AfDB sees commitments almost doubling to $11bn

5th August 2009
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The African Development Bank (AfDB) has seen its commitments almost double since last year due to the global financial crisis, the head of the bank, Donald Kaberuka, said on Wednesday.

The bank expects to loan some $11-billion this year from $5,8-billion previously, he said.

“This is in budget support operations, infrastructure projects, trade finance and liquidity programmes,” he said.

Kaberuka gave the example of Botswana, which has long been one of Africa’s best performing economies, but has had to borrow from the bank to mitigate against the crisis.

The bank’s loans to the southern African country have been tiny, but it was forced to borrow $1,5-billion in budgetary support this year because it was running a 12% deficit.

Botswana had been earning $340 million per month from diamond sales, but this fell to $40-million from November due to the global economic situation, Kaberuka said.

“You cannot blame Botswana for poor governance or bad business environment. This was a pure external shock,” he said.

The impact of the crisis on Africa has been bigger than earlier feared, he added, and the AfDB has set up a $1-billion trade finance facility to help business cope.

“Commercial banks come to us to finance exports and imports because money became very scarce during the crisis,” he said.

KEY PROJECTS

There are a number of key projects whose original promoters pulled out because of the crisis. Kaberuka cited a Tunisian airport project whose Turkish investors shied away and the AfDB had to step in with $100-million to prevent a collapse.

“The impact has been severe, (but) the picture varies from country to country depending upon the structure of exports, the level of dependency on external inflows and the capacity of the country to react,” he said.

About a dozen economies will still grow by 5% and above this year, and another 12 between 3% and 5%, but there are 26 countries on the continent that are seeing real per capita incomes decline, Kaberuka said.

Had the crisis struck 15 years earlier the impact on Africa would have been quite serious, but it has hit less because of reforms undertaken over the last decade and a half, he said.

And it is important that the continent prepares to take off again once the crisis is over, he said.

“It is wise that we take all measures to mitigate the crisis but stay focused on the long term recovery of the continent. That is why it is important to stay focused on infrastructure, energy and regional integration,” he said.

PORTS INVESTMENT

Kaberuka also said the bank will loan Djibouti and Senegal some $240-million to improve their ports.

The development of African port facilities has lagged behind that of roads and other infrastructure, and that was manifesting itself in delays at all ports.

“For Djibouti it is $90-million and for Dakar much more, maybe $150-million. We are looking very closely at other ports,” he said, adding that two Gulf investors would be putting more funds into the projects.

The bank is also keen on a Kenyan project to build a second port in the remote coastal town of Lamu and the infrastructure leading to it, Kaberuka said.

East Africa’s biggest economy plans to start constructing the port in February 2010 and has allocated $45-million for it.

The port is part of a broader $22-billion Kenyan development plan that includes railway lines, a pipeline, roads and airports to open up the northern part of the country and link the nation with Sudan and Ethiopia.

Infrastructure now accounts for 60% of the Tunis-based bank’s commitments. Kaberuka said the AfDB is carrying out a study on the port capacity on the Indian, Mediterranean and Atlantic oceans to see what improvements are needed to match upgrades being made to African road networks.

Edited by: Reuters

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