The role of development banks in times of crisis is crucial but Rémy Rioux, the head of AFD, calls for not to forget the support for SMEs to safeguard the African entrepreneurial fabric.

Carry a "disruptive" but "as honest as possible" discourse on Africa. This is the mission – in addition to financing 500 projects per year on the continent – of the French Development Agency (AFD) and its boss since 2016, Rémy Rioux.

Created in 1941 and established in Dakar the following year, AFD approved €14 billion in financing in 2019 in more than one hundred countries, half of which were in Africa, where it has 30 branches in 49 countries. In other words, the continent – and in particular the Sahel – is a priority for this armed wing of the France in terms of development aid, which focuses its financing on sectors with a high social impact: energy, education, access to water and sanitation, agriculture, in particular.

This action is accompanied by regular publications. The latest is an atlas (Atlas of Africa – AFD. Pour un autre regard sur le continent, published on August 26 by Armand Colin), bringing together a hundred new maps to assess and present the continent's progress in terms of development. It is a question of "doing justice to Africa" – recalling that the continent already weighs as much in terms of population and gross domestic product (GDP) as India – while "recalling its diversity" but also "its ability to innovate".

The result highlights, despite the difficult context, "the impressive progress made by the continent," says Rémy Rioux, also president of the International Club of Development Finance (IDFC).

Jeune Afrique: What lessons can be drawn from the current period of health and economic crisis caused by the coronavirus pandemic?

Rémy Rioux: I see two main ones. On the one hand, African integration or rather African integrations are undeniably progressing. The speed and coherence of the African response to this health crisis have, for the moment, shown this well. On the other hand, contrary to the widespread idea of failing health systems, we have seen organizations – yet poorly staffed – function and succeed in mobilizing other social actors or even traditional medicine in the fight against the coronavirus.

The epidemic is far from over but I was very interested in our misunderstanding of the evolution of Covid-19 in Africa and our trouble with an African reality that did not fit into pre-established boxes. This is exactly the spirit of our atlas which aims, following President Macron's Ouagadougou speech in 2017, to change the outlook.

Let's not let the African private sector down!

If the health response has been up to the task in your opinion, what about the economic response?

The economic crisis is certain and profound and each actor must mobilize very quickly. With one point to which we must be very attentive: avoid the tearing apart of the existing SME fabric. There is a lot of talk about health issues and state debt, but we also need to be concerned about micro-economics. We know how complicated access to credit was already before the crisis, we must mobilize to avoid bankruptcies and the shift of activities in the informal sector. In short, let's not let the African private sector down!

Proparco, our subsidiary dedicated to the private sector, continues and strengthens the deployment of the Choose Africa initiative with nearly 1.5 billion euros invested over the past eighteen months in support of African start-ups, VSEs and SMEs. Much more needs to be done and a broad financial coalition must be built, because the mechanisms to resist the crisis are not yet on scale.

How is AFD coping with the crisis?

In the current period, when demand for support is very strong, public development banks play a key countercyclical role, making it possible to compensate for the decline in commercial bank financing, which is held back by rising risks. In parallel and in the longer term, they encourage the transformations of our economies such as the development of renewable energies or agro-ecology. In 2020 and despite very major constraints, AFD should, over the whole year, reach a level of activity comparable to that of last year, which exceeded the threshold of 14 billion euros for the first time.

I do not see a downturn in financing for development and that is good news.

Isn't funding more complicated to mobilize?

I do not see a downturn in financing for development and that is good news. All commitments made before the crisis are being kept. In France, according to the first elements of the draft finance law for 2021, the "development aid" mission will see its budget increase compared to 2020. At European level, the Union has adopted a multiannual budget that maintains its ambitions in this area. Globally, the Green Climate Fund, so important for the implementation of the 2015 Paris Agreement, received an additional $10 billion. The African Development Bank (AfDB) is in the process of recapitalization. All of this is a step in the right direction. On the other hand, there is currently no international dimension in the recovery plans, which are all primarily national.

Regarding the AfDB, how do you judge its action and that of its president, Akinwumi Adesina, who has just been reappointed as its head after a crisis linked to complaints of bad governance?

I warmly congratulate my friend Akin on his re-election! This is very good news. After difficult months, he can continue and deepen his work. The AfDB is a key partner and we are ready to cooperate even more with it during this second mandate. The bank has an African legitimacy that neither AFD nor the World Bank will ever have.

The connection between all public development banks must be strengthened

And, to fully play its role, it must reach a larger financial size, as recently decided by its shareholders. The AfDB is also a platform to support all other public banks, regional, such as BOAD or TDB Bank, and national, in Rwanda, South Africa, Morocco or soon Ghana. In Africa, there are already more than one hundred public banks, but their balance sheets represent less than 5% of the consolidated balance sheet of all public development banks in the world. They must be strengthened quickly.

You also call for greater cooperation between these institutions. Will this be the objective of the first world summit of public development banks, which AFD is organizing from 10 to 12 November in Paris?

This is a crucial point in the response to the crisis and in the long term. There is a need to strengthen the connection between all public development banks, the AfDB and others, and in particular all national banks. In this way, through co-financing and the exchange of good practices, we will be able to be more ambitious for the climate and in the fight against inequalities. At the "Finance in Common" summit, which we are organizing in partnership with the Paris Peace Forum, we will bring together the 450 public development banks that exist in the world, which invest $2.5 trillion each year, or 10% of global investment.

Malians celebrate the departure of Ibrahim Boubacar Keïta in Bamako, August 21, 2020. © Baba Ahmed/AP/Sipa

To return to the news, many questions arise about the economic consequences of the political crisis in Mali. How do you read the situation?

Our job at AFD is to think and act in the long term, by placing ourselves on the side of local actors. In Mali, as throughout the Sahel, we provide loans for projects over 20 years. And it is on this horizon that we must try to imagine the future of this region. This is all the more important when the short-term situation is very uncertain.

By recalling a fundamental fact: even if Mali is far from the ranking of the human development index, this indicator has doubled in thirty years, driven in particular by a high growth rate of per capita income. This is the paradox of the situation in Mali and the Sahel, the region with the highest growth rate in all of Africa.

In Mali, development policy is part of the solution

How can action on the ground be improved?

Staying the course: we are present as never before in Mali, to the tune of 200 million euros in commitments per year and through 40 projects, including in the north and center of the country. This will not, of course, be enough to solve all the problems. But development policy, with its specificity, is part of the solution, alongside political action and the security effort. The recently opened Kabala station provides drinking water for more than a million additional inhabitants in Bamako. The troubled context of recent days must not lead to a renunciation of investment in development.

Some observers believe that French support for the agricultural sector in the Sahel is too weak. What do you think?

We know that there are modes in financing development. And it is true that, in recent decades, the trend has unfortunately been rather towards a decrease in the funds devoted to agriculture. This trend is not observed at AFD with the maintenance of our action in this sector – about one billion euros per year – strong of the expertise on the sectors of our agricultural engineers.

In Mali, one of our partners, the National Bank for Agricultural Development (BNDA), finances projects throughout the country, particularly in fragile areas. This is an example of the very positive contribution that public banks can make, even in the most complex national contexts.