Cote d’Ivoire: AfDB, Other Institutions Launch US$600 Million Capitalization Fund

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May 2010
Abidjan, Cote d’Ivoire, May, 26 2010 - The African Development Bank (AfDB) and four international finance institutions on Tuesday in Abidjan launched an African Capitalization Fund (FCC).

The other institutions involved in the initiative are the European Investment Bank, the International Finance Corporation (IFC), the Fund for Investment and Development of the OPEC (OFID) and the Development Fund of Abu Dhabi (ADFD).

With a total budget of US$ 600 million (including co-investment in resources), this new instrument is intended to finance the continental banking system.

The initiative, led by the IFC, will be managed by the asset management branch of the World Bank affiliate responsible for transactions with the private sector.

Speaking at the launch, Mr Timothy Turner, the Director of Private Sector and Microfinance of the AfDB said that the African capitalisation "is a multi-faceted response that the AfDB in particular, but more generally finance institutions (DFIs), set up to counteract the effects of the global financial crisis on African economies.”

“Indeed, taking the true measure of the real danger posed to the projected recovery of African economies, the credit crunch following the withdrawal of international commercial banks and the market hardening under banking regulations, these institutions with the new hearing tool, address the shortage of funding that tip.

Philippe Prosper, director of East and Southern Africa at the IFC said, "Reducing, if not closing the valve of credit would result in a dangerous decline of savings and financing therefore unfortunate contraction of private sector activity.

“Thus, the African capitalization is primarily aimed at strengthening the banking sector in African countries by providing the resources needed to continue funding the private sector.”

According to P. Walsh of the EIB, the fund will try to cover as much as possible in its interventions on the continent beyond what it can and that "countries will be treated the same way and the equity portfolio should be more diversified and in line with the principle of investment and to strengthen banks systemically important on the continent, whatever their size”.



 

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