In May, the African Development Bank (AFDB) committee will elect a new president to fill in the big boots of evangelical Akinwumi Adesina, whose second and final five-year term ends in September. Adesina leaves the bank with more firepower, but he also leaves at a great time of global political and economic upheaval. This new geopolitical reality distributes all assumptions that have attended postwar reconciliation that has been ordering world issues for the past 80 years. This will undoubtedly affect Africa and its native institutions, including AFDB.
Among the candidates who will lead the bank into this uncertain future are the former vice president of the bank (power, energy, green growth, climate change) and his native Senegal Minister of Economy, Planning and International Cooperation, Amadou Hot, whom he led the country through the pandemic. Hott's ambitions often sit in this context. He argues in his conversations with African businesses that the continent needs to awaken to the fact that support from international partners is not approaching. “They're having problems,” he notes, citing the UK's recent decision to promote defence spending while reducing official development assistance (ODA).
“Anything that remains (money) for development needs to be amplified.
Hot's view is that this opens the door for a larger role in the private sector. “That means leveraging capital markets, mobilizing private sector investments and strengthening domestic resource mobilization, whether through government channels or local private sector initiatives.”
And this is late, he says. “This is something we should have done a long time ago, but it's important now. Otherwise, our impact will be reduced.”
Moves from billions to trillions
He argues that the key he argues is lying to maximize the role of multilateral development banks (MDBs), such as the AFDB. “If an institution like a bank is given equity or hybrid capital, it can take on more risks and significantly amplify investment, whether it's in the private sector or the government, compared to a bilateral fundraising approach.”
Back to justify a new approach, Hott recalls shifting its ambitious demands from a decade ago from “billions” to “trillions.” The reality is lacking. “We're moving from 10 years onwards to billions to billions to just hundreds of millions, but we don't need trillions.”
He believes the gap focuses on the need for even more agile and efficient banks. “The banks have been extremely innovative over the past decade. They have pioneered key initiatives like Room to Run to optimize their balance sheets. But now we have to step up again, lead the way, and seek greater impact. ”
Naturally, Hott is keen to emphasize that despite his rounded experience and understanding of these challenges, he offers a fresh approach. “It's not business as usual,” he emphasizes. “If there are people who have been at the helm of these issues directly, it makes banks more competitive and effective.” Leadership is about impact. “The institutions I led, the positions I hold, fought hard to make the biggest impact, I worked to motivate my team and give examples to lead.
According to Hott, his records show that he can lead the bank throughout a period of chaos. In 2008 he was brought in to rebuild Nigeria's UBA capital and within two years he transformed into one of the nation's top investment banks.
He was then tasked with establishing Fonds Souverains D'Investissements Stratégiques (Fonsis), a Senegalese sovereign wealth fund. “Today, Fonsis is a leading sovereign wealth fund and implements strategic transactions that not only support Senegal, but also serve as a blueprint for other countries,” he says.
During his tenure as vice president of electricity, energy, green growth and climate change at the bank, he says private sector investments have increased by 150% in just two years. “We moved quickly. We hired top talent, set up new structures, made banks a serious player in energy finance. The story has changed. A client who has never worked with a bank before was now working on major projects.”
Hott praises this success for its combination of bold leadership and strong teamwork. “We have a very motivated team and have received full support from the bank's leadership, including the current president, who helped us move these initiatives forward.”
This is the approach he brings to his job. “I always worked hard, I was resilient and strived for excellence, and that's the approach we need to take.
“The private sector needs results.”
Hott explains his vision is to make banks a multiplier of force for the private sector so that they can play a greater role in financing the development of the continent. “What I want to do is intervene in the private sector,” he declares.
Currently, only 20% of the bank's portfolio belongs to private investment. Hott wants to triple that in ten years. “But to take more risk, we need stronger capital. Hybrid capital, mixed capital – everything needs to be mobilized.”
Attracting top talent and streamlining processes is essential to making banks a fast-moving, agile partner. “The private sector doesn't like delays. No, neither does the government. They have a five-year election cycle – they need results.”
Again and again, Hott returns to the theme of independence. “Africa financial and natural capital must be mobilized effectively,” he argues. “We must be responsible for development. Our partners are helping, but our biggest responsibility lies with us.”
