Seychelles: AfDBextends $10 million loan to support COVID-19 responses as economy reopens

The Board of Directors of the African Development Bank on Monday approved a $10 million loan to the Republic of Seychelles to support the government’s COVID-19 response program. The loan will be channeled toward macroeconomic stabilization, strengthening national health responses to the COVID-19 pandemic, and safeguarding livelihoods and social safety nets.

Against a backdrop of declining revenues, the Seychelles government recently amended its budget to respond more effectively to COVID-19, taking on an immense financial burden as it works to enhance the country’s health systems, mitigate job losses, and redress lost business and household incomes.

The amended budget provides for an additional $ 3.6 million to the health sector, which will help put in place robust early-detection surveillance systems and enhanced testing capability at points of entry. The government is also readying isolation and quarantine facilities ahead of the resumption of international flight arrivals.

The Government has committed to safeguard 37,409 private-sector jobs through provision of a six-month wage grant while also increasing allocations to the national Social Protection Agency to widen safety nets for informal workers and other vulnerable groups.

“The economic consequences of the COVID-19 pandemic have been more devastating than the disease itself in Seychelles. Tourism is one of the worst hit-industries globally, yet it is the main source of income for Seychelles, accounting for 25 percent of its GDP. The Bank’s support will augment the government’s efforts aimed at cushioning the country against the impacts of the pandemic,” said Nnenna Nwabufo, Ag. Director General for the Bank’s East Africa Regional Office.

The crisis response program is aligned with the Bank Group Ten-Year Strategy-TYS (2013-2022) and the High 5s priorities, specifically “improve the quality of life of the people of Africa”.  The operation is also aligned with the Bank’s Seychelles’ Country Strategy Paper (2016-2020), which aims at stimulating private sector activity in support of economic diversification though policy reforms. 

Insufficient economic diversification, a small domestic market and vulnerability to external economic and environmental shocks are among the main development challenges the Seychelles economy faces. The pandemic has seriously exacerbated these challenges and wiped out some of the country’s development gains. The Bank has revised the 2020 and 2021 GDP growth rate projections for the country downwards, from 3.3% and 4.2 % to -10.5% and -7.7%, respectively.

The country recorded its first case of COVID-19 on 14 March and had 11 confirmed imported cases by 6 April. All 11 cases are fully recovered with no new cases or deaths.

African Development Bank Group approves $10 million equity in Razorite Healthcare Fund for Africa

The Board of Directors of the African Development Bank has approved a $10-million equity investment in Razorite Healthcare Africa Fund 1 (RHAF1) to help improve healthcare infrastructure delivery across the continent.

The 10-year deal, approved on 26 February, will resource the Fund to address growing demands for affordable and quality healthcare services in several countries of Sub-Saharan Africa faced lack of access to low cost, first-class healthcare. RHAF1, to be registered in Mauritius, will provide growth capital to operating healthcare infrastructure facilities which show high potential for growth, as well as build new facilities, where identified as necessary.

To date, there have been over 9,000 cases of COVID-19 in Africa and over 500 deaths.

The Bank on 8 April unveiled a COVID-19 Response Facility that will mobilise up to $10 billion to assist regional member countries in fighting the pandemic. The Facility will be the institution’s primary channel for addressing the crisis.

The advent of the Novel Coronavirus pandemic (COVID-19) has highlighted the need to boost Africa’s healthcare infrastructure system to curb the spread of the pandemic and any future similar crises and build long term resilience. Healthcare-focused private equity funds in Africa with the capability to build equipment and an integrated eco-system across healthcare facilities and service providers are very limited. Target groups include low and middle-income class and vulnerable sectors.

The Fund is expected to increase bed capacity in Africa by over 1,500 and create over 500 jobs over its life span. It will also support the development of local enterprises and private infrastructure in the healthcare infrastructure sector. The Fund targets final capitalization of $100 million. The Bank expects its equity investment of $10 million to catalyze financing from other development finance institutions (DFIs) and commercial investors. As an advisory Board member, the Bank will ensure that the Fund and its portfolio of projects adhere to social, environmental and corporate governance best practices.

Somalia: African Development Bank Group approves framework to clear nation’s arrears

The African Development Bank and African Development Fund on Wednesday approved a framework  for $122.55 million to clear Somalia’s arrears, paving the way for the Bank Group to fully reengage with Somalia and opening opportunities for enhanced financing for the country.

The historic Framework for Somalia’s Arrears Clearance and a Policy-based Operation was approved at a meeting of the Boards of Directors held Wednesday.

The framework is premised on Somalia having secured donor support to clear all arrears to the Bank Group. This will result in the lifting of sanctions on the country, opening up new finance opportunities.

