Africa sees robust 2008 despite subprime-AfDB
| Thursday January 24, 2008 00:00
Bank President Donald Kaberuka told Reuters Asian demand for Africa's resources and better economic management by African governments had so far protected the continent's countries from the financial turbulence beyond its shores.'On first round effects there is no impact so far,' he said, referring to the performance of individual companies.
'My view on second round effects is also that African growth can remain robust in 2008, with expectations of 6.5 percent,' he said of the effects on national economies in general. The only multilateral development body specifically devoted to Africa, the AfDB lends commercially to Africa's richest nations and lends at concessionary rates to poor ones from its African Development Fund, financed largely by Western donors.Its shareholders include Africa's 53 nations and 24 non-African donor countries.
Economists say debt relief, a sharp rise in Asian purchases of commodities, improved governance and reforms to deepen and broaden African markets have helped double the continent's growth rate from the 2 to 3 percent of the late 1990s.
Kaberuka added: 'The subprime situation up to this point has not affected our capacity to keep the rate of growth this year where it is, because it is underpinned by fundamentals which have not changed, which is Chinese and Indian demand for African commodities and cumulative effects of macroeconomic reforms. 'Kaberuka was speaking on the eve of the launch of a report by independent advisors who advocate an expansion of the bank's mission to make it Africa's top development finance institution.
The AfDB is currently only the seventh largest provider of aid to Africa behind the World Bank, the European Union and big bilateral lenders like the United States and France.
Kaberuka said the bank was under pressure from shareholders to be more adventurous in its lending, and while it would certainly expand its loans to public-private joint ventures, its risk management would remain conservative.
'We are determined to keep our Triple-A rating,' he said. Lending to the private sector had multiplied almost fourfold since he took over the bank's presidency in 2005, but this was equivalent to only about seven percent of the lending portfolio. The bank's ADF concessionary lending channel makes soft loans and grants to Africa's poorest countries. The fund must periodically be replenished with fresh donor contributions.
The ADB channel, which has a triple-A rated balance sheet, provides loans at or near market rates to middle income African countries and the private sector.
Because of eligibility requirements, only 15 of Africa's 53 countries are permitted to borrow from this facility.
Kaberuka said the bank was facing calls from shareholders to widen the criteria for the bank's financing, and he had commissioned two outside investment banks to study the options.'The pressure from the shareholders is 'be a bit more risky to try to crowd in investment'. The argument is not about taking more risk, it's that shareholders think we are too prudent.'
The bank has an authorised capital of $33-billion, with a lending portfolio of $3,4-billion in 2006. Based since its creation in 1963 in Ivory Coast, the AfDB relocated temporarily to Tunis in 2003 because of war there.(Reuters)