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Tag: AfDB

  • AfDB issues N160b local currency bond

    AfDB issues N160b local currency bond

    The African Development  Bank (AfDB) has completed its maiden local currency issuance bond in the  country’s capital market.

    The bond issue came after the lender received the Securities and Exchange Commission (SEC’s) approval to establish a N160 billion Medium Term Note (MTN) Programme and “No Objection” to start the book building process on June 6.

    AfDB was advised on the transaction by Stanbic IBTC Capital and Rand Merchant Bank Nigeria, a wholly owned subsidiary of the FirstRand Group.

    In a statement over the weekend, AfDB said it launched a seven-year, semi-annual fixed rate coupon bearing bond structured with a three-year grace period preceding a four-year amortising profile on principal. It also introduced a new instrument into the domestic market and adding another issuance into the supranational asset class.

    The bank raised N12.95 billion, issuing at a discount of about 75 bps below the comparable reference point on the government yield curve (Federal Government of Nigeria 27 Jan 2022) to price at 11.25 per cent.

    The book building started on June 20 with a closing date on July 4 and the settlement of the proceeds occurred on July 11.

    The AfDB’s MTN Programme is the first ever to be established by a supranational issuer in the Nigerian capital market, and the amount raised also represents the largest ever issuance, and also the longest maturity instrument in its asset class to be introduced to the market.

    Acceptance of the issue in the market was also further evidenced and demonstrated by the diverse category of investors to whom the securities were distributed (including pension funds, asset managers, banks and insurance companies).

    Treasurer,African Development Bank Group, Pierre Van Peteghem, outlined the importance and significance of the transaction to the bank as it marks its inaugural issuance in the Nigerian market, given the size and relative sophistication of this market and Nigeria being the bank’s largest shareholder.

    He added that “issuances in the local markets allow the bank to lend to its borrowers in local currencies thereby eliminating their currency risks; and to participate in the development of African capital markets by providing a new investment product to the local institutional investors.” The bank’s local currency bonds are structured to match the underlying projects to which the bank will lend the proceeds. The proceeds of the maiden NGN issuance will be lent to a client who will use the funds to finance local SMEs and some infrastructure projects.

    This issuance marks the AfDB’s third domestic bond issue in Africa, outside of South Africa. The bank previously issued two local currency bonds in Uganda in August 2012 and May last year. “The Nigerian Naira issuance confirms the AfDB’s commitment to launch more local currency bonds across the continent, with proceeds used to provide local currency loans to the bank’s clients. This will enable us to better respond to client needs, particularly with respect to mitigating the foreign exchange risks posed by hard currency loans,” said Van Peteghem.

    As part of its Local Currency Initiative, the AfDB has issued, since 2005, some offshore bonds linked to the Botswana Pula, Ghana Cedi, Kenya Shilling, Tanzania Shilling, Uganda Shilling, Zambian Kwacha and the Nigerian Naira. The Bank currently has authorisation to issue domestically in over 10 African markets, including the CFA Franc zone, Zambia, Ghana, Egypt, Tanzania and Kenya.

    The AfDB is celebrating its 50th anniversary, with over 4,500 projects, amounting to over $118 billion since its creation in 1964, in various sectors. They include agriculture and rural development, financial intermediation, industry and manufacturing, and education and health.

     

  • AfDB inaugurates N5.6b public financial mgt project

    AfDB inaugurates N5.6b public financial mgt project

    The African Development Bank (AfDB) has launched a  $35 million (N5.66 billion) public financial and macroeconomic management capacity-building project approved by the bank’s board last December.

    The inauguration came at a workshop held in Khartoum, Sudan, presided over by the State Minister of Finance and National Economy, Magdi Yasin, and attended by high government officials from the Ministry of Finance and National Economy, Central Bank of Sudan, Taxation Chamber, Khartoum Stock Exchange, and Customs Authorities.

    The AfDB was represented by  the Officer-in-Charge (OIC) of the Sudan Field Office,  Suwareh Darbo, who presented a speech at the opening ceremony on behalf of the Resident Representative.

    In a statement, the bank said that the workshop was also attended by its staff, including  the Project Task Manager, Camille Karamaga, Financial Analyst, Tadesse Melaku and the Head, Procurement, Asaye Adal Fasil.

    The project’s overarching objective is to build and enhance transparency, accountability and efficiency in the use of public resources, macroeconomic policy and debt management through institutional strengthening and capacity building.

    In his opening remarks at the workshop, the State Minister, commended the Bank’s continuous support for Sudan and promised to provide the utmost support to the project’s team to effectively implement, what he termed, “this important project.”

