Strengthened Arab-Africa ties promises new funding for Africa

By Daniel NONOR, ACCRA

Mr. Gabby Asare Okyere-Darko, Founder and Executive Chairman of Africa Prosperity Network, has underscored the need to strengthen cooperation between the Arab world and Africa to tackle the continent’s developmental funding challenges.

 Speaking at a press briefing in Accra to announce the celebration of 50 years of the Arab Bank for Economic Development in Africa (BADEA) and the launch of the Arab-Africa Financial Institutions’ Consortium, Mr  Okyere-Darko emphasized the limitations of Africa’s increasing reliance on Chinese funding over the past decade and the need for a shift..

“The last three years have underscored the need for Africa to secure favourable funding for development,”

 He stressed that the new Arab-Africa cooperation offers a significant alternative to support Africa’s development, noting, “Together, the Arab world and Africa can do more for each other.”

The breakfast meeting, scheduled for Sunday, July 21, 2024, during the AU Mid-year Coordination Meeting, will celebrate BADEA’s five decades of promoting sustainable development and economic cooperation between Arab and African countries. The event aims to leverage BADEA’s role as a bridge for partnership, envisioning a future where enhanced collaboration drives further prosperity and unity between the two regions.

Gabby Okyere-Darko emphasized the urgent need for diversified funding sources, stating that, “The creation of a stronger Arab-Africa cooperation aims to provide an alternative to China’s funding, addressing the unique challenges faced by Africa.”

 He added that the event marks a new chapter in Arab-Africa development cooperation, with a significant focus on increasing financial support for Africa’s private sector.

“If the economic integration and development of the continent are to be accelerated and deepened, the private sector must gain access to funding,” he said.

Dr. Sidi Ould Tah, President of the Arab Bank for Economic Development in Africa, detailed BADEA’s strategic plans to support the African Continental Free Trade Area (AfCFTA) through two main mechanisms. The first is the African Trade Facility, which aims to support cross-border trade by providing financing at favorable rates to African exporters, thus enhancing intra-African trade. “This facility is meant to support cross-border trade, providing financing under good conditions to support the cross-border trade within Africa,” Dr. Tah explained.

The second mechanism is the Capacity Development Grants, which provide training, establish digital platforms, conduct feasibility studies, and support other activities that facilitate the implementation of the AfCFTA. “BADEA is already providing grants and will continue to provide more to support these types of activities,” He said.

He  also highlighted BADEA’s efforts to bring more equity into Africa to develop infrastructure projects, value chains, and small and medium enterprises (SMEs). “Africa needs more equity and less debt to develop its infrastructure, value chains, and SMEs,” he noted. This includes creating equity funds to support African development without increasing debt, a crucial step for sustainable growth.

Giving some background on its operations, Dr. Sidi Ould Tah explained that BADEA operates in partnership with Islamic finance institutions like the Islamic International Trade Finance Corporation and the Islamic Corporation for the Development of the Private Sector. This allows BADEA to offer financing in accordance with Islamic finance principles for both private sector and government projects. “We are able to provide financing in partnership with Islamic finance institutions, catering to specific needs and models,” he said.

The significance of the Arab-Africa partnership was also a key point of  his  address. He highlighted that BADEA’s mandate focuses on supporting African countries that are not Arab League members adding that the partnership aims to catalyze resources from the Arab region for Africa, including direct investments and trade.

He  emphasized the collaborative efforts between African and Arab financial institutions, noting, “We are really establishing a very strong partnership between African financial institutions and our financial institutions to create this consortium.”

He mentioned the Africa Trade Bridge program, led by Afreximbank in partnership with BADEA and the Islamic Trade Finance Corporation, as an example of such collaboration. “This program exemplifies the strong partnership envisioned by the African Union champion for financial institutions,” he added.