African Development Bank to start loan syndication in its lending strategy

The African Development Bank (AfDB) says loan syndication will have a higher profile in its lending strategy in the coming years.

The AfDB hinted about the move during its Board of Directors seminar on Loan Syndication and Co-financing in Tunis.

The Director of AfDB’s Private Sector Department, Tim Turner, who disclosed this, according to a statement from the Bank, said “Active resource mobilization through loan syndication needs to be an institutional priority of AfDB, and it is important that the Bank begins to act now.”

According to the statement, Mr. Turner together with Mr. Lorenz Jorgensen, Director and Head of Loan Syndication at the European Bank for Reconstruction and Development (EBRD) indicated in his presentations to the Board on the issue that “loan syndication would not only enhance AfDB’s private sector resource mobilization but also facilitate foreign direct investment in Africa by providing new international financial leverage that can make large transactions financeable.”

Mr. Turner underlined the point that, while there is no crystal ball on how the current difficult global financial situation will evolve, loan syndication could become a strong catalyst for private sector-driven change.

He, the statement said, emphasized the need for the Bank to take advantage of the partnership momentum already put in place by the private sector department and the EBRD.

Mr Turner further explained that, over the next six months, the AfDB and EBRD would be co-working on a case-by-case basis in order to establish reliable structures to make them lenders of record among possible groups of lenders in a syndicated loan, the statement noted.

The seminar reviewed the AfDB’s experience in co-financing, modalities for risk-sharing, particularly for A/B loans, the challenges of preferred creditor status, and Basel III 2019 requirements

By Ekow Quandzie