AfDB gets $688m from Japan to cushion Africa’s COVID-19 challenge

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The Japan International Cooperation Agency (JICA) and the African Development Fund (ADF) – the concessional arm of the African Development Bank Group – have signed a $688.1 million or 73.6 billion Japanese Yen loan agreement.

The agreement which was signed on Tuesday during a virtual ceremony in Côte d’Ivoire is to support the 15th replenishment of the African Development Fund (ADF-15) and combat the impact of the COVID-19.

African Development Bank Group President, Akinwumi Adesina and Japanese Ambassador to Côte d’Ivoire Kuramitsu Hideaki signed an Exchange of Notes, while the loan agreement was signed by the JICA Chief Representative in Côte d’Ivoire, Fujino Kojiro, and Acting African Development Bank Group Senior Vice President Swazi Tshabalala, in her capacity as Chief Financial Officer.

A statement by the AfDB stated that the concessional donor loan will support the 15th replenishment of the African Development Fund, approved in December 2019 by ADF donor countries. JICA is extending the loan – the largest to ADF-15 – on behalf of the Government of Japan.

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The statement further noted that Ambassador Kuramitsu Hideaki, whose country has been the fifth-largest contributor to the ADF in cumulative terms, said the loan formed part of Japan’s commitment to promote industrial human resource development, innovation and investment, and to invest in quality infrastructure to enhance connectivity, expressed at the TICAD 7 conference in August 2019.

Japan also announced at that conference that it would contribute to phase 4 of the Enhanced Private Sector Assistance Initiative (EPSA), a joint flagship project with the Bank.

“I sincerely hope that this loan in yen will allow the (African Development Fund) to execute concessional financing and grants for African countries facing emerging challenges caused by COVID-19 and contribute to the economic and social development of these countries,” Hideaki said.

JICA President Kitaoka Shinichi said: “The COVID-19 crisis has accelerated global structural changes. Africa is still in the midst of this crisis, facing serious challenges from coronavirus variants and the cold storage requirements for vaccines. Only a united Africa can defeat this threat to humanity. We should not allow this virus to jeopardize the steady progress of freedoms, independence and democracy that African countries have made so far. I firmly believe that today’s contribution to ADF-15 will further boost our cooperation with African countries and strengthen our partnership with the African Development Bank Group.”

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Deputy Director-General/ADF Deputy, International Bureau, Ministry of Finance Japan, Mimura Atsushi, said: “The African Development Fund is a key source of financing for Africa’s low-income countries heavily affected by COVID-19. The Yen Loan we are providing today has a higher grant-element compared to the Yen Loan provided for the last ADF replenishment, with a lower interest rate and longer maturity. Going forward, I would like to see our partnership further developed with the African Development Bank Group.”

Dr. Adesina highlighted the African Development Bank’s long-standing partnership with the Government of Japan, including the Enhanced Private Sector Assistance Initiative, which was launched in 2005. As of February 2021, Japan’s total contribution to the initiative amounts to $4.6 billion.

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Adesina pointed out that Japan’s concessional donor loan was almost 10% of the total ADF-15 resources of $7.5 billion. “This is a continuation of the strong leadership role of Japan in providing concessional loans to the African Development Fund. Japan was the largest provider of concessional donor loans to the African Development Fund’s 15th replenishment, just like Japan was also under the African Development Fund’s 14th replenishment,” he said.

“Japan continues to add great value to the overall replenishment cycles of the African Development Fund,” Adesina said, adding that the latest loan “will greatly boost the liquidity of the African Development Fund and allow us to ramp up much-needed support to the ADF countries…especially now at this critical time when they are struggling to cope with and recovery from the COVID-19 pandemic.”

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