Guest of the Day: Hassatou Diop N'Sele, Acting Vice-President, Finance, and Treasurer, African Development Bank Group
In this interview, the Treasurer of the African Development Bank Group, Hassatou Diop N’Sele, confirms the financial soundness of the Bank and its favourable prospects. In 2017, Bank lending reached a record US $7.2 billion.
How is the African Development Bank doing financially in 2018?
The African Development Bank is doing very well. Its rating was reaffirmed with a stable outlook. Our financial profile is judged as being very strong by rating agencies, thanks in part to our prudent financial management and policies, our very high level of liquidity and the very strong support we enjoy from our shareholders. Although profit-making is not our major objective, we have generated income of US $312 million that we will allocate to our reserves, while donating a substantial amount to the African Development Fund, among others, which caters to the needs of lower-income countries.
Despite an unfavourable context, the Bank Group has significantly increased lending to its regional members, bringing the volume of its disbursements to more than US $7.2 billion in 2017. How do you explain this performance?
This is who we are, a crisis partner. We play a countercyclical role, and support countries when they need it the most. We helped our countries ride out the financial and economic crisis, the food crisis; we supported them during the Arab Spring, and through the commodity crisis. Indeed, we had record disbursement levels in 2017, driven by a more effective way of doing business. Furthermore, decentralization has enhanced dialogue with our clients and enabled us to address bottlenecks more efficiently.
In 2017, you introduced a program of Social Bonds. What is your assessment of the introduction of this type of financial instrument and what are the next steps?
This was a great success, to the extent that we want to do it at scale, on an annual basis. Thanks to our mission and mandate, we are a socially responsible issuer, active in sustainable markets since 2010, when we started issuing small theme bonds related to education, clean energy or food security, and lately to the Bank’s High 5s. We launched our successful Green Bond program in 2013, which was very well received by investors, and which supports climate mitigation and adaptation projects. Riding on that success, we established a Social Bond program with a twofold objective: to showcase the Bank’s concrete actions to alleviate poverty on the continent, in particular the projects financed that have a strong social impact; and to respond to the growing demand from Socially Responsible Investors (SRI) asking for more transparency on their investments’ impact. As a multilateral development institution, we have a major role to play in providing support to this nascent market. Response from investors translated into an order book three times oversubscribed in less than three hours when we executed our inaugural Social Bond transaction in November last year. Going forward, we want to build on this success and will continue to cater to SRI needs, whether in the field of gender, ocean conservation (‘blue bonds’), the diaspora community, or in the area of impact investment.
Regarding the huge financing needs of the continent, what other initiative do you envisage to allow the Bank to have sufficient resources to support its regional members?
In 2017, the Bank Group approved US $8.7 billion in sovereign and non-sovereign operations This is well below what is needed to cover the vast financing needs of the continent. We are mainstreaming the use of leveraging financial products, such as guarantees to crowd-in additional private financing, syndication (we did the largest syndication on the continent in 2016 and intend to do more of those), putting a stronger emphasis on co-financing, and last but not least, we are launching the Africa Investment Forum. This is a landmark event to accelerate and scale up private investments on the continent. It will be dedicated to advancing projects to bankable stages, de-risking them, raising capital, addressing regulatory hurdles and the information gap, and accelerating the financial closure of deals. The AIF will help Africa reduce its resources gap.
Some support an evolution of the African Development Fund, for it to borrow on the financial markets. Do you support this evolution and what are the consequences?
The African Development Fund (ADF) is an effective partnership between the non-African shareholders of the Bank and recipient African countries. It is an important source of financial and technical assistance for the majority of African countries and is funded mainly through contributions by the non-African members of the Bank Group, and some African middle-income countries as well. An ADF Working Group was constituted by ADF donors to facilitate discussions on innovations to address structural issues on the future of ADF and how it can most effectively and efficiently contribute to the developing agenda of Africa’s lower income countries, which are its most vulnerable states. The working group is currently reflecting on the financing model for the ADF best-suited to meet the challenges relating to the new development agenda, including innovative approaches and instruments to deploy ADF resources more effectively.