‘Where is the brain surgery in making chocolate?’: AfDB president Akinwumi Adesina on Africa’s need for a farming revolution
African Development Bank (AfDB) President Akinwumi Adesina is not interested in the orthodoxies that have defined the development bankers of recent decades. Take, for example, the usual technocratic reverence for not interfering in markets. Rather than bemoan the way the United States and Europe distort agricultural markets by heavily subsidising their farmers, he argues that African countries should do the same.
“Everywhere around the world agriculture is supported,” Adesina tells The Africa Report. “What I don’t find acceptable is a situation where farmers in Africa are the least supported of anywhere in the world. We cannot abandon farmers. We must provide financing for them, access to technology, mechanisation, market access, rural infrastructure, all the things they need to help transform their lives.”
Likewise, he is keen to emphasise the need for African countries actively to start processing their own raw materials rather than allowing the ‘invisible hand’ of markets to determine where economic activity should be located. Of the $100bn world market for chocolate, Africa makes just 2% on revenue, while it provides 75% of the cocoa beans. “It’s not difficult,” says Adesina. “Where is the brain surgery in making chocolate?”
And while he wants open markets, he points out that Western countries use escalating tariffs that start at zero for raw materials and increase incrementally as the exported product gets processed. There are no tariffs on sending a raw cocoa bean to Europe, but turn it into cocoa butter and you face a 15% levy.
Though it’s no surprise to those familiar with his career, Adesina thinks that agriculture – in particular his mantra of agriculture as a business – is as close as we are going to get to a silver bullet for the continent’s developmental woes. This is important, in particular, for the vicious cycle of poverty and violence that allows extremism to prosper in rural areas such as the Sahel. “Take the Lake Chad area, northern Nigeria, northern Kenya, northern Mali – high levels of rural unemployment among youths, extreme rural poverty, climate and environmental degradation,” says Adesina. “Getting agriculture to work there is vital.”
To do that, he has launched an initiative that aims to provide 25m jobs over the next decade. “Last year alone the AfDB invested $800m in eight countries to get young people into agriculture. And over the next 10 years we will be spending on average $1.5bn a year on this programme,” adds Adesina.
That spending programme – alongside other commitments such as $15.5bn in infrastructure projects over the next five years, especially electrification – comes at a cost. In December 2016 the AfDB board validated the bank’s borrowing programme for 2017, with the institution authorised to raise $9.4bn, an increase of $900m compared to the previous year.
Convincing the board
But to reach his goal, Adesina wants to raise the capital base, which currently sits at around $94bn. Sources within the bank suggest he has yet to win over the entire board, with regional members – non-African shareholders like Germany and Norway – still not sold on the investment strategy.
“We are having conversations about the appropriate time [for a capital increase], but we have very strong shareholder support,” insists Adesina, pointing to the way the AfDB’s fortunes have been turned around in recent years. “When I started, we [had] declining net income. We’ve put that back on a positive trajectory, from about $400m two years ago to over $700m so far this year. And I think we will be able to reach $1bn by the end of the year.”
What about more aggressive attempts to close the financing gaps of the continent, including the nearly $100bn needed yearly to fund roads and power stations? In Tanzania, President John Magufuli accused Acacia Mining of underreporting its tax liabilities and sought a fine of $190bn this year.
For some, like Nigeria’s billionaire businessman Aliko Dangote, this is economic suicide. “Once an investor complains, the rest will run away. They don’t even want to hear the details.” But Adesina’s response is more nuanced. “It’s a balancing act. I don’t see anything wrong in renegotiating a bad deal,” he says. “Don’t forget that a lot of the challenges that we have in Africa when people talk about illegal capital flows actually come out of the fact that a number of companies involved are multinational companies.” He says that transparency, accountability and fairness on how Africa’s natural resources are managed is key: “We want the resources that belong to African countries to be used for Africa’s development, not misappropriated. Resources don’t belong to individuals. They don’t belong to companies. They belong to countries, and they must be used in the countries’ interests.”
Getting better deals
Adesina adds that some of the larger global resource companies hire more lawyers and accountants than entire African countries do. “Many countries got into deals that were not well structured in terms of their taxes and royalties […]. It’s a lopsided situation.” Progress is being made. The AfDB’s Legal Support Facility, for example, “has been highly successful in helping many, many countries to renegotiate deals,” he says.
But Adesina disputes the idea that East Africa has seen an uptick in what might be called ‘authoritarian developmental’ regimes, despite the tougher stances that governments in Rwanda, Ethiopia and Tanzania are taking towards both civil society and the private sector. “Africa needs to have stable governments, visionary leaders and fast-paced development. And I think what I see in East Africa encourages me more than anything else,” says Adesina.
The man who put Ethiopia on its current trajectory, the late prime minister Meles Zenawi, was also not interested in the development orthodoxies of the ‘Washington consensus’. Adesina says: “There is no particular route to getting things done, no cookie-cutter approach […]. But leaders must have vision. Everybody used to criticise China, but look at China today.”
Perhaps Adesina is echoing the ideological pragmatism of China’s former leader Deng Xiaoping. He aimed to use the most useful elements from both planned and market economies. It does not matter whether a cat is white or black, Deng said, as long as it catches mice.
“It’s not difficult. Where is the brain surgery in making chocolate?”
This article came from the December/January 2018 print edition of The Africa Report magazine