The Nation Newspaper

Tag: AfDB

  • AfDB rolls out disaster risks financing scheme

    The African Development Bank (AfDB) has approved the Africa Disaster Risks Financing (ADRiFi) Programme. It is the Bank’s first climate risk management programme to boost resilience and response to climate shocks in regional member countries.

    The comprehensive programme will enhance member countries’s ability to evaluate climate-related risks and costs, respond to disasters and review adaptation measures at both national and sub-national levels.

    The ADRiFi will also facilitate initial financing for countries in need of support. According to the Bank, the programme’s initial phase is expected to run from 2019 to 2023.

    The AfDB said the enhanced resilience and adaptation of countries to the negative impacts of climate change, as well as disaster risk insurance cover, will reduce the vulnerability of the poor to climate change and act as a safeguard against loss of livelihoods in communities, especially for smallholder farmers.

    Nine countries namely: Burkina Faso, Chad, Gambia, Madagascar, Malawi, Mali, Mauritania, Niger and Senegal have already expressed interest in participating in the programme.

    “Africa is the most vulnerable continent to climate change, prone to a wide variety of natural disasters including droughts, floods and tropical cyclones. However, disaster risk management suffers from inadequate financing and challenges in the deployment of available funds,” AfDB Director for Agricultural Finance and Rural Development, Atsuko Toda, said.

    the Bank’s Climate Change Action Plan II (2016-2020) policy.

     

  • AfDB ‘disbursed $5.1b to projects in 2017’

    • Forum to source funding for projects coming

    The African Development Bank (AfDB) recorded an impressive project performance, disbursing a record $5.1 billion to projects and programmes across Africa last year.

    This represented an increase of 14 per cent over the previous all-time high of $4.5 billion in 2016.

    The bank said in a statement during the week that its strong performance and ratings are based on the solid support from its shareholders, including in the form of strong callable capital.

    For instance, its net operational earnings for 2017 showed a 63-per cent jump to $597 million, from $109 million in 2016 – capping a five-year upward trend from 2013.

    The bank’s overall achievements across other key metrics like volume of new development assistance, disbursements and governance, were also excellent, in spite of the difficult operating environment.

    AfDB’s Senior Vice President Charles Boamah noted that “Of all multilateral development banks, AfDB operates in the most challenging operating environment defined by rating agencies as a reflection of the risks associated with the countries of operation.”

    He said the bank’s challenging operating environment was offset by the institution’s intrinsic financial strength, which prompted shareholders at this year’s annual meetings in May to approve the commencement of discussions for a possible seventh General Capital Increase for the Bank Group.

    Such an increase “would further strengthen the financial base of the bank, thereby enabling it to further scale up its support to African countries, including those facing conditions of fragility,” Boamah added.

    Since its founding in 1974, the bank has invested $45 billion in operations across Africa, with significant focus on the LDC countries.

    Since assuming office in September 2015, AfDB President Akinwumi Adesina has overseen wide-ranging institutional reforms and restructuring at the bank, with significant positive impact on its development programmes and cost savings.

    The 2018 Aid Transparency Index Report issued by Publish What You Fund ranked the African Development Bank 4th among 45 development institutions surveyed, lifting the bank by six positions since 2016.

    The bank has the lowest ratio of Administrative Expenses to Adjusted Equity at 2.2 per cent, meaning that it spends the least in administrative costs for every dollar entrusted to it by shareholders.

    AfDB’s strong financial and project performance come ahead of its maiden African Investment Forum next month. The inaugural forum will hold from November 7 to 9, in Johannesburg, South Africa.

    The forum will offer the platform for sourcing funding for bankable African projects, brokering infrastructure deals and providing innovative financial solutions.

     

  • AfDB, ATI launch $500m credit insurance scheme

    The African Development Bank (AfDB) and African Trade Insurance Agency (ATI) announce the successful completion of a $500 million credit insurance deal structured to cover a portion of the bank’s portfolio of non-sovereign operations in Africa.

