The Board of Directors of the African Development Fund, the concessional lending arm of the African Development Bank Group, has approved a partial credit guarantee to support Benin’s mobilization of financing to meet United Nations Sustainable Development Goals (SDGs) targets.
The partial credit guarantee will enable Benin to raise funds in foreign currency from international investors for expenditures related to meeting SDG targets on agriculture and agro-industry, water and sanitation, health, affordable housing, education and renewable energy.
Benin’s Minister of Economy and Finance, Romuald Wadagni, said, “this unique operation is further proof of Benin’s capacity for financial innovation, as it will soon become the first country to use a unique combination of credit enhancement for an SDG financing. The operation is consistent with our financing strategy, which places a central focus on development with environmental and social impact. We encourage the spread of this type of innovative structure on the continent, in order to promote the financing of sustainable projects on favorable terms, particularly in the current deteriorated market context. I would like to thank the African Development Bank teams for their support and involvement throughout this process.”.
Marie-Laure Akin-Olugbade, Acting African Development Bank Group Vice President for Regional Development, Integration and Service Delivery said: “We welcome the approval of this project which offers Benin the double advantage of mobilizing resources in line with its priorities based on the Sustainable Development Goals and optimizing its financing conditions.”
“This instrument will enable Benin to enhance its credit and catalyze financing from international institutional investors,” she added.
Benin became, in 2021, the first country in Africa to publish an SDG Bond Framework Document and to issue SDG bonds in line with international best practice. The loan supported by the African Development Fund’s partial credit guarantee will follow the principles of the SDG Framework Document, which outlines principles for resource use, project selection, and evaluation.
“This operation is an excellent example of how the resources of the African Development Fund can be effectively deployed to eligible countries. It is a success story that could be replicated to promote the development objectives of African countries through the international financial markets” said Stefan Nalletamby, Director of the Financial Sector Development Department of the African Development Bank Group.
To implement the UN 2030 Agenda, Benin has adopted ambitious measures to integrate the 17 Sustainable Development Goals into its national planning, and its budgetary and fiscal policies.