In response to the decision, the Finance Minister of Somalia, Dr. Abdirahman Beileh, said, “the African Development Bank has accompanied Somalia through the difficult reforms, which can only make Somalia a better place for all Somalis. We are committed to continuing our reforms as we have seen their benefits to our governance systems and capacity to manage our economy, and, more importantly, to improving government accountability to the people.”

The Bank plans to immediately resume normal cooperation with the Federal Government of Somalia as soon as it clears its arrears to the Bank Group. Additional financial resources will be provided to support ongoing and new reforms necessary for Somalia to reach Completion Point under the Enhanced Heavily Indebted Poor Countries Initiative.

“It is a historic day for us as a Bank. I think collectively we should be very proud of what has happened…difficultiescannot be allowed to exist forever.. because it defeats the very purpose of why we are here to serve,” President of the African Development Bank Akinwumi Adesina said, commenting on the approval. “The sacrifices of the Somali people under the leadership of the Federal Government of Somalia during the implementation of difficult and wide-ranging reforms has been recognized by the wider international community.”

The Bank commits to supporting the country towards reaching completion point, bearing in mind that more reforms to advance the national development agenda to consolidate peace, ensure inclusive economic growth and reduce poverty are still needed,” Khaled Sherif, the African Development Bank’s Vice President for Regional Development, Integration and Business Delivery, added.

Canadian Prime Minister Justin Trudeau meets African leaders to advance conflict resolution and economic security

Canada’s Prime Minister Justin Trudeau convened a meeting for African heads of state, foreign ministers and representatives of the United Nations and other multilateral bodies have discussed ways to secure peace across the continent as a necessary condition for prosperity.  

Trudeau, the 2020 chair of the United Nations Peacebuilding Commission, called for cooperation among international partners and governments to create economic opportunity and prosperity that is broadly shared, “…as a way not just of countering the pull of extremism in some places or the cynicism of populism, but as a way of building a real and tangible future for countries around the world.”

The breakfast meeting, which was held on the sidelines of the 33rd African Union Summit in Addis Ababa, was intended to strengthen the Commission’s partnership with the African Union (AU) and to better integrate African priorities in conflict prevention and bolstering economic security. Among issues discussed were the role that international financial institutions and youth job creation can play in Africa in averting extremism and conflict; and the AU leadership in peacekeeping and peacebuilding efforts.    

AfDB signs five-year agreement to use FIDIC standard contracts

FILE PHOTO: The headquarters of the African Development Bank (AfDB) are pictured in Abidjan, Ivory Coast, September 16, 2016. Picture taken September 16, 2016. REUTERS/Luc Gnago/File Photo – RC196B9DEF90

The International Federation of Consulting Engineers (FIDIC) (FIDIC.org) has secured a major agreement with the African Development Bank (AfDB.org) that will see the international funding organisation include the use of seven FIDIC standard contracts for the next five years.

Under the terms of the agreement, FIDIC has granted the Bank a non-exclusive licence to refer to the seven major FIDIC contracts (see list in notes below) for projects they finance and the documents may be used as part of the Bank’s standard bidding documents. The contracts include the latest 2017 Second Edition FIDIC contracts and 1999 editions, which cover a wide range of international construction and infrastructure work.

The move by the African Development Bank is another significant endorsement for FIDIC contracts from a multilateral development bank, following similar agreements signed with the World Bank, Inter-American Development Bank, Caribbean Development Bank, the European Bank for Reconstruction and Development and the Asian Infrastructure Investment Bank in recent months. 

FIDIC chief executive Dr. Nelson Ogunshakin said: “We are delighted to have signed this agreement with the African Development Bank, an organisation doing fantastic work fighting poverty and improving living conditions for people in Africa. The signing of this agreement means that FIDIC has now entered into similar licencing agreements with almost all of the major global funding organisations. By adopting the FIDIC contracts on major projects, the AfDB is demonstrating that they endorse the fair and balanced approach that these documents offer to parties on major construction contracts and we believe that this will create more certainty in the market as banks, lenders, investors and clients adopt them.

“The Bank’s endorsement should also provide additional comfort to the financial, institutional and private equity investors operating in the global market to adopt the use of FIDIC standard procurement contracts as an effective tool to mitigate the risks associated with investable infrastructure asset class.”

Commenting on the agreement, Mr. Frank Mvula the Bank’s Director of Fiduciary Services & Inspection, said: “We are glad to have concluded an agreement with FIDIC that would enable us to incorporate FIDIC contracts in some of our standard bidding documents. There is no doubt that the use of FIDIC contracts is a step towards enhancing equity and fairness as well as efficient and effective contract management as emphasized under the Bank’s new Procurement Framework.”

