S&P Global Ratings agency has certified its ‘AAA/A-1+’ long- and short-term issuer credit assessment of the AfDB (African Development Bank) with a stable outlook.
The rating agency positively assessed AfDB’s strong funding, very strong capital adequacy, extraordinary shareholder support, and adequacy of its governance and management.
Furthermore, S&P Global noted the Bank’s $115 billion (KSh12.2 trillion) capital increase, which was approved by shareholders in October 2019, and its replenishment to its concessional window, the African Development Fund, in December 2019.
“The stable outlook reflects our projection that, over the next two years, the Bank will carefully manage its capital, at the same time maintaining robust funding and solid levels of high-quality liquidity assets,” S&P Global said in a statement.
S&P Global rating’s report further notes that the “AfDB will play a key role supporting the region, particularly in the coronavirus context.
The institution already approved up to $10 billion COVID-19 Response Facility to governments and the private sector, a move aimed at enabling regional member countries to mitigate impacts of the global pandemic. Of the package, $6.9 billion will be financed by AfDB and the remainder through its concessional lending window.
The funding will be distributed as follows:
- $5.5 billion for sovereign operations in AfDB countries
- $3.1 billion for regional operations for member countries of the African Development Fund
- $1.35 billion for private sector operations.
The African Development Bank (AfDB) has already approved a KSh22 billion (€188 million) loan to boost Kenya’s efforts in response to the COVID-19 pandemic and mitigate the related economic, health, and social impacts. The funds will strengthen the national health system, support the poor and vulnerable people, and build economic resilience to ensure a quick recovery.
Because of the demand and supply shocks, Kenya’s real GDP growth is projected to fall to between 0.6% and 1.4%, from the initial 2020 projection of 6%.
The African Development Bank (AfDB) has also given Zimbabwe a $13.7 million grant, seeking to help the country in its fight against coronavirus. The grant will fund Zimbabwe’s COVID-19 Response Project (CRP), with the main focus on 15 high-density suburbs in Harare, among other areas.
The lifeline fund came at a critical time when Zimbabwe cannot access aid because of her debt arrears with international lenders such as the International Monetary Fund (IMF) and the World Bank.
Additionally, S&P Global expects that “shareholders will remain supportive by providing timely capital payments and that AfDB will continue benefiting from PCT (Preferred Creditor Treatment); and “prudently manage growth in private-sector lending in a way that’s aligned with its mandate.”
We are delighted with and welcome S&P Global’s decision to affirm the Bank’s AAA/A-1+ rating. This reflects AfDB’s very strong financial position and risk management, alongside our sound governance. We will continue to maintain these standards, with the strong support of all our shareholders, as we deliver much needed financial, knowledge and policy support to our regional member countries during and after this period of the global coronavirus pandemic.
Akinwumi A. Adesina, AfDB President
The African Development Bank Group (AfDB) is a multilateral development finance institution. It was founded in 1964 and comprised of three entities: The African Development Bank, the African Development Fund and the Nigeria Trust Fund. Its mission is to fight poverty and improve living conditions on the continent by promoting the investment of public and private capital in projects and programs that are likely to contribute to the region’s economic and social development. The AfDB is a financial provider to African governments and private companies investing in the regional member countries (RMC).
On the ground in 41 African countries with an external office in Japan, AfDB contributes to the economic development and the social progress of its 54 regional member states.
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