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What is African Development Bank (AfDB)?

  • ADB is a multilateral development finance institution.
  • It provides finance to African governments and private companies investing in the Regional Member Countries (RMC).
  • It was founded in 1948.
  • Its fundamental duty is to fight poverty and improve the standard of living of the continent by investing in projects and programs which uplifts the socio-economic conditions of the common mass.
  • The Headquarter is located in in Abidjan, Côte d’Ivoire. But it moved to Tunis, Tunisia in 2003, before returning in September 2014.
  • The AfDB is controlled by a Board of Executive Directors, made up of representatives of its member countries.
  • Akinwumi Ayodeji Adesina is the 8th elected President of the African Development Bank Group, on September 1, 2015.
  • Member governments are officially represented at the AfDB by their Minister of Finance, Planning or Cooperation who sits on the AfDB Board of Governors.
  • It is to be noted that Cabo Verde and Libya are the only two countries are without the beneficiary of AfDB or ADF.

Functions:

  • The primary function of AfDB is making loans and equity investments for the socio-economic advancement of the RMC.
  • Secondly, the bank provides technical assistance for development projects and programs.
  • Thirdly, it promotes investment of public and private capital for development.
  • Fourthly, the bank assists in organizing the development policies of RMCs.
  • Fifthly, The AfDB is also required to give special attention to national and multinational projects which are needed to promote regional integration.
  • Other functions include: (i) Mobilizing financial resources from the Government or the foreign financial institutions with (ii) A view to lending the money for development of specific sectors of the economy.

The African Development Bank Group has two other entities:

The African Development Fund (ADF):

  • Established in 1972
  • The African Development Fund started operations in 1974
  • It provides development finance on concessional terms to low-income RMCs which are unable to borrow on the non-concessional terms of the AfDB.
  • In harmony with its lending strategy, poverty reduction is the main aim of ADF activities.
  • Twenty-four non-African countries along with the AfDB constitute its current membership.
  • The largest ADF shareholder is the United Kingdom, with approximately 14% of the total working shares.
  • Followed by United States with approximately 6.5 percent of the total voting shares.
  • Followed by Japan with approximately 5.4 percent.
  • The Federal Reserve Bank of New York was designated as the depositor bank for the fund according to telegraphs sent from the U.S. Embassy in Abidjan in 1976.
  • The tenth United Kingdom replenishment of the ADF was in 2006.

The Nigeria Trust Fund (NTF):

  • The Nigeria Trust Fund (NTF) was established in 1976.
  • It was established by the Nigerian government.
  • The NTF is aimed at assisting in the development efforts of the poorest AfDB members.
  • The NTF uses its resources to provide financing for projects of national or regional importance which further the economic and social development of the low-income RMCs whose economic and social conditions require financing on non-conventional terms.
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