    The State Minister further underscored that this project is essential for better management of public resources in the overall context of the government’s Poverty Reduction Strategy Paper. For his side, the OIC of the Sudan Field Office, underscored the fact that the realisation of the project bears is a concrete testimony to both the bank’s and the Government’s commitment to financial governance, which is critical for the country to realise its development aspirations.

    The OIC also emphasized the project’s alignment with the pillars of the Interim Poverty Reduction Strategy Paper (I-PRSP) and the National Development Plan (2012 to 2016), both of which strengthen governance and institutional capacity in the public sector.

     

     

  • AfDB’s lifeline for ‘low income’ countries

    AfDB’s lifeline for ‘low income’ countries

    The African Development  Bank Group (AfDB) has said low income countries are now eligible to secure loans from its sovereign loan window.

    In a statement, it said the decision followed a review of its credit policy which has been approved by its Board of Directors.

    It said the policy underscores the bank group’s recognition of the strong economic progress of African countries during the last decade, and its mandate to help sustain inclusive growth in its Regional Member Countries (RMCs) or African countries, including Nigeria, Ghana, Togo, among others.

    “The proposal reconciles the need to address the demand for resources to speed up the structural transformation of low-income African countries in a sustainable manner, RMCs’ debt sustainability, as well as the bank’s financial stability,” the statement said.

    About 37 countries or nearly 70 per cent of the RMCs fall under the low-income countries category that is eligible only to concessionary resources from the African Development Fund (ADF).

    However, the report argues that diminishing scarce concessionary resources would be inadequate to finance and sustain the current high rates of growth and transform the structure of Africa’s economies to generate much-needed employment. This view is bolstered by the fact that many African countries borrow non-concessionary funds in the capital markets at rates that are significantly higher than what they could obtain from the bank.

    Access to the AfDB’s sovereign resources by low-income countries would be available to low or moderate risk of debt distress countries and subject to International Monetary Fund’s Debt Sustainability Assessment (DSA), sustainable macroeconomic position as well as stringent oversight by the Bank’s Credit Risk Committee, among other safeguards.

    In approving the policy, the Board underscored the fact that policy responds to the drive to channel more resources to the low-income countries in line with its client assessment and the bank’s 10-year strategy. It would also enable the bank to broaden its base of potential clients; enhance its delivery capacity by improving the role of its non-concessional envelope in supporting the development agenda of the continent through sovereign instruments.

  • Diaspora remittances up by five percent to $65b, says AfDB

    Diaspora remittances up by five percent to $65b, says AfDB

    Despite the financial crisis, remittances from the Diaspora and foreign direct investment (FDI) to Africa have continued, with relatively large volumes in recent years, The African Development Bank (AfDB) has said.

    According to the lender’s 2013 annual report released at the weekend, remittances reached $65 billion last year, an increase of five per cent compared to 2012. The bulk of the remittances were to North and West Africa, regions with the largest number of migrants abroad and which alone received some 80 per cent of the total funds from the Diaspora.

    AfDB said 40 per cent of the remittances are from Europe, 28 per cent from the United States, 13 from Africa itself and about nine per cent from the Middle East. It said the resilience of these remittances is starting to attract the interest of the public authorities and the private sector in Africa.

    It said net foreign direct investment (FDI) flows have increased by almost nine per cent, to reach $57 billion in 2013. This increase reflects Western investors’ quest for value amid general low interest rates. The bulk of FDI went to mining exploration and to building the capacity of the extractive industries.  Paradoxically, while the continent is short of investment capital, considerable financial resources continue to leave African countries illegally.

    President, AfDB Group, Donald Kaberuka, said in 2013, growth for most African countries continued to be robust and is expected to accelerate in the year. However, sustainability requires that the benefits are shared more equitably. “In 2013, the bank committed $6.7 billion to projects and programmes in member countries, an increase of some three per cent in real terms over the previous year in accordance with our strategy—the bulk of the investments were in infrastructure,” he said.

    Kaberuka said the lower overall lending at the bank window was more than compensated for by higher levels of financing from our concessional window, the African Development Fund (ADF).

    “Despite the unfavourable global economic environment, the bank has maintained a strong financial position. Our risk bearing capacity remains robust. The four major rating agencies once again reaffirmed their AAA rating of the bank’s senior debt, with a stable outlook. This confirms the bank’s capital adequacy, prudent financial and risk management, solid shareholder support, and preferred creditor status,” he said.

     

  • India Exim bank, Nigeria sign $100m loan for energy projects

    India Exim bank, Nigeria sign $100m loan for energy projects

    The African Develop-ment Bank (AfDB) said over the weekend that the Export-Import Bank of India and Nigeria had signed 100 million dollars line of credit agreement to finance energy projects in Nigeria.

