Japan Supports African Development Fund With $421 Million Concessional Loan

The African Development Bank Group and the Japan International Cooperation Agency (JICA) have signed a landmark 51.67 billion Japanese yen (US$421 million) concessional donor loan (CDL) agreement towards the African Development Fund.

The loan, pledged by the Japanese government at the 16th general replenishment of the resources of the African Development Fund in December 2022, will support much-needed development in Africa’s least developed and fragile countries. The country is a top donor to the African Development Fund, having contributed the largest loans to the 14^th, 15th and 16th replenishments of the Fund.

Present at the signing ceremony on Tuesday 15 October, Deputy Vice Minister Daiho Fujii of the Finance Ministry expressed optimism that Japan’s concessional donor loan, together with grant contributions, would support African countries to address various challenges relating to climate change, lack of infrastructure, fragility, regional integration, private sector development, and debt management and transparency.

“Through fruitful discussions, we reaffirmed that the African Development Fund has been playing a significant role in supporting low-income countries in Africa through its concessional loans and grants. We commit to working together toward a successful ADF-17 replenishment discussion next year,” Fujii said.

Japan and other donor countries met in Cotonou last week to review the progress made against operational priorities and policy commitments at the midpoint of the ADF-16 period that ran from 2023 to 2025. Fujii congratulated the African Development Bank Group on the successful mid-term review of the 16^th cycle of ADF.

African Development Bank Group President Dr Akinwumi Adesina, who is marking his fifth visit to the Asian nation, commended Japan’s government for its unwavering support.  He expressed the Bank Group’s appreciation for Japan’s broader partnership, particularly through JICA’s Enhanced Private Sector Assistance for Africa initiative – an innovative multi-component framework for resource mobilisation and development.

Adesina said:  “We wouldn’t have had a successful ADF-16 replenishment without Japan’s continued support for concessional donor lending.  It is important to sign these agreements, but it is the lives we touch that matter.  We deliver what we promise. We keep our word”.

He highlighted the significant impact of projects completed under the African Development Fund. “This year alone, 500,000 people have been connected to electricity, one million provided with water and sanitation, 2.5 million to improved transport, and 2.7 million to health services.”

In her speech, JICA Executive Senior Vice President Katsura Miyazaki described the signing ceremony as symbolic.

She said: “African countries are facing multiple crises. Rising energy and food prices, supply chain disruptions, and worsening debt sustainability are having a serious impact on African countries. The African Development Fund is critical to addressing these challenges.

Japan’s journey with the African Development Fund

The African Development Fund (ADF), the concessional lending window of the Bank Group was established in 1972 and became operational in 1974.

Japan joined the Fund in June 1973 and has contributed to all its replenishments, significantly increasing its contributions over time.

Over the past 50 years, the ADF has played a pivotal role in providing concessional resources and knowledge services to low-income African countries, consistently demonstrating clear value for money. The ADF delivers transformative ideas and catalytic financing to these countries, including those in fragile situations. As a major source of financing, the ADF’s operations are efficient and deliver a strong development impact, cementing its reputation as a trusted and strategic partner for its stakeholders.

Japan’s critical role in supporting the ADF was underscored by its extension of the largest concessional donor loan contributions to both ADF-15 and ADF-16, as well as the largest bridge loan provided to ADF-14. The Mid-Term Review (MTR) of ADF-16, successfully concluded in Cotonou in October 2024, highlighted several key achievements.

Source:norvanreports.com