    A statement from the bank  said the transaction is expected to have an important effect to encourage similar institutions to invest more on the continent in the future.

    While ATI will be the direct insurer facing the AfDB, the transaction involves the participation of a number of Lloyd’s & Company private reinsurers wthat will share the risk on African financial institutions. This vehicle will enable many insurance companies operating outside Africa to participate in the financing of development in Africa for the first time.

    The deal is the second Balance Sheet Optimisation transaction under the “Room to Run” initiative following the successful signing of the Synthetic Securitisation transaction in September.

    The insurance will cover approximately 22 per cent  of the AfDB’s $2.3 billion outstanding non-sovereign financial sector portfolio. Specifically, it will protect the Bank against the non-payment of loans made to approximately 30 African financial institutions. The portfolio spans the African continent, with exposure to financial institutions in all major regions of the continent, and is expected to release sufficient capital to create almost $500 million of headroom for new lending.

    Speaking on the development, President, AfDB Group, Akinwumi Adesina, said: “This transaction leverages the bank’s own capital to achieve more development and lending as it creates new pathways for collaboration between private insurers and the Bank in the development of the African continent. This is a significant step towards enhancing Africa’s finance partnerships across the globe.”

     

     

    Adesina added that, given Africa’s endowment as a resource-rich continent with a strong economic outlook, the Bank had adopted more efficient and effective initiatives to bridge the existing development financing gaps.

  • AfDB approves $50m credit for Nigerian women and SMEs

    The African Development Bank (AfDB) has approved a US$50 million line of credit for Nigeria’s Fidelity Bank Plc to support small and medium sized, and women-owned enterprises in selected transformative sectors.

    The facility will also include close to a 100 SMEs in manufacturing, health and education.

    A statement from the AfDB said the credit facility was “approved by the Bank’s Board on 10 October 2018, and it is fully dedicated to financing micro, small and medium sized enterprises (MSMEs), with a minimum of 30 percent going to women-owned enterprises.”

    The statement noted that “the loan will enhance Fidelity Bank’s liquidity and help meet the demand for medium-term funding to players in the target sectors, contributing to improved quality of lives, job and wealth creation and tax-revenue generation.”

    “The facility complements the Government of Nigeria’s long-term development strategy, as espoused in its Vision 20:2020 agenda. Aligned with Nigeria’s Economic Recovery and Growth Plan 2017-2020 (ERPG), the funding will ultimately boost enterprise competitiveness and expand Nigeria’s economic base. The ERPG seeks to stimulate Nigeria’s economic growth, catalyse macroeconomic stability, foster diversification of the economy, and enhance social inclusion as well as governance” the release said.

    SMEs account for 30 percent of Fidelity Bank’s loan portfolio. The selection of the tier 2 Nigerian bank for this seven-year credit facility (with a grace period of two years) is based on its strong niche presence in the SME and mid-sized corporates space. It is also in recognition of the bank’s credit management and strong track record with the African Development Bank. The Nigerian lender has previously received US$18 million and US$75 million lines of credit from the development finance institution in 2001 and 2013, respectively.

    “Fidelity Bank is a niche player, focused on the SME space and this US$50 million credit line will contribute to strengthening its presence in its key market segments,” said Ebrima Faal, Senior Director, Nigeria Country Office at the African Development Bank. “The Nigerian financial institution also continues to meet its ongoing credit obligations under the terms of previous support received from the African Development Bank.”

    The line of credit to the Nigerian financial institution is consistent with the Bank’s Ten-Year Strategy (2013–2022). It also aligns with two of its High 5 priorities – Industrialize Africa and Improve the quality of life for the people of Africa.

  • AfDB showcases Africa’s investment opportunities to investors

    The African Development Bank (AfDB) has presented Africa’s financial products and investment opportunities to Nordic investors to leverage more access to financing.

    The Bank made the presentation during a series of road shows it organised, which brought together more than 50 private sector companies, investors and government and public institutions in Norway, Sweden, Finland, and Denmark.

