Accelerating Africa’s industrialization
Drawing on the example of South Korea’s economic transformation
Every year since 1964, the African Development Bank Group brings together development experts and Africa’s Central Bank Governors, Finance and Economic Planning Ministers to discuss the continent’s economic fortunes.
Busan, Korea’s second-largest city and industrial hub, is host to the Bank’s 53rd Annual Meetings this week attended by finance and development experts, business leaders and Finance Ministers from Africa and beyond.
The “Land of the Morning Calm,” Chaohsien in Korean, offers Africa several lessons on how to fast-track economic and industrial development. Korea is the only economy in the world that has grown at an average annual rate of more than 5% for 50 consecutive post-war years. Today, it is the world’s 11th largest economy and one of the leading industrial and economic powerhouses. Its exceptional economic success has taken vision, creativity, ingenuity, fiscal discipline, and a willingness to focus on long-term priorities.
“Africa has a lot to learn from Korea, a leading global industrial economy… especially in the areas of technology, in agriculture and in manufacturing,” according to Henry Rotich, African Development Bank Governor and Kenya’s Minister of Planning.
In addition, Korea’s vested commercial and diplomatic interests in Africa continue to grow. It is one of the Bank’s 26 non-regional member nations, comprised of leading OECD member countries. Korea is an ideal place to discuss Africa’s efforts to industrialize.
The Challenge of Busan
The theme for the Bank’s 2018 Annual Meetings is “Accelerating Africa’s Industrialization” – the “Challenge of Busan,” according to Bank President Akinwumi Adesina.
Delegations from the Bank’s 80 member countries attend the week-long event convened in partnership with the Ministry of Strategy and Finance of the Republic of Korea.
Development experts and Finance Ministers will address a diverse range of development finance, economic development and public-private sector partnership issues during these meetings.
The need to spur unprecedented growth for Africa while optimizing its abundant human and material resources will be the defining thread of discussions. The meetings kicked off Monday, May 21 with sessions on agriculture and how Africa’s youth are finding innovative solutions to some of the continent’s development challenges, Adesina touched on the key issues being addressed: These include the looming 4th Industrial Revolution; Africa’s rising external debt profile and the need for countries to explore innovative development financing solutions; political stability; the role of strong institutions; infrastructure; the place of Science-Technology-Engineering-Mathematics skills set in Africa’s human capital development; and the need to grow intra-Africa trade.
The Bank estimates the costs of the Africa’s estimated infrastructure needs at between US $130 billion and US $170 billion a year. The financing gap is between US $68-108 billion. “With such a large gap, and urgent needs in health, education, administrative capacity, and security, Africa has to attract private capital to accelerate the building of critical infrastructure needed to unleash its potential,” Adesina told reporters.
At the inaugural press conference, Adesina announced that the Bank’s regional members seemed favourably disposed to a general capital increase for the Bank.
He also announced the renewal for another 10 years of the Nigerian Government’s commitment to the Nigeria Trust Fund, which was due to expire this year. This self-sustaining revolving fund assists the development efforts of the Bank’s low-income regional member countries requiring concessional financing. Created in 1976 by agreement between the African Development Bank Group and the Nigerian government, the NTF placed an initial capital of US $80 million at the Bank’s disposal, and replenished it with US $71 million in 1981.
A win-win situation
Following the press conference, Muhammadu Sanusi II, Emir of Kano and former Governor of Nigeria’s Central Bank, remarked, “Africa’s economic transformation will be best achieved by fast-tracking regional co-operation and carrying out hardnosed structural reforms focused on developing the continent’s human capital and material resources.”
At the Korean-Africa Forum on Economic Cooperation Ministerial Roundtable on the theme “Africa and the 4th Industrial Revolution: Opportunities for leapfrogging?” on Tuesday afternoon, Bank President Adesina said, “This year’s theme cuts neatly across all the African Development Bank’s High 5s. Africa’s industrialization would be a win-win for the world. It would help raise productivity by spurring technological progress and innovation while simultaneously creating higher-skilled jobs in the formal sector in advanced economies.”