    A statement released in Abuja by AfDB said the Managing Director of India-Exim Bank, Mr Yaduvendra Mathur and Nigeria’s Minister of Finance, Dr Ngozi Okonjo-Iweala, signed the agreement during the AfDB’s Annual Meeting in Kigali on Thursday.

    The statement said the agreement was meant to provide electricity transformers for solar electrification in rural areas in three states of Enugu, Kaduna and Cross River.

    It explained that the 100 million dollars would be spent on distribution of transformers for 96 communities in three senatorial districts of Enugu State.

    It also said that part of the loan would be used to provide a substation, including solar mini-grid electrification and solar street lighting in Kaduna State.

    “The money will also be used for the construction of two 26MW gas-based power plants in  Cross River State in the Delta Region of the southern part of Nigeria,” it said.

    The statement said that India-Exim bank would reimburse 100 per cent of the contract value to the Indian exporters upfront upon the shipment of equipment and goods under the agreement.

    According to the statement, major export items from India to Nigeria are transport equipment, machinery, pharmaceuticals, rice and electronic goods.

    The statement explained that the agreement with Nigeria brought India-Exim bank’s commitment in 76 countries in Africa, Asia, Latin America, Europe, and Oceania to 10 billion dollars.

    The statement quoted Mathur as saying that “Exim Bank is very proud to engage with Nigeria in the area of electricity development and we are looking forward to further corporation in different sectors.”

    It also quoted Okonjo-Iweala as saying that the agreement had been in negotiations for seven years and that its implementation signified a great shift in the relationship between Exim Bank and Nigeria.

     

  • Africa’s economy to grow by 4.8%

    Africa’s economy to grow by 4.8%

    The African Development Bank (AfDB) and its development partners, including the United Nations Development Programme (UNDP), have projected that Africa’s economic growth would expand by 4.8 per cent in 2014.

    They also said the growth rate would rise by 5.7 per cent in 2015.

    The projection is contained in AfDB’s “African Economic Outlook 2014” report which was released on Wednesday in Abuja.

    The annual report said that Africa had maintained an average growth of about four per cent, compared with three per cent for the global economy.

    It said the growth rate underscored the continent’s resilience to global “headwinds.”

    It added that the economic performance varied across regions with sub-Saharan Africa having five per cent in 2013 and 5.8 per cent projection in 2014.

    The report said that East and West Africa recorded the fastest growth in 2013 with six per cent respectively, adding that growth in low-income countries in the sub-regions also stood at six per cent.

    The bank disclosed that upper-middle-income countries in North and Southern Africa recorded low growth rates of below three per cent.

    It added that based on a gradual strengthening of the world economy and improvements in political and social stability in the countries currently in conflicts, Africa’s average growth could accelerate to five per cent in 2014.

    The report also said that the rate could also rise to 5.6 per cent in 2015, the levels that were last seen before the onset of the 2009 recession.

    The bank, however, hinted that “if the global economy should remain weak or if political and social tensions within Africa were to improve less than assumed, growth would be lower than projected.”

    According to the report, inflationary pressures have eased in many countries as energy prices have stopped rising and food prices have declined.

    “These developments, together with prudent fiscal policies, have provided some scope for monetary policy to reduce interest rates.

    “But in other countries where fiscal policy has been lax and where currencies have weakened, monetary policy has tightened to stem inflationary pressure,” the News Agency of Nigeria quoted the report saying on Wednesday.

  • AfDB okays five-year anti-graft framework

    The African Development Bank Group (AfDB) has approved a  five-year strategy for fighting corruption in member-countries.

    In a statement, the lender said the Governance Strategic Framework and Action Plan (GAP II) would take effect from this year and end in 2018. It will promote good governance, accountability and enhance the continent’s transformation.

    The policy, he added, would assist in fighting corruption and enhancing regional integration in the continent.

    Presenting the document to the Board, the bank’s Governance Director, Lobe Ndoumbe, said the strategy, which is based on the “One Bank” concept, benefited from wide-ranging external consultations with various stakeholders.

    He explained that GAP II vision is: “Africa governed by transparent, accountable and responsive governments and strong institutions, capable of driving inclusive and sustainable growth.”

    He said the plan would strengthen governments’ capacity for transparent and accountable use of public resources and citizens’ ability to hold governments responsible while also improving outcomes in the sectors and citizens’ ability to monitor them.

    The plan, he added, would promote a business enabling environment which supports job creation and financial inclusion.

    “Within these three strategic pillars, the bank will build on the achievements of GAP I in the areas of Public Financial Management, Business Enabling Environment and sector governance. Regional integration will be mainstreamed in all the three strategic pillars,” he said.

