African Development Bank president Donald Kaberuka has urged
members boost the banks capital base, as demand for loans
has soared in the wake of the financial crisis and brought it
close to running out of resources.
In an interview yesterday with Emerging Markets
Kaberuka said that he was 99% certain that another
shareholder nation, which he declined to name, would soon raise
its capital contribution.
This follows Canadas commitment, given at the G20
summit in Pittsburgh, to boost its callable capital by an extra
$2.6 billion which will triple its capital contribution
to the bank.
Emerging Markets revealed in May that the AfDB is
hoping to triple its capital base to roughly $98.4 billion.
Kaberuka said in an interview that the AfDB is fast
approaching its lending capacity, as it has been faced
unprecedented demand for resources in the wake of the global
We have come very close to our lending headroom,
he said. Canadas support gives us more headroom
pending the conclusion of the negotiations with other
I hope other countries will follow... Another
country will make a similar announcement this
The big capital push, announced earlier this year, comes at
a time when the pressure for resources has intensified. The
AfDBs pre-crisis lending stood at $5.9 billion per year
but demand has since shot up to over $12 billion.
Before the crisis, we planned to increase lending from
$5.9 billion to $7 billion per year by 2012, said
Kaberuka. The crisis has placed new demands on the bank, which
is now sometimes called on to fill gaps.
Countries that have seen their projects scaled down
want us to be countercyclical, he said. The demands
are 2.5 or 3 times [higher than] our original lending
scenario. If the global crisis is prolonged, he said, the
demand may reach $15 billion per year.
This new role has forced the bank to reinvent itself.
Trade finance has never been our role in the past. Our
mission was to finance long term projects, but because trade
finance had become scarce, we came in, said Kaberuka.
A fresh $1 billion in trade financing had been brought to
the continent, half each from the AfDB and the IFC, under its
global trade liquidity programme.
The AfDB has also intervened to support infrastructure
projects at risk of being scaled down or abandoned, such as an
airport in Tunisia. The bank has about $3 billion of trade,
infrastructure, and energy loans in the pipeline.
Kaberuka said he is now bullish on capital
flows and much more optimistic now than last
year, but added that it was too early to be
relieved. The crisis was major setback, the
former Rwanda finance minister said, and had caused a drop in
real income per capita this year in Africa.
Uncertainty about the global economys future is also a
big threat to recovery in Africa. Fiscal stimulus needs
to be maintained until the recovery is sustained,
Kaberuka said. We need an extra effort to bring low
income countries into the global stimulus.
Olivier Blanchard, chief economist at the IMF, told
Emerging Markets: Africa as a whole is still too
small a continent to make a major difference to world
growth, but African economies would benefit from
increased demand for commodities if the global economy gains