AfDB Bolsters Concessional Finance for Adaptation, Development in ADF’s 17th Replenishment
BY SAADA MOHAMED
The election of the new AfDB president, Mr. Sidi Ould Tah, headlined the Bank’s 2025 Annual General Meeting and marked its future direction on accelerating institutional innovation to advance Africa’s developmental agenda.
Top among Tah’s priorities was to secure successful replenishment of the African Development Fund’s (ADF) during its 17th financing cycle.
This coincides with the critical decade of climate action, dominated by growing calls for Africa to be more financially self-reliant to meet its development and climate needs. It also comes when the world is coursing a fragmented geopolitical landscape, buttressing development aid cuts, and dwindling resources for climate action.
ADF is the concessional arm of the AfDB Group dedicated to mobilising highly concessional and innovative financing mechanisms to drive impactful climate-resilient investments in Africa. This Fund remains the cornerstone of Africa-led development. So far, it has provided more than $45 billion in grants, concessional loans, and guarantees to Africa’s low-income countries.
A key component of the Fund is the Climate Action Window (CAW), a dedicated vehicle to mobilise $4 billion in grants and highly concessional finance from both public and private sources. Of these resources, 75% will support adaptation action.
Thus far, the AfDB President secured a record $11 billion for ADF’s 17th replenishment, representing a 23% increase over the previous cycle, and the highest figure despite growing global financing pressures.
Most importantly, this cycle demonstrated Africa’s ownership of its development future with 23 African countries pledging a total of $182.7 million to the concessional financing window, with 19 of them being first time contributors.
Moreover, it ushers in a new financial era for concessional finance, shifting from aid to an investment model that allows ADF to leverage its balance sheet, including through a Market Borrowing Option; deploy innovative instruments, including hybrid capital; and strategically deploy concessional finance to absorb risk, crowd in private capital, and catalyse investment at scale.
This is expected to expand access to affordable capital and strengthen the continent’s financial independence against the backdrop of worsening fiscal balances, a skyrocketing debt crisis, and growing climate impacts.
These resources are earmarked to support long-term investments in critical sectors including energy access; food systems and food security; and resilient infrastructure in 37 low-income, vulnerable and fragile African countries.
By prioritising adaptation financing and investment in climate-sensitive sectors amidst Africa’s growing adaptation needs, estimated to be US$ 84 billion annually, this will also boost AfDB’s climate legacy.
This development reaffirms the significance of African financing with African ownership and realities through continental financial institutions. AfDB is finally championing innovative climate finance mechanisms that accelerate local climate solutions across the continent.
This indeed inspires hope, especially after last year’s COP30 in Belem, Brazil, failed to secure a new commitment to triple adaptation finance to at least $120 billion in public and grants-based finance by 2030.
Saada Mohamed is a Climate Finance Advisor at Power Shift Africa