Shareholders of the African Development Bank approved the tripling of the lender’s capital base to almost $100 billion to help fund railways and power plants in the world’s poorest continent.
The capital increase “was voted on and approved,” Thierry de Longuemar, the bank’s vice president of finance, said in an interview in Abidjan, the commercial capital of Ivory Coast. “The resolution was approved without discussion.”
The African Development Bank, one of five major multilateral development lenders in the world, invests more than half of its funds on infrastructure projects, mainly in energy and transportation. The World Bank estimates that electricity capacity in Africa amounts to only 68 gigawatts for 48 countries, about the same capacity as in Spain.
“That capital will be put to serving Africa’s needs of today: closing the infrastructure deficit, its roads, railways, waterways, broadband, water systems dealing with climate change,” bank President Donald Kaberuka said in speech in Abidjan. “It will enable the bank to contribute to the continent’s agenda to feed itself, accelerating integration, getting more private sector in low-income countries, and rehabilitating our higher centers of learning.”
Kaberuka, a former finance minister of Rwanda, was re-elected for a second five-year term at the bank’s annual meeting in Abidjan today.
Founded in 1963, the African Development Bank has 53 member countries from Africa and 24 from outside the continent, including the U.S., the European Union and Japan. Nigeria, Africa’s most populous nation, has the biggest shareholding in the bank, with 8.9 percent.
The capital increase will give the bank more leeway to borrow to finance its projects. The bank plans to borrow about $5 billion annually over the next two years, Pierre van Peteghem, head of the bank’s treasury, said on May 25.
Infrastructure investments may help to sustain economic growth on the continent as the European debt crisis threatens the global recovery. Growth in Africa will probably accelerate to 4.5 percent this year from 2.5 percent in 2009, and reach 5.2 percent in 2011, according to the African Development Bank.
Kaberuka said his main goal in his second term is to ensure more economic integration on the continent.
“The continent of Africa is still viewed as there to supply oil, minerals and raw materials,” Kaberuka told reporters in Abidjan. “It’s high time this continent becomes another platform for demand. I’m determined during my last term to accelerate economic integration.”
Trade within Africa accounted for only 9.5 percent of the $424 billion in exports from the continent in 2007, according to data from the African Development Bank.
While the bank has increased lending in the past five years, non-performing loans have declined to less than 4 percent of total loans from 14 percent in the same period, Kaberuka said.
“The bank has been able to expand while managing its portfolio and managing the risks,” he said.