The African Development Bank (AfDB) must leverage its capital to raise cheaper funds to accelerate the development of the continent, the Minister of Finance, Ken Ofori-Atta, has said.
“Given the current local and global dynamics, it has become imperative that we vigorously mobilise resources through innovative means, including those from the digital space.” We must simply ‘uncover’ this potential to recover and build better.
This bank must be unshackled to provide competitive financing for its members. We must lend support to the proposed reforms in respect of the regulations around African Development Fund (ADF) funds to enable the Bank to leverage these funds to raise more funds and lend at a lower coupon rate, “he said yesterday in his opening remarks during the opening of the 2022 Annual General Meeting (AGM) of the AfDB currently underway in Accra.
The 57th AGM of the AFDB is on the theme “Achieving climate resilience and a just energy transition for Africa.”
Mr Ofori-Atta, who is the chairman of the Board of Governors of the AfDB, said the bank must be in a position to raise competitive financing for its members.
He opined that it remained puzzling that the ADF, concessional financing arm of AfDB, could not raise money from the capital market.
“We must rethink and address this in the face of the present challenges that confront us. On the ADFs 50th anniversary, our aim must be to raise a further $50 billion within the next 5 years in the capital markets. Such an ambition is bold, courageous, and necessary to signal a new dawn,” Mr Ofori-Atta, said.
Mr Ofori-Atta, said the bank had $3 trillion opportunity to co-finance project pipelines, provide concessional resources and de-risk green transactions.
“Positioning our Bank to crowd in the needed finance for climate must continue to engage our attention, mainly because the prospects of being left with “stranded assets” is an emerging concern in the African climate change debate,” he said.
He said in designing our the continent’s response strategy, AfDB must build from our innate resilience and strengthen partnerships, adding that AfDBs focus here must therefore be guided by advancing progress across a number of pillars such digitalizing the society, raising innovative climate finance, and leverage the ADFs balance sheet to raise additional capital for the Continent
The President of AfDB, Dr Akinwumi Adesina, called on the International Monetary Fund to give Africa Special Drawings Rights of $100 billion from developed economies as agreed to by the Heads of Africa States and at the Conference of Financing African Economies, hosted by President Emmanuel Macron of France.
“Africa can accelerate its development and cope with other challenges such as climate change, debt, insecurity, and the effects of the Russian war in Ukraine on their economies, if we better leverage the Special Drawing Rights (SDRs) of the International Monetary Fund,” he said.
Dr Adesina observed that providing SDRs through the multilateral development institution such as the AfDB would have several benefits, pointing out that SDRs could be game changer for accelerated development of countries.
He said SDRs could become “Supporting Development Revitalization (SDR).
At the African Development Bank, we can leverage the SDRs by a factor of 4 times. Second, the SDRs can be absorbed by the bank as equity, which will expand our lending capacity to countries. Third, the SDRs that have been leveraged will be used to provide additional capital and financing to the development banks in Africa as part of the Financing in Common. The SDRs can also be provided as concessional loans to the African Development Fund, “he said.