The African Development Bank and energy investments

For investment plans to be realized, African economies must understand the need for coherence between financial institutions and the regulatory requirements that enable the appropriate management of development funds.

Global estimates indicate that Africa needs an annual investment of $100 billion to keep pace with growth expectations for the next ten years. Of the $2 trillion raised to improve infrastructure projects globally, Africa received $59 billion. Therefore, there is a need to raise more funds to meet development plans. To raise more funds for growth, Africa needs to improve its reputation as a preferred destination for large-scale investments, thereby, maximizing productivity through enhanced funds management.

The African Development Bank (AfDB), serves as a premier organization that provides financial and social enterprise support for the development efforts of African economies. The AfDB supports growth in Africa through a focus on five key issues in the continent. The five goals are: lighting up Africa, feeding Africa, industrializing Africa, integrating Africa, and improving the quality of life of Africans.

Investment prospects and trade agreements are a vital part of the programs needed to improve the skills of the local workforce and the impact of a nation’s infrastructure. A society without the adequate training for managing development plans and workforce skills for industrialization is incapable of meeting growth marks.

Therefore, financial institutions serve as the leading source of funds necessary for development. Banks are significant for economic vitality as they serve as the motor that keeps commerce evolving. A bank that conducts cross-border trade can provide access to funds needed to sustain local farmers, support infrastructure improvements, and guide private enterprise.

Investments in energy production goes a long way to lighting up Africa and providing appropriate means for improved living conditions. With a population of 1.2 billion, Africa needs reliable energy sources to sustain industrialization plans. The AfDB has committed $12 billion to fund energy projects in Africa over the next five years. These investments can be used to build solar plants, similar to the Noor Plant in Morocco, which can be used to power office buildings and industrial warehouses.

Funding for energy production also provides support for hydropower plants, reservoirs, irrigation schemes and navigation facilities. A continent that relies heavily on agricultural production for income, investments in energy production are necessary. It improves the process for managing water sources, and it provides additional sources for agricultural production.

The funds for development must be managed properly to realize growth in Africa. Therefore, infrastructure planning and adequate management of these programs are the main concerns for development schemes in Africa. To contribute to the sustained growth of investment schemes, the AfDB incorporates risk management strategies and monitoring plans to reduce waste.

As a part of the bank’s financial management process, the AfDB promotes the anti-corruption initiatives adhered to by other global financial institutions. The AfDB employs compliance controls to ensure the appropriate management of funds, to reduce the bungling of resources for Africa’s development. By doing this, the investments are allocated properly and that the correct programs are implemented efficiently.

Sources: AfDB Document 1, Nepad