Published: December 13, 2012
AfDB funding will be used to back projects in local currencies throughout the continent.
The African Development Bank (AfDB) has extended a multi-currency credit line to South Africa’s FirstRand Bank worth the equivalent of US$300mn. The seven-year line will be used to fund several development projects in local currencies throughout the continent.
Currencies in the funding package include the Nigerian naira, the Kenyan and Tanzanian shillings, the Mozambique metical and the Ghanaian cedi. In order to help encourage local market activity, the funds will be distributed through bond issuance programmes in the respective domestic capital markets.
Timothy Turner, director of the AfDB’s Private Sector Department, said of the deal: “With this line of credit, the AfDB is introducing a new and innovative form of local currency financing. This structure can be replicated by other banks in Africa to gain access to funding in African currencies, thereby reducing unnecessary currency mismatches and deepening the local capital markets.”
In other news, the European Investment Bank has committed €420mn to Moroccan transport and energy infrastructure. This is part of a €700mn assistance package agreed in 2011 to be spent on projects that will help tackle youth unemployment. Around €240mn of the latest tranche will go toward the construction of a motorway between El Jadida and Safi. The extension of Morocco's electricity grid will receive €180mn.