The global gloomy outlook occasioned by the ravaging Covid-19 disease was brightened yesterday giving many reasons to smile inspite of the stories of gloom and doom that pervades the global news space. This is as a result of the successful One Billion Norwegien Krone (NOK) from the bond issuance of the African Development Bank made in 2019 which has received global acclaim from experts and analysts leading to the lender receiving The Environmental Finance 2020 Award. This bond award was given by an independent panel comprising 30 of the world’s largest green, social and sustainability bond investors. “It is inspiring to observe how the African Development Bank sources global capital to finance, lead and develop a strong platform for inclusive and environmental growth across Africa. We know from many of our investors that the ability to participate in Africa through AfDB’s triple-A rating is highly appreciated and we look forward to many more transactions like this,” said Christopher Flensborg, Head of Climate & Sustainable Finance in Large Corporates & Financial Institutions at Skandinaviska Enskilda Banken, a Swedish financial group.
Bajabulile Tshabalala, acting Senior Vice President of the African Development Bank
The African Development Bank bond issue was the first social bond ever launched in the Norwegian market, and the Bank’s first transaction in NOK. It was launched in April 2019, as part of a dual-tranche social bond and green bond, placed on the Norwegian and Swedish markets. The dual transaction drew strong interest from dedicated socially responsible investor portfolios as well as those who strongly weight environmental, social and governance considerations in their investment strategies.
The proceeds from this social bond issuance are being directed toward poverty reduction, job creation, and inclusive growth. Since 2017, the Bank has launched nearly $5 billion worth of such instruments denominated in US dollars, euros and Norwegian krone. In 2018, the Bank was recognized as “Second most impressive social or sustainability bond issuer” at the Global Capital Socially Responsible Investments Awards.
The Environmental Finance 2020 bond award followed the 27 March announcement that the Bank had raised a record $3 billion from its Fight COVID-19 social bond, the proceeds of which will fund public and private efforts to tackle the viral pandemic in Africa. Fight COVID-19 is the largest social bond ever issued in capital markets.
“We are honored to receive this recognition for this first ever issued social bond in the Norwegian market. This NOK issue reinforces the Bank’s High 5 operational focus which is aligned with the Sustainable Development Goals. Our Social bond framework allows us to attract investors whose interests are aligned with those of our development mandate,” said Bajabulile Tshabalala, acting Senior Vice President of the African Development Bank.
“We are delighted to be honored by market leaders as we devote our efforts towards the economic and social development of the African continent. The mission of the African Development Bank is to combat poverty and improve lives and social bonds allow us to showcase the impact of our social projects in Africa,” said Hassatou Diop N’Sele, Treasurer of the African Development Bank Group.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Africa’s economic growth in the nearest future rests mostly on the performance of the continents ‘Big Five’ made up of Algeria, Egypt, Morocco, Nigeria, and South Africa, so says the new Africa Economic Outlook released today in Abidjan, Cote d’Ivoire. The report notes that for the first time in a decade, investment expenditure rather than consumption accounts for more than half of GDP growth. But the continent needs to invest in education and infrastructure for good returns in long-term GDP; “Youth unemployment must be given top priority.
Hanan Morsy, Director of the Macroeconomic Policy, Forecasting and Research Department at The African Development Bank
According to the Africa Economic Outlook, the slower than expected growth is partly due to the moderate expansion of the continent’s “big five” — Algeria, Egypt, Morocco, Nigeria, and South Africa – whose joint growth was an average rate of 3.1 percent, compared with the average of 4.0 percent for the rest of the continent. The Bank’s flagship publication, published annually since 2003, provides headline numbers on Africa’s economic performance and outlook. The 2020 edition, launched at the Bank’s Abidjan headquarters, was attended by former Liberian president Ellen Johnson Sirleaf, African ministers, diplomats, researchers, and representatives of various international bodies.
The 2020 Africa Economic Outlook (AEO), themed Developing Africa’s workforce for the future, calls for swift action to address human capital development in African countries, where the quantity and quality of human capital is much lower than in other regions of the world. The report also noted the urgent need for capacity building and offers several policy recommendations, which include that states invest more in education and infrastructure to reap the highest returns in long-term GDP growth. Developing a demand-driven productive workforce to meet industry needs is another essential requirement.
