African Development Bank chief criticizes opaque loans tied to Africa's natural resources
The head of the African Development Bank is calling for an end to loans given in exchange for oil or critical minerals used in smartphones and electric car batteries
Lagos, NIGERIA — The head of the African Development Bank is calling for an end to loans given in exchange for the continent's rich supplies of oil or critical minerals used in smartphones and electric car batteries, deals that have helped China gain control over mineral mining in places like Congo and have left some African countries in financial crisis.
“They are just bad, first and foremost, because you can’t price the assets properly,” Akinwumi Adesina said in an interview with The Associated Press in Lagos, Nigeria, last week. “If you have minerals or oil under the ground, how do you come up with a price for a long-term contract? It’s a challenge.”
Linking future revenue from natural resource exports to loan paydowns is often touted as a way for recipients to get financing for infrastructure projects and for lenders to reduce the risk of not getting their money back.
The shift to renewable energy and electric vehicles has caused a spike in the demand for critical minerals, driving these kind of loans. That includes a China-Congo deal that strengthens Beijing’s position in the global supply chain for EVs and other products as it taps into the world's largest reserves of cobalt, a mineral used to make lithium-ion batteries, in the impoverished central African country.
Adesina, whose Abidjan, Ivory Coast-based institution helps finance development in African countries, said these arrangements come with a litany of problems.
He highlighted the uneven nature of the negotiations, with lenders typically holding the upper hand and dictating terms to
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