In the past, the provision of infrastructure in Africa was largely the preserve of government and public finances. In the 1980s and 90s, there was a shift, with the belief that the private sector could on its own provide the required capital for the infrastructure sector. With one billion people, closer to India and China. Africa’s population grows at 2.2%, compared to Asia’s which is 0.9%, so there will be around 2.2 billion Africans in 2050. They will not only more be more numerous, they will also be younger. The median age in Sub-Saharan Africa is 18.5 years. Provided the right investments are made in education, this is the basis of the so called demographic dividend – more people in the labour force than dependents; a wider consumer base for almost everything from food, to housing and infrastructure. Consequently, the development paradigm of the 1950s was dominated by one-sector models of growth coached under the Harrod-Domar model, a paradigm in which foreign aid was seen as a source of capital to trigger higher growth through higher levels of investment. In the 1960s, with the rise of balance of payments concerns, the two-gap models became dominant and the role of foreign aid became that of filling the two gaps (investment-savings gap and the foreign exchange gap). The development paradigm of the 1970s was driven by concerns about employment, basic needs and income distribution, a paradigm in which the role of foreign aid was to raise the standard of living of the poor largely through increased employment. In the 1980s, stabilization and structural adjustment policies were adopted and foreign aid was used to mitigate the adverse effects of debt and to induce countries to adopt the proposed SAPs by presumably absorbing the shock and other negative effects of SAPs. In the 1990s, the trend towards integrating poverty concerns in development and towards comprehensive models of development emerged. In this development paradigm a multi-dimensional perspective to development putting on the agenda concerns about ownership and good governance as important influences on aid effectiveness.
The Role of the AfDB: Driving Change and Growth Across Africa
The African Development Bank (AfDB) Group is a multilateral development finance institution established to contribute to the economic development and the social progress of African countries. The agreement establishing the Bank on August 4, 1963 in Khartoum, Sudan became effective on September 10, 1964. The African Development Bank Group comprises three entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). As the premier development finance institution on the continent, the AfDB’s mission is to help reduce poverty, and improve living conditions on the continent. The AfDB headquarters is officially in Abidjan, Côte d’Ivoire. However, due to the political situation in Côte d’Ivoire, the institution’s activities have temporarily been relocated to Tunis (Tunisia) in 2003.
The Bank Group therefore strives to mobilize internal and external resources to promote investment and provide technical assistance to the Regional Member Countries (RMCs). Additional resources are usual ly mobilized through co-financing with bilateral and other multilateral development agencies as well as from the financial markets. The AfDB Group also promotes international dialogue on development issues concerning Africa. It supports policy reforms, capacity building, knowledge sharing, studies and preparation of development projects. As from 2006, the Institution has placed greater emphasis on the following strategic areas: Investing in infrastructure; the private sector, supporting economic and governance reforms; promoting higher education, technology and vocational training; promoting regional integration. Through these core investment areas, the AfDB Group provides support to fragile states, low income countries, middle-income countries, agriculture and rural development, social and human development, the environment and climate change, and gender issues. The current President of the Bank, Dr. Akinwumi A. Adesina, a national of Nigeria, was elected on 28 May 2015, and commenced his first term on 1 September 2015. Following his re-election on 27 August 2020, Dr. Adesina commenced his last 5-year term on 1 September 2020.
Funding Pullback: What It Means for Africa’s Development Bank
The United States Agency for International Development (USAID) was set up in the early 1960s to administer humanitarian aid programmes on behalf of the US government. The country that received the most USAID funding during the 2023 fiscal year was Ukraine during its ongoing war with Russia, according to a report by the Congressional Research Service using the most recent complete data available. The agency has also sent humanitarian aid to Gaza during the war between Israel and Hamas, and allocates funds to counter China’s influence in the world. Other top recipients of USAID assistance in that fiscal year included Ethiopia, Jordan, the Democratic Republic of Congo, Somalia and Yemen. For more than six decades, USAID has been a pillar of U.S. soft power and a source of foreign assistance for struggling countries, playing a leading role in coordinating the response to international emergencies such as the global food security crisis. In the late 1960s, for example, USAID helped global efforts to eradicate smallpox; decades later, the agency joined a global campaign to fight polio, then considered highly endemic. USAID is also a key implementation partner in the President’s Emergency Plan for AIDS Relief (PEPFAR)—created by Republican President George W. Bush in 2003—providing care, treatment, and prevention services for HIV/AIDS. Most recently, the agency helped distribute vaccines, offer humanitarian aid, and support health workers amid the COVID-19 pandemic.
