Markets Wired

It is an honor to represent the United States of America at the 60^th Annual Meeting of the African Development Bank in Nairobi, Kenya. Kenya has been an exemplary host and it is always a great pleasure to visit this dynamic country that represents the vibrancy and beauty of the continent, especially on the heels of the successful State Visit of H.E. President William Ruto to Washington, DC.

The United States warmly congratulates the African Development Bank on 60 remarkable years of operation. These years have been filled with accomplishments and triumphs, and strong partnership between regional and non-regional shareholders, and between shareholders and Management.  The United States is proud to stand together with AfDB and our fellow shareholders in support of a prosperous, inclusive, resilient and integrated Africa. 

The United States’ commitment to the African Development Bank is rooted in our shared development agenda.  It is an agenda that strives for economic development in Africa that is inclusive and sustainable, and that lifts people out of poverty and into the middle class.  It is an agenda that treats all people as equal, fights discrimination, and seeks to support those who are most vulnerable. It is an agenda that values the abundant natural resources and biodiversity of the continent. It is an agenda that enables the youth of Africa to look to the future with confidence.  In our shared agenda, high-quality jobs and sustainable economic development have the potential to transform economies and change lives.

While the United States joined AfDB in 1983, we joined the African Development Fund even earlier, in 1976.  As the largest historical donor to AfDF replenishments, we are proud that the 16^th replenishment is now in implementation and that the United States was been able to increase our contribution to $426 million in support of AfDF countries.  We congratulate the AfDF on its more than 50 years of achievements.  Deepening the work in countries affected by fragility, conflict and violence, investing in regional infrastructure, bolstering debt management capacity, and stimulating greater attention to how a changing climate impacts development, are important focus areas of AfDF-16 that we believe will pay dividends for growing AfDF countries.

In AfDB’s 60 years, the face of Africa has changed, with its population nearly quadrupling over that time.  As Secretary Yellen has said, “…we believe that Africa will shape the future of the global economy. Africa’s demographic boom can create massive economic opportunity.  And its talents and resources can grow global industries and drive global innovation.” These words reflect the Biden-Harris Administration’s commitment to be a steadfast supporter to the people, businesses and governments of Africa..  And for the United States, the AfDB is a vital partner in helping Africa realize its potential in the global economy. 

In recent years, external shocks from climate change, pandemics and epidemics, and fragility and conflict along with political shocks and threats from terrorist and insurgent groups across the Sahel, have taken lives, derailed economic growth and stability, depleted human capital, and reversed hard-won development gains for the first time in decades. Such shocks have also exacerbated debt sustainability risks and diminished options to access external financing, undermining productive investments and underscoring the importance of timely debt relief from official bilateral and commercial creditors.  To that end, we are committed to working together with creditors, debtors, and international financial institutions to finalize the outstanding debt treatments as quickly as possible and improve the efficiency and timeliness of the debt restructuring process.  We call on all financing partners to take steps to sustain net positive flows to African and other developing countries that are pursuing responsible macroeconomic and sectoral policies,and prioritizing high ambition with respect to accelerating progress on the Sustainable Development Goals.

The increase in the frequency and complexity of global and regional challenges, including climate change, pandemics and health security, and fragility and conflictand their inextricable link to development outcomes in Africa are why the United States believes it is so important that the multilateral development banks evolve to better address those challenges.  Treasury Secretary Yellen, our AfDB and AfDF Governor, has called on the multilateral development banks to evolve their vision, operating models, incentives, and financial capacity to better reflect the changing needs and pressing realities of the 21^st century. 

We know that change is hard. We welcome the AfDB’s creative mindset and capacity to reflect and evolve.  The recently approved Ten Year Strategy sets the stage for further steps in AfDB’s evolution, including an increased focus on global and regional public goods. This will help us respond to African leaders’ request for more support in responding to those challenges.  Through the enhanced focus embodied in the new Ten-Year Strategy, the Bank Group will be able to more sustainably and effectively address food security, energy access, and climate adaptation, and develop quality, resilient infrastructure. We encourage the Bank to deepen efforts to mobilize private capital, align institutional incentives to deliver against the new Strategy, and continue its innovative leadership to responsibly stretch its balance sheet as it implements the new Strategy. 

