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FULL SPEECH: Nigeria needs help to tackle its debt burden, says Akinwumi Adesina

Dr Akinwumi A. Adesina, president of the African Development Bank (AfDB), says Nigeria needs help to tackle its debt burden.

The AfDB president said this on the sideline of the United Nations 77th General Assembly on September 22, 2022, in New York, USA.

See full speech below.

Your Excellency, Muhammadu Buhari, President of the Federal Republic of Nigeria.

Excellencies, Heads of State and Government.

Global business leaders and investors.

Distinguished ladies and gentlemen.

I am greatly honored to be invited to speak to you today about investing in Nigeria, and to share some thoughts on some of the global challenges facing Africa, and Nigeria and suggestions for tackling them with global partnerships.

Size matters. Nigeria is Africa’s largest country with a population of 208 million people. It is a well-endowed nation, with huge natural resources, including oil and gas for which its mostly known, mining, but also in agriculture, the blue economy, banking and financial services, digital and creative industries, and industrial manufacturing.

You cannot talk of investing in Africa without thinking of Nigeria. With its rapidly growing population, estimated to be the third largest in the world by 2050, Nigeria is an investors dream, with the market pull, rapidly growing middle class and burgeoning youth that can create demand, but also spark and spur entrepreneurship.

Nigerians excel in whatever they do. Nollywood, Nigeria’s film industry is estimated at $7.2 billion today, and has become the second largest movie industry in the world, after Hollywood.

Investors must recognize this and invest. That’s why the African Development Bank, together with the Islamic Development Bank and the French Development Agency are investing $618 million in the Digital and Creative Enterprises Program (I-DICE) in Nigeria. The program will support the creation of 225 creative start-ups and 451 digital technologies small and medium sized enterprises. They will create 6.1 million jobs and add $6.4 billion to the economy.

That is the power of international partnerships working for Nigeria.

The future is not just digital, the future will be driven by digital revolution. According to estimates by McKinsey, the number of tech startups in Africa has increased by three-fold to reach 5,200 companies, with half of those being fintech companies.

Today, Nigeria has 5 of the seven unicorns in Africa and raised almost $ 1.4 billion of the total of $4 billion raised by Fintech companies across Africa in 2021. When you think of financial services digital innovations, think Nigeria, with Flutterwave, OPay, Andela and Interswitch holding the status of unicorn companies, worth at least $ 1 billion each.

Nigeria holds today impressive investments that are global references. The newly constructed $19 billion Dangote petrochemical and fertilizer complex (the world’s largest ammonia plant) in the free trade zone, with new deep seaport, is exactly the kind of massive infrastructural and industrial manufacturing that is needed to make Nigeria a regional and global player in gasoline, diesel and aviation fuel, and fertilizer value chains.

Yes, Nigeria has several challenges, but Nigeria remains an attractive investment destination.

That’s why the African Development Bank has invested $4.5 billion in Nigeria. To help unlock its huge agricultural potential, the African Development Bank, the International Fund for Agricultural Development, and the Islamic Development Bank have provided $540 million to develop Special Agro-industrial processing zones. This financing will boost food and agribusiness value chains across Nigeria and make Nigeria more competitive.

That is the power of international partnerships working for Nigeria.

Your Excellency, Mr. President, we, the partners are looking forward to your launching of the landmark Special Agro-Industrial Processing Zones.

Your Excellencies, ladies and gentlemen, roses come with thorns. Nigeria’s economic and growth potential roses have a few thorns, but those thorns should not discourage us. They call on us to strengthen international partnerships around Nigeria.

Nigeria growth will be conditional on its ability to fix its massive infrastructure deficits. The National Integrated Infrastructure Masterplan shows that Nigeria will need a total financing of $759 billion to support infrastructure over a 23-year horizon (2020-2043). These covers tackling the crippling lack of energy to power the economy, including power generation, transmission and distribution infrastructure, water and sanitation, and transport infrastructure.

The African Development Bank has invested $44 billion in infrastructure in Africa over the past six years. Together with other partners, we stand ready to build strong alliances to help Nigeria tackle its infrastructure deficits.

At the Africa Investment Forum organized by the African Development Bank and its partners in March 2022, we mobilized investment commitment of $16.1 billion to finance the Lagos to Abidjan highway, that will boost Nigeria’s connectivity, trade, and competitiveness.

That is the power of partnerships around Nigeria.

African countries are facing a huge debt challenge, due to a confluence of factors, especially Covid, climate and the Ukraine Conflict – what I call the 3 C’s. The solution to them is simple: 3 F’s: Finance, Finance, and Finance.

Financing is critical because debt to GDP ratio of Africa has increased to 70%. Several countries are at the risk of debt distress due to unstainable debt levels. Nigeria total debt level is N 42.84 trillion or $103 billion. External debt level stands at N16.61 trillion or about $40 billion.

Nigeria needs help to tackle its debt burden.

International partnerships on debt are helping Africa, and Nigeria. The issuance of special drawing rights by the International Monetary Fund of $650 billion helped to provide liquidity support to countries, with Africa receiving only $33 billion. African countries need more.

The call of African Heads of State and Government for developed countries to re-channel an additional $100 billion SDRs to Africa will go a long way in helping to reduce the debt burden. Allocated SDRs through the African Development Bank, as called for by the Heads of State and Government, will be leveraged by 4 times by the Bank. This will deliver more financial resources for Nigeria and other African countries.

Nigeria and other African countries need debt relief.

They cannot run up the hill carrying a backpack full of sand.

African countries, including Nigeria, need international partnerships to tackle climate change. Africa, which only accounts for 3% of total carbon emissions suffers more from the negative effects of climate change. Africa loses $7-15 billion a year due to climate change, which will rise to $50 billion per year by 2030. Africa needs at least $125 billion annually to tackle climate change but receives only $28 billion a year.

Climate change has devastated the Lake Chad Basin, affecting the livelihoods of millions of people, sparking serious conflicts between farmers and pastoralists and insecurity. Nigeria will need about $247 billion between 2020 and 2030 to tackle climate change. And Nigeria must revive the Lake Chad Basin.

International partnerships are being developed on climate change.

The African Development Bank and the Global Center on Adaptation have launched the African Adaptation Acceleration Program to mobilize $25 billion for climate adaptation for Africa.

Your Excellencies, ladies and gentlemen, the road may the long, the journey may sometimes be rough, but we must keep hope alive. Nigeria will not be alone.

The African Development Bank, and other development partners, many of them here today, will be there to strongly support Nigeria.

I like the song by Michael Jackson on “the Man in the Mirror”. It says, “I am talking about the man in the mirror, I am asking him to change his ways”.

We must change our ways.

To attract greater foreign direct investment to Nigeria, we must fix the security situation. Capital does not like to be troubled. Ultimately, investment capital must be made comfortable. Only then can it be attracted.

Investment capital in the quantum required can only be attracted in the presence of secure environments.  Essentially, investors vote with their money about where to have it positioned.

With the right conditions in place, we can confidently say Nigeria is a great investment destination.

Believe in us.

Invest in us.

Invest with us.

Thank you very much.

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