With 12 million graduates entering the labor market each year and only 3 million of them getting jobs, the mountain of youth unemployment is rising annually” says Dr. Akinwumi Adesina, President, African Development Bank. The Report points that Africa’s economic growth remained stable in 2019 at 3.4 percent and is on course to pick up to 3.9 percent in 2020 and 4.1 percent in 2021.
Johnson Sirleaf commended the Bank for upholding the confidence of the people of the continent “… because we trust you. As simple as that. Because we trust you to share our vision. We trust you to understand our limitations.” Referring to Africa’s fastest-growing economies, she said, “There are stars among us…and we want to applaud them. We want to see more, particularly for countries like mine, which have been left behind, so that more can be done to give them the support that they need.”
In 2019, for the first time in a decade, investment expenditure, rather than consumption, accounted for over 50% of GDP growth. This shift can help sustain and potentially accelerate future growth in Africa, increase the continent’s current and future productive base, while improving productivity of the workforce.Overall, the forecast described the continent’s growth fundamentals as improved, driven by a gradual shift toward investments and net exports, and away from private consumption.
Breaking down the reports on regional basis, the findings show that East Africa maintained its lead as the continent’s fastest-growing region, with average growth estimated at 5.0 percent in 2019; North Africa was the second-fastest, at 4.1 percent, while West Africa’s growth rose to 3.7 percent in 2019, up from 3.4 percent the year before.
Central Africa grew at 3.2 percent in 2019, up from 2.7 percent in 2018, while Southern Africa’s growth slowed considerably over the same period, from 1.2 percent to 0.7 percent, dragged down by the devastating cyclones Idai and Kenneth.
“Africa needs to build skills in information and communication technology and in science, technology, engineering, and mathematics. The Fourth Industrial Revolution will place increasing demands on educational systems that are producing graduates versed in these skills,” the report noted.
To keep the current level of unemployment constant, Africa needs to create 12 million jobs every year, according to the report. With rapid technological change expected to disrupt labor markets further, it is urgent that countries address fundamental bottlenecks to creating human capital, the report said.
“Youth unemployment must be given top priority. With 12 million graduates entering the labor market each year and only 3 million of them getting jobs, the mountain of youth unemployment is rising annually,” said Akinwumi Adesina, African Development Bank President, who unveiled the report.“Let’s look at the real lives beyond the statistics. Let’s hear their voices, let’s feel their aspirations.”
Although many countries experienced strong growth indicators, relatively few posted significant declines in extreme poverty and inequality, which remain higher than in other regions of the world. Essentially, inclusive growth — registering faster average consumption for the poor and lower inequality between different population segments — occurred in only 18 of 48 African countries with data.
“As we enter a new decade, the African Development Bank looks to our people. Africa is blessed with resources but its future lies in its people…education is the great equalizer. Only by developing our workforce will we make a dent in poverty, close the income gap between rich and poor, and adopt new technologies to create jobs in knowledge-intensive sectors,” said Hanan Morsy, Director of the Macroeconomic Policy, Forecasting and Research Department at the Bank.
The African Economic Outlook provides compelling up-to-date evidence and analytics to inform and support African decision-makers. The publication has built a strong profile as a tool for economic intelligence, policy dialogue and operational effectiveness.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Africa’s premier development finance institution the African Development Bank has launched and priced a US$ 2 billion 3-year Global Benchmark bond which will be due by 16 September 2022. This is the Bank’s first US$ benchmark of the year. The Bond which was launched on September 11 is the Bank’s second Global Benchmark of 2019, following the EUR 1 billion 10-year priced in March 2019. This has brought the amount raised by the Bank to US$ 4.4 billion and executed 61% of its borrowing program for the year.
Hassatou Diop N’Sele, Treasurer of the African Development Bank
This very transaction received strong support from investors globally which is a sign of level of confidence investors have on the Bank as its order books has reached US$ 2.8 billion with 53 investors participating. This high quality of the order book is illustrated by the strong participation of Central Banks and Official Institutions, taking 64% of the allocations.
