Angola Seeks to Secure Infrastructure Loans From African Development Bank

Angola has asked the African Development Bank for loans to help rebuild its economy following a 27-year civil war, adding to funds from the International Monetary Fund and a possible international bond sale.

Angola doesn’t currently qualify to borrow long-term loans from the bank because of its low-income status and has requested the lender to change this policy, Donald Kaberuka, president of the African Development Bank, said in an interview yesterday in Abidjan, the commercial capital of Ivory Coast.

The southern African nation told the IMF in a letter published on May 19 that it needs $6 billion in loans to help rebuild infrastructure, such as bridges and ports, destroyed during the civil war that ended in 2002. Angola has also said it may sell bonds to raise funds and the country was awarded its first credit ratings from Standard & Poor’s, Fitch Ratings and Moody’s Investors Service last week.

“The opportunities in reconstruction of Angola are enormous,” said Kaberuka. “There are ports, there’s the issue of urban housing. I’ve just opened a large office in Angola. I was there to assess opportunities for infrastructure and for the private sector.”

The IMF said on May 11 it disbursed $171.5 million to Angola as part of a $1.3 billion loan program it approved for the nation in November.

The African Development Bank is finalizing its assessment of Angola before deciding how much it can lend to the country, Kaberuka said.

Policy Change

“We look at a country’s ability to repay, the fiscal situation, current account, governance issues, if there’s risk of default,” Kaberuka said. “Once you’ve submitted that analysis, then you decide at what level you can lend at. They haven’t come to us for a particular amount. They’ve asked us to change the policy to allow them to borrow.”

Kaberuka was speaking ahead of the African Development Bank’s annual meeting on May 27 and 28, where the bank’s 77 members are expected to approve a tripling in the lender’s capital base to about $100 billion. That will allow the bank to sustain an increase in lending following the global financial crisis, Kaberuka said.

“It’s a big, big boost to the work of the bank,” Kaberuka said. “The capital increase will give us the firepower to increase our support to infrastructure, to the private sector, while at the same time not breaching our prudential limits.”

About 60 percent of the bank’s lending is on infrastructure projects, mainly in energy and transport.

“Infrastructure is the single biggest obstacle to the growth of Africa’s domestic market and the ability to connect Africa to the rest of the world,” Kaberuka said.

To contact the reporters on this story: Nasreen Seria in Abidjan at nseria@bloomberg.net.

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