Standard & Poor’s Global, an international ratings agency has affirmed its “AAA/A-1+” foreign currency issuer credit rating of the African Development Bank with a stable outlook.
According to the rating agency, its outlook was based on the expectation that the African Development Bank (AfDB) would, for the next two years, “prudently manage its capital while maintaining solid levels of high-quality liquidity assets and a robust funding profile. We also assume extraordinary shareholder support to the bank will remain unchanged.”
S&P acknowledged the approval of an amount of US$115 billion as capital injected into the bank by its shareholders in October 2019 which increased the bank’s capital to US$208 billion.
“Our ratings on AfDB reflect its important role in Africa, marked by a long track record of fulfilling its policy mandate through economic cycles, combined with robust shareholder support. In October 2019, the Bank’s shareholders approved its seventh General Capital Increase (GCI-VII), effectively increasing the bank’s capital base by US$115 billion… to US$208 billion.”
The Ratings Agency added that this increase in capital will expand the bank’s reach and increase its impact in the African sub-region, in connection with the bank’s renewed focus on financing infrastructure projects across Africa as well as providing credit to the private sector.
“We expect the capital increase will enable AfDB to continue expanding its reach, particularly in light of the renewed focus on infrastructure financing and private-sector lending. The bank has already been growing steadily over the years. The bank is in a good position to support increasing mobilization efforts and crowd-in additional private sector funds.”
Speaking in connection to the new rating of the bank, the President of the African Development Bank, Dr. Akinwumi Adesina said: “The AAA rating by S&P Global Ratings affirms our prudent financial risk management at the African Development Bank, and our governance systems.
“We have been able to maintain our high standards despite the tremendous challenges posed by the ongoing COVID-19 pandemic. We are grateful for the steadfast and extraordinary support of our shareholders. The Bank remains committed to providing African countries with needed financing support to recover from the health crisis and to strongly grow back their economies while managing our risk and capital requirements.”
Among the notable success stories of the Bank’s funded projects include the ongoing four-tier Pokuase Road interchange in Ghana which links the capital, Accra and the middle belt via Ghana’s second largest city of Kumasi and it is expected to be completed by the end of the first quarter of 2021. The Concessional Arm for the Bank Group indicated that the project costs US$83.9 million.
Also, the bank, being the leading financial partner of the Noor Ourzazate, the world’s largest solar power station extending over 3,000 hectares of desert in Morocco, has again provided funding for the construction of another giant solar power plant in the Sahel this year. If completed this will turn the Sahel into one of the largest solar-power-generating area in the world.
According to the Bank, this project costs $20 billion and aims to produce 10 gigawatts of electricity by 2025, providing 250 million people with power, of whom at least 90 million will be connected to the electricity grid.
READ ALSO: AfDB supports Ivorian smallholder cocoa farming communities
