the pandemic in terms of infections and deaths, African economies have not been as lucky. The poorer and smaller nations and those nations that are dependent on a single resource, commodity or sector are worse off.

This has been due mainly to respective domestic and border shutdowns that hit tourism and trade flows hard as well as the collapse of global demand for products like oil.

In the regional economic outlook published by the International Monetary Fund (IMF) in June 2020, for instance, the organisation projected that sub-Saharan African economy would contract by 3.2 per cent in 2020 before recovering to a growth of 3.4 percent in 2021. When compared to the global growth recovery estimate of 5.4 per cent in 2021 from a deterioration of 2020, the prognosis doesn’t not looking good.

The IMF also projected that the region will not return to a pre-pandemic GDP level until 2022/2023.

Furthermore, according to a May 2020 policy brief published by the International Growth Centre, an additional 9.1 per cent of Sub-Saharan Africa populations have already been pushed into extreme poverty by Covid-19, while 3.6 per cent of the population, including 3.9 million children under the age of five, are grappling with food deprivation.

Thus, Africa’s economic recovery is not just about resuscitating growth, but equally about helping those that dropped below the poverty line back up again.

However, it was the AfDB President who brought the reality home in January when he said that the continent’s economies would in two years record a cumulative loss of $409 billion due to the Covid-19 pandemic with the continent’s GDP estimated to lose $236 billion in 2021.

“Before the pandemic, six of the 10 fastest growing economies in the world were in Africa. With the pandemic shock, growth plummeted. Africa’s GDP growth declined by 2.1 per cent last year, the worst in two decades.

“As economies went into lockdowns, people’s incomes declined, millions lost their jobs, trade volumes fell, and demand for goods and services declined. Cumulative loss to Africa’s GDP is estimated at $173 to $236 billion for 2020 and 2021, respectively”, he said.

AIF: Charting a path out of a quagmire

Nobody saw Covid-19 pandemic at the time AIF was established- not the pundits, not the prophets or a host of others, who lay claim to clairvoyance. However, amidst the gloom, the AIF beams hope on the horizon for Africa, as it continues to show up as the continent’s pathway out of the Covid-19 quagmire.

Not only has it been strategically intervening to ameliorate the socio-economic impact of the pandemic on the continent, it continues to drive strategic investments.

The Afreximbank AfDB has proved the African adage that the closest relation of the dead bears the coffin by the head end. The AfDB announced a whooping $10 billion Covid-19 response. Out of this, $5.5 billion is for the Bank’s sovereign operations in the AfDB countries, while $3.1 billion is for operations under the African Development Fund.

AfDB equally launched a $3 billion fight Covid-19 social bond of which 8 per cent is reserved exclusively for African nations. 53 per cent goes to the central banks and official institutions. 27 per cent goes to Bank treasuries, while 20 per cent goes to asset managers.

President of the Bank, Adesina, captured that commitment again when he said: “Africa will come out of this pandemic, tough as it is, and will build better and stronger economies. As partners of the Africa Investment Forum, the premier investment platform for Africa, our gaze must be clear: help Africa reboot its economy”.

AIF’s Founding Partners emphasised the imperatives of boosting local manufacturing while also leveraging the continent’s vast resources to unlock investment. To walk the talk, the AIF earmarked 15 deals in its portfolio worth US$3.79 billion to address Covid-19 impact. In a virtual Marketplace, a look-alike of the archetypal sessions of its annual Market-Days, the AIF brought together more than 190 participants – current and prospective partners, investors and project sponsors.