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| Adesina during the board meeting |
THE African Development Bank (AfDB) has increased the bank’s
capital by 125 percent to US$208 billion, an increase of US$115 billion, the
Bank’s President Akinwumi Adesina announced on October 31, 2019 after a meeting
of the board in Abidjan, Ivory Coast.
During the meeting, the shareholders of the pan-African financial institution agreed to double the African Development Bank’s authorized capital to $208 billion.
And after the tough negotiations, Dr Adesina told journalists that the "historic decision" will allow the African Development Bank to meet its mandate.
“This is a joyful day for Africa, a historic day, this will give us greater stability for the future,” says Dr Adesina.
The capital increment, the biggest throughout the entire existence of the African Development Bank since its foundation in 1964, is a striking demonstration of certainty by investors.
With this increment, the capital of the Bank will dramatically increase from US$93 billion to US$208 billion. This will further strengthen the Bank’s initiative on advancing financial development for the continent.
The increase in capital guarantees that the Bank will maintain its sterling AAA rating, all steady, from the top rating organizations.
The African Development Bank launched solicitation for a general capital increment two years ago, to hasten the achievement of its High 5 developmental strategies, the sustainable developmental goals and the African Union’s Agenda 2063.
“This intermediate scenario allows the AfDB to continue its loan growth focused on its High Fives priorities while maintaining robust capital adequacy metrics that support its credit profile,” says David Rogovic, a Vice President – Senior Analyst in Moody’s Sovereign Risk Group.
The African Development Bank was established to foster sustainable economic development and social progress in its member-states, thus contributing to poverty reduction, has 53 African countries as well as 26 non-African states as members.
The Bank carries out the mission by mobilizing and allocating resources for investment in member-countries and providing policy advice and technical assistance to support development efforts.
Three scenarios had been discussed over the past two years for the African Development Bank’s capital increase: increases of 100 percent, 150 percent and 200 percent.
Dr Adesina’s team, supported by several African shareholders, advocated this third option, arguing that it was essential for the Bank’s “High 5” plan to continue (enlighten, feed, industrialize, integrate Africa and improve people’s quality of life).
Non-regional shareholders have long favoured a more moderate enhancement, sometimes with reservations about the effectiveness of the bank’s disbursements and operations.
These foreign shareholders who include United States, France, England, etc represent 41.1 percent of the Bank’s shareholding.
They are the most highly rated shareholders and those whose equity participation – and the implicit guarantee that they will come to the bank’s rescue in the event of a crisis – is the most reassuring for AfDB lenders.
During Dr Adesina’s presidency, at the helm since September 2015, the AfDB significantly increased its lending, in line with the Nigerian leader’s ambitious programme. The bank’s outstanding loans increased from US$ 17.83 billion in 2015 to US$ 26.3 billion at the end of 2018, nearly 80 percent of which was made up of sovereign loans. A ramp-up supported mainly by debt, whose stock increased from US$22.8 billion in 2015 to US$33.365 billion last year.
During the meeting, the shareholders of the pan-African financial institution agreed to double the African Development Bank’s authorized capital to $208 billion.
And after the tough negotiations, Dr Adesina told journalists that the "historic decision" will allow the African Development Bank to meet its mandate.
“This is a joyful day for Africa, a historic day, this will give us greater stability for the future,” says Dr Adesina.
The capital increment, the biggest throughout the entire existence of the African Development Bank since its foundation in 1964, is a striking demonstration of certainty by investors.
With this increment, the capital of the Bank will dramatically increase from US$93 billion to US$208 billion. This will further strengthen the Bank’s initiative on advancing financial development for the continent.
The increase in capital guarantees that the Bank will maintain its sterling AAA rating, all steady, from the top rating organizations.
The African Development Bank launched solicitation for a general capital increment two years ago, to hasten the achievement of its High 5 developmental strategies, the sustainable developmental goals and the African Union’s Agenda 2063.
“This intermediate scenario allows the AfDB to continue its loan growth focused on its High Fives priorities while maintaining robust capital adequacy metrics that support its credit profile,” says David Rogovic, a Vice President – Senior Analyst in Moody’s Sovereign Risk Group.
The African Development Bank was established to foster sustainable economic development and social progress in its member-states, thus contributing to poverty reduction, has 53 African countries as well as 26 non-African states as members.
The Bank carries out the mission by mobilizing and allocating resources for investment in member-countries and providing policy advice and technical assistance to support development efforts.
Three scenarios had been discussed over the past two years for the African Development Bank’s capital increase: increases of 100 percent, 150 percent and 200 percent.
Dr Adesina’s team, supported by several African shareholders, advocated this third option, arguing that it was essential for the Bank’s “High 5” plan to continue (enlighten, feed, industrialize, integrate Africa and improve people’s quality of life).
Non-regional shareholders have long favoured a more moderate enhancement, sometimes with reservations about the effectiveness of the bank’s disbursements and operations.
These foreign shareholders who include United States, France, England, etc represent 41.1 percent of the Bank’s shareholding.
They are the most highly rated shareholders and those whose equity participation – and the implicit guarantee that they will come to the bank’s rescue in the event of a crisis – is the most reassuring for AfDB lenders.
During Dr Adesina’s presidency, at the helm since September 2015, the AfDB significantly increased its lending, in line with the Nigerian leader’s ambitious programme. The bank’s outstanding loans increased from US$ 17.83 billion in 2015 to US$ 26.3 billion at the end of 2018, nearly 80 percent of which was made up of sovereign loans. A ramp-up supported mainly by debt, whose stock increased from US$22.8 billion in 2015 to US$33.365 billion last year.
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