Although there is much more to be done, the African Development Fund is proud of its results. Between 2014 and 2018, ADF facilitated the installation of 206MW of new power capacity, of which 59MW was renewable energy. The ADF financed the construction and rehabilitation of 10,487km of feeder roads, linking farmers to markets. It also supported 546,000 small and micro businesses with access to finance.
While these select results show just a glimpse of ADF’s important role in the development story of the African continent, the real feat is realizing these results with limited resources. The ADF has been an incredibly shrewd steward of ADF donor funds, leveraging each replenishment to achieve maximum impact. The value for money the ADF provides shows that the African Development Fund not only works hard, but also works smart for the people of Africa.
A bedrock for innovation. The running thesis has been - how can we leverage the concessional funding of the ADF to crowd in other players with larger pockets?
One solution the ADF devised with the support of the ADF donors was the Private Sector Credit Enhancement Facility (PSF). Recognizing the importance of private sector investment for the development of Africa’s least developed countries, the ADF established a risk-sharing instrument in 2015 that is now much respected in the development community. The PSF has crowded in up to USD 2.6 billion in private sector financing to ADF countries since its inception across all the High 5s, especially in support of infrastructure development.
42 risk participation agreements & USD 717 million in risk exposure across all High 5s
ADF guarantees success. The Fund’s Guarantees Program has also unlocked valuable resources for the continent. In addition to concessional loans, the Fund offers both the ADF Partial Risk Guarantee (PRG) and the ADF Partial Credit Guarantee (PCG). These risk mitigation instruments are both examples of the smart use of scarce ADF resources. Specifically, ADF resources have provided a backstop to private sector investors looking to mitigate project risks in Africa’s low-income countries. For example, an ADF PCG allowed Madagascar to mobilize over EUR 51 million from international banks by leveraging some of its ADF allocated resources.
ADF offers the best value for money, maximizing results despite limited resources. The 15th replenishment of the African Development Fund will do even more to support private sector as the engine of growth for African economies and as the creator of stable jobs for African youth.