AfDB Creates Facility for Concessional Lending and Rating

(2 Minutes Read)

Membership of the fund will be voluntary and open to any member state of the African Union.

African leaders have approved a fund to provide concessional lending to cash-strapped governments. To be managed by AfDB (African Development Bank, the facility known as the African Financial Stability Mechanism (AFSM). Importantly, the facility will have its credit rating agency and can borrow from international money markets.

The idea to have the facility came up in 2022 after the COVID-19 pandemic when the resource flows dried up. The war between Russia and Ukraine exacerbated the situation followed by sovereign defaults. The repeated pleas of African countries to have more resources to cope with the dire resource constraints fell on deaf ears.

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The AfDB said membership of the fund will be voluntary and open to any member state of the African Union.