African Development Bank

The African Development Fund (ADF) of the African Development Bank (AfDB) offers the Partial Risk Guarantee (PRG) instrument to crowd-in investors from eligible countries served by the AfDB.

PRGs protect private lenders against well-defined political risks that lead to failures of a government or public entity to meet contractual obligations. Covered risks include: currency inconvertibility, confiscation, expropriation, regulatory changes, various forms of contract breaches, political instability.

When the guarantee is called, the government of the beneficiary member country is required to reimburse the defaulted amount. Failure to do so within applicable time frames will cause cross-default provisions on all ongoing operations. The ADF will have the option to convert the disbursed amount into a loan.

Projects that advance the economic and social development according to the priorities of the country are eligible with a focus on public–private partnerships, private greenfield, privatization projects and private undertakings where sovereign risk exposure hinders bankability. Public sector projects only eligible if they involve private finance.

ADF regional member countries classified with low risk of debt distress* and deemed to have adequate debt management capacity.

The instrument will also be available to SOEs in ADF countries with low-to-moderate risk of debt distress** if stringent eligibility criteria are fulfilled.

*              Green light countries based on the World Bank/IMF Debt Sustainability Framework traffic light country classification

**           Green and yellow light countries, respectively, based on the World Bank/IMF Debt Sustainability Framework traffic light country classification

• Costs: To be paid by the beneficiary:
  • A front-end fee to recover development costs set within a range of 0.5 to 1 per cent of the maximum possible exposure of the fund under the guarantee payable before or at guarantee signature.
  • A standby fee equal to the contractual commitment fee charged on the unused portion of the guarantee and set at 0.5 per cent.
  • A guarantee fee similar to the service charge applicable to ADF loans is payable either according to a schedule approved by the fund or as a one-time upfront payment.

https://www.afdb.org/en/projects-and-operations/financial-products/african-development-fund/guarantees/

The African Development Bank (AfDB) offers several Risk Management Products (RMPs) to existing or new borrowers that received a bank loan. RMPs include interest rate swaps, currency swaps, commodity swaps, and interest rate caps and collars. RMPs enable borrowers to mitigate their exposure to respective market risks (e.g., interest rates, currency and commodity prices) and enhance their debt management.

Projects that advance economic and social development according to the priorities of the country are eligible.

AfDB regional member countries classified with low risk of debt distress* and deemed to have adequate debt management capacity. The instrument will also be available to state-owned enterprises in countries with low-to-moderate risk of debt distress** if stringent eligibility criteria are fulfilled.

*              Green light countries based on the World Bank/IMF Debt Sustainability Framework traffic light country classification.

**           Green and yellow light countries, respectively, based on the World Bank/IMF Debt Sustainability Framework traffic light country .

• Tenor of coverage: RMPs are available to borrowers at any time of a bank loan.

https://www.afdb.org/en/projects-and-operations/financial-products/african-development-bank/risk-management-products/