    The aim of the event was to bring the Bank closer to customers in order to increase awareness of key private sector stakeholders to understand the Bank’s financial and risk mitigation products for investment projects.

    The road shows also generated significant interests of businesses to the Africa Investment Forum, the Bank’s maiden market place, scheduled for November 7-9 in Johannesburg, South Africa.

    The first road show took place in Norway on 24-25 September, followed by Sweden on September 27- 28. In Finland, the Bank met key private sector companies, private funds, and pension funds from 1-2 October and the final event was in Denmark on October 4-5.

    The Bank presented its strategy for the transformation of African economies and showcased investment opportunities on the continent. The highly interactive event targeted commercial banks, institutional investors including pension funds, asset managers and insurers as well as individual investors across the Nordic region.

    “Nordic countries are very important for the development of Africa and we want to see more investments coming from these countries. Hence, the road show was organised to showcase African investment opportunities and to present the Bank as a gateway for their investments”, the Director, Syndication, Co-financing and Client Solutions Department, Olivier Eweck, said.

    He added that several private investors and companies have shown keen interest in the Africa Investment Forum.

    The AfDB team discussed key roles in accelerating Africa’s investment opportunities across the Nordic region in line with the Bank’s development priorities for Africa as enshrined in the High 5s such as light up Africa and power Africa, feed Africa; industrialise Africa, integrate Africa; and improve quality of life for the people of Africa.

    The Bank sees its partnership with long-term investors from the Nordic region as important and welcomes their perspective and visions to support new investments in infrastructure and to foster sustainable development initiatives in Africa.

    The Africa Investment Forum is a novel platform for international business and social impact investors looking to transact and invest funds in Africa. It will connect investors with both public and private sector projects throughout the continent.

    The Bank expects that holding the event under one roof would provide an ideal platform for interfacing with its partners, reduce intermediation costs, improve the quality of project information and documentation, and increase action-oriented engagements between African governments and the private sector.

  • AfDB approves $10m investment in Chapel Hill Denham Fund

    The African Development Bank Group will invest $10 million in Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF).

    The Board of Directors of the pan African finance organisation has approved the investment of the Naira equivalent of $10 million.

    According to the organisation, the investment intends to meet the country’s infrastructure investment needs, including those in the power and energy infrastructure sectors.

    The NIDF is the first and the only listed local currency infrastructure debt fund in Africa.

    The transaction is financed through the Bank’s ordinary capital resources allocated for private sector operations financing. It is expected to deliver significant development outcomes – private sector development through support to industrialisation and diversification from the conventional oil and gas.

    The investment will also help to strengthen capital markets, harness domestic financial resources to fund critical infrastructure and human development by providing and improving access to basic services.

    The AfDB’s investment in NIDF will significantly boost the country’s infrastructure stock, including increased clean gas distribution and power generation (through renewable energy) capacities. The NIDF will also target investments in other key infrastructure sub-sectors, such as transportation and logistics.

    The fund will meaningfully contribute to inclusive growth by supporting infrastructure development in Nigeria, which faces significant infrastructure deficits. Consequently, the funding will help improve the quality of life and the business environment.

    The Project is aligned with the African Development Bank’s New Deal on Energy for Africa and High five priorities, particularly “Light Up and Power Africa”, “Industrialise Africa” and “Improve the Quality of Life for the People of Africa”.

    The project is also aligned with the bank’s Climate Change Action Plan, which focuses on supporting infrastructure development and prioritises the power sector and private sector development. The private Sector Operations strategy emphasises the provision of equity capital to catalyze and crowd-in financing from external parties, which the Fund will achieve by tapping into financing from local institutional investors such as pension funds, insurance companies and asset managers.

    Presenting the project to the Board, the Bank’s Vice President for Power, Energy, Climate Change and Green Growth, Amadou Hott, underscored the importance of the crowding-in effect to fill the infrastructure-financing gap in Nigeria, in order to achieve universal energy access. “The Bank’s investment in NIDF will have a demonstration crowding-in other Nigerian institutional investors. This will enable the Bank to fill critical gaps in infrastructure financing, especially in the energy sector,” he said.

