Global development challenges and the urgency of financial reform: Insights from AfDB President

Akinwumi Adesina, President of the African Development Bank (AfDB), has sounded a crucial alarm about the state of global development. He expressed his concerns during the 2023 Kofi Annan Eminent Speakers’ Lecture. Adesina highlighted the challenges posed by the COVID-19 pandemic, climate change, rising debt, food insecurity, and conflicts, emphasizing the need for swift action to address these issues.

Climate change stands out as a top-priority challenge, with its potential to cause devastating, existential risks worldwide. Adesina stressed the importance of limiting global warming to no more than 1.5 degrees Celsius. Achieving this requires innovative solutions that harness renewable energy sources to power the world. Additionally, he underscored the need to eradicate hunger, stating that it is unacceptable for over 2.3 billion people worldwide to go hungry. Adesina emphasized that creating a hunger-free world is a moral imperative.

The COVID-19 pandemic highlighted the importance of global pandemic preparedness and equitable access to affordable healthcare. Adesina stressed that “all lives matter,” and no one should be left behind in accessing healthcare, regardless of their economic status.

One of the key challenges is the concentration of resources in developed countries, leaving the rest of the world struggling to address pressing issues. Adesina cited Kofi Annan’s observation that nearly three billion people, almost half of humanity, subsist on two dollars or less a day, despite unprecedented global wealth. This inequality calls for intervention from the international community.

Adesina pointed out that Africa faces significant financing needs for development, including closing a $1.2 trillion gap through 2030 to finance the Sustainable Development Goals (SDGs) and adapt to climate change. For instance, Africa’s commitments under the Paris Climate Agreement require an estimated $277 billion annually until 2030, while climate finance flows are significantly below this target, at just $30 billion in 2019 to 2020.

The global financial architecture is struggling to meet the demands of development in the face of various global challenges. Adesina called for a comprehensive reform and transformation of this financial structure to effectively address these challenges and accelerate SDG achievement.

Multilateral Development Banks, by their nature, are well-positioned to respond to economic shocks, finance SDG needs, address rising fragility, and mobilize funding for climate change mitigation. Adesina argued that these banks must collaborate effectively as a system to deploy knowledge, risk mitigation tools, and concessional financing at scale. To meet these new challenges, a shift from billions to trillions of dollars is required.

Adesina concluded by emphasizing the importance of the G20’s call to significantly raise the ambition of multilateral development banks. He called for increased resources, a higher ability to take risks, optimized balance sheets, more financial innovations, and stronger collaboration to deploy knowledge, risk mitigation instruments, and concessional financing at scale.

The urgent message from Akinwumi Adesina is clear: the global development boat is leaking, and immediate action is necessary to prevent potentially devastating consequences. Financial reform and a collective effort are essential to tackle the complex challenges facing global development and ensure a more equitable and just world.

Credit: NAN