He is not alone. Leaders have put together several plans to raise debt relief for the continent, but the growing consensus is that these efforts may not have the desired effect as the changing political realities of donor countries eliminate more generosity towards external partners.
A more practical approach is to focus on reducing the cost of capital on the continent. Furthermore, prioritizing long-term funding options is important, especially for infrastructure projects. In line with Hott's perspective, this also calls for a larger role for MDBs and regional development banks, and uses the existing financial system more effectively to maximize their impact.
The process should take weeks, not months
Running at speed is central to his strategy, he says. “Intra-African trade cannot flourish without roads, rail, energy and digital connections,” he declares. “Banks have expertise, but they need to be faster. The six-month process needs to be reduced to two or three months, if not weeks.”
The final part of the puzzle is institutional efficiency. “You have to go through all the processes that aren't necessary,” he says. “We need to use technology to streamline operations and make bank responses more responsive. We can't afford to wait.”
Hott is optimistic about the continent's outlook, but he points out that energy and infrastructure are essential to its success. “Without solving them, Africa's economic potential remains locked,” he argues. So initiatives like Mission 300, a joint effort to bring electricity to 300 million people with the World Bank, are top priority. “Turn people out of the darkness – this is number one.” Digital conversion is also important.
“We can't afford to be left behind,” he emphasizes. As the world moves ahead with investing in AI and digital technology, Africa needs to seize opportunities.
“While countries may not have the same level of investment, we can work together and with the support of banks to establish innovation hubs across the continent.”
Whether he has won the presidency or not, Hot foresees the expansion of the role of banks and other MDBs as African countries face increased debt pressure and decline in concessional funds. “I think the role of the African Development Bank will become even more important, which is why we need to prepare for its importance. The country will want to rely more on us rather than going to the capital market,” he suggests.
In this environment, banks' concessional and semi-contradictory measures become even more important tools for countries seeking sustainable financing solutions, he says.
Tax time
Nevertheless, African countries must strengthen their domestic resource mobilization by expanding their tax nets rather than simply raising tax rates or introducing new ones.
“We cannot introduce new taxes, but we need to make sure the tax system is simple, accessible and digital.
A stronger tax base not only provides immediate financial relief, but also increases the country's credibility. Increased revenue generation will lead to improved credit ratings and reduce borrowing costs in international markets, Hott notes.
Also, if the Hot wins, it is a continuous action against permanent bugbears for African leaders and policymakers, that is, an overly strict credit rating that limits the allocation of investors' risk to the continent.
“On a 20-year, $1 billion loan, African countries will pay 1 billion interest on their own compared to their peers with the same rating elsewhere,” Hott points out.
“It's an incredible cost that directly hinders development.”
Beyond fundraising, “We need to communicate more with investors. They can know our plans first. If they believe in their vision and their ability to generate revenue, they charge a lower risk premium. That's very important,” he adds.
Hott is opposed to a field that includes some of the continental elite athletes in finance and development. Among them is Samuel Munzel Maimbo, Zambia's development finance expert and Vice President of the World Bank. Sidi Tar, Arab Bank for Economic Development (Badea) and former Mauritania pastor, Sidi Tar. Abbas Mahamato Trili of Chad, former secretary of the bank's secretary de l'afrique centrale (beac); Bajabril Swaj Tshabalala of South Africa, former senior vice president of the African Development Bank.
However, Hott is a fully bilingual investment banker with a track record of mobilizing capital, and a development banker with deep insight into policy impact and government partnerships, he is confident that at this moment he has what banks need.
“Of the candidates, I am the only person with that double hat. I am both an investment banker with the real ability to mobilize resources quickly, and a development banker focused on impact,” he argues.
“Today, Africa must have the best perupur to lead our institution,” he adds. “Banks need to demonstrate more leadership in mobilizing private capital, both domestically and internationally, to promote reforms with speed and transparency. Speed is not opposed to transparency and good governance. You can achieve both, and that is essential for us.”
Another command is independence. “African wealth must change Africa,” he says firmly. “Whatever our partners bring should be catalytic money to help us achieve that goal. It must be the cherry on the cake, not the cake itself.”
