As a multilateral development finance institution, the African Development Bank Group (AfDB, or the Bank) seeks to further the social and economic well-being of its regional member countries. To do so, the Bank uses the leverage afforded by its AAA rating to lend at favorable terms to its borrower countries resources that have been raised in the international capital markets.
The AfDB’s menu of financial products has evolved over the past decade. The need for the Bank to be more responsive to the varied and evolving requirements of its borrowers called for more flexibility. Some of the more innovative changes include the introduction of Risk Management Products (RMPs) that allow clients to hedge against financial risks associated with their AfDB related loans. Other innovations include the introduction of equity, quasi-equity products, guarantees and syndicated loan products. These allow the Bank to play a catalytic role in mobilizing capital for projects in both the private and public sectors.
The Bank has also broadened its scope to allow it to lend in local currencies and has developed a policy framework that guides it when providing such loans. Providing loans in the currencies of its Regional Member Countries (RMCs) depends, however, on there being sufficient demand from a client and the Bank’s ability to efficiently fund itself. Currently, in addition to the South African Rand, the Bank has designated the following as lending currencies of the Bank: Egyptian Pound, Ghanaian Cedi, Franc CFA currencies (XOF and XAF), Kenyan Shilling, Nigerian Naira, Tanzanian Shilling, Ugandan Shilling, and Zambian Kwacha.
In further response to demand from clients financing in their domestic currencies as a means of reducing foreign exchange risk, the Bank also offers the Synthetic Local Currency Loan (SLCL) product. This simulates local currency financing by indexing the payment of interest and principal (paid in an approved hard currency) to local currency interest and exchange rates through an agreed formula.
In summary, in keeping with the Bank’s role of encouraging innovation in its operations, the AfDB is committed to expanding its product range as needed. Currently, the Bank’s financial products comprise loans (including those denominated in a local currency, and syndicated loans), lines of credit (including for trade finance), agency lines, guarantees, equity and quasi-equity, trade finance, and risk management products. In addition, the Bank provides technical assistance to its clients through grant funds.
Financial Products Offered by the African Development Bank
This brochure presents the general terms and conditions of the African Development Bank financial products.