🔴 INTERVENTION BY PR TIDJANE THIAM AT THE FII NEW AFRICA SUMMIT IN RIYAD ON OCTOBER 28TH , 2024

Well, thank you, Jumana. And I would like to reiterate what His Excellency Mohammed Jadaan said at the beginning of the session today of welcoming everyone, first thanking Richard and the FII for convening this summit and this gathering and getting us to talk about a very important topic. I think it goes without saying, and it's been mentioned, but I'll mention it again because if it's important, that Saudi Arabia has always considered itself very close to Africa. In fact, sometimes we consider ourselves also African. I think if you think of the Red Sea Rift, it's relatively, in geologic time, a young and recent rift, and Saudi Arabia was very much, the Arabian Peninsula was very much an extension of Africa. If you look at the ethnic composition in Africa, many of them trace their roots and their origin to the Arabian Peninsula, which is essentially Saudi Arabia. Arabic is widely spoken not only in Northern Africa but in East Africa. And indeed, if you look at Saudi Arabia itself, our genetic makeup, our skin complexion, and all of that has strong content from Africa that we're very proud of. The cultures are similar. A third of the African population are Muslims, but other ethnicities and religions within Africa are very much close to us. Trade is strong. We have about $45 billion of trade with Africa and significant investments from Saudi Arabia. And of course, development aid, as His Excellency mentioned, has been extended close to $45 billion also. And most of the African continent, the majority of countries, the challenges in Africa, I would reverse the previous proverb mentioned, and that when Africa sneezes, indeed the rest of the world catches a cold. It is the heart of the planet in many ways. Africa today has 18% of the global population. Is that a problem or is that a dividend that Africa should and the rest of the world indeed harness as the world goes through aging and human resources become scarce? And it's a very young population. Africa has a third of the global mineral resources, much of it has not been developed and exploited. And we are initiating today in the global economy an era where minerals are going to be the fuel, the new fuel for the next phase of economic development. There is significant rainfall in sub-Saharan Africa and significant land mass that has not been also developed fully. And modern agriculture is lacking, and also being able to raise livestock and create enough protein not only for the African population, which is going to be a quarter of the global population, but indeed Africa can be the breadbasket and the food basket for the rest of the world. Certainly for us in the Arabian Peninsula, the GCC, Saudi Arabia, we see a great potential, and the list goes on of the potential of Africa that needs to be unleashed, without exaggeration, to create solutions not only for its young population, rising population, and its aspiring economies, but for surrounding regions like the Arabian Peninsula, GCC, Saudi Arabia, and very much the rest of the planet if we think of our common future. For that, I would just end: we need to work together to mobilize finance. I think development aid, His Excellency talked about what we're doing within the context of Saudi Arabia, the GCC, Islamic Development Bank, but also within the context of the World Bank Group and IMF and the relief we have provided during G20 leadership of the Kingdom and since then. But we need to combine that development aid with investment by owner-operator companies. Many of them in Saudi Arabia are very, very active in Africa, and they're very bullish and ambitious about the great potential, some of the things I just mentioned and beyond. And Saudi companies are active there. We need to bring financial institutions from the private sector to work. We need to reduce the perceived or real country risk. For that, I would just end my first intervention by saying we don't want to help Africa, we want to work with Africa to create opportunity for investors. And for that, Africa needs to do what we heard: Africa needs to first help itself. We need better governance. We need transparency on policies by the government, laws and regulations. We need technology. I think one thing I want to mention in addition to traditional investments, what Saudi Arabia can do by deploying modern technology that has enabled the transformation that many of you are seeing in the Kingdom of Saudi Arabia. Technology is a big enabler. Saudi Arabia, from a laggard to a leader in digitalization in education, digitalization in healthcare, where we have virtual hospitals reaching people across our large country, as well as digitizing government. And then we need to address urbanization, which is a great challenge, by creating smart cities, again, by mobilizing finance and deploying technology in these smart cities. Thank you.

