African Development Bank Has Created A New Asset Class For Global Investors, To Boost Its Lending Capacity

At the African Union meeting in Accra, Ghana, President of the African Development Bank, Akinwumi Adesina, outlined the Bank’s successes in mobilizing financial resources for the continent’s development needs.

Adesina spoke to heads of state and government officials at the 6th Mid-Year Coordination Meeting of the African Union in Accra, about the Bank’s recent general capital increase from $201 billion to $318 billion, which was approved by the Board of Governors during its Annual Meetings in Nairobi in May this year.

He said, this will allow Africa’s only AAA-rated financial institution to keep its status and meet the urgent and growing development needs of the continent.

He touched on several topics, like how the Inter-American Development Bank and the African Development Bank worked together to create a new financial model that lets the Special Drawing Rights of the International Monetary Fund flow through multilateral development banks.

As indicated by Akinwumi Adesina, after two years of work, supported by the backing of the African Union, they have succeeded. At the meeting, he was addressing attendees such as: representatives of regional economic communities and heads of state.

The African Development Bank launched a landmark $750 million hybrid capital, the first by a multilateral financial institution, with success at the start of the year.

“By so doing, we created a new asset class for investors globally. The hybrid capital will be leveraged four times to allow the Bank to boost its lending capacity,” said Adesina.

In addition, he informed the leaders of the progress that the Bank is making in leading international efforts to include Africa’s natural wealth in GDP calculations.

Additionally, progress has been made with the Africa Financial Stability Mechanism, a Bank initiative to mitigate financial and other exogenous shocks to African economies. The framework for the mechanism’s establishment has been approved by the 15 Ministers of Finance of the African Union.

Also, to upgrade food security, the Bank is launching a $650 million Local West Africa Rice Development program in a joint effort with the Africa Rice Center. This initiative is expected to include 1,000,000 farmers across 15 nations and produce 53 million tons of rice.

He went on to say that rice self-sufficiency will be achieved in West Africa in five years.

“We know we can do it. Our work helped Ethiopia to become self-sufficient in wheat in under four years, turning it into a net wheat-exporting country. What is critical is strong political will,” the Bank Group head said, referencing the Bank’s flagship Technologies for African Agricultural Transformation (TAAT) program”.

Adesina briefed the leaders on growing global confidence in the Bank.

“Last week, the African Development Bank was ranked as the most transparent development financial institution in the world by Publish What You Fund for its sovereign operations.” This is in addition to other impressive recognitions for the Bank and its concessional window, the African Development Fund.

Meanwhile, the African Development Bank (AfDB) and the World Bank have collaborated to connect 300 million Africans to electricity by 2030, expanding access to electricity to over 20 million people over the course of five years.

AfDB Calls For A Strong Approach To Address The Challenges Facing The World

The Bank’s $20 billion Desert to Power project in the Sahel region aims to build 10,000 megawatts of solar power for 250 million people in 11 countries.

During the opening ceremony, the host, Ghana’s President Nana Addo-Dankwa Akufo-Addo, called for expedited action on plans to achieve the financial stability and economic integration necessary for the African Union’s Agenda 2063.

Mohamed Ould Ghazouani, Chairperson of the African Union and President of the Islamic Republic of Mauritania, made the announcement that the African Union intends to raise approximately $100 billion to support export-oriented businesses.

In addition, he emphasized how crucial it is for the AU and regional African blocs to maintain effective coordination in order to achieve continental integration and the Agenda 2063 objectives of creating inclusive and long-term socioeconomic development.