Approval of African Development Bank policy on Non-sovereign Operations (NSO) was announced in a statement on Friday.
The Board of Directors of the African Development Bank Group has approved it’s Policy on Non-sovereign Operations (NSO).
This provides the framework within which the Bank, through its private sector lending window may provide financing or investment without sovereign guarantees to private and public entities that meet specific eligibility requirements on non-concessional terms.
A release issued by APO group and made available to The Next Edition, said The NSO Policy “will complement the Bank’s overarching 2013 Private Sector Development policy framework, notably, by defining what the Bank will do in the area of non-sovereign lending.”
The statement reads further that “Within this context, the objective of the Bank’s non-sovereign operations is to help accelerate the continent’s transformation through various financial support mechanisms and products including loans, lines of credit, guarantees, blended finance, equity investments and trade finance. “This would enable the Bank to contribute to the sustainable economic growth and inclusive social development of its RMCs individually and jointly, in fulfilment of the Bank’s mandate.
“More specifically, the Bank’s engagement in its selected non-sovereign operations will aim to maximise the catalytic impact of its limited resources, while seeking to promote inclusive growth and the gradual transition to ‘green growth’ in its RMCs. It will also help scale up financing in the Bank’s High 5 priority areas of intervention.”
According to the release, under the NSO Policy, the Bank would provide financing to non-sovereign operations subject to four conditions namely: the borrower is a private enterprise or an eligible public sector enterprise; the operations are financially sound; the operations should result in satisfactory development outcomes, including supporting or creating opportunities for private sector development; and what the Bank brings additionally, which could be either financial or non-financial.
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The Policy, it is further stated, would ensure that “NSOs are well-prepared with clear value added/additionally brought by the Bank; are technically, economically and financially sound, and diligently managed, adhering to high ethical norms; are environmentally and socially sustainable; and have solid prospects of generating significant development results in the RMCs in which they are implemented.”
The NSO Policy does not apply to the Bank’s sovereign loans and sovereign-guaranteed loans.
Such operations will continue to be governed by the relevant policies that guide the Bank Group’s public sector operations.
The approval of the Policy comes at a critical moment when the Bank is seeking to accelerate inclusive and sustainable economic growth, and crowd in more private sector funding for strong and inclusive growth to drive economic transformation and sustainable development in its Regional Member Countries (RMCs).
