Japan International Cooperation Agency (JICA) and the African Development Fund (ADF), the concessional arm of the African Development Bank Group, have signed a 73.6 billion yen (US$668.1 million) agreement to replenish the fund.
The concessional donor loan will support the 15th replenishment of the African Development Fund (ADF-15), approved in December 2019 by ADF donor countries. JICA is extending the loan, the largest to ADF-15, on behalf of the Japanese government. ADF-15 will deliver investments to support Africa’s poorest countries in building sustainable and quality infrastructure that bolsters regional integration.
The African Development Fund is made up of 32 contributing states. It benefits 37 countries, including fragile states that need special support to ensure basic service delivery, and countries that in recent years experienced higher growth rates. The fund’s resources are replenished every three years.
During the ADF-15 period (2020-2022), it is expected that the ADF’s projects will have included up to 28,000 kilometres of new or improved power distribution lines, around 9 million people will have improved access to water and sanitation, and up to US$1.6 billion of turnover will have been generated from investments in micro, small and medium-scale enterprises.
During a virtual ceremony held on February 17, African Development Bank Group president Akinwumi Adesina and Japanese Ambassador to Cote d’Ivoire Kuramitsu Hideaki signed an exchange of notes, while the loan agreement was signed by the JICA chief representative in Cote d’Ivoire, Fujino Kojiro, and acting African Development Bank Group senior vice president Swazi Tshabalala, in her capacity as chief financial officer.
Ambassador Kuramitsu Hideaki, whose country has been the fifth-largest contributor to the ADF in cumulative terms, says 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, as expressed at the TICAD 7 Conference in August 2019. At the same conference, Japan also announced that it would contribute to phase 4 of the Enhanced Private Sector Assistance Initiative (EPSA), a joint flagship project with the bank.
“The African Development Fund is a key source of financing for Africa’s low-income countries heavily affected by Covid-19," says Mimura Atsushi, deputy director-general/ADF deputy, International Bureau, Ministry of Finance Japan. "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 underscores the African Development Bank’s long-standing partnership with the Japanese government, including the Enhanced Private Sector Assistance Initiative, which was launched in 2005. As of February 2021, Japan’s total contribution to the initiative has amounted to US$4.6 billion.
Adesina notes that Japan’s concessional donor loan is almost 10% of the total ADF-15 resources of US$7.5 billion. “This is a continuation of the strong leadership role of Japan in providing concessional loans to the African Development Fund," he says, adding that Japan was also the largest provider of concessional donor loans under the African Development Fund’s 14th replenishment.