Nigeria and other African countries may benefit from donor-assisted funding by the OPEC Fund for International Development (OFID).
It may be recalled that the OPEC Fund had in July announced that its first financial bonds in the global markets, amounting to $1 billion dollars, could be issued this year.
Speaking on the sidelines of the Islamic Development Bank Group (IsDB) meeting recently, the Director General of the OFID, Abdulhamid Alkhalifa, was quoted as saying that the Fund could issue low-interest bonds following its 2021, high credit rating, and is only waiting for international markets to stabilise.
Since its establishment, the Fund has been providing development assistance in 125 countries with a total financial cost of $190 billion and a capital of about $7.5 billion.
Records show that about 50 percent of the financing provided by the Fund is in African countries, including the Arab countries in North Africa and Sudan. Funds have also been made available to other Arab countries, the Caribbean, Eastern Europe, and Asia regions.
The Fund targets the transport, health, education and energy sectors which are among the important sectors in the target regions and countries, in addition to the agriculture and water sectors.
According to the OFID boss, more than one billion dollars were spent in the health and related sectors during the outbreak of the coronavirus pandemic. Currently, the Fund does not intend to increase its capital or the members’ subscriptions.
He explained further that due to the high risk involved in their selected projects, commercial banks are usually not the best to rely on in terms of finance.
It was his view that development institutions, such as the OPEC Fund, do not compete with commercial banks in financing projects. They were established to take high risks. It is, therefore, necessary to ensure the sustainability of the return on these projects by being at least able to repay the provided financing to be sustainable for a longer period.
In alignment with the Fund’s plans to diversify funding sources, the expected value of the first bonds offered by the Fund might be $300 million, $500 million, or $1 billion.
The total loans approved by the Fund in 2021 amounted to about $1.8 billion, and it is expected to increase to $2 billion in 2022.
The OPEC Fund is a multilateral development finance institution established in 1976 by the Member States of the Organisation of Petroleum Exporting Countries (OPEC) and exclusively provides financing from member countries to non-member countries.
The OPEC Fund’s objective is to reinforce financial cooperation between OPEC Member Countries and other developing countries, by providing financial support to the latter for their socio-economic development.
With the rise of the food crisis in many developing countries, there has been a call for a shift in its focus. Consequently, the Fund is in talks with other partners to prepare an aid package for developing countries to help mitigate the impacts of the current food crisis.
