Finland to support sustainable economic growth and industrialisation in Africa through African Development Fund

Finland will participate in the 17th replenishment of the African Development Fund (AfDF-17) to support sustainable economic growth in the poorest countries on the continent. The objective of the African Development Fund (AfDF) is to reduce poverty by promoting the economic and social development of African countries. Finland is also involved in supporting Africa’s debt sustainability.

The donor countries reached an agreement on AfDF-17 for the 2026–2028 cycle in London on 15 December. The target set for the AfDF is USD 11 billion. The fund will start borrowing capital from the financial markets, which is expected to increase the volume of lending. The AfDF also consists of loans granted by donors and repayments of loans previously granted by the fund, and a climate finance window. Finland will contribute EUR 45 million to the AfDF. Finland’s contribution will decrease compared with the previous replenishment cycle due to the savings made in the development cooperation budget.

The AfDF brings together a wide range of donor countries. A record number of African countries will participate in the new replenishment cycle as donors, 23 in total.

The AfDF’s support is especially necessary for countries that are not yet creditworthy for lending from the African Development Bank and have a great need to improve their debt sustainability. The AfDF finances climate-resilient infrastructure in different sectors, the administrative capacity of African countries and reforms to strengthen the domestic revenue base. The activities take climate impacts into account and promote gender equality and youth employment. The aim is to improve the operating conditions for the private sector and thus mobilise more private capital for Africa’s poorest and most fragile countries. A quarter of the AfDF's activities foster regional economic integration and reduce barriers to trade.

“Finland welcomes the African Development Bank Group's increasing focus on private sector cooperation in the least developed African countries to boost sustainable economic growth and industrialisation. The AfDF must be used to improve the business environment in the poorest countries and to reduce investment risks. The aim must be sustainable economic growth led by the private sector,” says Minister for Foreign Trade and Development Ville Tavio.

In 2023–2025, almost half of the AfDF’s support was allocated to projects strengthening the private sector, and this share will increase. In 2015–2024, over three million people were able to access electricity, with the number expected to rise to 10 million by 2030, reflecting the fund’s development impacts. Food security has improved for more than 92 million people. The new replenishment cycle aims to provide access to funding for 36,000 companies; moreover, 37.4 million people are expected to benefit from better transport connections and 9.1 million people to gain access to clean water.

In addition, Finland will provide a total of EUR 13.34 million in support for strengthening debt sustainability and debt relief in the AfDF’s recipient countries in 2026–2028 as part of the Multilateral Deficit Relief Initiative (MDRI), which Finland committed to in 2005.

The MDRI supports poor, heavily indebted countries. The initiative is based on a proposal advanced by the G8 in 2005 which called for full cancellation of debts owed by the member countries of the Heavily Indebted Poor Countries (HIPC) initiative upon their reaching the completion point under the HIPC programme. For a country to reach the completion point, it must implement the reforms agreed at the beginning of the programme and make progress in reducing poverty. The three institutions involved in the MDRI are the International Development Association (IDA) of the World Bank, the International Monetary Fund (IMF) and the AfDF.