The African Development Bank Group (ADB)

AFDB BOARD ADOPTS FRAMEWORK FOR BANK LENDING IN LOCAL CURRENCIES

The Board of Directors of the African Development Bank (AfDB) has approved a policy framework for providing loans denominated in the currencies of its regional member countries. The framework provides the basis on which decisions will be made from time to time to designate any particular currencies as lending currencies.

The main rationale for the provision of financing in local currency is to reduce the exposure of borrowers to foreign exchange risk, particularly as many projects have expenditures and revenues denominated in local currency.

 “By providing local currency finance which may necessitate local currency bond issuance, the Bank will also be contributing to the development of local bond markets by establishing reference benchmarks, encouraging best practices and catalyzing a virtuous cycle of long-term savings and development,” said a senior Treasury official.

It is also expected that local currency bond issuance by the Bank will reinforce efforts by local authorities to widely disseminate international best practices with respect to financial instruments such as: listing, settlement, rating, clearing, transparency and risk management.

The resulting benefits to the capital market are consistent with the Bank’s role as lead agency under NEPAD for the dissemination and application of international standards and best practices for the financial sector.

The South African Rand (ZAR) is currently the only regional member country currency on the menu of the Bank’s approved lending currencies. Introduced in 1997, Rand borrowing has been especially successful, making the ZAR the AfDB’s third largest lending currency. The Bank currently has a full treasury operation in the Rand.

In December 2005, the Bank issued its first Botswana Pula denominated bond with a maturity of one year, followed in February 2006 by a bond issue linked to the Tanzania Shilling. The Bank has also supported other local currency operations using non-lending instruments. It backed a CFA Franc private sector loan by extending a guarantee to cover the borrower’s debt service and repayment obligations to local banks. The Bank also recently approved a partial credit guarantee facility in Kenya which provided partial guarantees for loans denominated in Kenya Shillings provided by local banks to women entrepreneurs.  (More)

AFDB GROUP APPROVES PROJECTS TO ENHANCE REGIONAL INTEGRATION AND TRADE COMPETITIVENESS

Over USD 390 million in loans and grants for infrastructure and other projects

The Boards of Directors of the African Development Bank (ADB) and Fund (ADF) today approved a number of projects that are expected to contribute significantly to enhancing regional integration and trade competitiveness in the region.

Meeting in regular weekly session in Tunis, the Boards approved loans and grants totaling nearly US$ 400 million to finance infrastructure and other projects in different parts of the continent and support the development activities of some regional economic communities.

 “I am very proud of what we have done today,” President Donald Kaberuka told the Board.  “These approvals will contribute to improving the competitive position of some of our member countries and enhance regional integration on the continent.  I am glad we are doing so in partnership with other development partners.”

A US$ 149 million loan to Morocco will co-finance a US$ 864 million highway infrastructure project that is expected to result in increased economic activity in the country; another loan of US$ 102 million will provide drinking water to a rural population of over 350,000 people and sanitation services to more than 300,000 rural people.

A US$ 100 million loan to the Development Bank of Southern Africa will support competitive infrastructure development, expansion and rehabilitation in the Southern African Development Community (SADC) area.  Swaziland, a member of SADC, will receive US$ 8,4 million in project funding to promote flower exports and support private sector initiatives in the country.   

The ADF Board approved a grant of US$ 8.4 million to finance procurement reforms and a capacity building project in the states of the Common Market of East and Southern Africa (COMESA). The project will modernize and harmonize national procurement systems and, in the process, enhance intra-regional trade in COMESA and between the trade area and the rest of the world.

The Board also approved funding for a rural development project in Burkina Faso and a grant to rehabilitate the economic planning capacity of the government of the Central African Republic.  A loan of US$ 18.5 million will enhance food security in Burkina Faso by increasing agricultural production through the development or rehabilitation of irrigation systems and feeder roads and the dissemination of production techniques in the country.  A US$ 4.9 million grant to the CAR will finance the rehabilitation of the economic planning capacity, with a view to building the capacity of government services in macro-economic and sectoral planning and rehabilitating the country’s development planning. (More)

THE AFRICAN DEVELOPMENT BANK INCREASES OPERATIONAL FOCUS ON WATER AND SANITATION

Launches new Department entirely dedicated to Water and Sanitation Issues on the African continent

The African Development Bank (AfDB) has reaffirmed the importance it attaches to the infrastructure development on the African continent, with particular emphasis on the Water and Sanitation Sector. Within the framework of the reforms undertaken by the President Donald Kaberuka, a Water and Sanitation Department has been established, effective July 2006, under the new Vice Presidency for Infrastructure, Private Sector and Regional Integration (OIVP). This decision will help to consolidate and enhance the AfDB’s leading role in water sector activities in the region.

The Department will centralize the AfDB’s water sector activities for better coordination and facilitate the definition and implementation of sustainable solutions across the water value chain, from strategy, policy-making and institutional reforms to project implementation and monitoring. It will spearhead the Bank’s contributions to national efforts to achieve the Millennium Development Goals (MDGs) targets in the Water sector and the related areas of nutrition, education, health, gender empowerment and environment.

Headed by Mr. Kordjé Bedoumra, also Director of the African Water Facility (AWF), the Department will be instrumental in ensuring that the AfDB plays a leadership role in water sector activities on the continent.  In this regard, it will reinforce the implementation of the major Rural Water Supply and Sanitation Initiative (RWSSI) and ensure financing for projects and studies in the water sector through its public sector operations window. The Department will also serve as trustee for the African Water Facility Special Fund, initiated by the African Ministers’ Council on Water (AMCOW). Finally, it will also provide support to the NEPAD Water and Sanitation Program, the operation of a multi-donor RWSSI Trust Fund and a multi-donor Water Partnership Program (MDWPP) funded by the Netherlands, France, Denmark and Canada.

“My department will work to enhance the image of the AfDB as a centre of excellence and knowledge for water development activities,” said Mr. Bedoumra. “It will support the development of the water sector in Regional Member Countries (RMCs) through lending, grants, technical assistance and water sector policy-based operations. The Department will also position itself as a leader in mobilizing political will and actions to implement policy and institutional reforms in the water sector and catalyze public and private sector investment flow.”

In order to create synergies and avoid duplication in the water and sanitation activities in Africa, the Department will be responsible for promoting and building partnership with all the stakeholders involved in the sector. These synergies should result in the development of an appropriate monitoring and evaluation system for water sector activities, providing a reliable database of such activities in Africa and the organization of regular reviews of the sector with all stakeholders from RMCs, donors, NGOs, and the private sector.

Water and Sanitation in Africa

Less than 60% of the total population in Africa has access to improved water and sanitation services.

Approximately 210 million people in urban areas will need to be provided with access to water supply services.

211 million people will need to be provided with sanitation services if the international coverage targets of the MDG for 2015 are to be met.

The same number of people in rural areas will also need to gain access. (More)