African Development Bank expects private sector portfolio increase to $10b in 2014

The African Development Bank (AfDB) is expecting the size of its private sector portfolio to rise, adding about $2 billion in 2014.

The Bank’s private sector investment currently stands at a little over $8 billion.

“We currently have a portfolio just over $8 billion in size. We expect that portfolio to grow up to $10 billion next year,” Tim Turner, Director of AfDB’s Private Sector Department told ghanabusinessnews.com April 25, 2013.

The Tunis-based Bank has in recent times been investing in commercial banks to boost private sector growth across the continent.

The AfDB in February 2013 approved a total of $400 million for two major banks operating in Africa. Ecobank and Standard Chartered Bank – each received $200 million. The Bank’s Board gave approval for the funds for a trade finance package from the private sector window.

It also approved a $15 million equity investment in the African Trade Insurance Agency (ATI) to increase its capital base.

According to Turner, the Bank is expecting an over 15-20% increase of financial returns from its investments.

“We are expecting an overall portfolio returns between 15-20%,” Turner said indicating some may be long term especially with equity investment which is quite young.

He stated that some of AfDB’s funds are targeting higher returns while funds targeting small businesses (SMEs) are expected to “naturally” have lower returns.

By Ekow Quandzie in Tunis, Tunisia