The African Development Bank Group (AfDB) has adopted a new policy on the multi-tranche financing approach.
The new policy adopted by the Bank’s Board of Directors is a programmatic approach that will enable the institution to structure large and/or complex operations (projects or programs) over time, presented in the form of a series of small projects linked together in tranches over a period not exceeding 10 years, the AfDB said in a statement.
“Multi-tranche financing is not a new financing instrument of the AfDB Group, but an approach to achieving a development result,” said Bajabulile Swazi Tshabalala, Senior Vice President of the AfDB Group.
“Multi-tranche financing can provide practical financing and structuring solutions for the financing of priority national development programs, and increase their effectiveness and efficiency,” said Ms. Tshabalala.
The objective of multi-tranche financing is to support programs that contribute to the development needs of African countries and which consist of two or more operations with common development objectives and goals, aligned with both the Bank’s strategic priorities and the country’s development priorities.
The new approach should improve the implementation of financing instruments currently used by the Bank to support activities and expenditures that are productive and necessary to achieve the development objectives of African countries.
The multi-tranche financing approach is particularly suitable for programs composed of modular and scalable tranches, each having stand-alone results anchored in the causal results chain of the program or project and its development objective.
The Bank’s multi-tranche financing may include various financing instruments currently used by the Bank, including investment loans, guarantees and results-based financing.
The multi-tranche financing approach is in line with the Bank’s vision to drive development impact, sustainability and social progress in African countries.
The Bank will use this approach to promote poverty reduction, stimulate sustainable development and help manage debt in African countries. By providing phased and well-paced financial and operational support, this approach will promote broad-based economic growth, contribute to social and environmental sustainability, enhance public sector efficiency, and promote the overall development of African countries.
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