The African Development Fund (ADF), the concessional lending arm of the African Development Bank Group, is preparing to undertake its first-ever market borrowing of around $1 billion. This marks a significant shift for the fund, which has traditionally depended on donor contributions and loan repayments to finance long-term, low-interest support for Africa’s poorest countries.
The move comes amid growing financial pressure on the ADF as international aid flows tighten and development needs increase. The fund’s 17th replenishment round, concluded in December in London, raised only $11 billion against an initial target of $25 billion. A major factor behind the shortfall was the absence of a contribution from the United States, historically one of the fund’s largest donors.
To enable market access, the ADF has begun the process of securing a credit rating, which is required before issuing bonds. Officials expect that a first bond issuance could take place within the next two years. Proceeds from market borrowing would help the fund sustain concessional lending to 37 eligible low-income African countries, particularly in areas such as infrastructure, agriculture, energy access, and climate resilience.
This initiative represents a strategic evolution in the ADF’s operating model, bringing it closer to other multilateral development finance institutions that already leverage capital markets to expand their lending capacity. The World Bank’s International Development Association provides a key precedent, having successfully combined donor funding with market borrowing to scale up support.
At the same time, the fund is increasingly drawing support from African member states themselves. For the first time, several African countries made direct contributions to the ADF, totaling $182.7 million, including initial commitments from Kenya, Zambia, Madagascar, and Côte d’Ivoire. Some European donors, such as Denmark and Norway, also increased their pledges, partially offsetting the withdrawal of others.
The United States formally announced that it would not support the ADF in the 2025 cycle, citing concerns that the fund places too much emphasis on climate and social priorities. This followed an earlier pledge of $550 million made in 2022 under the Biden administration, of which $197 million was ultimately not disbursed due to a change in administration.
Since 2022, the ADF has expanded its focus on climate adaptation while continuing to finance food security and energy access. Established in 1972, the fund has mobilized around $45 billion to support Africa’s lowest-income countries, financing critical investments in irrigation, transport, electricity, and rural development.
