African Development Bank Boosts Capital to $318 Billion with $117 Billion Injection

The African Development Bank Group has significantly bolstered its financial capacity with an approved $117 billion General Callable Capital Increase. This move elevates the Bank's authorized capital from $201 billion to $318 billion, a strategic decision aimed at preserving its lending capacity and maintaining its AAA credit rating.

Akinwumi Adesina, President of the African Development Bank, highlighted the confidence shareholders have placed in the institution. "It is a major demonstration of the faith, of the confidence that our shareholders have in us, in our ability to use our resources well," he stated. Adesina also emphasized the importance of the additional callable capital in maintaining the Bank's rating, saying, "The additional callable capital allows us to maintain and leverage our firepower, while preserving our rating."

This capital increase is significant because it enables the African Development Bank to respond to the substantial development finance needs of its member countries, which is vital for Africa's economic growth and a href="https://www.africa.com/african-development-bank-group-board-of-governors-approves-117-billion-general-callable-capital-increase/" target="_blank" rel="noopener noreferrer">development. This increased capacity will have a positive impact on the continent's development challenges, such as poverty reduction and infrastructure development.

The capital increase is essential for the Bank to respond to the substantial development finance needs of its member countries. The Board of Governors' approval ensures that the Bank can continue to support Africa's pressing needs and challenges. Hassan Abdalla, Governor of the Central Bank of Egypt, noted the significance of maintaining the Bank's AAA credit rating, stating, *"Indeed, maintaining the AAA credit rating of the African Development Bank, Africa's premier development partner, is critical for us—as Bank shareholders—to enable the African Development Bank to provide sufficient development finance that adequately responds to Africa's pressing needs and challenges and accelerates transformation. "*

The approval of the callable capital increase signals a robust response to the global economic community's call for action by multilateral development banks under the G20 reform and evolution annual agenda. This increase became necessary in response to the recent downgrade of some of the Bank's major AAA shareholders. The Bank's AAA Ratings were reaffirmed by four global rating agencies in 2023, underscoring its strong capital adequacy, prudent financial management, and very high liquidity coverage.

Shareholders, including Nigeria, Germany, Spain, and the United States, have expressed strong support for the capital increase. Germany confirmed its readiness to subscribe to its share, emphasizing its commitment to Africa's sustainable development. Similarly, Spain and the United States highlighted the importance of maintaining the Bank's financial soundness and management.

The African Development Bank's enhanced capital base will enable it to address the continent's critical development challenges more effectively. This move demonstrates the Bank's commitment to supporting sustainable development and economic growth across Africa.

The African Development Bank's capital increase to $318 billion, backed by a $117 billion injection from its shareholders, highlights the institution's robust financial health and its central role in Africa's development. The strong support from shareholders and the reaffirmation of its AAA credit rating signal confidence in the Bank's ability to meet the continent's development needs.

Key Takeaways

• African Development Bank's authorized capital increases to $318 billion.
• $117 billion General Callable Capital Increase approved to maintain AAA credit rating.
• Bank's enhanced capital base to address Africa's critical development challenges.
• Shareholders, including Nigeria, Germany, Spain, and the US, express strong support.
• Move demonstrates Bank's commitment to sustainable development and economic growth.