Report: Africa's Economic Prosperity at Risk From Instability

Mariama Diallo
April 15,2014

The head of the African Development Bank, Donald Kaberuka, says achieving economic progress does not just depend on having impressive numbers of GDP growth, high-rise buildings or first-class highways. For development institutions like his and others looking to promote growth, they must also consider political factors.

When recent fighting erupted in South Sudan, the African Development Bank had just approved a $25 million electricity project. Neither Bank President Donald Kaberuka nor his staff saw the conflict coming.

Kaberuka says when conflicts erupt in countries, the bank's financing of development projects has to start all over again.

"We did finance development in Somalia. We built roads, hospitals, but the country went back to shambles. I had an office in Bangui. We had offices in Juba, but when we go back to square one, I’ll be going further than my traditional mandate of economics and development. I’ll be looking closely at the political economy of the countries," said Kaberuka.

In a recent report on the so-called fragile states of Africa, Kaberuka said Bank managers have not taken political risks into account when making development decisions.

“We [the report] concluded that fragility is a big risk for Africa. We looked at stable countries which suddenly erupt either because of bad elections, corruption," he said. "We found that each one of our countries is at risk and by extension, Africa’s own prosperity at the moment is at risk.

That sustainable development cannot be achieved without security was one of the key themes of the EU-Africa Summit that took place recently in Brussels.

Since 2004, the EU has provided more than $1.6 billion to support peacekeeping missions like AMISOM in Somalia and MISCA in the Central African Republic.

EU institutions have also pledged almost $39 billion for development assistance for Africa in the next seven years.

Andris Piebalgs, the EU Commissioner for Development, says 70 percent of those funds will go to less developed nations, based on specific criteria, including a measure of per capita income.

“So if a country is richer, it gets less. For example, Gabon. The second is vulnerability, meaning if the country is more landlocked or has some structural weaknesses and also gets more," said Piebalgs.

The commissioner also says that some countries are doing better.

“I would take Ethiopia and Rwanda where basically our support managed to bring countries to new levels of development," he said. "They are still very poor countries but they are moving. Are there risks? Yes there are, but I think in these politics [political situations], no one is safe. Let’s take Europe.

Piebalgs points to what is happening now in Ukraine, which he says no one foresaw.