BOAD Increases its Capital to $2.82 Billion

The West African Development Bank (BOAD) has just validated the first phase of its capital increase program, on March 31st, 2023, on the sidelines of the Council of Ministers of the West African Economic and Monetary Union (WAMU). Essential lever allowing to increase the capacity of the institution to be able to mobilize more funds and to grant additional loans to the States and to the economic agents in general, the social capital of the bank passes from $1.9 billion (1.15 trillion FCFA) to $2.82 billion (1.7 trillion FCFA), an increase of 48%.   

The development bank based in Lomé is therefore making a change of scale with a strong impact on its total balance sheet for the years to come and on the quality of its signature on the market. This success materializes the decision taken by the Board of Directors in September 2020 to approve BOAD’s new strategic plan (the Djoliba Plan) providing for a capital increase of $1.5 billion (900 billion FCFA). 

Eventually, BOAD will double its level of equity and increase its commitment by more than 50% over the next five years, almost the genesis of a new bank. The WAMU Council of Ministers, which gave the green light to this first step on December 30, 2022, approved the modification of the Bank’s statutes on March 31st in Dakar.  

Read more about BOAD and find the latest economic news from around the world with the Born2Invest mobile app.

The capital increase structured in two phases respected the balance among the shareholders

The due diligence carried out from the outset gave priority to historical regional shareholders, namely the 8 WAEMU States and the Central Bank of West African States (BCEAO), which provided substantial support. The other success of the operation lies in the participation of the 8 non-regional shareholders, that of Germany being considered “unpublished” by sources familiar with the matter. In all, seven of the non-regional shareholders (Germany, the African Development Bank, the European Investment Bank, China, France, the Kingdom of Belgium, and the Kingdom of Morocco) participated in this first stage. 

Concretely, this first closing improves BOAD’s borrowing profile and allows it to substantially lower its pricing in favor of the States and the private sector of the Union. The Bank, chaired by the Beninese Serge Ekué, is giving itself the means to raise its levels of activity, including concessional activity. Moreover, due diligence is continuing with a view to finalizing the second phase of the operation, which will concern an amount, recorded as unsubscribed capital, and reserved for new non-regional shareholders, as approval is granted. of their membership by the Deliberative Bodies.

A sharp increase in BOAD profit 

In addition to the modification of its statutes, as a result of the increase in its capital, the West African Development Bank (BOAD) was on the list of the last Council of Ministers of the West African Economic and Monetary Union (UEMOA) for the approval of its accounts. The examination of the accounts of the development institution for the financial year ended December 31st, 2022, suggests a profit result of $55.7 million (33.6 billion FCFA), up 9.27%. The Bank was able to maintain a balanced financial structure throughout the year, in particular, with effective equity capital amounting to $1.76 billion (1.06 billion FCFA) and representing 31.62% of the total balance sheet, i.e. four times the capital adequacy.

On the strength of its international reputation, BOAD continues to enjoy the full confidence of its partners and investors, due to the quality of its rating. These Baa1 and BBB “Investment Grade” category ratings remain unchanged and confirmed by Moody’s and Fitch Ratings. These results attest to the sound financial situation of the institution which, on the eve of its fifty years, is resolutely a  “creator of the future”, for the integration and economic transformation of East Africa. West “

__

(Featured image by geralt via Pixabay)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in Financial Afrik, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.