    The strategy will be implemented in the context of the “One Bank” approach and the decentralisation road map. While the former will necessitate a collective cross-departmental effort in mainstreaming governance across all bank operations.The decentralisation roadmap would further bring the bank closer to its clients, enhance policy dialogue and facilitate responsiveness and feedback.

    According to the document, policy dialogue will act as an enabler of reforms and as an essential tool for sustainable development.

  • Chibok abduction, attack on women’s rights – Kabureka

    Chibok abduction, attack on women’s rights – Kabureka

    The President of the African Development Bank, Dr. Donald Kabureka, Thursday said the abduction of over 200 schoolgirls in Chibok, Borno State, was a direct attack on  women’s right  to education.

    The kidnapping, according to Kabureka, also puts the very future of the country in danger as school children represent that future.

    The AfDB president said insecurity, violence and terrorism in Africa must be tackled on socio-economic and political levels, as well as through force.

    “We must use economic measures and political policy to ensure we do not have coalitions of permanent losers. If you have such a situation, you have a very low threshold for violence,” Kabureka said.

    He added that he does not buy into the idea that insecurity on the continent is entirely an “African problem,” as causes of militant groups are often imported from elsewhere.

    “I believe some of these fighters cannot even speak an African language,” he said.

    The Deputy Chairperson, African Union, Erastus Mwencha, said “fighting crime and terrorism must be multisectoral and inclusive, because terrorism itself knows no borders, responses to it must be transnational in terms of organization, information transfer and funding.”

     

  • AfDB sets development goals

    AfDB sets development goals

    The African Development  Bank (AfDB) Board of Directors has approved the institution’s Results Measurement Framework (RMF) covering 2013 to 2016.

    The RMF is a corporate management tool which helps the institution to meet its development goals.

    It is framed around 100 performance indicators organised into four interconnected levels, namely: Development progress in Africa (Level one); AfDB’s contribution to development in Africa (Level two); the bank’s operational performance (Level three); and its organisational efficiency (Level four).

    According to the bank, the exercise will further enhance the bank’s ability to maintain high standards in delivering development results on the continent.

    Also, it will track performance at all four levels through the Annual Development Effectiveness Reviews.

    “The document is based on extensive research and draws on international best practice in managing for development results. It not only builds on lessons learnt from experience in implementing the previous RMF, but also benefits from consultations from other development institutions,” it said.

    The bank’s Director, Department for Quality and Results, Simon Mizrahi said: “The Results Measurement Framework is not an end in itself: It is a development tool for the bank to achieve its objectives.”

    He said the RMF brings together evidence from the bank’s work, including its strength and weaknesses, so appropriate action could be taken to implement its programmes and successfully meet its new ambitions outlined in the 10-year strategy from 2013 to 2022.

    He said in approving the RMF, the directors expressed satisfaction, saying that it strengthens the  measurement culture in the AfDB.

     

  • AfDB okays $125m to Zenith for SMEs

    AfDB okays $125m to Zenith for SMEs

    The African Development Bank (AfDB) has approved a $125 million Line of Credit (LOC) to Zenith Bank Plc for lending to Small and Medium Scale Enterprises (SMEs).

    In a report obtained from its website, AfDB said the approval was the fourth to Zenith.

    The facility, it said, would enable the lender gain access to long-term foreign currency funding to generate additional lending to its SME clients in various sectors of the economy, including agriculture and agribusiness, transportation and manufacturing.

    “In approving the LOC, the Board of Directors underscored the fact that the SME sector represents a strategic pillar for Nigeria’s quest to modernise and improve its economy while diversifying away from the heavy dependence on the oil industry,” AfDB said.

    According to the Federal Office of Statistics, SMEs account for 97 per cent of all businesses in Nigeria, contributing 50 per cent of employment and output in the non-oil sector. This compares unfavorably with many peers, reflecting a relative underper-formance of the SME sector in the country.

    One of the major impediments to SMEs’ growth and development, it said, is limited access to bank credit. It regretted that despite banking reforms aimed at salvaging the real sector, access to credit for the SMEs is still severely constrained. The proposed LOC will therefore contribute to filling this critical financing gap.

    “The LOC aligns with the renewed strategy of the Nigerian Government to revitalise the economy by developing its SME sector. It also aligns with the lender’s country assistance strategy to support private sector led growth in Nigeria.

    “Furthermore, it is consistent with the AfDB’s strategy to support SMEs through sound and reputable financial intermediaries as well as its new inclusive growth priority by supporting SMEs in critical sectors of the Nigerian economy,” it said.