The African Development Bank and China launched on Thursday a new fund that could be seen as a milestone in China-AfDB relations, and the start of a partnership that is worth watching out for — even after the institution wraps up its annual meetings in Kigali this week.
The Africa Growing Together Fund will have an initial investment of $2 billion, which will be disbursed over a 10-year period, according to a news release.
For AfDB, the new fund means an additional $2 million a year for “more or larger-sized projects,” Charles Boamah, the bank’s vice president for finance, said. This could translate to more transport corridors or renewable energy and hydropower plants across the continent. Spending on these two sectors accounted for 32.2 percent and 16 percent of bank operations in 2013, respectively.
It's unclear how big or little China's influence will be on how the money will be used. Although the Asian behemoth has shares in the bank, it is not among the top shareholders, which currently include traditional donors such as the United States and Japan, and African member states like Nigeria and South Africa.
AfDB President Donald Kaberuka said the fund's operations will adhere "within the strategic framework, policies and procedures of the AfDB, including its integrated safeguards," emphasizing how China conducts business in the continent. Devex earlier reported that China approaches aid differently from traditional donors, but several issues remain, such as the need to consider environmental and social issues.
Nevertheless, this initiative provides a huge opportunity for the two to work together — rather than separately or compete — and leverage each other's strengths: the bulk of Chinese aid money and AfDB's vast experience and best practices
The partnership may also give stakeholders a glimpse of how Chinese aid works in the continent, assuming projects to be funded under this would also be publicly available in the bank's new mapping tool. The donor's direct investments in the continent are expected to increase to $12 billion, although the time frame for this investment is unclear.
What do you think of this new fund? How will it transform AfDB's relationship with China and the way the two actors do business in the continent? Please let us know by leaving us a comment below, sending an email to news@devex.com or joining our LinkedIn discussion.
Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.
About the author
Jenny Lei Ravelo@JennyLeiRavelo
Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.
