AfDB to accelerate private capital mobilisation in 2023

African Development Bank (AfDB) Group has announced plans to accelerate private capital mobilisation to the African continent in line with its 2023 lending programme.

The bank in a statement on its website said that its Co-Financing, Syndications and Client Solutions department held an investor relationship event on Feb. 28 to achieve this ambition.

The statement said that the event held in London to herald the ExCred International conference was attended by representatives from over 30 insurance companies, including London, Bermudan and many Lloyd’s Syndicates.

It noted that the interactive session allowed the insurance market practitioners to learn more about the bank group and its mobilisation plans for 2023 and beyond.

The statement said that Mr Max Ndiaye, Acting Director of the Co-Financing, Syndications and Client Solutions department, highlighted the evolution of the bank’s risk transfer activities.

Ndiaye also highlighted the importance of the preferred creditor status in the asset quality of AfDB’s sovereign loan book and new transactions’ origination and approval process.

He said that the bank reinforced benefits of its preferred credit status with respect to pricing and elaborated on the lack of sovereign defaults on its loans or credit-enhanced facilities.

“The G20 Capital Adequacy Framework Report notes that increased private capital mobilisation is critical to achieving the UN Sustainable Development Goals and Agenda 2063.

“The report’s recommendations include scaling up the transfer of risks embedded in multilateral development bank loan portfolios to private sector counterparties.

“Therefore, the bank continues engaging with asset managers and institutional investors to innovate new risk-sharing structures.

“AfDB has already concluded many balance sheet optimisation and risk sharing structures with pools of private capital and/or unfunded credit protection providers.

“But it recognises that regular dialogue will help strengthen its partnerships in this area,” he said.

He said measures were in place to mobilise more institutional investors to maximise the benefits of the bank’s landmark GCI-7 capitalisation and further leverage its capital.

Mr Simon Bessant, Global Head of Insurance at The Texel Group, AfDB’s major brokers and the event’s host, urged the bank to deepen its relationship with institutional investors.

Bessant said this could be realised by explaining their origination processes and excellent risk management framework to crowd them into projects they may not be able to accommodate.

“And at a pricing that is palatable to the AfDB borrowers,” he added.

The acting Manager of the Client Solutions Division, Nana Spio-Garbrah, said the year was particularly exciting.

“This is because we are increasingly exploring multi-instrument approaches with insurers through syndication and guarantees supporting sovereign borrowings.

“And this is in line with their newly adopted Environmental, Social and Corporate Governance (ESG) Frameworks,” Spio-Garbrah said.