As the African Development Fund prepares for replenishment, African Development Bank President Sidi Ould Tah has urged donor support.
The African Development Fund (ADF) continues to play a pivotal role in helping fragile states, such as Somalia, rebuild resilience. A total of 37 low-income countries in Africa are eligible for support from the ADF, the concessional window of the African Development Bank (AfDB) Group.
Since its creation in 1972, the Fund has disbursed more than $45bn in concessional financing, providing a mix of grants, guarantees, highly concessional loans, and technical assistance.
Donor countries and partners meet every three years to replenish the Fund, determining the size of the grant and loan envelope for the next cycle. The 17th replenishment, covering 2026-2028, will take place in London this December. The previous cycle, ADF-16, mobilised a record $8.9bn, but expectations for the upcoming replenishment are more modest amid tightening aid budgets.
The target is $25bn, and development advocates have urged donors to show solidarity with Africa, warning that reduced commitments could erode progress in fragile states and undermine global stability.
Jenny Chapman, the UK's Minister of State for Development and Africa, said: "The replenishment is an opportunity to signal our collective commitment to Africa's growth and development, its institutions, and to innovate modern approaches to development finance in a challenging global environment."
Sidi Ould Tah described the ADF's replenishment as "both an investment in Africa's development as well as in shared global prosperity." He highlighted that over the past decade the Fund has connected more than 18 million people to electricity, enhanced agricultural productivity for 11 million farmers, improved access to water and sanitation for 48 million people, and supported transport infrastructure for over 87 million people.
Supporting Somalia's recoverySomalia's economic outlook has improved following full debt relief from the AfDB in early December, which cancelled all outstanding loans owed to the ADF for the 2024-2039 period. This decision reduced Somalia's external debt obligations by $17.68m, freeing up public resources for urgent development priorities.
The AfDB explained that the debt cancellation reflects growing confidence in Somalia's economic reform trajectory, citing the country's completion of the Enhanced Heavily Indebted Poor Countries (HIPC) initiative in December 2023. HIPC, managed by the IMF and the World Bank, is designed to ease the debt burdens of the world's most distressed economies. Participating countries qualify for cancellation of eligible loans once they meet agreed reform targets, which include clearing arrears, strengthening macroeconomic governance, and mobilising domestic revenue. Additional measures focus on poverty reduction and improved basic service delivery.
Somalia's HIPC completion triggered full debt relief from multilateral creditors, including the AfDB, IMF, and IDA, the World Bank's concessional window. Once fully implemented, the debt cancellations will reduce Somalia's external debt to approximately $577m from $5.2bn in 2018, giving it fiscal space to redirect resources towards essential development priorities.
Rebuilding institutions and capacityThe civil war left Somalia without a functioning, internationally recognised central government between 1991 and 2012. During this period, arrears to creditors accumulated and debt records were scattered or lost. Following the formation of the federal government in 2012, rebuilding institutional capacity for economic governance became a priority.
The AfDB supported these efforts through grants and technical assistance via the ADF. Support included reconstructing Somalia's external debt data, establishing and staffing a Debt Management Unit (DMU) within the Ministry of Finance, and developing strategies for arrears clearance and access to HIPC debt relief.
Mohamed Sadaq, former head of the DMU, said, "The African Development Bank should be commended for playing a vital role in assisting the Federal Government of Somalia in normalising relations with international creditors, providing renewed access to concessional financing needed for poverty alleviation, economic recovery, and development."
Sadaq, who joined the Ministry of Finance in 2014, worked with AfDB consultants to reconstruct Somalia's debt database and normalise relations with external creditors. By 2015, he became head of the DMU.
"We now have a staffed debt management unit and operational debt management system. Most of our external debt records have been reconstructed, largely thanks to the government's commitment and the AfDB's technical and financial support," he added.
The ADF provided $3.5m in grant financing for the establishment of the DMU and a further $7.59m grant between 2017 and 2023 to strengthen macroeconomic management and enhance transparency and accountability in public resource use.
Nevertheless, challenges remain. The World Bank notes that in fragile environments development is not linear and can easily regress if momentum is lost. State and institutional building must continue, as must international support.
Sustaining momentumThe next phase of funding will aim to accelerate development by supporting private sector participation alongside concessional resources.
Valerie Dabady, AfDB's head of resource mobilisation and partnerships, explained: "We aim to raise funding from capital markets, which would help us diversify how we fund ourselves. To achieve this, we need to change our charter."
With global aid budgets under pressure, experts are calling for increased innovation to help the ADF leverage its balance sheet more effectively. Proposals to amend the Fund's charter are gaining support, allowing it to diversify funding sources beyond donor contributions. The so-called Market Borrowing Option would enable the Fund to raise capital directly from financial markets, potentially generating up to $5bn in each three-year cycle. Approval by 75% of shareholders is required for this change.
This article has been produced with the support of the African Development Bank. The 17th ADF replenishment, co-hosted by the governments of Ghana and the United Kingdom, will take place in London on 15-16 December.