AFRICAN LENDER GROWS TO FILL NEED

The African Development Bank Group (AFDB), the continent's largest financing institution, is in the midst of an ambitious expansion program under its new president, Babacar N'Diaye, which is designed to meet the development challenge in Africa in the 1990s and beyond.

Since taking over in September 1985, Mr. N'Diaye, a long-time financial expert from Senegal, has sought to improve the quality of the bank's services and restructure its operations to better meet the growing financing needs of African economies.The AFDB's top management has been shaken up. For the first time, for example, a non-African was appointed vice president for finance. The nomination to this post of the Swiss-born U.S. banker, Milan Kerno, formerly vice chairman of Dean Witter Capital Markets, was designed to strengthen the bank's image in international financial circles.

The AFDB has 50 African and 25 non-African members. The non-African members hold one third of the bank's capital, the main equity holders being the United States and Japan. The group, based in Abidjan, the capital of Ivory Coast, includes the soft lending affiliate, the African Development Fund and the Nigeria Trust Fund.

For the first time last year, loans from the AFDB group topped the billion-dollar mark at $1.15 billion, up 31 percent on 1984. A further expansion in lending is forecast for 1986 with commitments rising 15 percent to around $1.32 billion. The bank's performance also markedly improved in 1985. Its profits were up 64 percent to $58 million and disbursements soared by some 80 percent to $302.5 million.

The steady reduction in the Bank's lending rate has made it more attractive to the poorer African countries: Its rate was reduced to 8.3 percent last July. Considerable efforts also have been made to streamline lending procedures by lessening internal red tape, increasing computerization and granting greater autonomy to AFDB regional offices in Yaounde, Cameroon; Harare, Zimbabwe; and Nairobi, Kenya. A regional office is also in operation in London. AFDB officials are planning to open a new regional office in North Africa. The choice of location has been narrowed down to Casablanca, in Morocco, or Cairo.

Mr. N'Diaye is in the midst of delicate negotiations on proposals to raise the bank's capital from $6.4 billion to $18.4 billion. This is meant to finance the new 1987-1991 five-year lending program, which should enable the AFDB to provide close to 5 percent of total African investment funds by 1991, compared with around 1.5 percent today. A major extension is expected in non- project lending in the form of structural adjustment and sectoral loans stressing policy reforms and rigorous financial management.

Nonetheless, project lending, especially for agriculture, is to remain the core of the bank's activities (U.S. agricultural chemical producers and farm implement manufacturers might take note of this).

The AFDB is also seeking ways to increase co-financing with commercial banks as well as inter-African trade financing. Mr. N'Diaye has underlined that the AFDB will concentrate on being a catalyst to channel more funds into the continent.

I think that in the past we have made the mistake of trying to do too much ourselves, he says. Getting additional money is now extremely important. Mr. N'Diaye's ambition is both to make the AFDB one of the leading players trying to mobilize new resources for Africa and, through productive lending, promote renewed economic growth for the continent.

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