The AfDB has an important role in building knowledge on the interaction between global challenges and country development needs and establishing incentives for staff and borrowing countries to take these factors into account in developing AfDB financing priorities and shaping how AfDB improves its capacity to deliver development outcomes. This could include, for example, re-orienting operations to bring relevant global challenges into country engagement and results frameworks and expanding operations to include support for sub-national and supra-national entities.  It could include increased use of country platforms and more diverse and more effective, outcome-oriented partnerships.  

In terms of how to leverage resources, the AfDB has been highly innovative and forward thinking; indeed, it is a leader in balance sheet optimization.  The G20 MDB Capital Adequacy Framework recommendations remain relevant and valid, and we commend the AfDB’s efforts in pursing those recommendations.  We congratulate the AfDB for being the first MDB to issue hybrid capital, and we encourage other MDBs to follow its lead.  This new asset class will attract new investors, and help the Bank to deliver additional resources to member countries.  We are also pleased that the AfDB and its peers are working together with shareholders to demonstrate the relevance and power of callable capital. The United States also recognizes the importance of protecting the AfDB’s AAA-rating.  We strongly support the Bank’s request for increased callable capital so that lending volumes can be maintained while preserving and protecting its credit rating. And we encourage the AfDB to continue the work to earn its own stand-alone rating.    

Given the significant financing needs on the continent, however, public funds alone will never be enough. A key element of MDB evolution is using AfDB and AfDF resources – financing, expertise and policy engagement – to effectively to unlock investments from the private sector.We call on the Bank and African countries to find new ways to bring in private finance, including in coordination with other development partners.  That will require innovative ways to crowd in private finance to the Bank’s work and providing data on the performance of investments on the continent, including through the Global Emerging Markets Risk database.  It will also necessitate supporting countries as they strengthen investment climates, promote domestic resource mobilization, and build local capital markets. 

In closing, the United States wishes to highlight several specific items that we encourage Governors, Board members, Bank Group Management alike will keep in mind in 2024. 

First, we wish to underline the importance we place on supporting Africa’s ability to feed itself.  Secretary Yellen challenged the MDBs to address the global food crisis in the IFI Action Plan to Address Food Security.  The Plan yielded multi-year commitments exceeding $47 billion and demonstrated the value of a long-term, cohesive approach among the IFIs. We appreciate the AfDB’s role and engagement in that effort.  The United States is proud to have partnered with the AfDB in a variety of fora this year to shine a light on this critical issue.

Second, , we wish to note the importance of doing all we can to protect the most vulnerable.  In some cases, this means protecting women, girls, and sexual minorities from sexual exploitation, abuse, harassment or other forms of gender-based violence.  Vulnerable groups deserve to benefit from economic development in their communities without the fear of violence or reprisals, and AfDB should seek to make inclusivity a cornerstone of all of its operations.  

Third, rooted in the Bank’s selectivitystrategy and re-iterated in its Ten-Year Strategy, is our continued demand for selectivity.  To make best use of finite resources and maximize impact, the AfDB must relentlessly focus on where it can deliver in its areas of comparative advantage, through its core operations. 

Fourth, we await the work of the consultants who are assessing the independence of the AfDB’s accountability mechanisms under the Board-led review.  This is critical work so that AfDB has a best-in-class set of independent accountability functions, which underpin effective development impact delivery.  Governors must continue seeking to receive a strong report that helps us know what measures might be needed to achieve and sustain this vision for these functions.

 

Finally, we insist on robust implementation of the Strengthening Social and Environmental Safeguards Action Plan.  The New Integrated Safeguard System was approved in April 2023, and absent adequate staff and well-trained and empowered staff, the new ISS will not deliver the intended impact.  A strong safeguards system supports workers’ safety, improves stakeholder engagement, and protects vulnerable groups while mitigating risks.  The credibility of the Bank’s projects, and the ability to deliver on the Bank’s mandate, depends on strong safeguards.

 

The 60th anniversary is an important milestone, and it is right that we take a moment to reflect and celebrate.  In this vein, we warmly thank Bank Management and staff for their tireless work, commitment to AfDB’s mandate, and their deep passion for the African member countries. Of course,  the work is far from done.  We must not lose momentum on the importance of delivering quality development outcomes, strengthening and evolving the Bank Group, finding new solutions, and preparing for the challenges of tomorrow.  The people of Africa and our planet are counting on us.