The African Development Bank’s board approved a 125% capital increase to $208 billion from $93 billion on Thursday, the largest in the lender’s history, AfDB President Akinwumi Adesina said.
The decision caps two years of negotiations to give the Abidjan-based bank greater scope to meet the continent’s funding needs. The last increase was agreed in 2010.
At an extraordinary meeting of the board, Adesina said the extra capital would help the bank finance energy, climate, and agricultural projects, as well as support infrastructure needed for the success of a continental free-trade zone.
“This is a joyful day for Africa, a historic day,” he said in a press conference after the meeting. “This will give us greater stability for the future.”
The AfDB’s shareholders are Africa’s 54 nations and 26 non-African donor countries. Part of its lending to poorer countries is at concessionary rates, largely financed by Western donors.
Each member country appoints a governor to the board whose voting power is proportionate to the amount of capital contributed by the country.
The capital increase is the largest in the history of the bank, which was established in 1964.
The boost in capital ensures that the Bank will continue to maintain a sterling AAA rating, all stable, from the top rating agencies.
Speaking at the opening ceremony of the extraordinary general meeting, the President of Ivory Coast, Alassane Ouattara said: “the integration of the continent’s priorities into the High 5s indicates that the African Development Bank group is a strategic partner for African governments.”
In the past four years, the Bank’s High 5 priorities have delivered impressive results on the ground, including helping to connect 16 million people to electricity, 70 million people provided with agricultural technologies to boost food security; 9 million people given access to finance through private sector investee companies; 55 million people provided improved access to transport services; and 31 million people with access to water and sanitation.
According to African Development Bank President, Akinwumi Adesina, “We have achieved a lot, yet there is still a long way to go. Our responsibility is to very quickly help improve the quality of life for the people of Africa. This general capital increase represents a very strong commitment of all our shareholders to see better quality projects that will significantly have an impact on the lives of the people in Africa – in cities, in rural communities, and for millions of youth and women.”
With the new general capital increase, the Bank plans to do more, with the following expected results: 105 million people to have access to new or improved electricity connections; 244 million people to benefit from improvements in agriculture; 15 million people to benefit from investee projects; 252 million people to benefit from improved access to transport; and 128 million people to benefit from improved access to water and sanitation.
Adesina noted that “the Bank will continue its leadership role on infrastructure development, strengthening regional integration, helping to realize the ambitions of the African Continental Free Trade Area, supporting fragile states to build resilience, ensuring sustainable debt management, addressing climate change and boosting private sector investments. We will do a lot more. This is a historic moment.”
He added: “I applaud the shareholders for their strong confidence in the Bank and for boosting support for Africa’s development”.