The African Development Bank is taking advantage of favorable investor sentiment post summer break to access the 3-year tenor, in spite of volatile market conditions ahead of the Fed Meeting the following week. The mandate was announced on Tuesday, September 10, with Initial Pricing Thoughts of Mid-Swaps + 13 basis points (bps) area.
The transaction met strong interest from the outset, with Indications of Interest in excess of US$ 1.8 billion (excluding Joint-Lead Managers interest) when order books officially opened at 08:00 London time the following morning, with initial price guidance of Mid-Swaps + 13bps area.
Momentum continued throughout the European morning, with orders in excess of US$ 2.5 billion around 11:20 London time. At this time, final pricing was set at Mid-Swaps + 13bps. Following the close of the order book in the US, the size of the transaction was set at US$ 2 billion by 14:20 London time.
The transaction was priced at 16:24 London time with a re-offer yield of 1.679%, equivalent to a spread of 8.75bps vs UST 1.5% 15 September 2022, the issuer’s tightest print vs US Treasuries to date.
Speaking of the development, Hassatou Diop N’Sele, Treasurer of the African Development Bank said that the Bank is delighted with this successful dollar Global Benchmark, and particularly pleased by both the very high quality of the order book and the solid participation of African Central Banks. The African Development Bank achieved its tightest ever spread to US Treasuries, and grateful to her investors across the world for this outcome, and the financing it will bring to the African continent.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Africa’s premier development finance institution, the African Development Bank (AfDB) yesterday saw its efforts at improving procurement process paid off with the recognition in commendation for exhibiting procurement excellence by the Chartered Institute of Procurement & Supply (CIPS). The CIPS is the world’s largest professional body for procurement and supply management professionals, with offices all over the world including Africa. This Award came at a very auspicious time and captures efforts being made by the Bank’s management led by Dr. Akinwumi Adesina is building a world class development finance institution.
Dr. Akinwumi Adesina, President, African Development Bank.
Moreso, the African Development Bank is the first multilateral development bank in the world to receive this recognition. Commending the efforts of the African Bank, Alan Martin, Head of Procurement Excellence expressed a sincere congratulations to the Bank for achieving the CIPS Procurement Excellence Award at advanced standard silver level, noting that it is clear that the Bank has the right procurement governance mechanisms in place for effective supply assurance and compliance. “We hope the Bank will continue to effect change while adding value from procurement processes”, he added.
The Bank was awarded a silver award at advanced standard level following the CIPS Procurement Excellence Programme for having successfully developed its corporate procurement processes from an operational focus to managerial and strategic, building performance, capability and value. Speaking on the Award, the Vice President Corporate Services and Human Resources at the African Development Bank Mateus Magala, said that winning this globally-recognised award is welcome news and that the staff and management of the Bank are delighted to be commended for demonstrating advanced levels of corporate procurement capability.
This goes to show the level and depth the Bank ensures that special attention is paid to economy and efficiency in its procurement processes, both internally and externally across bank-funded projects. Transparency and open competitive procedures for procurement of goods, works and services are also essential. The Bank has been proactive in enhancing its corporate procurement processes and pinpointing the procurement department’s role as a fundamental activity in its strategic operations. “We have made significant progress in improving corporate procurement performance to catalyse the Bank’s efforts in achieving sustainable development and poverty reduction on the continent,” Magala added.
The CIPS Procurement Excellence Programme is an in-depth benchmarking process measuring an organisation’s procurement function against CIPS world-class standards of excellence and its global framework.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Following an open tender and a highly competitive international bidding process, the African Development Bank through its African Legal Support Facility (“ALSF”) and the National Petroleum and Gas Commission, representing the government of the Republic of South Sudan, selected the Centurion Law Group to build capacity in the Republic of South Sudan’s oil and gas sector.
The project is a result of the ALSF’s commitment to foster legal and technical best practices and transparency across South Sudan’s oil & gas value chain. It will focus on providing specialized capacity building training to officials from the National Petroleum and Gas Commission, including the development of best practice procedures for the negotiation, evaluation, and monitoring of contracts in the oil and gas sector.
