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Board Approves USD 313 Million for Five Major Operations

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  • USD 39.40 million ADF Grant for Liberia Water and Sanitation
  • USD 40 Million Equity Participation in African Agricultural
  • € 15 million loan for Cape Verde Wind Power project
  • USD 200 million Loc to South Africa’s IDC
  • USD 15 million FSF grant for Burundi Budget Support Programme

The African Development bank (AfDB) Group Board of Directors met on Wednesday, 19 May 2010 in Tunis and approved over USD 313 for five operations.

Under the approvals Liberia will received USD 39.40 million comprising an ADF grant and a Fragile States Facility (FSF) grant: to finance the country’s  urban water supply and sanitation project. The provision of water supply and sanitation on a sustainable basis to rural and urban dwellers in Liberia constitutes a priority development objective for the government, which significantly contributes to the fight against poverty and disease.

Liberian aims to achieve the Millennium Development Goals (MDGs) for water and sanitation targeted at halving the proportion of the un-served population in both the urban and rural areas by 2015. The project is the first water and sanitation investment by the Bank Group in Liberia. It is an extension of the ongoing Monrovia Water Supply and Sanitation Rehabilitation Project (MWSSRP) funded by DFID and managed by the Bank. It is designed to help increase the country’s national water supply coverage from the current 25% to 50% and sanitation coverage from 15% to 40% by the end of 2012.

The USD 40 million Equity Participation in the African Agriculture Fund (AAF) will assist in efforts to diversify the continent’s agricultural sector. The AAF is a closed-end private equity fund targeting African agribusiness companies, including SMEs. It provides two instruments to lower the risk perception associated with the agriculture sector:

  • A first-loss mechanism for the institutional sponsors, to attract smaller private investors, and
  • A scalable carried interest mechanism to fully incentivize the fund managers in their fundraising efforts. A Technical Assistance Facility is being funded by IFAD/AGRA to enhance the capacity of portfolio/investee companies.

The key sponsors of the project are AFD, AfDB, BOAD, IFAD, and AGRA (Alliance for Green Revolution in Africa).

Cape Verde will use its €15 million senior loan to finance the Cabeolica wind power project which comprises the construction, operation and maintenance of four onshore wind farms on four islands of the Cape Verdean archipelago (Santiago, São Vicente, Sal, and Boa Vista). These will have a combined installed capacity of 25.5 MW and will be connected to the existing electricity grid on each island. Each wind farm will include towers with wind turbines, transformers, a substation, a command centre, an underground transmission line and an access road. The project was developed by InfraCo, an infrastructure development company established by the donor-funded Private Infrastructure Development Group (PIDG), established to develop viable private infrastructure investment opportunities that balance the interests of host governments, the national and international private sector and providers of finance.

It is key to achieving the country’s targets in terms of renewable energy generation (25% of total generation by 2011 and 50% by 2020). It aligns well with the Bank’s institutional priorities for infrastructure and renewable energy and would be the Bank’s first private sector project in Cape Verde.

The project has allowed the Bank to consolidate its partnership with EIB under the AFP and to develop its working relationship with InfraCo.

For its part, South Africa’s Industrial Development Corporation (IDC) will deploy the approved USD 200  million Line of Credit to provide long-term funding in industry, including projects outside of South Africa.

IDC through on-lending to development projects in low-income African countries and fragile states.

Established in 1940, IDC is a development finance institution focused on promoting sustainable growth in South Africa and the African continent through the promotion of industrial development and entrepreneurship. IDC is wholly owned by the South African government but operates as a self-financing, independently sustainable business. The LoC is well aligned with the Bank’s institutional strategies, including the latest Medium-Term Strategy. It is also aligned with the South Africa country strategy as well as the Bank’s private sector operations strategy.

Finally, the Board approved USD 15 million (UA 10 million) from the resources of the Fragile States Facility (FSF) to finance Burundi’s third Economic Reform Support Programme (ERSP III). The financing of ERSP-III falls under Pillar 1 of the FSF. Burundi, which is gradually implementing reforms, and is in the phase of consolidating its achievements in respect of peace, security and development following the end of the civil war in 2000. The grant is for budget support to be implemented during 2010 for a twelve-month period. It is a continuation of ERSPII previously supported by the Bank and other multilateral donors, including the World Bank, European Union, and other bilateral donors such as Netherlands and Norway. It is underpinned by the general orientations of the 2006-2009 Poverty Reduction and Growth Strategy Paper (PRGSP) adopted by the government in 2006.

* 1 UA Units of Account = USD 1.51112 as at 19/05/2010

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