FIDIC President Bill Howard said: “I’m delighted that FIDIC has concluded this agreement with the African Development Bank. It’s a key aim of ours to strengthen FIDIC’s relationships with the multilateral development banks and other international funding institutions as improved communication and cooperation will bring benefits to the whole industry. Agreements like these can only be good for FIDIC, the global infrastructure sector and the banks and I look forward to a mutually beneficial relationship with the Bank over the coming years.”

Angola: African Development Bank Approves $165 Million for Economic Diversification

The Board of Directors of the African Development Bank Group (www.AfDB.org) on Tuesday approved a $165 million loan to finance part of Angola’s three-year economic diversification support program intended to restore the country’s macroeconomic stability.

Angola President João Manuel Gonçalves Lourenço

The Angolan government is implementing reforms to diversify its oil-dependent economy and has adopted measures to improve human and social development to restore fiscal balance after the economy was hit by a global slump in oil prices and repeated droughts.

The program aims to prioritize and promote the production and export of non-oil products and to start to substitute imports through diversification. It forms part of the country’s 2018-2022 national development plan.

There are three main components in the plan; advancing fiscal consolidation through improved public financial management and tax reforms; accelerated implementation of the diversification program; and improving governance in natural resource management and state-owned enterprise reform.

Abdoulaye Coulibaly, African Development Bank director at the governance and public financial management department, said the loan will contribute significantly to the government’s stabilization plan and provide a conducive private sector environment.

“For the past two years we have felt that the authorities are quite committed to make changes. Many concrete measures have been taken… We expect that the program will ultimately impact positively on macroeconomic stability, economic diversification and poverty reduction” Coulibaly said, adding that the country was on track to meet its benchmarks for 2019.

The reforms are expected also to improve state-owned enterprises (SOEs) transparency and increase the availability of SOE financial and performance data which will in turn improve corporate governance and enhance the performance of SOEs, reducing the need for subsidies, he added.

In approving the loan, Board members called for the monitoring of Angola’s high public debt levels, estimated at about 90% of GDP, and projected to ease to around 60% by the end of the program period. They praised renewed efforts by the Angolan government to curb public sector corruption and step up good governance which had deteriorated.

A sharp decline in oil prices since 2014 has harmed the economy, and real GDP shrank by 0.2% in 2017 and an estimated 0.7% in 2018 while fiscal revenues declined by more than 50% between 2014 and 2017. Public debt, largely external, increased from 40.7% of GDP in 2014 to an estimated 80.5% in 2018, raising concerns about its sustainability.

The Bank Group has regularly provided diversified support covering agriculture, rural development and environment, health and education, water and sanitation to Angola’s development efforts. To date, the Group has provided eight loans for a total of $122.4 million to the country

Senegal: African Development Bank lends €60 million to develop value chains through improving water supply

On Wednesday 17 July in Abidjan, the Board of Directors of the African Development Bank approved a loan of €87 million to the government of Senegal, to implement its Project to Improve the Water Supply for the Development of Value Chains (PROVALE-CV).

For this project, valued at an estimated €122 million, the Bank will provide €60.8 million, while the “Africa Growing Together Fund” (AGTF) will provide €26.8 million.

Developed with the support of the Bank, PROVALE-CV is the first project under Senegal’s small-scale Local Irrigation National Development Programme (PNDIL). It operates in three agro-ecological areas in the country: Les Niayes, the groundnut basin, and Casamance, and covers eight administrative regions: Kaolack, Fatick, Kaffrine, Diourbel, Thiès, Ziguinchor, Sédhiou and Kolda.

The project will run for 5 years – November 2019-October 2024 – and aims to sustainably increase agricultural production, employment and incomes in rural areas through the use of surface and underground water. It comprises the management of 12,730 hectares including 7,950 hectares fed by retention dams, 3,980 recovered hectares, 800 hectares of borehole-fed market gardens, production roadways, warehouses and pastoral infrastructure.

This project will have a direct impact on 38,000 households, or about 300,000 people. And the actions planned for the project will help create 28,000 decent jobs, 30% of which will be for women and 40% for young people, together with an average increase in earnings from agricultural production of around €1,520 per beneficiary, according to Marie-Laure Akin-Olugbadé, the African Development Bank’s General Manager for West Africa.

The Bank’s active portfolio in Senegal comprises 28 operations and a commitment of around €1.3 billion. Its agricultural sector portfolio includes six national projects (with a value of €179 million), one multinational project (valued at €27 million) and one project financed by the private sector.