The African Development Fund (ADF) which is a concessional arm of the African Development Bank Group (AFDB) and the Japan International Cooperation Agency (JICA) signed a loan agreement worth $668.1 million (73.6 billion Japanese yen) which will help finance Africa’s low-income countries affected by the pandemic.
The loan will help support the 15th replenishment of the African Development Fund (ADF-15) which was approved in December 2019 by ADF donor countries. JICA is extending the loan – the largest to ADF-15 on behalf of the Government of Japan. Japan has been the fifth-largest contributor to the ADF in cumulative terms.
African Development Bank Group President Dr Akinwumi A. Adesina and Kuramitsu Hideaki, Japanese Ambassador to Côte d’Ivoire signed an Exchange of Notes, while the loan agreement was signed by Fujino Kojiro, the JICA Chief Representative in Côte d’Ivoire and Swazi Tshabalala, Acting African Development Bank Group Senior Vice President, in her capacity as Chief Financial Officer.
Hideaki, Japan’s ambassador said that as expressed at the TICAD 7 conference in August 2019, the loan formed part of Japan’s commitment to promote industrial human resource development, innovation and investment and to invest in quality infrastructure to enhance connectivity.
During the virtual launch, Japan also said that it would contribute to phase 4 of the Enhanced Private Sector Assistance Initiative (EPSA) which is a joint flagship project with the Bank.
“I sincerely hope that this loan in yen will allow the (African Development Fund) to execute concessional financing and grants for African countries facing emerging challenges caused by COVID-19 and contribute to the economic and social development of these countries,” said Kuramitsu Hideaki.
“The COVID-19 crisis has accelerated global structural changes. Africa is still in the midst of this crisis, facing serious challenges from coronavirus variants and the cold storage requirements for vaccines. Only a united Africa can defeat this threat to humanity. We should not allow this virus to jeopardize the steady progress of freedoms, independence and democracy that African countries have made so far. I firmly believe that today’s contribution to ADF-15 will further boost our cooperation with African countries and strengthen our partnership with the African Development Bank Group.” Said Kitaoka Shinichi, JICA’s President.
Mimura Atsushi, Deputy Director-General/ADF Deputy, International Bureau, Ministry of Finance Japan, said: “The African Development Fund is a key source of financing for Africa’s low-income countries heavily affected by COVID-19. The Yen Loan we are providing today has a higher grant-element compared to the Yen Loan provided for the last ADF replenishment, with a lower interest rate and longer maturity. Going forward, I would like to see our partnership further developed with the African Development Bank Group.”
The African Development Bank president noted that the bank’s long-standing partnership with the government of Japan includes the Enhanced Private Sector Assistance Initiative, which was launched in 2005. Japan’s total contribution to the initiative amounts to $4.6 billion as of February 2021.
According to the bank’s president, the concessional donor loan from Japan is almost 10 per cent of the total ADF-15 resources of $7.5 billion. He also commended Japan for their continued support in replenishing the overall cycles of the African Development Fund. He added that the loan will boost the liquidity of the African Development Fund which will allow them to provide support to ADF member countries especially now when they are struggling to recover from the pandemic.
It is expected that the ADF’s projects will have changed the lives of millions of Africans by the end of the ADF-15 period (2020-2022). Around 9 million people will have improved access to water and sanitation, up to $1.6 billion of turnover will have been generated from investments in micro, small and medium-sized enterprises and up to 28,000 km of new or improved power distribution lines will have been installed.
The project will deliver investments to support Africa’s poorest countries in building economic resilience and reducing systemic vulnerability. It will also highly consider climate change, gender equality, the private sector and upholding good governance principles. It will emphasize two strategic pillars which are governance and institutional capacity development to boost decent job creation and inclusive growth and sustainable and quality infrastructure that bolsters regional integration.
Also Read: AFDB supports Uganda MSMEs in the petroleum sector