As South Sudan continues to increase oil production – its most important export commodity – and attract foreign investment into its oil & gas sector, this project will enhance the National Petroleum and Gas Commission’s ability to fully exercise its functions as a regulator and a facilitator in the oil sector.
As per the South Sudan Petroleum Act of 2012, the National Petroleum and Gas Commission notably provides general policy direction with respect to petroleum resources, acts as a supervisory body in matters relating to petroleum resource management, approves all petroleum agreements on behalf of the Government and ensures that they are consistent with the Act.
“The National Petroleum and Gas Commission is a key institutional pillar of South Sudan’s oil & gas sector,” declared Hon. Caesar Oliha Marko, Chairperson of the Commission. “We are delighted to be working with a reputable firm like Centurion to enable our country’s oil industry to meet its obligation to our citizens and investors. Building capacity is key to us ensuring that we deliver on the promise of making oil work for everyone in South Sudan”.
The project will notably focus on reviewing South Sudan’s existing legal and fiscal framework and ensure the transfer of skills and know-how to the government’s representatives and experts.
“It is a real honor to have been selected for this project with the Petroleum Commission,” declared Nj Ayuk, CEO of the Centurion Law Group. “Local content development and domestic capacity building are at the core of everything we do as a firm. We take this project as a unique opportunity to contribute to the development of South Sudan and Africa’s oil industry in general. We are grateful to the African Development Bank and the Republic of South Sudan for entrusting us with this responsibility.”
“As a team, we truly believe in the role the National Petroleum and Gas Commission has in shaping the future of South Sudan’s oil & gas sector,” said Glenda Irvine-Smith Centurion’s Director of Business Development & International Relations, who will coordinate the project on behalf of Centurion.
“South Sudan in East Africa’s most mature petroleum province with the potential to double its current output of over 150,000 b/d in the next five years. Through CenturionPlus, our lawyers and experts on-demand platform, we will mobilize the best African and international experts for the benefit of South Sudan. We are honored to have been entrusted by the Commission and the African Development Bank to accompany South Sudan in this journey.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Following an open tender and a highly competitive international bidding process, the African Development Bank through its African Legal Support Facility (“ALSF”) and the National Petroleum and Gas Commission, representing the government of the Republic of South Sudan, selected the Centurion Law Group to build capacity in the Republic of South Sudan’s oil and gas sector.
The project is a result of the ALSF’s commitment to foster legal and technical best practices and transparency across South Sudan’s oil & gas value chain. It will focus on providing specialized capacity building training to officials from the National Petroleum and Gas Commission, including the development of best practice procedures for the negotiation, evaluation, and monitoring of contracts in the oil and gas sector.
As South Sudan continues to increase oil production – its most important export commodity – and attract foreign investment into its oil & gas sector, this project will enhance the National Petroleum and Gas Commission’s ability to fully exercise its functions as a regulator and a facilitator in the oil sector.
As per the South Sudan Petroleum Act of 2012, the National Petroleum and Gas Commission notably provides general policy direction with respect to petroleum resources, acts as a supervisory body in matters relating to petroleum resource management, approves all petroleum agreements on behalf of the Government and ensures that they are consistent with the Act.
“The National Petroleum and Gas Commission is a key institutional pillar of South Sudan’s oil & gas sector,” declared Hon. Caesar Oliha Marko, Chairperson of the Commission. “We are delighted to be working with a reputable firm like Centurion to enable our country’s oil industry to meet its obligation to our citizens and investors. Building capacity is key to us ensuring that we deliver on the promise of making oil work for everyone in South Sudan”.
The project will notably focus on reviewing South Sudan’s existing legal and fiscal framework and ensure the transfer of skills and know-how to the government’s representatives and experts.
“It is a real honor to have been selected for this project with the Petroleum Commission,” declared Nj Ayuk, CEO of the Centurion Law Group. “Local content development and domestic capacity building are at the core of everything we do as a firm. We take this project as a unique opportunity to contribute to the development of South Sudan and Africa’s oil industry in general. We are grateful to the African Development Bank and the Republic of South Sudan for entrusting us with this responsibility.”
