The African Development Fund's Ambitious Move into Capital Markets
The African Development Fund (ADF) is taking a bold step by seeking to raise funds through capital markets for the first time in its 17th Replenishment cycle. This initiative aims to secure $5 billion in patient capital every three years to support the development of low-income countries across the continent. However, this move faces significant challenges due to the ADF’s charter, which currently prohibits borrowing from capital markets. To make this change, 75% of the fund’s shareholders must approve the amendment.
As the concessional arm of the African Development Bank (AfDB), the ADF was established to offer an alternative to the stringent conditions imposed by the Bretton Woods institutions. These conditions often hinder the growth of African economies. Based in Abidjan, the AfDB is the largest development bank on the continent. Since its inception in 1972 and becoming operational in 1974, the ADF has relied solely on donor grants, concessional loans, and reflows to finance development projects. Over the past 50 years, it has provided $45 billion in concessional credit to 37 low-income African countries.
In the 2023-2025 financing cycle, the ADF raised an impressive $8.9 billion, including $8.5 billion in core funding and $429 million for its climate window. This marked the largest amount in its history. For the upcoming 17th Replenishment cycle, the fund has set a target of raising $25 billion for the period 2026–2028. However, the United States, the fund’s largest cumulative donor, under President Donald Trump, plans to cut its contribution by $555 million. Additionally, the ADF faces competition from other global funds also seeking replenishment, which could threaten its funding sources.
At the African Transformation briefing on the ADF Replenishment, Valerie Dabady, Division Manager for Resource Mobilisation at the AfDB, emphasized the need for the fund to access capital markets. She stated that it is high time the ADF taps into global capital to complement its “built-in equity.” Dabady highlighted that 2025 is a defining year, with the amendment process already initiated and diplomatic efforts underway to secure shareholder approval before the December deadline. Currently, the fund has secured 66% of the required support, but securing the remaining 9% before year-end remains a critical barrier.
If successful, this amendment would allow the ADF to access larger pools of capital to fulfill its dual mandate of building critical “hard infrastructure” such as roads, ports, and energy systems, while also strengthening “soft infrastructure” like governance and financial management systems.
The ADF is poised for a transformative shift but must meet the critical December 2025 deadline to unlock access to global capital markets. Leaders argue that this move is essential to bridging Africa’s wide financing gap and accelerating development in the continent’s most vulnerable nations.
Dabady stressed the importance of unfettered market access, stating, “We have an ambition to raise up to $5 billion every three years on the capital markets, diversifying beyond traditional donor grants. This isn’t just about more money; it’s a sea change in how we finance Africa’s future, putting us on par with our global peers.”
Joseph Chanda, Principal Economist at Zambia’s Ministry of Finance, provided compelling evidence of the ADF’s impact on nations in distress. He noted that since Zambia’s debt distress classification in 2017, the ADF has been a lifeline. He detailed the fund’s interventions, including a $13.5 million grant for improving water and sanitation in Lusaka and Kawe, and support for smallholder farmers through irrigation projects. The ADF also funded the $68 million Kazungula Bridge connecting Zambia to Botswana and the Nakala Road Corridor, costing $17.7 million. Additionally, the Lobito Corridor rail project received $247 million from the ADF’s regional window, significantly boosting regional trade.
Dabady outlined innovative financial tools such as the Private Sector Credit Enhancement Facility and Partial Credit Guarantees, which have successfully attracted private investment in Benin and Rwanda. She acknowledged the challenging global context for development funding, with many traditional donor nations focusing inward. However, she emphasized the need for strong awareness and advocacy to spread the fund’s successes and expand its donor base.
Success in December could unlock billions, empowering the ADF to scale its mission significantly—connecting the continent, powering economies, and lifting its most vulnerable nations towards prosperity.
The ADF, as part of the AfDB Group, contributes to poverty reduction by spurring sustainable economic development and social protection in its regional member countries.