APA-Nairobi (Kenya) – The decision brings the authorised capital of the African Development Bank (AfDB) from $201 billion to $318 billion.
The Governors of the African Development Bank (AfDB) Group met in Nairobi on Friday to approve an unprecedented increase of $117 billion (88.1 billion units of account) in the Bank’s callable capital. This historic decision, taken unanimously, brings the Bank’s total authorised capital to $318 billion and will enable it to maintain its lending capacity and its precious AAA credit rating, which is essential to mobilise financing on the best possible terms.
“This is an important demonstration of the confidence our shareholders have in us and in our ability to use our resources well,” President Akinwumi Adesina said at a press conference held on Friday at the end of the Bank Group’s Annual Meetings in Nairobi, adding that “the additional callable capital allows us to maintain and leverage our firepower while preserving our investment grade credit rating.”
Vice-President for Finance, Hassatou Diop N’Sele, stressed that this increase had become essential to meet the requirements of a rating agency following the recent downgrading of the ratings of some of the Bank’s major AAA shareholders.
The continent’s massive financing needs
This decision comes at a crucial time for Africa, which despite its enormous economic potential, faces huge development challenges. Recent estimates put the continent’s infrastructure financing needs at nearly $130 billion per year.
The continent also needs to accelerate its energy transition and adapt to the devastating effects of climate change, at an estimated cost of nearly $50 billion per year, not to mention the colossal investments needed in health, education and agriculture to capitalise on the demographic dividend.
Against this backdrop, the AfDB’s counter-cyclical role as a driver of investment in Africa is more important than ever. Thanks to this capital increase, the institution plans to increase its lending to $10 billion by 2025.
Confident and supportive shareholders
In the face of these daunting challenges, AfDB’s major shareholders have expressed their strong support for the increase to enable the Bank to fully assume its role as the spearhead of sustainable development in Africa.
Maintaining the AAA credit rating of AfDB, Africa’s leading development partner, is indeed essential to enable it to provide adequate financing,” said Hassan Abdalla, Governor for Egypt.
Germany, the largest AAA donor, ‘is ready to subscribe its share of the increase in callable capital’, said Parliamentary State Secretary Bärbel Kofler.
Kenya, the host of the meetings, welcomed ‘a strong signal to the markets’ that the Bank ‘is a solid institution committed to an autonomous AAA rating’.
Spain welcomed “a tool to meet future challenges”, while the United States praised “a financially sound and well-managed Bank” that “enjoys very strong shareholder support”.
Thanks to this record vote of confidence, which confirms its model as a mutual bank owned by its African member countries and testifies to the unwavering commitment of its partners, the Bank hopes to continue to fulfil its mandate as a catalyst for development in a continent facing immense economic and environmental challenges.
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