AfDB approves US $40-million 10-year Line of Credit to East African Development Bank to fund regional projects
The Board of Directors of the African Development Bank Group on Wednesday, October 15 in Abidjan approved a US $40-million 10-year Line of Credit (LoC) for a pipeline of projects covering various economic sectors (agro/food, infrastructure, manufacturing, education sectors) in the East African Community (EAC) countries of Kenya, Rwanda, Tanzania and Uganda. The projects aim to promote economic growth.
The East African Development Bank (EADB) has a project pipeline totaling US $361 million comprising 49 projects which are at various stages of appraisal. A dedicated sub-pipeline linked to AfDB’s LoC has been selected. EADB intends to tap into both debt and equity sources from both development finance institutions (DFIs) and commercial financial markets for long-term financing to obtain the remaining funding required.
In 2013, the Bank also approved a US $24-million equity investment in EADB (US $14 million "Callable" and US $10 million "Paid-in") to further strengthen EADB's capital. The equity was supported by a US $0.9 million technical assistance (TA) package to strengthen EADB's operations. Implementation of the TA package will buttress both the earlier equity injection and this LoC. The Bank is a long-term shareholder in EADB and has provided 7 LoCs over time to EADB.
EADB has effectively implemented a turnaround strategy since 2008/9. As part of this, it has successfully strengthened its policies and internal structures and streamlined its portfolio, as a result of which it has managed to maintain yearly increasing profits since 2009. EADB is now in the third ‘growth’ phase of its Strategic Plan, under which it aims to increase its market position and portfolio. It has a strong project pipeline requiring external funding resources. The AfDB’s LoC plays an important catalytic role in this regards, and underscores AfDB strong confidence in the EADB as a key regional DFI promoting economic growth and regional integration.
EADB is currently rated “B” by Fitch and “Ba1” by Moody’s, with stable outlook. These ratings reflect the institutions’ stable financial profile.