(3 Minutes Read)
The African Development Fund (ADF), the concessional arm of the African Development Bank, faces a significant setback with the loss of a potential USD 555 million financial windfall, delivered by a decision from US President Donald Trump. Despite the challenges, this blow may prompt the ADF to explore alternative financing strategies.
The Biden administration’s shift in priorities, which includes a USD 49 billion reduction in international aid to boost defense and security, will have a crucial impact on structural reforms in Africa.
As the AfDB prepares for the 17th replenishment of ADF resources for 2026–2028, aiming to raise USD 25 billion, direct access to capital markets is seen as a strategic option, potentially securing up to USD 27 billion. Akinwumi Adesina, the AfDB President, has endorsed this approach, citing the bank’s AAA rating and the support of major contributors like Germany, France, Japan, and Canada.
Additionally, reinforcing regional collaboration will play a vital role, as emphasised by Kenyan President William Ruto during the AfDB’s annual meetings in May 2024. He pledged a USD 20 million contribution from Kenya, urging greater confidence in African institutions. This belief has already attracted investments in countries such as Benin, Sudan, and Ghana.
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With financing needs reaching an estimated USD 402 billion annually until 2030, the ADF may need to enhance its partial credit guarantees, which help reduce borrowing costs for several African nations, including Côte d’Ivoire, Rwanda, and Togo, in sectors like infrastructure, energy transition, and education.
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