Korea to ramp up African aid on top of offering $14bn in export credits

June 5, 2024 in Finance, Foreign News, Trade & Industry by Editor

Yoon leads colleagues for a photo opportunity, promising to extend Korea’s Trade and Investment Promotion Frameworks, and Investment Protection Agreements to African countries as well as assist in digitalisation, e-government, education, climate change and capacity building.

The President of Korea, Yoon Suk Yeol said their country will bolster its official development assistance (ODA) fund to African nations to $10 billion by 2030, while providing $14 billion of export financing to Korean firms to stimulate Korean investments across Africa. The country’s ODA budget for Africa was $590 million in 2021.

President Yoon promised to extend its Trade and Investment Promotion Frameworks, and Investment Protection Agreements to African countries. He was addressing 25 heads of state at the inaugural Korea-Africa Summit which concluded Tuesday.

The gathering also saw on the sidelines, plans for launching a Critical Minerals Dialogue. This aims to identify opportunities for Korean companies to invest in Africa and add value to the development of critical mineral resources.

Yoon said, “The Critical Minerals Dialogue being launched between Korea and Africa aims to stabilize supply chains through mutually beneficial cooperation. This initiative will also serve as a model example of sustainable development of global mineral resources.”

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.’

Referring to the theme, Dr Akinwumi Adesina, the President of the African Development Bank (AfDB) Group said, “I wish to request that Korea solidify this Korea-Africa Summit by agreeing to re-channel SDRs (Special Drawing Rights) to the African Development Bank.”

He said, “The IMF-approved $20 billion limit for SDR rechanneling for hybrid capital, channeled through the African Development Bank and other multilateral development banks, will deliver $80 billion of new financial support.”

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.”

Rwanda’s President Paul Kagame said Korea’s experience shows a country can be radically transformed in the course of a generation and queried: “Is there any reason Africa hasn’t become a high-income region?”

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. She said, “We are working with Dr Adesina (President of the African Development Bank) to fundraise for this agenda.”

President William Ruto acknowledged the AfDB’s financial innovations and requested that Korea consider channeling some of its SDRs through the African Development Bank.

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.

However, the Chairman of the Africa Union Commission Moussa Faki Mahamat said the trade volume between Africa and Korea remains insignificant. He said, “In 2022 Africa accounted for 2% of Korea’s trade.”

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,” he said.

Equatorial Guinea President Teodoro Nguema Obiang Mbasogo highlighted his country’s 2050 Vision for diversification of the economy. “I look forward to Korean companies investing in attractive Equatorial Guinea. We will provide appropriate guarantees and support for investors,” he said.

Togolese leader Faure Gnassingbe said although their country is small in size, they have an an open economy and, “We have a major seaport which needs to be expanded to promote trade,” he said.

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, Yoon of Korea described 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.