African Development Bank and IADB Renew $3.2 Billion Exposure Exchange Agreement

African Development Bank President Dr. Akinwumi Adesina emphasized the importance of such transactions in maintaining the institution’s leadership in innovative financial solutions.

In a major step to bolster their financial strength and expand their development impact, the African Development Bank Group (AfDB) and the Inter-American Development Bank (IADB) have signed a renewed Exposure Exchange Agreement valued at $3.2 billion. The signing took place in Washington, DC, on the sidelines of the Spring Meetings of the World Bank Group and International Monetary Fund, reflecting the growing trend among Multilateral Development Banks (MDBs) to collaborate and innovate in enhancing their operational capacities.

A Continuation of a Successful Partnership

This new agreement builds on a foundational partnership between the two institutions established in 2015. The original exposure exchange initiative proved to be a groundbreaking model for enhancing capital efficiency, managing sovereign risk, and strengthening the resilience of both banks. By allowing the AfDB and the IADB to exchange portions of their sovereign loan portfolios, the arrangement diversified risk exposure and freed up additional lending capacity for both regions — Latin America and the Caribbean for IADB, and Africa for AfDB.

The latest transaction marks the fourth exposure exchange undertaken by the African Development Bank with other MDBs, having previously partnered with the International Bank for Reconstruction and Development (IBRD) and the Asian Development Bank (ADB) as well. These strategic moves are critical as MDBs face increasing pressure to do more with their balance sheets amidst rising global development challenges.

Strategic Innovation in Capital Management

African Development Bank President Dr. Akinwumi Adesina emphasized the importance of such transactions in maintaining the institution’s leadership in innovative financial solutions. “This transaction underpins the African Development Bank’s forward-looking approach to capital and risk management,” said Adesina. “We are pleased to continue our longstanding collaboration with the Inter-American Development Bank in structuring and executing innovative financial solutions. This aligns perfectly with the G20’s call for MDBs to work together as a system to expand development impact for our member countries.”

Adesina further advocated for increased use of exposure exchanges across the MDB system, highlighting the proven success of these agreements in enhancing financial resilience while achieving substantial development outcomes.

A "Win-Win" for Development

IADB President Ilan Goldfajn echoed these sentiments, noting the continued success of the collaboration that began a decade ago. “This new agreement marks yet another milestone in our strong and fruitful collaboration with the African Development Bank," Goldfajn stated. "Thanks to this operation, we're strengthening the financial resilience, creditworthiness, and financing capacity of both our institutions. It's a win-win for all, ultimately benefiting the people of Latin America, the Caribbean, and Africa."

Exposure exchange agreements like these are particularly valuable in an era where MDBs are being called upon to scale up their support to meet ambitious global development goals, such as those outlined in the Sustainable Development Goals (SDGs) and climate action initiatives. By sharing risk among institutions and creating room for more lending, such mechanisms help overcome capital constraints without immediately requiring additional shareholder contributions.

The Road Ahead

As global financial conditions become increasingly complex, partnerships like the AfDB-IADB exposure exchange demonstrate that collaboration and innovation are essential for MDBs to continue fulfilling their mandates. This agreement is expected not only to benefit the two participating banks but also to set a replicable model for other institutions seeking to maximize development impact through prudent financial engineering.

Both AfDB and IADB have reaffirmed their commitment to remaining agile, resilient, and innovative in their pursuit of sustainable development, with leaders from both banks urging more multilateral financial institutions to explore similar collaborative arrangements.

With Africa, Latin America, and the Caribbean facing pressing challenges — from climate change to infrastructure deficits — the renewed agreement comes at a critical time, offering renewed hope for faster, more efficient delivery of development resources where they are needed most.