“As a team, we truly believe in the role the National Petroleum and Gas Commission has in shaping the future of South Sudan’s oil & gas sector,” said Glenda Irvine-Smith Centurion’s Director of Business Development & International Relations, who will coordinate the project on behalf of Centurion.
“South Sudan in East Africa’s most mature petroleum province with the potential to double its current output of over 150,000 b/d in the next five years. Through CenturionPlus, our lawyers and experts on-demand platform, we will mobilize the best African and international experts for the benefit of South Sudan. We are honored to have been entrusted by the Commission and the African Development Bank to accompany South Sudan in this journey.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Three years ago, Anthony, then 11, showed signs of stunted growth as observed by African Development Bank President Akinwumi Adesina during a visit to Madagascar’s Bas Mangoky region. To the Bank chief, the boy looked no more than 5 years of age.
“I was transfixed by one of the children attracted by my helicopter landing. He was so small that I was convinced he could be no more than 5 years old,” recalls President Adesina.
“I asked him his name and he told me it was Anthony. But his voice was not that of a 5-year-old child. I was shocked to discover that he was 11. He was suffering from severe malnutrition.”
This was on 2 August 2016 and the story could have ended there. President Adesina could have continued his tour of the region, where rice production had tripled, from two to six tonnes per hectare, thanks to the decisive intervention of the African Development Fund (ADF), the concessional window of the African Development Bank. He could have continued his rounds, proud of the Fund’s intervention, which had enabled the region to record a 141% increase in its agricultural income.
This, however, would have gone against his convictions and his personal efforts to help curb malnutrition. “Anthony said his dream was to become a doctor,” he recalls, visibly moved when he reunited with Anthony this week on the sidelines of the ADF-15 replenishment meeting in Antananarivo. The President of the African Development Bank thus decided, in agreement with his wife, to adopt Anthony and provide him with the means to live a dignified life, alongside his family, in his home environment.
And even then, Anthony’s incredible story did not end there. “I saw him again, the day before yesterday. Our son, Anthony, is growing normally. He is fine and well-fed,” Adesina says. “He is doing well in school and is one of the best in his class. I really hope that one day he will achieve his dream of becoming a doctor.” Barely half the height of his adoptive father in 2016, Anthony now seems well on track to overtake him.
Senior representatives of ADF donors are currently meeting in Madagascar to discuss the 15th Replenishment of the Fund. ADF has invested some $48 billion in low-income African countries.
For President Adesina, Anthony’s story is one of hope. Just like this young Malagasy boy, the continent can overcome its weaknesses. “Fragility is not inevitable. It can be overcome,” Adesina said in his opening speech at the second consultative meeting of the replenishment of the Fund.
“We believe in Africa! We believe in a prosperous future. We believe in its destiny!” he declared.
“The African Development Fund can continue to create hope among the least developed populations, offer opportunities to those who have nothing, and restore pride and determination,” he said, calling on donor countries to maintain their strong commitment to the continent.
President Adesina cited Cote d’Ivoire as one of the numerous success stories of ADF’s intervention.
“Côte d’Ivoire’s GDP plummeted following the political, economic and social turbulence it suffered a few years back. Thanks to the timely and decisive action of the African Development Fund, this country now has one of the most impressive growth rates in Africa, even the world.”
Just like Anthony, who is now racing ahead of the other pupils in his class.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
The Bank will also participate in the meetings of the 37th NEPAD Heads of state and Government Orientation Committee.
African Development Bank Group President Akinwumi Adesina will next week lead a delegation of top Bank officials to the extraordinary summit of Heads of State and Government of the African Union (AU) in Niger’s capital, Niamey.
High on the agenda of the July 7-8 summit are discussions on the African Continental Free Trade Area (AfCFTA). President Adesina will meet African leaders to review the continent’s development issues and hold talks on the effective implementation of the AfCFTA.
As a member of the continental Task Force, the Bank will participate in several executive discussions, including the deliberations of the 8th meeting of African Trade Ministers, as well as a meeting of the 37th Steering Committee of Heads of Commerce.
