Emergency Liquidity Facility (ELF)
Concerned that recent trends in global financial markets, in particular the rapidly diminishing availability of capital worldwide, are having an increasingly adverse impact on African countries and AfDB clients, the African Development Bank (AfDB) Group on March 4, 2009, established a US$1.5 billion Emergency Liquidity Facility (ELF) as part of a global response to the financial crisis.
ELF aims at providing financial support to eligible clients in exceptional cases. The range of beneficiaries includes the Bank’s:
- Middle Income Countries (MIC);
- Central Banks in MICs for on-lending to domestic financial institutions;
- Public and private financial institutions in all Bank Group regional member countries for on-lending to the productive sector;
- Non sovereign guaranteed projects in all regional member countries exposed to risks of delays, postponement, financing or refinancing risks; and
- Non-Bank clients provided they are already receiving assistance from other International Financial Institutions (IFIs) whose due diligence is similar to that of the Bank.
Eligible beneficiaries could use ELF resources to finance a broad range of obligations, including, but not limited to: underpinning a fiscal stimulus, supporting public-private partnerships (PPPs) at risk. Given the urgent nature of the financing needs to be addressed by the ELF and the need for a fast-tracked process, proposals for the use of the resources will be considered by the Board within ten (10) working days.
ELF resources will be provided under the following financial terms:
|Loan Type||Sovereign Guaranteed||Non Sovereign Guaranteed|
|Interest Rate||6-month Libor/Euribor||6-month Libor/Euribor|
|Liquidity Premium||250 bp||Project Specific spread + Risk Premium|
|Final Maturity||Up to 5 years||Up to 5 years|
|Grace Period||Up to 3 years||Up to 3 years|
|Front end fee||0.5% flat||1% flat|
|Disbursement||Single or multiple draw-down||Single or multiple draw-down|
|Repayment||Semi-annual after grace period or faster||Semi-annual after grace period or faster|
|Prepayment||Encouraged - No prepayment penalty charged||Encouraged - No prepayment penalty charged|
The operational modalities of the ELF have been designed with a view to:
- Providing assistance to a large number of beneficiaries and leveraging resources from other IFIs;
- Ensuring the last resort nature of the facility hence the stringent and non standard financial terms and conditions; and
- Providing speed and efficiency through accelerated appraisal and approval processes.
The facility will complement AfDB’s existing menu of products with a flexible instrument that enables the institution to respond to exceptional circumstances while minimizing the impact on its regular operations.