AfDB Regional Governors Meet in Tunis to Assess the Bank’s Resources Needs
|AfDB Governor for Côte d'Ivoire, Paul-Antoine Bohoun Bouabre||AfDB Governor for Burkina Faso, Lucien Marie Noel Bembamba|
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The regional governors of the African Development Bank (AfDB), who represent the institution’s African member countries, will meet in Tunis on 12 February 2010 in order to assess the bank’s capital increase modalities. At the meeting, the shareholders will discuss the need for additional resources so Africa’s premier development finance institution can continue to address the needs of African countries effectively.
As a result of the economic and financial crisis, these needs have significantly increased. In order to address these demands, AfDB has significantly increased its lending to regional member countries. Its financing grew to more than USD 12 billion in 2009 as against an annual average of USD 5 billion.
According to AfDB forecasts, demand is projected to remain at this level until 2011. Demand on AfDB resources is projected to remain high in the medium to long term, because the economic recovery will need financing. Limited access to reasonably priced funds from capital markets is also expected to maintain a high demand level on AfDB resources.
The expected capital increase (from USD 30 billion to USD 100 billion) will help the Bank continue to finance Africa’s economic development, while remaining within prudent limits. Canada’s and Korea’s decision in late 2009 to temporarily triple their callable capital in AfDB capital was a very encouraging step forward. Now, AfDB reports that there is an immediate and urgent need for a General Capital Increase to enable the institution to continue to lend beyond 2010 unhindered.
“The General Capital Increase will directly benefit borrowing member countries, as it will enable the bank to raise funds on the capital markets at very competitive prices,” AfDB Finance Vice President Thierry de Longuemar said.
As a result of comprehensive institutional reforms launched since 2006, AfDB has greatly enhanced its capacity to deliver. These reforms have enabled the institution to effectively manage an unprecedented level of lending volumes in 2009, so becoming the leading development finance institution in Africa.
The Tunis meeting comes after the first consultation of AfDB governors, which was held in Tunis on 11 September 2009. The Board of Governors, meeting in May 2009, had previously authorized the institution to launch discussions aimed at assessing its needs for increased resources.
The last capital increase dates back to 1999. Fundamentally, it sought to strengthen the capital structure of the AfDB. Along with institutional reforms, the capital increase helped restore the AfDB AAA rating, which had been lost at an earlier time, said an independent report commissioned by the AfDB in December 2009.
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