New AfDB President advocates fiscal buffers for African countries

01 Sep 2015
Financial Nigeria

Summary

Dr. Adesina, who assumed office today, advised that African nations should set up sovereign wealth funds to provide fiscal buffers during a period of slump in commodity prices.

President of African Development Bank Akinwumi Adesina

The new African Development Bank (AfDB) President Akinwumi Adesina has advised African countries to build fiscal buffers as a mechanism for weathering global market volatility.

Dr. Adesina, who assumed office today, advised that African nations should set up sovereign wealth funds to provide fiscal buffers during a period of slump in commodity prices.

Coming into office a few days after the turmoil in global markets, on concerns over China’s economy, Adesina said the AfDB “will allow countries to have fiscal buffers and liquidity buffers to this kind of shock.” He projected that there would be disquiet in the global markets going forward, and that this kind of turbulence might be the “new normal.”

Nigeria’s immediate past Agriculture minister, Adesina, replaced Rwandan Donald Kaberuka as AfDB President today. Mr. Kaberuka is widely acknowledged to have served the Bank meritoriously in the last 10 years.

Adesina comes into office at a time of daunting challenges for many African nations, chiefly economic slowdown in China – the continent’s largest trading partner -- and slump in oil prices.

To be able to deal with these challenges, Adesina advised that African countries should optimise domestic resource governance.

He said: “We can do a lot more in terms of domestic resource mobilization that reduces the need to post a lot of foreign currency-denominated bond issuance.”


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