    The Bank’s investment in the NIDF will catalyse private sector investments, and is expected to unlock up to N134 billion from the private sector, especially from Pension fund administrators who have already invested N15.4 billion in NIDF.  This is the first unit trust investment by the Bank, with expectations to replicate similar investments across the African continent.

    NIDF provides long-term financing for infrastructure projects in Nigeria that are denominated in the local currency (Naira). It plays a critical role in correcting the current tenor and currency mismatch that is prevalent in infrastructure financing in Nigeria.

    The Director of the Energy Financial Solutions Department, Wale Shonibare addressed this in his presentation saying:  “NIDF is addressing the issues of currency and tenor mismatch in infrastructure projects in Nigeria, by providing loans that are denominated in the local currency, with proceeds in Naira, and also closely matching the loan tenor to the life of the asset.”

    Established in June 2017, the NIDF is structured as a permanent capital vehicle. Its units are listed on the FMDQ OTC Exchange, Nigeria, and regulated by the Securities & Exchange Commission.

    The Fund has registered a programme for issuance of up to two billion Units with par value of N200 billion. Since its inception, it has raised an aggregate capital of more than N19.15 billion and currently has a portfolio of eight infrastructure loans.

    The NIDF is sponsored by Chapel Hill Denham, an independent investment bank in Nigeria and managed by Chapel Hill Denham Management Limited.

     

  • AfDB $1b funding plan to help cut costs

    Room2Run, the African Development Bank and partners’ innovative $1 billion portfolio of private sector loans, will serve as a model for other lenders, help reduce costs, and shorten execution time, finance experts have said.

    The landmark securitization instrument, a first for any multilateral development bank, has been described by investors as a “strong market fit.” The instrument offers other multilateral development banks and investors a roadmap for innovative financing and new ways to explore the release of much-needed capital to impact financing and catalyze private capital in developing markets.

    “This is particularly important, as it opens the door for significant scale in the future, both in Africa and in other continents where your institutions are present and financing development projects,” said Swazi Tshabalala, the Bank’s Vice President of Finance.

    About 70 participants from the international finance community – investors, bankers and other financial institutions, attended the workshop entitled “A Look at Optimizing MDB Balance Sheets Through Securitization, “organized by the African Development Bank and the Mariner Investment Group, LLC (Mariner), a key investor in the deal. The participants heard presentations on the structure of the securitization, challenges and lessons learned, followed by a question and answer session.

    The workshop took place on the sidelines of the International Monetary Fund and World Bank annual meetings and the 2018 Global Infrastructure Forum in the Indonesian island of Bali. The AfDB’s Chief Risk Officer Tim Turner said the meeting was convened in response to massive interest from sister development institutions following the announcement of Room2Run in September, 2018.

    The bank, the European Commission, Mariner Investment Group, LLC (Mariner), Africa50, and Mizuho International plc announced the pricing of Room2Run on 18 September in Ottawa, Canada – the first-ever portfolio synthetic securitization between a Multilateral Development Bank (MDB) and private sector investors, pioneering the use of securitization and credit risk transfer technology to a new and previously unexplored segment of the financial markets.

    Tshabalala said Room2Run was timely in the light of new regulations in banking that would see more traditional commercial bank lenders scaling back some of their activities in the project finance and trade finance markets. “These regulations will make investments in regions such as Africa more expensive and capital intensive, and this is why we have to find new avenues to crowd-in non-traditional sources of funding, “ Tshabalala said.

     

  • AfDB boosts jobs with $2m for youths

    The African Development Bank’s Fund for African Private Sector Assistance (FAPA), has provided funds totaling nearly  $2 million to its Jobs for Youth in Africa initiative.

    FAPA, of which the Government of Japan is a major donor, along with the Austrian Government and the African Development Bank, will contribute $923,570 and $988,202 to finance the Bank’s Fashionomics Africa Digital Marketplace and Entrepreneurship & Innovation Lab (eLab) programmes, respectively.

