African bank expects to lend $6b this year

Cape Town: The African Development Bank expects to grant loans totalling about $6 billion (Dh22 billion) this year, with proposals to fund mining projects in Mauritania and Guinea, a port in Morocco and transport projects in South Africa currently under consideration.

The Tunis-based lender, which aims to reduce poverty on the world's poorest continent, saw a surge in demand for credit last year as alternate sources of funding dried up amid the global financial crisis. The bank and a development fund it administers provided a total of $11 billion in financing in 2009, up from $5.6 billion the year before.

Direct lending is expected to "be close to what we reached in 2009," Thierry de Longuemar, the bank's vice president of finance, said in an interview in Cape Town. There is no letup in "requests for infrastructure funding. We may see some slowdown in demand" for budgetary support and loans from the financial sector.

Founded in 1984, the African Development Bank is controlled by 53 African and 24 non-African countries. In May last year, the bank asked shareholders to consider tripling its subscribed capital base to enable it to maintain direct lending at between $5 billion and $6 billion for 10 years.

"We are asking for $66 billion in additional capital," de Longuemar said. "The bulk is callable. The paid-in portion is 6 per cent. Hopefully a decision will be made at the bank's annual general meeting in May" this year.

Notes due in 2013

The bank, which borrowed about $7.5 billion last year, has authority to raise about $5.5 billion this year. Earlier this month the bank sold $1 billion of notes due in 2013.

While most future bond issuances will be denominated in dollars, euros and rand, the bank is also looking to issue bonds denominated in several African currencies, de Longuemar said.

The bank is also considering how it can assist Zimbabwe clear its arrears, which currently stands at slightly more than $400 million, de Longuemar said.

While the debt will not be written off "there are prospects for a solution," he said. Negotiations "are at a very early stage. We hope to clear the arrears by 2013."