'Sound institutions are key to sustainable development'

African Development Bank (AfDB) President Donald Kaberuka has said that sustainability of Africa’s achievements is only possible if sound institutions are in place, opportunities are widely spread, and jobs are created.

According to the AfDB President, capital alone is not the most important determinant of development. “Indeed, until sound institutions are established, finance’s usefulness will be limited,” he added.

Speaking during an intervention on October 10, 2013 at a meeting organised by the Washington-based Brookings Institution, Mr. Kaberuka highlighted four megatrends shaping each and every one of the 54 countries in Africa, namely: the emergence of the multipolar economic world and new opportunities; the demographic dynamics characterised by the growth in the number of people with disposable income driving domestic demand; the discovery of large amounts of hitherto unknown natural wealth; and opportunities to leapfrog in some technologies -- such as the mobile phone which is having a deep and lasting impact on service delivery and cost of doing business.

These trends, according to Mr. Kaberuka, are shaping countries of the continent in ways that will influence the future trajectory of many countries -- at a time when two decades of economic and political reforms and increased economic integration has built a stronger shock-absorbing capacity but is also exposing new vulnerabilities.

Speaking on the role of capital markets in bridging infrastructure deficits in Africa, he said that many countries have taken advantage of the current international market conditions to borrow for infrastructure under attractive conditions, but cautioned that it is a direction that needs to be encouraged on two conditions: managing debt carefully and investing well.

On the Africa50 Fund, he noted that the African Development Bank has proposed this initiative as a special vehicle for African institutional investors. The Fund will be deployed to finance transformational projects.