    Both programmes form key components of the Bank’s Jobs for Youth in Africa Strategy, which invests in high-growth sectors with potential to promote youth and women’s empowerment, as well as create 25 million jobs over the next decade.

    “Africa hosts the world’s youngest population, which will double to almost one billion by 2050. The continent needs to create jobs much faster, particularly for women and youth,” said Director of Women, Gender and Civil Society Department at the Bank, Vanessa Moungar.

    “FAPA’s generous support will go a long way to accelerating the Jobs for Youth Entrepreneurship & Innovation Lab and Fashionomics Africa Digital Marketplace programmes that contribute to meeting these needs,” Moungar further remarked, during the funding announcement event, which was themed “Entrepreneurs 2.0 – When fashion meets technology”.

    Attended by Bank staff, dignitaries, public and private sector stakeholders, the event was also graced by fashion designer PatheO’, known for making the distinctive, colorful shirts worn by the late Nelson Mandela and Salimou Bamba, Managing Director of the Abidjan-based SME development firm, AGENCE CI PME.

  • AfDB releases new tool to assess resilience, fragility in countries

    African 1Development Bank (AfDB) has created a  tool to tackle fragility in countries, taking into account their capacities and pressure.

    The tool, known as Country Resilience and Fragility Assessment (CRFA), uses seven key criteria: political inclusiveness, safety and security, justice, the economy, social cohesion, the regional contagion effect, and climate change.

    “The creation of the CRFA represents a significant advance in the assessment of fragility, which is a reality that it is not always easy to pin down or discern. By introducing, for the first time, the concepts of ‘capacities’ and ‘pressures’, this new tool brings much more rigour and effectiveness to the assessment of resilience and fragility, especially since it takes greater account of the national context,” explained Director, Transition States Coordination Office (RDTS), Sibry Tapsoba.

    Before its approval by the bank’s Board on September 11, the CRFA was subjected to a range of checks for reliability and effectiveness, conducted under the supervision of the Transition States Coordination Office, with support from the bank’s statistics and resource mobilisation departments.

    In addition to assessing resilience and fragility, the new tool is also useful for advocacy and communication and improving and strengthening dialogue between the bank and its regional members. It is expected to help to anticipate crises, thanks to an early warning system.

    “What we have here is an assessment tool of unquestionable rigour. It is easy to use; it is reliable and it is accessible to all. It brings an undeniable added value to existing techniques for the assessment of resilience and fragility,” said Riadh Ben Messaoud of the bank’s Resource Mobilisation department.

    He stated further that the tool is an important contribution to research for greater effectiveness in the bank’s work.

    The CRFA, he added, provides better insight into every dimension of fragility, including the less obvious, making it possible to offer the most appropriate responses in terms of building a country’s capacity and resilience.

  • AfDB approves $15m equity fund for SMEs

    The Board of Directors of the African Development Bank has approved a $15 million equity investment in Verod Capital Growth Fund III, a private equity fund that will make investments in high growth middle market companies in Anglophone West Africa including Nigeria, Ghana, Liberia, Sierra Leone and the Gambia.

    The Fund’s investments will be in companies in consumer driven sectors including light industrials, fast moving consumer goods, education, financial services and agro processing. The ticket size for each investment will be between $ 5 million and $20 million.

    “The Fund will help accelerate investments in small and medium scale enterprises (SMEs) in the West African region. This is key to job and wealth creation, knowledge transfer and scaling up of local businesses,” said Abdu Mukhtar, the African Development Bank’s Director of Industrial and Trade Development. He also added: “The Fund will provide an important vehicle to growing SMEs in Africa, which are a key pillar to the continent’s industrialization drive”.

    The Fund Manager, Verod Capital Partners, is an experienced indigenous private equity firm with extensive knowledge of the Anglophone West Africa market. It also possesses a strong record of accomplishment in SME investments. Since 2008, Verod Capital Partners has invested in 16 SME companies in the region.