AfDB Boosts “One Bank” Policy to Build a Better Africa
The African Development Bank (AfDB) strengthened its “One Bank” approach in order to strengthen the economies and social structures of its member countries in Africa during the 2011 financial year.
The explanation of this deepening of the “One Bank” policy during 2011 is given in the AfDB’s Annual Report.
The policy, the AfDB says, is in contrast to a more limited, product-driven strategy. With the One Bank approach, the AfDB Group offers a holistic approach to the needs of its regional member countries (RMCs) in Africa.
It maximises the use of the group’s resources, instruments and competencies across financing windows, and also engages both the AfDB’s headquarters and its field offices.
The AfDB delivers its development assistances through two main channels – the public sector and the private sector. Each reinforces the other to achieve sustainable economic development and social progress in the RMCs.
The two elements by which the AfDB achieves that objective are, first, by mobilizing and allocating resources toward investment in the RMCs and, secondly, by providing policy advice and technical assistance to add value to its development efforts.
One aspect of the “One Bank” way of operating has been through increased dialogue between the AfDB and the RMCs at the country level. This has been made easier over recent years through institutional reform, in particular the AfDB’s decentralisation program.
Features of this program have included setting up regional resource centres, empowering field offices and close engagement at the grass roots level.
Also, as One Bank, the AfDB is able to work better not just with its RMCs, but also with its partners in the international development community, regional economic communities in Africa and civil society organizations.
The approach also further cements the AfDB’s position as the premier development finance institution and knowledge bank for Africa.
Speaking as One Bank gives the AfDB a stronger voice in supporting good governance in the RMCs, through more effective policy dialogue led by experts based in the regional resource centres and field offices.
In practical terms, the Bank’s operations in the RMCs are delivered through a spectrum of financial instruments. The spectrum includes project loans, grants, lines of credit, equity participation, guarantees, program-based operations and institutional capacity-building support.
The AfDB’s financing conditions for such types of support are based on a debt sustainability classification for each regional member country.
The AfDB Group has three resource windows. They are the African Development Bank, the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).
Each resource window offers different terms and conditions, which are tailored to the needs of the RMCs.
The African Development Bank window derives its resources from the capital markets and it uses those funds to make loans to the RMCs on non-concessional terms.
In addition, resources from this window are used to back private sector projects in all RMCs through direct loans, lines of credit, equity participation and guarantees to financially sound and viable private enterprises as well as multinational projects that support regional integration.
The African Development Fund’s resources are derived from contributions and periodic replenishments by ADF-State Participants, usually on the three-year basis.
No interest is charged on ADF loans. However, the loans do carry a 0.75 percent per annum service charge on outstanding balances, and there is a commitment fee of half a percent per annum on undisbursed commitments.
The ADF also provides grants to RMCs, and these do not carry an interest charge.
The Nigeria Trust Fund resources are entirely provided by the Federal Republic of Nigeria, under an agreement signed with the AfDB for an initial period of 30 years.
Following its revision in April 2008, the Agreement provides that the NTF’s resources are used in accordance with the terms of three options, covering different interest rates and payback periods.