AfDB launches $3 billion “Fight COVID-19” social bond

African Development Bank (AfDB) President Akinwumi Adesina speaks during an interview with Reuters in Dar es Salaam, Tanzania August 17, 2019. Picture taken August 17, 2019. REUTERS/Emmanuel Herman
FILE PHOTO: African Development Bank (AfDB) President Akinwumi Adesina speaks during an interview with Reuters in Dar es Salaam, Tanzania. REUTERS/Emmanuel Herman

The African Development Bank (AfDB) announced that it had raised $3 billion in a three-year bond to help ease the negative economic and social effects the coronavirus pandemic will have on livelihoods and economies in Africa.

The bond, which the Bank says is the first part of its comprehensive response to the pandemic, will pay an interest of 0.75 percent.

“The Fight COVID-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including Socially Responsible Investors, with bids exceeding $4.6 billion. This is the largest dollar denominated Social Bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank,” the AfDB said in a statement.

Organisers of the bond said the scale of the investment showed the level of investor support the AfDB enjoys.

““In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African continent’s fight against COVID-19,” George Sager, Executive Director, SSA Syndicate, Goldman Sachs said.

The International Monetary Fund recently said that more than 80 poor and middle-income countries have sought financial help from it as they battle to contain the virus and respond to its effects.

The Bank’s funds are expected to complement the efforts of governments and global financial institutions to cope with the devastating effects of the COVID-19.

“It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it. Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession.”

AfDB President Dr. Akinwumi Adesina said that Bank was taking bold measures to help African countries during critical times.

“This is indeed the largest dollar social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” Adesina said.

Several African countries have imposed strict measures to contain the spread of the virus including lockdowns, border closures, restrictions on travelling and trade among others. Additionally, in some countries, like Kenya, government officials have said they will take voluntary pay cuts to avail funds to boost the fight against the virus.

According to the Africa Centres for Disease Control, 46 African countries have reported a total of more than 4,200 cases with 134 deaths and 302 recoveries as of March 29, 2020.