Governors Approve AfDB's Sixth General Capital Increase
Meeting on May 27 2010 in Abidjan, Governors representing the African Development Bank (AfDB)'s shareholders endorsed a tripling of the Bank’s capital resources to nearly USD 100 billion.
This substantial increase allows the AfDB to sustain a higher level of lending, including to the private sector, in response to overwhelming demand in all countries.
In response to the financial crisis, the Bank had front loaded its commitments, put in place new instruments to facilitate trade, and restructured its portfolio. As a result the Bank had used its available resources more quickly than previously expected.
Why does the Bank Group Need a General Capital Increase (CGI)?
Africa was badly hit by the financial crisis, which threatened to set back the progress of improved economic growth that the last decade witnessed. When member countries came to the Bank for support in the midst of the financial crisis, the Bank stepped up to the plate – it frontloaded commitments, restructured portfolios to release additional resources, and quickened its operational processes. In addressing a demand that did not trickle but surged in, the Bank utilized its resources much more quickly than envisioned, making a GCI necessary in 2011, two years earlier than anticipated by the Bank’s Medium Term Strategy.
This has happened at a moment where Africa faces significant hurdles, such as financing gaps in excess of USD 117 billion in 2009 and USD 130 billion in 2010 just to meet the Millennium Development Goals.
Looking ahead significant long-term challenges remain – like climate change and energy generation. The financial crisis has already added to the increasing burden in Africa of coping with climate change, which is estimated to reach at least USD 10 billion – and more likely USD 30 billion – every year by 2030.
The Bank has been implementing a programme of institutional reform, and made a commitment to Governors that this would continue.
The reform matrix targets improvements in areas such as: Bank strategies and policies; business processes; project quality at entry and results; risk management; information disclosure policy and communications.