MICROCAPITAL BRIEF: African Development Bank, Four Other International Finance Institutions Launch $600m African Capitalization Fund

The African Development Bank (AfDB) and four development finance institutions recently launched an African Capitalization Fund (the “Fund”), which will be structured as a private equity fund. The other financial institutions involved are the European Investment Bank, the International Finance Corporation (IFC), the OPEC Fund for International Development (OFID) and Abu Dhabi Fund for Development (ADFD). The Fund will be managed by the IFC’s Asset Management Company and will invest in private sector commercial banks.

The Fund’s total budget is USD 600 million and is intended to finance continental financial recovery. The funding is intended to strengthen the African banking sector by mitigating the effects of the global economic crisis on African countries. The Fund is also intending to reflect the global financial community’s commitment to responding jointly to the global financial crisis and demonstrate its commitment to investment and recovery in Africa.

By Jennifer Shevock, Research Associate

About African Development Bank:
The African Development Bank is a development finance institution in Africa and its objective is to support sustainable economic development and social progress in its regional member countries thus contributing to poverty reduction. In 2009 its private sector operations totaled USD 2 billion.

About European Investment Bank:
The European Investment Bank is the lending organization of the European Union. Its primary objective is to raise funds in the capital markets to finance EU member projects. In 2009, it raised USD 96 billion.

About International Finance Corporation:
The International Finance Corporation is a member of the World Bank Group. Through its 182 member countries, the IFC provides investment and financial advisory to emerging markets. In fiscal 2009, commitments totaled USD 12.4 billion.

About OPEC Fund for International Development: The OPEC (Organization of the Petroleum Exporting Countries) Fund for International Development is an intergovernmental finance development institution based in Vienna. Its mission is to provide financing in developing countries for economic and social progress, most specifically in the neediest countries and to the rural poor. In fiscal 2008 it had total commitments of USD 10.3 billion.

About Abu Dhabi Fund for Development: The Abu Dhabi Fund for Development’s mission is to provide financing to alleviate poverty in developing countries. Since its inception in 1971, 52 countries have benefited from development operations valued at a total of USD 3.5 billion.

Sources and Additional Resources:

“AfDB, other institutions launch US$600 million capitalization fund” May 26, 2010. http://www.afriqueavenir.org/en/2010/05/26/afdb-other-institutions-launch-us600-million-capitalization-fund/

“AfDB, EIB, and OFID Commit to Africa Capitalization Fund to Strengthen Banks across the Continent” June 2, 2010. http://www.afdb.org/en/news-events/article/afdb-eib-and-ofid-commit-to-africa-capitalization-fund-to-strengthen-banks-across-the-continent-6936/

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