BOAD secures US$78m equity investment from AfDB to support job creating sectors

WEST AFRICA – The Board of Directors of the African Development Bank (AfDB) has approved a line of credit of €70 million (US$78.68m) and an equity investment of US$24 million for West African Development Bank (BOAD).

The line of credit will support businesses in the West African Economic and Monetary Union, particularly in job-creating sectors such as agribusiness, renewable energy, health and information and telecommunication, which were drastically affected by the COVID-19 pandemic.

The €70 million (US$78.68m) forms part of a €150 million (US$168.60m) facility, which will be co-financed along with other development finance institutions.

The US$24 million equity investment is part of a capital increase transaction, which will allow the AfDB to increase its shareholding from 0.55 per cent to one per cent, and therefore retain its seat on the Board of Directors of the regional financial institution.

In addition, the Abidjan-based bank will assist the West African lender, through funding from the Women Entrepreneurs Finance Initiative to set up a technical assistance program to mainstream gender aspects in its project review process and to promote women’s entrepreneurship.

The project is projected to help to create or consolidate at least 5,900 jobs, including 2,000 to women.

The facility is strongly aligned with three of the Bank High 5 strategic priorities, namely Feed Africa, Industrialize Africa and Improve the quality of life of Africans.

AfDB Group as Africa’s premier development finance institution comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).

On the ground in 37 African countries with an external office in Japan, the AfDB contributes to the economic development and the social progress of its 54 regional member states.

In February this year, the West African Development Bank (BOAD) issued its first bond with sustainable development objectives (Sustainability Bonds) and has since received a welcome from Global investors.

This issue amounting to €750 million (US$902) with a 12-year maturity, attracted more than 260 investors across the world (40% from the United Kingdom, 40% from Europe, 17% from the United States, 2% from Asia, and 1% from the Middle East),

It also includes 75% asset managers and 21% institutional investors (banks, insurance companies and pension funds). The issue was oversubscribed six times, with total demand amounting to €4.4 billion (US$4.95m).

The bonds carry a coupon of 2.75% and 300 basis points spread over the average market rate, 12-year MID-SWAP Euro rate, which represented the lowest rates achieved by BOAD in the global financial markets.

The issue is part of a “Sustainability Bond Framework”, calling on BOAD to finance projects with a high social and environmental impact. The proceeds will reinforce BOAD’s capacity to invest in priority sectors such as agriculture and food security, renewable energy, basic infrastructure, health, education and social housing.

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