Trump administration officials, including Musk’s DOGE group, have leading a widespread effort to dismantle the agency by laying off thousands of employees, revoking funding for more than 80% of its programs, and shedding its Washington, D.C., headquarters. However, humanitarian aid experts expressed alarm at the new cuts to an agency whose humanitarian aid has gained Washington influence and saved lives across the globe for more than 60 years. Antecedently, the United States through USAID has participated in various Bank initiatives/Funds: US$ 120 million to the African Emergency Food Production Facility (AEFPF) and the Africa Risk Capacity (ARC); US$ 26 million committed to the Sustainable Energy Fund for Africa (SEFA) over four years in line with Power Africa initiative. US$5 million received in 2015 and US$ 11 million in 2016. US$ 2.47 million incremental funding for SEFA 2.0 was received in 2021 US $6.2 million in 2023; US$ 11 million to the Agriculture Fast Track Fund (AFTF) to facilitate project preparation in the agriculture sector; US$ 3 million to the African Legal Support Facility (ALSF); US$ 200,000 to the Migration and Development Trust Fund; US$ 15 million for the Africa Disaster Risk Financing (ADRiFi). According to AfDB, in 2016 a Memorandum of Understanding (MOU) was signed with Millennium Challenge Corporation (MCC) that provides for sharing of information and data; particularly in the power sector and focuses on mobilizing private investment as well as possible co-investment in regional and national projects. USAID through Power Africa signed a Regional Development Objectives Agreement to serve as an umbrella agreement covering any potential contribution to the Bank’s initiatives and co-financing that could be agreed, mainly in the energy sector. An MOU was signed between the Bank and the US Development Finance Corporation in 2019. A new Regional Development Objectives Agreement was signed between the Bank and USAID’s Prosper Africa in September 2020 with a focus particularly on the industrialization strategy, trade, and regional integration.
The US has backed the African Development Fund since 1976 and is the AfDB’s second-largest shareholder. Other leading donors have also been cutting back on their contributions but none of the reductions have been anywhere near as drastic as those put forward by the US. The changes will be a challenge for the incoming AfDB president after leadership elections later this month when current president Akinwumi Adesina steps down at the end of his second term. On May 2, 2025 a letter which provides President Trump’s recommendations on discretionary funding levels for fiscal year (FY) 2026 noted that: Consistent with Executive Order 14169, “Reevaluating and Realigning United States Foreign Aid,” the Budget proposes to eliminate contributions to the African Development Fund, which is not currently aligned to Administration priorities. The Budget also includes $3.2 billion over three years for the U.S. Government contribution to the International Development Association 21, where other donors and institutions should take on more of the burden sharing. This fulfills the President’s promise to no longer dole out foreign aid dollars with no return on investment for the American people.
The Way to Go
With Dr Adesina at the helm, the African Development Bank Group achieved the highest capital increase since its establishment in 1964 when on 31 October 2019, shareholders from 80 member countries raised the general capital from $93 billion to a historic $208 billion. The African Development Bank Group responded boldly and swiftly to the Covid-19 pandemic. On 3 April 2020, the premier development finance institution launched a landmark $3 billion Covid-19 Social Bond followed by a Crisis Response Facility of $10 billion. The Steering Committee of the Board of Governors on the Election of the President of the African Development Bank met on 11 and 12 February 2025 at the Bank Group’s headquarters in Abidjan, Côte d’Ivoire. The Steering Committee, after examining the candidatures cleared the following list of candidates for the office of the President of the African Development Bank during the next election to be held on 29 May 2025: Amadou Hott (Senegal), former Minister of Economy, Planning and Cooperation for Senegal; Samuel Maimbo (Zambia), Vice President for Budget, Performance Review, and Strategic Planning at the World Bank; Sidi Ould Tah (Mauritania), former President of the Arab Bank for Economic Development in Africa; Abbas Mahamat Tolli (Chad), former Minister of Finance and Budget of Chad; and Swazi Tshabalala (South Africa), former Senior Vice President of the African Development Bank Group. The next AFDB presidential elections represents a watershed in the journey of the AFDB towards the development of the African continent. It is expected that the next president would do much more to rescue African countries from mounting debt, depreciating currencies, high inflation, and sluggish rates of global growth currently bedeviling them.
In 60 years, the Bank has mobilized more than USD 184 billion to support Africa’s development and growth. In total, it has financed 6,575 projects since its establishment in September 1964. The Bank has changed the lives of hundreds of millions of Africans. In 2024, the Bank Group held its Annual Meetings in Nairobi, Kenya, around a central theme: reforming the global financial architecture to increase resources needed for the continent’s sustainable development. President Adesina launched ten strong ideas to strengthen regional integration and development in Africa. “African people expect concrete actions from our meeting here in Nairobi. African integration is everyone’s business,” he declared. He called for a series of reforms without which it will be impossible to create what he calls a “fit-for-purpose bank.”
Similarly, Dr. Adesina has called for a bold rethinking of Africa’s development strategy in light of the proposed cuts. He remarked that “the era of aid or free money is gone,” urging African nations to become more self-reliant. Besides, a major part of the solution to Africa’s financing gap must come from renewed efforts by African countries to mobilise domestic revenues, to increase funding for public services and infrastructure. In Sub-Saharan Africa, average tax revenue today stands at 16.5% of GDP. In 2022,70 Africa’s average tax-to-GDP ratio fell significantly below that of the Asia-Pacific region (19%), Latin America and the Caribbean (22%), and the OECD (34%). Tax-to-GDP ratios vary considerably across African nations, ranging from 11% in Nigeria to 32.5% in Tunisia. These variations show the potential for most African countries to mobilise greater revenues by strengthening tax collection systems, improving tax compliance, combating tax evasion and illicit financial flows, and promoting fair and effective tax policies. If African countries are to finance their planned transformation, their average tax-to-GDP ratio needs to be above 20%. The mobilisation of more domestic revenue must be accompanied by measures to raise the quality of public investment and expenditure, including reducing leakages from corruption and wastage.