The African Development Bank Group and the OPEC Fund for International Development have strengthened their partnership, opening the door to up to $2bn in new concessional financing for Africa’s most vulnerable economies.
The two institutions signed an amended memorandum of understanding on January 12 in Abidjan, reinforcing a long-standing alliance to scale development finance through the African Development Fund (ADF), the AfDB Group’s concessional lending window.
Under the revised agreement, the partners plan to mobilise up to $2bn — about 1,127.5bn CFA francs — in co-financing for ADF-supported projects, significantly expanding the pool of resources available to low-income and fragile states across the continent.
Economist Sebastien Mendy, a specialist in African development finance, said the pact could be transformative if deployed effectively. “The types of innovative projects that can be financed include AgriTech, especially with the financing of startups developing precision solutions such as smart irrigation and drones,” he said, adding that digital platforms for small farmers and technologies to combat food waste could also benefit.
Mendy noted that such projects are often “too risky for a traditional bank loan but perfect for venture capital or mezzanine debt, which this pact can catalyse”.
Innovation, risks, and safeguards
Beyond agriculture, Mendy said digital health could emerge as a key beneficiary, citing “the large-scale deployment of telemedicine solutions, health data platforms, or financing for companies producing medical equipment locally”. He added that the agreement “can help structure investment vehicles dedicated to this sector”.
Green venture capital is likely to gain most directly, he said. “The funds could be used to create or strengthen investment funds dedicated to decentralised renewable energy such as solar mini-grids, electric mobility, the circular economy, or biodiversity conservation.”
However, Mendy cautioned that scale alone would not guarantee impact. “Regarding the risk of government control and elitist capture, the pitfall is that the funds could be diverted to ‘trendy’ but ineffective projects, or captured by a well-connected political and economic elite,” he warned.
To mitigate this, he argued for “mechanisms of extreme transparency”, stronger local oversight institutions, and explicit targeting of emerging entrepreneurs and underserved regions.
He also flagged the danger of financing “high-tech solutions ill-suited to local realities”, stressing that local communities and SMEs must be involved in project design.
Debt sustainability remains another concern. While concessional, the financing still adds to national debt stocks. Mendy said mitigation was possible through “interest rates close to zero with long grace periods and extended repayment periods of 30 to 40 years”, alongside a strategic focus on income-generating projects, human capital, and climate resilience.