The Bank will also participate in the meetings of the 37th NEPAD Heads of state and Government Orientation Committee, as well as in the 1st mid-year coordination meeting of the AU and Regional Economic Communities.
President Adesina will share the Bank’s vision on empowering African women and on the AFAWA (Affirmative Finance Action for Women in Africa) initiative.
On the sidelines, there will be discussions between the Bank and major African private sector representatives on the AU’s 2063 vision of an integrated, inclusive and prosperous continent.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
The African Development Bank Group (AfDB) and the Africa Finance Corporation (AFC), will meet industry and business leaders in Abuja, Nigeria on Monday, 9th of July 2019 at the Transcorp Hilton, Abuja, as part of a roadshow to woo investors ahead of its second Africa Investment Forum (AIF) in November.
AIF − the continent’s biggest investment marketplace for accelerated economic transformation – is slated for 11-13 November 2019 in Johannesburg, South Africa. It is dedicated to advancing projects throughout Africa to bankable stages, raising capital, and accelerating the financial closure of deals.
African Development Bank
The Abuja roadshow targets chief executive officers, captains of industry, State governments and other key players that will re-affirm Nigeria’s investment-ready status. The event will build on the quantity and quality of deals brokered in 2018, as well as explores investment opportunities across the continent.
By convening Nigeria’s premium project sponsors, borrowers, lenders and investors, the roadshow will showcase bankable projects, attract financing, and provide platforms for investing across multiple countries.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
The African Development Bank Group said on Friday that two General Electric Co subsidiaries would be temporarily barred from bidding on power contracts as part of a settlement of misconduct cases.
The agreement bars GE Power units in Egypt and Germany from bidding for up to 76 months, the bank said. The units, former parts of Alstom that GE acquired in 2015, were found to have engaged in bribery and fraud in 2006 and 2011, the bank said.
“This conduct happened long before GE acquired Alstom’s power business and we cooperated fully with the investigation,” GE said in a statement. “Ethical behavior and compliance are foundational to GE’s ability to successfully operate in more than 180 markets around the world.”
Other development banks may also enforce the bans, the bank said. “We have no reason whatsoever to doubt that the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group will follow the African Development Bank’s lead,” Johann Benohr, a senior advisor to the director of the office of integrity and anti-corruption at the African Development Bank Group, said in an email to Reuters.
The barred entities are Alstom Egypt for Power Projects S.A.E., based in Cairo, and GE Power Systems GmbH, based in Mannheim, Germany, the bank said.
GE is trying to restore profits at its money-losing power business as the conglomerate slims down to three main product lines: power plants, jet engines, and wind turbines.
African Development Bank turns to a hedge fund to offset the risk
The pioneering deal comes as supranational face pressure to expand lending capacity
The African Development Bank is paying a New York hedge fund to take on some of the risks of losses on its loans in a pioneering deal which illustrates the growing financial sophistication of supranational institutions. The AfDB has bought insurance on a $1bn portfolio of loans from a group of investors led by Mariner Investment Group through a so-called synthetic securitization, in which the hedge fund does not acquire the assets but will take on $152m of default risk in exchange for returns in the low double digits.
Supranational organizations, which are backed by groups of nations and so enjoy the world’s highest credit ratings, are under pressure from the governments that fund them to seek new ways of bolstering their lending capacity. By turning to Wall Street to take on some of its lending risks, the AfDB has reduced the amount of capital it has to hold against the loans and thereby freed up more lending capacity. While this financing structure has already been used by banks — Mariner signed a similar deal last year with Crédit Agricole — it is the first time that a supranational development bank has engaged in this kind of financial engineering.
The deal will “super-charge our ability to invest in urgently needed projects across Africa”, according to AfDB president Akinwumi Adesina. “It leverages our financial resources so we can have more impact, and it creates new pathways that enable long-term investors to support Africa’s development while getting excellent financial returns.” In the decade since the financial crisis supranationals have significantly stepped up their capital markets activity, with their low cost of capital making them a cost-efficient way of financing development and infrastructure projects. However, they are still small by comparison to sovereign states’ finance-raising volumes — the assets of the world’s multilateral development banks are approximately equivalent to those of a medium-sized international investment bank.
