AfDB and IDB Seek Global SDR Donors for $80 Billion Climate Financing

Date:

LONDON, June 14 (Reuters) – The African Development Bank (AfDB) and the Inter-American Development Bank (IDB) are touring North America, the Middle East, Korea, and Brazil to secure $20 billion in IMF reserve assets, aiming to transform these into $80 billion for climate financing.

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AfDB President Akin Adesina and IDB President Ilan Goldfajn are engaging with at least five countries, including Canada, the United States, Saudi Arabia, Korea, Kuwait, Qatar, and Brazil, to pledge Special Drawing Rights (SDRs). This follows the IMF’s recent approval for SDRs to acquire ‘hybrid capital bonds,’ which AfDB introduced to extend the reach of multilateral lenders’ resources.

“We’ve been talking to Canada, the United States, Saudi Arabia, Korea, Kuwait, Qatar, and Brazil,” Adesina said during a visit to London.

The AfDB and IDB plan to leverage each $1 of SDRs into $4 of new funding through instruments like hybrid bonds. Japan and France have shown interest in supporting this initiative, with France potentially providing SDRs for a “liquidity guarantee.”

Adesina emphasized the potential impact of this funding, saying, “There are a lot of things that bacon can feed – electricity, water sanitation, education.”

Earlier this month, the AfDB’s board approved a $117 billion capital increase and is seeking an additional $25 billion for its African Development Fund concessional lending arm. The bank aims to use these resources for credit guarantees and debt-for-nature or climate swaps, among other initiatives.

Adesina also highlighted the need to recognize the economic and planetary value of Africa’s natural resources, estimating them to be worth at least $6.8 trillion. He stressed the importance of recalculating the continent’s GDP to reflect these assets properly.

The bank is developing new currency hedging tools and recently set up a $1 billion guarantee program in South Africa in collaboration with the UK government. The IDB has launched a similar initiative with Brazil for sustainability-focused projects.

Adesina strongly advised against resource-backed loans, which involve promising oil, gas, or metals in exchange for funding. “If somebody has a liquidity challenge, it doesn’t mean you should pawn your assets,” he said, condemning the practice as “financial scavenging” that exploits countries’ desperation.

“It’s not about any particular country or institution; it is a fundamental thing. I think it is a disaster for Africa,” Adesina concluded.

By Naija247news
By Naija247newshttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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