 |
| African Development Bank (AfDB) President Akinwumi Adesina speaks to press after a meeting of the board in Abidjan, Ivory Coast October 31, 2019. |
The shareholders of the pan-African financial institution, meeting in Abidjan on 31 October, agreed to double the African Development Bank’s authorized capital to $208 billion.
A compromise with non-African shareholders
Three scenarios had been discussed over the past year for the African Development Bank’s capital increase: increases of 100%, 150% and 200%.
Akinwumi 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 (United States, France, England, etc.) represent 41.1% 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.
In the end, the bank’s capital increases by 125% to $208 billion, an increase of “$115 billion” announced Akinwumi Adesina. 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.
No comments:
Post a Comment