The African Development Fund (ADF), the concessional financing arm of the African Development Bank (AfDB), is preparing to raise $5 billion from international capital markets every three years starting in 2027, a major pivot from its decades-long reliance on donor contributions.

The move comes amid tightening aid budgets in developed countries and signals a strategic shift in how Africa’s largest multilateral lender supports low-income nations. The ADF has extended $45 billion in concessional credit to 37 countries since its founding in 1972, but is now facing diminishing contributions, including proposed cuts from its largest historical donor, the United States.

“We have an ambition to go to the capital markets and raise funding, which would help us to diversify the way that we fund ourselves,” Valerie Dabady, AfDB’s head of resource mobilisation and partnerships, told Reuters.

To pursue its plan, the Fund must amend its charter. Once revised, ADF will seek a credit rating and begin structuring its own debt offerings, echoing the AfDB’s broader strategy of issuing international bonds to fund development programs.

AfDB approved a review of the ADF’s funding mix in December 2022, well before the recent wave of geopolitical uncertainty cast a shadow over donor replenishments. But the timing now seems prescient.

“What the current geopolitical context has done is to give a bit more impetus to what it is we want to do with the market borrowing,” Dabady said.

The next replenishment round for the ADF is scheduled for November. AfDB had originally set an ambitious goal of raising $25 billion — nearly triple the $8.9 billion secured during the last cycle. But amid fiscal tightening across donor nations, Dabady acknowledged the target may be out of reach.