AfDB Group Posts Excellent Financial Results in 2008
Dakar, 11 May 2009 – The African Development Bank (AfDB) Group posted excellent results in 2008, reflecting the institution’s prudent and proactive financial and risk management policies.
A financial presentation made by Bank Group’s Treasurer, Pierre Van Peteghem, on Monday in Dakar, indicated the extent to which the institution’s prudent financial management and new policies have earned her the strong support of its member countries and consolidated its sound capital adequacy and preferred creditor status.
In spite of the very volatile financial conditions, the Bank Group was able to maintain its “Triple A” ratings while its access to capital markets for funding remained unhindered.
A snap shot of the Bank Group operations for 2008 shows that it approved UA 3.53 billion (US$ 5.3 billion) in loans, grants, and other operations in the year, a 13.9% increase over the UA 3.10 billion (US$ 4,65 billion) approved in 2007.
Of the overall approvals, UA 3.17 billion was in the form of loans and grants, while UA 358.5 million was allocated to debt relief, assistance to fragile states, private sector equity participation, private guarantees, and special funds.
Infrastructure accounted for 45% of operations during the year in review. Africa’s infrastructure needs in the next decade is estimated at over US$ 75 billion.
In the same vein, the private sector operations increasingly recognized as the engine of economic growth in the Regional Member Countries (RMCs) received UA 901.2 million, or 49.9 percent of AfDB approvals and 25.5 percent of Bank Group total approvals in 2008.
The presentation also emphasized the threat posed by the global economic crisis that could wipe out Africa’s gain in the recent past. “There is the possibility of a vicious circle in Africa – economic crisis leading to a financial and social crisis – as expected real GDP growth halves, and budget and balance of payment deficits emerge,” Mr. Mr. Van Peteghem said.
Pre-emptive measures would include fast-tracking support to needy countries, keeping trade moving, providing liquidity, helping Africa stay the course of sound policy framework, and filling gaps in financing of key infrastructure projects.
Mr. Van Peteghem highlighted the institution’s proactive response to the food and the financial crises in Africa as a major milestone of the year’s operational activities. However, the Bank Group would require additional resources to continue to meet the increasing demand for support from its clients, he said, adding that the recapitalization of the AfDB window would be brought forward to 2010 from 2013.
He explained how the Bank Group’s conservative risk management philosophy has enabled it to weather the financial turmoil, such as prudent management of investment portfolio through a judicious combination of ratings, limits and benchmarks as well as its risk capital that supports the Bank’s growing development footprint in the continent under its medium-term strategy.