AfDB Response to Financial Crisis Economic Impact

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Considering the gravity of the crisis and the Bank’s capacity as the continent’s premier development finance institution, the African Development Bank (AfDB) Group is providing concrete support to institutions and projects in Africa given the intensity of external shocks and evaporating financial resources.

To this end, the AfDB Board of Directors on Wednesday, 4 March 2009 in Tunis, Tunisia, adopted a policy paper on the "Bank’s Response to the Economic Impact of the Financial Crisis”. The response comprises four initiatives to be considered together:

  • An Emergency Liquidity Facility
  • A Trade Finance Initiative
  • A Framework for Accelerated Resource Transfer of African Development Fund Resources to eligible countries
  • Enhanced Policy Advisory Support.

This response is largely based on the conclusions of African Finance Ministers Conference held in Tunis, Tunisia, in November 2008 on AfDB’s initiative. Its content reflects real needs and demands, and it takes into account actions by the Bank’s partners.

A Targeted and Appropriate Response to the Crisis

The rapid spread and intensity of the global financial crisis have resulted in a sudden and rapid decline in financial resources in the short term and have required the development of an appropriate response. Like most MDBs, the Bank has been called upon by the G20 and the African Ministers' statement in a communiqué following their meeting on November 12, 2008, in Tunis, Tunisia, to do all it can to provide a timely and targeted response to the crisis.

The “Bank’s Response to the economic impact of the financial Crisis” derives from the notion that Africa’s marginal integration in global trade and the financial environment has not spared the continent from the contagious effects of the financial crisis, which is certainly not temporary. The crisis does not only add to existing vulnerabilities, it also requires sustained and concerted efforts to return to the path to growth. The effort must start with by taking measures which will immediately help to avoid further damage and a major slide back.

A combination of instruments such as those proposed - and working in close concert with other development partners - would make it possible to tackle the most important steps:  fast-tracking support to eligible low-income countries in need of it, keeping trade moving, providing liquidity, helping the institution’s regional member countries (RMCs) stay the course of sound policy frameworks and filling financing gaps in key infrastructure projects.


  • The establishment of an Emergency Liquidity Facility (ELF) with a provisional US$ 1.5 billion, in the short-term, will enable the Bank to disburse resources in a fast and flexible manner to enable eligible recipients to rapidly meet the urgent, unforeseen and short-term financing needs caused by the financial crisis.
  • The establishment of a US$ 1 billion Trade Finance Initiative (TFI), which will be implemented in phases as the Bank strengthens its capacity in this regard. The Bank looks to launching, as a first phase of the TFI, a new line of credit for trade finance TI LOC of US$500 million which will enable commercial banks and development financing institutions in Africa use AfDB resources to help trade financing operations. 
  • Possible short-term support actions to support low-income borrowers of ADF concessional resources. These countries will certainly need ADF’s support in the following areas: budget support to offset budget deficits due to falling commodity prices declining exports, worsening terms of trade and infrastructure financing in key long-term projects.
  • The global financial and economic crises have underscored the need for policy-makers to share experiences on development challenges facing Africa. The Bank continues to deepen its analysis of the impact of the crisis to develop appropriate policy responses at the national and regional levels.

The innovation, flexibility and rapidity were effective and greatly appreciated by beneficiary countries during the Bank’s response to the food crisis and a number of lessons were learned which would be useful in dealing with the economic crisis. During the MDB heads meeting in Tunis, Tunisia, on February 12, 2009, the pivotal role to be played by the Bank was emphasized.

The response to the economic impact of the financial crisis reinforces the Bank’s credibility as a partner that is capable of playing such a role.

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