Korea Pledges Billions of Dollars at Inaugural Leaders’ Summit with Africa
The Republic of Korea will commit $14 billion in export financing to support Korean companies investing in Africa while increasing its official development assistance (ODA) to $10 billion by 2030.
The President of Korea, Yoon Suk Yeol announced this on Tuesday in Seoul at the opening of the first Korea-Africa Summit, attended by 25 African heads of state and government, as well as the president of the African Development Bank Group Dr Akinwumi Adesina.
Up to 48 African countries were represented at the summit by either a president, king, prime minister, vice president or minister to discuss, “The Future We Make Together: Shared Growth, Sustainability, and Solidarity.”
President Yoon Suk Yeol pledged that Korea would extend its Trade and Investment Promotion Frameworks, and Investment Protection Agreements to African countries.
African leaders praised Korea for its open and mutual approach to strengthening cooperation with the continent. They highlighted investment opportunities in their own countries and across the continent.
In his address, Bank Group President Adesina referred to the theme of the summit and said: “To show solidarity with Africa, for the ‘future we make together’, I wish to request that Korea solidify this Korea-Africa Summit by agreeing to rechannel SDRs (Special Drawing Rights) to the African Development Bank.”
Adesina added: “The approval by the IMF Board for use of SDRs of $20 billion for hybrid capital, as championed by our institutions, with immense advocacy of African heads of state and government, marks a new way to scale up development financing.”
The Bank Group president said, “The IMF-approved $20 billion limit for SDR rechannelling for hybrid capital, channelled through the African Development Bank and other multilateral development banks, will deliver $80 billion of new financial support.”
Additionally, Adesina urged Korea to contribute generously to the forthcoming 17th replenishment of the African Development Fund, the concessional window of the Bank Group, as well as to the Alliance for Green Infrastructure in Africa (AGIA), a new initiative by the Bank, in partnership with the African Union and Africa50, to mobilise private financing for green infrastructure in Africa.
The Korea-Africa Economic Cooperation (KOAFEC) Trust Fund (KTF), established by the Korean Government in 2007, and managed by the Bank, is the largest among the Bank’s 17 active bilateral trust funds, in terms of contributions received, and portfolio size.
Adesina’s call for greater financing commitments from wealthier countries like Korea comes on the heels of the 59th Annual Meetings of the Bank, where discussions focused on a comprehensive reform of the global financial architecture, through innovative financing mechanisms like the rechannelling of SDRs, and a re-evaluation of unfavourable debt management practices.
President Adesina praised Korea’s inspiring and determined development journey, that transformed “a poor and aid-dependent country” into “one of the largest donor countries in the world.”
He highlighted the deep relationship between Korea and the Bank, starting from 1982 when Korea became a member of the Bank. Since then, he said, Korea “has contributed close to $795 million to the Bank, the African Development Fund and the Korea Trust Fund.”
“You are investing in the right institution: the African Development Bank,” he declared.
Rwanda’s President Paul Kagame said Korea’s experience shows a country can be radically transformed in the course of a generation. “Is there any reason Africa hasn’t become a high-income region?” he posed.
United Republic of Tanzania President Dr Samia Suluhu Hassan called for investment in clean cooking agenda as part of the just energy transition. She said investment in clean cooking will lower emissions, deforestation and respiratory diseases that affect especially women and children.
“We are working with Dr Adesina (President of the African Development Bank) to fundraise for this agenda,” she said.
President William Ruto publicly acknowledged the African Development Bank’s financial innovations. He told Korea to consider channelling some of the SDRs through the African Development Bank.
Other touchpoints of the bilateral relationship cited by Adesina include the jointly organized Korea-Africa Economic Cooperation Ministerial Conference (KOAFEC), the Korea-Africa Energy Investment Framework, and the $115.4 million KOAFEC Trust Fund, the Bank’s largest bilateral fund.
Providing an update on the $600 million Korea-Africa Energy Investment Framework, sealed in 2021, Adesina said: “We have jointly approved the first two projects: $57 million for the Kenya Transmission Network Improvement Project and $52 million for Eastern Ethiopia Electricity Grid Reinforcement.”
Mohamed Ould Ghazouani, the President of Mauritania and Chairperson of the African Union, and co-chair of the summit alongside host President Yoon described the summit as an opportunity for both sides to renew their commitment to shared growth and partnership based on mutual respect and trust.
A new chapter
The Chairman of the Africa Union Commission Moussa Faki Mahamat observed that the trade volume between Africa and Korea remains insignificant. “In 2022 Africa accounted for 2% of Korea’s trade,” said Mahamat and called for promotion of bilateral trade relations, more exchanges in the private sector and focusing on key value-added areas.
King Mswati III of Eswatini encouraged Korean business community to invest in any part of the continent. “Choose a location to establish industries. Choose anywhere. We are no longer competing but collaborating.”
That chimed with President Teodoro Nguema Obiang Mbasogo who spoke about his country’s 2050 vision for diversification of the economy and looked “forward to Korean companies investing in attractive Equatorial Guinea. We will provide appropriate guarantees and support for investors.
Togolese leader Faure Gnassingbe spoke about the opportunities his country presents. “Togo is an open economy. We are small in size… We have a major seaport which needs to be expanded to promote trade.”
The President of Cote d’Ivoire Alassane Ouattara said the summit had created “a turning point in the relationship between Korea and Africa.”
Zimbabwe’s President Emmerson Mnangagwa said, “The Journey travelled by Korea is a beacon and source of encouragement to Africa as it works to lift its people out of poverty.”
In his closing remarks, President Yoon of Korea summed up the summit as “a new chapter for Korea-Africa relations.”
He also outlined Korea’s areas of interest for support and partnership in Africa: digitalisation, e-government, education and capacity building, climate change, food security and critical minerals. A Korea-Africa critical minerals dialogue is scheduled to be inaugurated later this year.
On the sidelines of the Summit, Adesina held bilateral meetings with the Korean Minister of Agriculture, Food and Rural Affairs, Song Miryung.
The African Development Bank signed two agreements: a Memorandum of Understanding between the Bank and Korea Trade Insurance Corporation (K-SURE), and a Letter of Intent between the Bank and Korea Overseas Infrastructure and Urban Development Corporation (KIND).