Thank you very much, Jumana. It's a great pleasure to be here as always. I think it is extremely important to have sound public finances and making sure that we are mobilizing more resources domestically, in particular increasing the fiscal space so that we can get more revenue. And when you get more revenue, you get a better rating. And when you get a better rating, that affects your capacity to raise more money, but also it affects the quality and the capacity of the fundraising of your private sector. In most countries, the private sector rating is sealed by the country, basically sovereign rating. That is extremely important. Number two, the ability to prepare bankable projects at scale. It's not one or two projects in a country, it's hundreds of projects, thousands of projects to address the infrastructure gap and to make sure that money managers like our brother here, Bao, and others, Tony, and everyone else who want to invest in Africa see actually bankable projects. And bankable projects, it takes the government, it takes the private sector to basically work together, and it takes more importantly skills. And once you have all those ingredients, implementing projects also on the ground, that's why it's not only about policy, it's also about skills, about training people so that we have the ability basically to implement fast. When you look at the MDBs, a lot of resources can be mobilized, but sometimes the implementation takes a lot of time, and Africa is in a hurry. We are going to sort of train many more people so that we can sort of implement extremely fast. And then one last point actually is the cost of financing, both for the governments but also for basically the private sector. You know, once the African countries have the same rating than other countries in other regions, the credit spread is extremely high. I was looking at more than 15 countries comparing them to other countries that have the same rating. Africa can pay up to 500 basis points more, meaning that when the other country pays 5% on a bond, African governments pay 10% on the bond. So 500 basis points over 20 years on a $1 billion loan is another $1 billion of extra cost, and that can make countries more in debt vulnerability if those issues also are not addressed.

You know, the concession and the need to access concessional money is extremely important because you cannot finance infrastructure with short-term money and very expensive money. You cannot finance capacity building, education, human capital without also cheap money. But also, most of the money is in the private sector, and how to attract more private sector money, it's been said before, policies, but also developing more projects. That's why during my last mission at the African Development Bank, I was raising a fund for project preparation and development for green infrastructure. Within 18 months, we raised about $300 million from donor countries, from philanthropy, from MDBs, and that will allow us to develop more than $6 billion of projects to make them bankable for debt to come in, private debt, but also for equity to come in, private equity, and implement it without increasing the borrowing of the government. So we talk about moving from millions, billions to trillions, but to make that happen, project preparation and project development is critical. If projects are not bankable, the money will sit there at lower-yielding assets while Africa needs that. So let's put all our resources together to develop bankable projects at scale. Six countries in Africa needed $30 billion of project development money to make sure they achieve that infrastructure gap. Only six countries. Imagine the need for 54 countries. So I'm rooting for more project preparation, more project development, so we can have more private sector resources going into Africa.

Well, first, thanks for having me, Richard. Thanks for the invitation. I appreciate it. And Tony, thanks for the kind words. Look, you've heard from His Excellency, you've heard from Tony what the conditions are that African governments need to have to encourage private capital. Let me state from the beginning what I do is invest private capital in infrastructure, so you're going to expect to hear from me the virtues of private capital. Okay, so what do African countries need to do to attract private capital? First, we actually need to be more realistic. Okay, Africa is in competition. We're competing with Latin America, we're competing with the US, we're competing with Europe, we're competing with the GCC. There is, other than minerals, there's no reason why anybody has to invest in Africa. Okay, and so African countries have to realize, we need to realize that we're in competition, and therefore make it attractive for private capital to come to the continent. That's the first thing. The second thing is we also need to be more realistic about how we think about these things. We looked at some investing in some electricity projects on the continent, and the response I got from the government was, well, the cost of electricity is too expensive. Okay, 40% of the African continent has no access to electricity. Tony, Alum, those companies have to have diesel-fired generation to supply electricity in Africa, in Nigeria, in the 21st century. Nigeria has less electricity generation capacity than some mid-sized city in the US. Okay, what is the cost of the 40% of the Africans who do not have access to electricity? That's the way you should think about it. So any amount you spend to get central generation of electricity makes it more attractive. So that's the other thing. We've heard from His Excellency about how Africa has the youngest population. By I think 2050, the working-age population in Africa will increase from roughly 800 million to about 1.5 billion. That is in an environment where the US will stay flat, Europe is declining, China is declining. That creates a tremendous opportunity for Africa to be the service economy of the world. But that's also a challenge because if you can't create jobs for these young people, it's going to create political and economic problems. There is also the fact that you don't have all the time in the world. Yeah, artificial intelligence is coming. Artificial intelligence, artificial general intelligence will increase productivity in most of these other countries. And so if we don't move quickly in Africa, we will find ourselves in a situation where what should be an asset could become a liability. So these are some of the things that I think we need to be thoughtful about as we think about how to attract capital to invest in Africa.