President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, has warned that another 39 million people in the continent could fall into poverty at the end of this year.
Adesina stated this at the ongoing virtual Africa Singapore Business Forum. He said the 39 million people could pass on as an added number to 30 million individuals rendered poor by the COVID-19 pandemic.
According to him, the “people impact” is the worst negative consequence of the pandemic, with 30 million jobs lost and inflation spiraling out of control.
“The debt also began to accumulate. The debt to gross domestic product (GDP) went up to between 60 and 70 per cent. But that is just on the financial side. I am more bothered about the people’s impact,” he noted.
On the bright side, he said 85 per cent of operators in the special economic zones of Africa believed that the foreign direct investment (FDI) flow to the continent would rise significantly again while 90 per cent outside Africa believed the same.
Adesina said Africa holds the key to the global economy with enormous opportunity for return on investment (RoI), stressing that those who do not invest in Africa would probably not invest at all. He added that the continent has improved tremendously in the ease of doing business.
The development banker, however, said poor infrastructure had blighted the potential of the continental economy but that recent investments by AfDB and other stakeholders are reversing the story. He called for “resilient and quality” infrastructure to make Africa truly attractive to the rest of the world.
While the rest of the world slowed down in their investment in Africa, he said, Singapore has increased in that regard. He said the African Continental Free Trade Agreement (AfCFTA) provides huge opportunities to Singaporean companies to expand their footprint in the regional market.
Singapore’s Senior Minister and Coordinating Minister for Social Policies, Tharman Shanmugaratnam, who joined Adesina on a panel, said public sector reform was an urgent and necessary action plan to leapfrog the Africa economy.
Shanmugaratnam said there are huge opportunities in digitalisation and education for Singapore and Africa to explore as they scale-up their relations.
He pointed out that innovation, in every sphere of economy, would help Africa to reduce the cost of business operation and make it more efficient, noting that Singapore would be very useful to Africa in achieving innovation and energy efficiency.
The minister said the small and medium enterprises (SMEs) need incentives to help them export to the rest of the world. Credit, he said, “is very important to achieving this”. In doing this, he said, an innovation that will increase banks’ ability to assess the creditworthiness of SMEs would necessarily be put in place.