African Development Bank Annual Meetings: Vice president Akin-Olugbade hails Horn of Africa Initiative milestone of $10 Billion in portfolio commitments

African Development Bank Annual Meetings: Vice president Akin-Olugbade hails Horn of Africa Initiative milestone of $10 Billion in portfolio commitments

African Development Bank Group Vice President Marie-Laure Akin-Olugbade has commended the Horn of Africa Initiative for reaching $10 billion in total commitments in its nearly five years of existence.

She spoke during the initiative’s 21st Ministerial Meeting which took place in Nairobi on May 28, 2024, on the sidelines of the Bank Group’s Annual Meetings. It brought together finance ministers from Djibouti, Eritrea, Ethiopia, Kenya, Somalia, South Sudan, and Sudan to take stock of portfolio performance and discuss strategies for attracting more private investment into the region. The initiative works to deepen regional economic integration, tackling fragility, and enhancing resilience to foster peace and stability, and improve the living standards of the people of the Horn.

“We launched the Horn of Africa Initiative five years ago in 2019 with three development partners, the African Development Bank, the European Union and the World Bank, and today it has grown to five development partners as we have welcomed BMZ-Germany and FCDO-UK. The portfolio has grown to about $10 billion in total commitments across the four pillars of the Horn of Africa Initiative,” said Akin-Olugbade, who co-chaired the meeting alongside Ethiopia’s Finance Minister Ahmed Shide. She lauded the initiative’s progress in bolstering food security and tackling locust swarms.

The initiative’s four pillars are regional infrastructure connectivity; economic and trade integration; building resilience to climatic and other shocks; and human capital development.

Minister Shide said, “Together, we have the power to transform this potential into tangible prosperity to enhance the lives of millions through improved infrastructure, economic integration, and proactive measures against the threat of climate change and food insecurity.”

He added: “We also face the imperative of addressing the economic challenges that look over our region. Reliance on concessional support is going to be very important. The urgency of debt sustainability discussions and innovative financing solutions are needed, such as debt swaps, which are critical to easing the resource constraints weighing on our economies.”

The meeting also featured an update on the implementation of the Borderlands Roadmap, adopted at the 18th Ministerial in Addis Ababa in October 2023.  The roadmap, covering the 2024-2048 period, represents a common vision and strategy for accelerating development in the borderlands of the Horn of Africa, defined as regions at the margins of its nation-states. 

Finance ministers emphasised the need to mobilise more investments in borderland regions, building on existing commitments by development partners.

Praising the Borderlands Roadmap, UK Minister of State in the Foreign, Commonwealth and Development Office, Andrew Mitchell, said, “From the menace of violent extremism to conflict and climate shocks, these are the problems that span national borders. A united approach is therefore necessary to resolve them,” he said.

He noted that the UK is working closely with members, including through a £15 million program to build stability along the borders between Kenya, Somalia, and Ethiopia.

Germany, which became the first bilateral partner to join the initiative last year, announced plans to contribute further to its objectives. “I’m glad to announce that as a next step in our partnership, we intend to make an announcement of €10 million to the Multi-donor Trust Fund which is managed by the World Bank,” said Birgit Pickel, Director General, Africa, BMZ.

Representatives from the governments of Japan, Canada, and the Netherlands, as well as the Islamic Development Bank and the Arab Bank for Economic Development in Africa (BADEA), among others, also attended the meeting. BADEA, an observer to date, announced its intention to join the initiative as its sixth Development Partner.

The findings of the portfolio review were presented during the meeting. While 75 percent of portfolio projects received a satisfactory rating, there were areas for improvement, including addressing chronic capacity constraints across the region, particularly in public financial management audit, and procurement.

Akin-Olugbade stressed the need for the initiative to learn from past experiences and focus on improving portfolio performance and efficiency while reducing bottlenecks.

“As development partners, we have to continue to learn lessons about how we can better design, prepare and execute operations in the region, which has unique challenges at both regional, national and sub-national levels,” she noted.

The vice president also highlighted ongoing discussions for the reform of the multilateral development banks and on how multilateral development banks can work and coordinate more efficiently as a system.

Referring to a Memorandum of Understanding (MoU) between the African Development Bank and the World Bank that is under development, she noted: “This demonstrates how we are constantly thinking of ways to better serve our clients – including within the context of the African Development Bank’s new Ten-Year Strategy.”

Last year, in the role of co-chair for the first time, the Bank Group hosted the 17th Ministerial Meeting of the Horn of Africa Initiative during its 2023 Annual Meetings in Egypt.

In that meeting, Djibouti’s Minister of Economy and Finance Ilyas Moussa Dawaleh and Somalia’s Minister of Finance Elmi Nur signed a $72 million financing agreement for the Bank-supported Djibouti-Somalia Corridor project. The Bank Group’s Director General for East Africa Nnenna Nwabufo signed on the institution’s behalf.