African Development Fund (ADF)

The African Development Fund (ADF) is the concessional window of the African Development Bank (AfDB) Group. Established in 1972, the ADF became operational in 1974. It is administrated by the African Development Bank and comprises State Participants (donor countries) and recipient countries. Its main objective is to reduce poverty in Regional Member Countries (RMCs) by providing loans and grants.

The ADF contributes to the promotion of economic and social development in 40 least developed African countries by providing concessional funding for projects and programs, as well as technical assistance for studies and capacity-building activities.

The Agreement establishing the African Development Fund designates the Board of Governors as the Fund’s highest policy-making organ. The Board of Governors meets at least once a year. The ADF Board of Directors includes seven Executive Directors from non-RMCs - the Executive Directors are nominated by their constituencies - and seven Executive Directors representing the AfDB. The Board oversees the Fund’s general operations. The Fund’s resources are replenished every three years by 27 donor countries. In the replenishment discussions, the donor countries are represented by their ADF Deputies.

No interest is charged on ADF loans; however, the loans carry a service charge of 0.75 percent per annum on outstanding balances, and a commitment fee of 0.50 percent per annum on undisbursed commitments. Project loans have a 50-year repayment period, including a 10-year grace period. Lines of credit have a 20-year repayment period with a five-year grace period.

The ADF successfully concluded in October 2010 its 12th Resource Replenishment (ADF-12) for the Fund’s activities in 2011-2013. For this period, ADF Deputies agreed on a record level of UA 6.1 billion. The Fund’s core strategic priorities for ADF-12 remain infrastructure, governance, fragile states and regional integration. Cross-cutting issues are private sector development, climate change adaptation and mitigation, gender equality, and food security and agricultural productivity.

*1 UA=1 US$1.535

In 2010, 59 new ADF projects and programs were approved, for a total value of UA 1.46 billion. This compares with total approvals of UA 2.43 billion in 2009, which were exceptionally high due to the Bank’s expedient response to the financial crisis affecting its member states. The two main beneficiary sectors were infrastructure, which attracted UA 1.10 billion (77.1 percent) and multisector, with UA 214.8 million (15.1 percent). This focus is consistent with the operational priorities of the Bank Group, as contained in its Medium-Term Strategy and the ADF-12 Report.

Total approvals can be broken down as follows:

Project lending: UA 802.1 million for 26 activities in 2010, compared with UA 951.3 million in 2009 for 25 activities.
Policy-based lending, which encompasses financing sector activities and budget support: UA 38.9 million for two operations in 2010, as compared to UA 349.2 million for six activities in 2009.
Grant approvals: UA 585.6 million in 2010 as compared with UA 862.8 million in 2009.
Debt relief: UA 30.0 million in 2010, as compared to UA 259.1 million in 2009.

ADF Loan and Grant Approvals by Country, 2010 (UA millions)

Figure 1 shows that 26 countries benefited from ADF loan and grant approvals during 2010. The 16 countries that received the highest allocations were: (in order of magnitude): Ethiopia, Democratic Republic of Congo, Tanzania, Kenya, Ghana, Niger, Cameroon, Benin, Mali, Mozambique, Burkina Faso, Burundi, Togo, Zambia, Liberia, and Sierra Leone. Furthermore, under the HIPC Initiative, Congo Republic and Liberia received funds from ADF for debt relief.

Disbursements of ADF loans and grants totaled UA 1.17 billion in 2010, compared to UA 1.73 billion in 2009. Cumulative disbursements at end-December 2010 amounted to UA 14.77 billion. A total of 1,673 loans and grants were fully disbursed, amounting to UA 11.75 billion, which represents 80.0 percent of cumulative disbursements.