Given governments’ reluctance to boost supranationals’ capitalization through additional financial contributions, the AfDB-Mariner deal has attracted political attention. Canada helped advise on its structure, the European Commission has insured a $100m tranche of the loans and Africa50, an investment platform backed by 27 African nations, also invested in the deal. Bill Morneau, Canadian minister of finance, said: “Attracting more private capital into global development efforts is critical to building economies that work for more and more people around the world. “That is why Canada and our G20 partners have been calling on multilateral development banks to use their existing resources as efficiently as possible and to look for new ways to attract more private capital.”
A report by thinktank ODI earlier this year concluded that synthetic securitizations were the best mechanism by which multilateral development banks could increase the amount of financial firepower they had available to lend. The AfDB’s deal covers approximately 40 loans to power, transport, finance and manufacturing projects across more than 15 African countries.
The bank has promised to lend the freed-up funds to projects which meet sustainable and social impact targets. The AfDB will take the first $20m of losses on the portfolio. Mariner portfolio manager Andrew Hohns said the deal “may well provide a template for unlocking significant private sector and impact capital into urgently needed projects in developing economies”. Mariner now hopes to sign similar deals with other multilateral institutions. Mizuho structured the transaction.
AfDB imposes debarments to restore integrity in project development.
March 25, 2019
Following years of investigation into alleged bribery and fraud, the African Development Bank (AfDB) and GE Power have reached a settlement on legacy Alstom misconduct.
The AfDB imposed debarments of 76 months and 12 months on former Alstom companies after it was found to have engaged in bribery and fraud in 2006 and 2011 in relation to two bank-financed Egyptian power generation projects. GE Power acquired the companies in 2015.
Last week, the bank announced a conclusion of a settlement agreement with GE Power, thus resolving sanctionable practices committed by former Alstom companies.
“Corrupt practices in the power generation sector directly undermine the African Development Bank’s operational priority to light up and power Africa. This can never be accepted by the Bank”, said Bubacarr Sankareh, manager of the investigations division within the Office of Integrity and Anti-Corruption.
Sankareh added: “We are very pleased that GE Power is joining us today in our efforts to fight corruption and to ensure the delivery of value for money to the bank’s regional member countries.”
Corrupt practices
An investigation conducted by the bank’s office of Integrity and Anti-Corruption established that in 2006 and 2011 the companies, then named Alstom Power Generation AG, Alstom Power GmbH, and Alstom Egypt for Power & Transport Projects, engaged in two instances of corrupt practices and in one instance of a fraudulent practice in the context of the bank-financed Suez Thermal Power Plant Project and the El Kureimat III Power Project, both in Egypt.
GE Power assumed control over these three companies in 2015 after the misconduct had occurred when it acquired Alstom’s thermal power generation business. As part of the settlement, the bank imposes on former Alstom Egypt for Power & Transport Projects S.A.E. (now known as Alstom Egypt for Power Projects S.A.E.), based in Cairo, Egypt, and on former Alstom Power Generation AG (now known as GE Power Systems GmbH), headquartered in Mannheim, Germany, a debarment of 76 months.
Debarment period
The debarment period may be reduced to 48 months if the companies comply with all conditions of the agreement early.
This debarment may be enforced by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group.
Further, pursuant to the settlement, former Alstom Power GmbH (now known as GE Power GmbH), equally based in Mannheim, Germany, is debarred for a period of 12 months.
Among other conditions for release from debarment, GE Power commits to collaborate with the Office of Integrity and Anti-Corruption in the fight against corruption in the power generation and transmission sector.
Tender processing
In 2006, Alstom Egypt for Power & Transport Projects S.A.E. and Alstom Power Generation AG participated in a tender for steam turbine generators in the context of the Bank-financed El Kureimat III Power Project.
The companies indirectly paid an amount of €963,477 to their local agent.
