By KT Reporter
The sudden dismantling of USAID should African countries including Uganda force African leaders to rethink their development financing says African Development Bank Group, Secretary General Vincent Nmehielle.
On March 10, Secretary of State Marco Rubio announced that he had cut 83 percent of U.S. Agency for International Development (USAID) programs, which provided humanitarian and development assistance worldwide.
Development experts and charities have indicated that the cuts will severely affect development programing in African countries.
Nmehielle says the continent should not continue bemoaning the fact that President Donald Trump withdrew USAID funding but rather say it is time to move on, time to focus and it is time use their resources better.
“After that decision is made, how do you respond? D keep crying saying that the US has removed the money so we are no longer able to develop? That means you will not exists if that fund doesn’t exist” he argued.
“I would like to think that Africa has resources it needs in order to drive its own development. One lesson that I have learnt in development economics is that development is a do it yourself”
Vincent Nmehielle made the remarks while addressing a group of African journalists about the Bank’s 2025 Annual Meetings taking place from May 26-30 in Abidjan, Côte d’Ivoire, under the theme: “Making the most of Africa’s capital to foster its development.”
This year’s event will mark the 60th annual meeting of the Board of Governors of the African Development Bank, and the 51st Annual Meeting of the Board of Governors of the ADF.
These meetings serve as the premier event for the Bank Group and provide a platform for assessing the institution’s progress toward advancing Africa’s development and improving the quality of life across the continent.
The highlight of this year’s meetings will be the election of a new president of the Bank Group for a renewable five-year term.
The current president, Dr. Akinwumi A. Adesina, is concluding his second and final term.
Navigating Trumps Tariffs
Africa is also under panic following what some trade and development experts described as Donald Trump’s “illogical massive trade tariffs. There are suggestions the tariffs have killed the African Growth and Opportunity Act (AGOA), which gave non-reciprocal, duty-free access to the lucrative US market for most exports from 32 eligible sub-Saharan countries.
The tariffs will remain in effect until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated. There are reports that countries in Africa sent or are sending delegations to Washington to plead for revocation or reduction of tariffs. Some are seeking alternative markets in effort to balance trade.
Kevin Urama, Chief Economist and Vice-President for Economic Governance and Knowledge Management at African Development Bank Group told journalists that the tariffs are a wakeup call to Africa. It is all about trade. Isn’t it? Trading what you produce with others. The relevance of African Free Continental Area is here. Can you imagine this continent trading within its self?” he remarked.
The African Continental Free Trade Area (AfCFTA) is one of the Flagship Projects of Agenda 2063 Africa’s development framework.
The AfCFTA aims at accelerating intra-African trade and boosting Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations Urama said now that tariffs are in place, it is upon the continent to put in place strategies to deal with it.
“You need to interrogate whether or not the African Continental Free Trade Area (AfCFTA) is a reality. More so now. But the AFDB will support every country that has found an avenue. We can work with them to fine tune how to proceed” he said.
Meanwhile, Vincent Nmehielle suggests that African leaders have to look inward and use the continent’s capital to work for it.
Can Africa jump out debt Crisis? Economists at African Development Bank Group like other experts in development economics are of the borrowing from external sources should only occur in countries don’t have resources back at home. They suggest that if resources are in country, then they could reduce the level of borrowing.
A report by the United Nations in 2024 found that Africa’s external debt had climbed to more than $650 billion, and debt servicing costs reached nearly $90 billion. It observed that over 40 per cent of African countries allocated more funds to debt service than to health—a stark reflection of how debt obligations are undermining Africa’s development goals.
Nmehielle said if the continent improves more in domestic revenue mobilization, improves more in investing fiscal resources , her savings, her sovereign wealth funds and pension funds, they could boost productivity and thereby reduce borrowing.
“If Africa is able to do governance better in order to improve transparency, close illicit financial flows, because Africa loses almost ninety billion dollars every year. That is far much more than we get from aid and Foreign Direct Investment (FDI) every year” said Nmehielle.
“If we plug that, those resources will remain for Africa to develop itself” Nmehielle said estimates indicate that Africa loses $248 billion every year.
“Again the resources would be for better use for Africa’s development,” he said.
He further suggests that Africa should urgently address the risk rating and perceptions of risk rating, then it will be able to attract investments need to propel development. Political and market risks within Africa make the cost of capital higher making it to lose an estimated about $74.5 billion every year.
A UNDP report launched in April 2023, estimated the impact of biased credit ratings on African countries at $74.5 billion.
At the time, Africa’s debt profile had surged by 183% since the beginning of the new millennium, a rate nearly four times higher than its gross domestic product growth rate.
Over the past two decades, African governments have turned to issuing sovereign bonds – both in domestic currency and Eurobonds – to procure funds for infrastructure development, aiming to reduce dependence on diminishing international aid.
Economists say while sovereign bonds provide a stable financing avenue devoid of preconditions akin to multilateral concessional funding, their repayment terms are contingent upon global credit ratings, It is hoped that he establishment of an Africa Credit Rating Agency (AfCRA) being championed by the African Union would bring a balance to the continent’s position-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
