The African Development Bank (AfDB) said it had approved new credit policy for low income African countries to access more development resources through its Sovereign Loan Window.
This is contained in a statement issued by the bank on Wednesday in Abuja.
The statement said that low income member-countries that were eligible only to concessionary resources from the African Development Fund (ADF) would now have access to AfDB?s ?Sector Sovereign Guaranteed Loans?.
According to the statement, eligible countries for sovereign loans before the review are regional member countries (RMC) classified either as AfDB countries or Blend countries.
It said that the bank?s board approved a review of the institution?s credit policy on Tuesday in Tunis to provide low-income countries access to resources for financing viable projects.
“The policy underscores AfDB group?s recognition of the strong economic progress of African countries and its mandate to help to sustain inclusive growth in its RMCs,? it said.
It stated that no fewer than 37 countries or 70 per cent of the bank?s RMCs currently fell under the low-income countries category.
The bank said that scarce concessionary resources would be inadequate to finance and sustain current high rates of growth ?and transform the structure of Africa?s economies to generate much-needed employment.?
According to the statement, many African countries borrow non-concessionary funds in the capital markets at rates that are significantly higher than what they could obtain from the AfDB.
?Access to the AfDB?s sovereign resources by low-income countries would be available to low or moderate risk of debt-distressed countries and subject to IMF?s Debt Sustainability Assessment,?? it said.
It said that the policy would enable the bank to respond to the drive to channel more resources to the low-income countries in line with the bank?s 10-year strategy.
“It will also enhance its delivery capacity by improving the role of its non-concessional envelope in supporting the development agenda of the continent through sovereign instruments.
“In addition, the move will help to diversify the Bank?s sovereign portfolio, minimise concentration risk within the portfolio and increase the Bank?s footprint on the continent,” the statement added.