The Office of Integrity and Anti-Corruption has concluded that one purpose of the payment was to ensure the support of public officials involved in the procurement process in order to gain an unfair competitive advantage in the tender.
Further, the Office of Integrity and Anti-Corruption established that the companies had erroneously only declared €50,000 in fees paid to its local agent.
In 2011, Alstom Egypt for Power & Transport Projects S.A.E., Alstom Power GmbH, and Alstom Power Generation AG, by then renamed Alstom Power Systems GmbH, participated in a tender for a steam turbine generator and condensers for the Bank-financed Suez Thermal Power Plant.
In the context of this tender, the companies indirectly offered €1.7 million to their local agent.
The Office of Integrity and Anti-Corruption has concluded that one objective of the offer was to ensure that public officials would assert undue influence on the procurement process in favor of the companies’ bid.
In reaching this settlement, the African Development Bank took into account General Electric’s substantial cooperation with the investigation of the legacy cases as well as the high quality of the company’s comprehensive compliance programme, which now applies to the Alstom entities acquired by GE Power.
African Development Bank debars CHINT Electric for 36 months for fraudulent practices
The African Development Bank Group has announced the conclusion of a settlement agreement with CHINT Electric Co., Ltd., a power transmission and distribution equipment manufacturer and EPC contractor.
An investigation conducted by the Bank’s Office of Integrity and Anti-Corruption established that CHINT Electric engaged in a multitude of fraudulent practices: In bidding for contracts in the context of numerous Bank-financed power projects, the company misrepresented its experience with similar assignments in order to meet qualification requirements.
As part of the settlement, in consideration of the company’s cooperation with the investigation, the African Development Bank imposes a debarment on CHINT Electric for a period of three years, subject to the company enhancing its corporate compliance program within that period to the institution’s full satisfaction.
During the debarment period, the company is ineligible to be awarded contracts under any African Development Bank-financed project or to be a subcontractor, consultant, supplier, or service provider of an otherwise eligible firm in the context of a Bank-financed project.
The debarment qualifies for cross-debarment by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group.
The African Development Bank will verify the adequacy of CHINT Electric’s compliance framework and the robustness of its implementation prior to any release decision. In addition, CHINT Electric commits to cooperate with the Office of Integrity and Anti-Corruption in its investigations of unrelated cases of misconduct in African Development Bank-financed projects.
The period of debarment may be reduced to 24 months if CHINT Electric complies with all conditions of the agreement early.
“Procurement under the Bank’s rules aims at ensuring optimal value for money for the Bank’s Regional Member Countries,” said Bubacarr Sankareh, Acting Director of the Office of Integrity and Anti-Corruption of the African Development Bank. “The misrepresentation of a bidder’s qualifications materially undermines this objective and is therefore taken very seriously by the institution.”
Between 2012 and 2017, CHINT Electric participated in the tenders for: the supply of 132-kV and 66-kV substation equipment for the Mendi substation and others in the context of the Bank-financed Rural Electrification II Project in Ethiopia, the supply of substation equipment in the context of the Bank-financed Emergency Power Infrastructure Rehabilitation Project in Zimbabwe; the design and supply of 132-kV equipment for the Yabello and Buee substations in the context of the African Development Bank-financed Rural Electrification II Project in Ethiopia.
It also participated in the design and supply of a total of four substations at Iringa, Dodoma, Singida and Shinyanga in the context of the Bank-financed Electricity Transmission System Improvement Project in Tanzania; the transmission rehabilitation of the Marvel and Chertsey substations equipment in the context of the African Development Bank-financed Emergency Power Infrastructure Rehabilitation Project – Phase II in Zimbabwe; works and equipment for the Prince Edward Dam substation and others in the context of the Bank-financed Emergency Power Infrastructure Rehabilitation Project – Phase II in Zimbabwe; and the transmission rehabilitation of the Sherwood and Orange substations in the context of the African Development Bank-financed Emergency Power Infrastructure Rehabilitation Project – Phase II in Zimbabwe.
In the context of the above tenders, CHINT Electric misrepresented the technical specifications, the value, the execution period and/or the degree of completion of contracts used as credentials in order to qualify for the tenders.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
