The African Development Fund (ADF), the concessional lending arm of the African Development Bank (AfDB) that provides loans to low-income countries, will begin raising $5 billion from capital markets every three years starting in 2027. The announcement was made this Tuesday (29th) by Valerie Dabady, Director of Resource Mobilization and Partnerships at the AfDB, at a time when donor countries such as the United States are reducing their support.
According to Reuters, the ADF has granted $45 billion in concessional loans to 37 low-income African countries since its creation in 1972.
The United States is its largest cumulative donor, but the administration of President Donald Trump plans to cut $555 million in funding.
“We aim to access capital markets and raise financing, which will help us diversify how we fund ourselves,” said Valerie Dabady during a press conference.
“We believe we can raise up to $5 billion in each three-year cycle. But to get there, we need to change our statutes,” she added, noting that the process to do so is already underway. The ADF will then seek a credit rating and begin working on fundraising, following in the footsteps of the AfDB, which over the years has issued a range of instruments in international capital markets, according to Dabady.
Headquartered in Abidjan, Côte d’Ivoire, the AfDB is the largest development bank on the continent. It approved a review of the ADF’s financing structure in December 2022, ahead of geopolitical shifts that have raised concerns about meeting replenishment goals, the representative highlighted.
“It was very insightful and timely for us to do that. In the current geopolitical context, what was done has given a bit more momentum to what we want to achieve with market-based lending,” Dabady emphasized.
The next ADF replenishment round, held every three years, is scheduled for November, and the AfDB has set a goal to more than double the $8.9 billion raised in the last cycle.
“We started these discussions with the goal of reaching $25 billion, but I think, given the context, that won’t be possible, considering the restrictive environment and other similar factors,” she acknowledged.
Source: Diário Económico
