AfDB approves four risk participations under its Private Sector Credit Enhancement Facility
The Board of Directors of the African Development Fund (ADF), the concessional arm of the African Development Bank Group (AfDB) on Wednesday, June 8, 2016 approved four operations amounting to close to US $45 million in lines of credit to African financial institutions under its Private Sector Credit Enhancement Facility (PSF). The four operations are credit risk participations in lines of credit of the African Development Bank to financial institutions in East, North, West and Southern Africa.
Launched in 2015, the PSF is the African Development Bank Group’s credit enhancement initiative to increase private financing in low-income countries. The PSF’s credit enhancement capacity is backed by the liquidity of a reserve pool of €206 million seeded by a grant from the ADF to cover potential losses on payment defaults.
The PSF’s credit enhancement structure is designed to cover exposures amounting to €620 million.
The PSF’s take up has been significant since it began operations. With these approved risk participations, the cumulative amount of exposures approved has reached €261 million (41% of total program amount).
These LOCs bring to 19 the number of approved projects under the PSF scheme, which cover a cross section of sectors including independent power producers (including renewable energy projects), toll roads, container terminals, cement plants, agro-industries, and financial institutions.