African Development Bank chief calls for end to loans tied to natural resources
![Akinwumi Adesina, the head of the African Development Bank](https://sustainabilityeconomicsnews.com/wp-content/uploads/2024/03/GINlBYwXgAApSUu.jpeg)
In an interview with The Associated Press, Akinwumi Adesina, the head of the African Development Bank, voiced his concerns over loans tied to Africa’s natural resources. Adesina emphasized the difficulty in properly pricing such assets and highlighted the challenges these loans pose to sustainable development.
Adesina criticized the imbalance in negotiations, where lenders often dictate terms to cash-strapped African nations, leading to potential exploitation and corruption. He pointed out the detrimental effects of such loans, citing Chad’s financial crisis after an oil-backed loan from Glencore.
The shift to renewable energy and electric vehicles has increased demand for critical minerals, driving the proliferation of these loans. Adesina stressed the need for transparency and fair negotiation, advocating for the termination of natural resource-backed loans.
The African Development Bank has initiated efforts to help countries renegotiate asymmetric and opaque loans. Adesina also introduced the Alliance for Green Infrastructure in Africa, aiming to mobilize $10 billion for sustainable infrastructure projects, potentially reducing reliance on problematic financing mechanisms.
Natural resource-backed loans are financial arrangements in which a borrower, typically a government or a state-owned company in a resource-rich country, secures a loan using its natural resources, such as oil, minerals, or other commodities, as collateral.
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