US president warned on cut to African foreign aid




US president Donald Trump risks stoking extremism in Africa and provoking a further exodus of migrants heading for Europe if he goes ahead with plans to cut funding to the continent, according to the head of the African Development Bank.

Akinwumi Adesina, president of the AfDB, told the Financial Times that Africa was facing a “triangle of disaster” in high youth unemployment, extreme poverty and environmental degradation related to climate change.

His warning comes after Mr Trump proposed a budget last month that would slash foreign aid and cut the US contribution to the World Bank and other multilateral development banks, such as the AfDB, by $650m annually.

“The development agenda must not be myopic. We must therefore do everything to support Africa, to create more jobs . . . To do that requires a lot of financing. We need more resources to do more as a bank,” Mr Adesina said.

“Everywhere you find this triangle of disaster you always find terrorists,” he added.

Somalia, where al­Shabaab extremists have a strong foothold, has been hit by a series of severe droughts that many experts link to global warming. In north­east Nigeria, a region where Boko Haram militants have wreaked havoc, poverty and lack of job opportunities are often cited as contributing to young people’s susceptibility to extremism.

Many African countries, particularly commodity exporters, have also been enduring their worst economic downturns in years.

Last week, the International Monetary Fund reduced its growth projection for sub­Saharan Africa to 2.6 per cent this year, although the figure is skewed by the poor performance of South Africa, as well as big oil producers such as Nigeria and Angola. Still, the IMF warned that the region was set to record a second consecutive year of output lagging population growth, meaning per capita incomes are falling in some countries.

The potential cut to US funding also comes at a time when some multilateral institutions, including the World Bank, are running up against capital limits and being forced to scale back lending. In an interview with the FT last week, Steven Mnuchin, US Treasury secretary, was non­committal over whether the new administration would back a capital increase for the World Bank.

Mr Adesina said multilateral development banks were needed more than ever.

“If you don’t create jobs in Africa fast then the whole terrorism thing that you see in Africa is just the tip of the iceberg,” he said. “Look at all the young people heading for the Mediterranean Sea. The future of Africa doesn’t lie on the bottom of the Mediterranean Sea. It lies in a more prosperous Africa.”

He also appealed to Mr Trump’s business instincts. The AfDB’s work on infrastructure and other projects benefited US companies operating in Africa, he said.

US legislation giving African countries preferential trade access to the US ­ the African Growth and Opportunity Act ­ had helped non­oil African exports to the US reach $4.5bn annually, but also contributed to $18bn of US exports to Africa, creating an estimated 210,000 jobs, Mr Adesina said.

Jeffrey Sachs, a development expert, said that while Washington worried about “wasting our money in Africa”, Beijing was busily seizing the commercial opportunity.

“China says we’re not wasting our money, we’re building a new world economy. China gets it and Europe and the US have not gotten it,” Mr Sachs said.

 

 



By Shawn Donnan and David Pilling


Published on Apr 29,2017 [ Vol 18 ,No 887]


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