The African Development Bank (AfDB) Group’s board of directors has approved its new initiative, the Global Energy and Fertiliser Crisis Response Framework (GEFCRF), to ease the impact on African countries of the current global energy and fertiliser crisis. This crisis has been triggered by the ongoing crisis in the Middle East. The GEFCRF was based on the AfDB’s successful Covid-19 Response Facility and its African Emergency Food Production Facility.

“This framework is about listening and responding to the urgent needs of African countries, helping them protect households and vulnerable populations, keep food, fertiliser and energy systems functioning, and preserve hard-won development gains while building greater resilience for the future,” explained AfDB Group acting VP for country and regional operations Abdul Kamara. “A crisis response must do more than cushion the shock. It must make countries stronger. That is exactly what this framework aims to achieve.”

The GEFCRF will be financed by an extra $4.1-billion in lending by the AfDB itself and also by up to $960-million from the AfDB Group’s concessional lending wing, the African Development Fund. This will increase the AfDB’s lending target for this year to some $12.7-billion.

The GEFCRF will be driven by demand and will provide tailored support to deal with specific vulnerabilities using relevant policy and financial responses. It is a temporary initiative, with a validity of one year, with effect from September 1 this year. It could be extended, but only after a review.

In addition to driving up energy and fertiliser prices, the Middle East crisis is disrupting particularly key global maritime and trade routes, and logistics. These effects are driving up costs, retarding deliveries and increasing the fragility of supply chains.

“The Bank’s new [GEFCRF] gives us a way to respond to the pressures African farmers are facing as the conflict in the Middle East disrupts global trade,” assured AfDB officer in charge: VP for agriculture, human and social development Martin Fregene. “When fertiliser becomes too expensive or difficult to find, farmers use less and harvests can suffer. Access to finance is part of the solution, helping businesses keep fertiliser moving to farmers, while we work to build stronger fertiliser markets and more local supply in Africa.”

The GEFCRF has four main aims – to stabilise macroeconomic conditions; secure key energy, fertiliser and food supply systems; protect essential spending and vulnerable households; and maintain reforms to build medium- to long-term resilience.

Stabilising macroeconomic conditions involves the swift provision of counter-cyclical financing and short-term buffers, as well as coordinated monetary, fiscal and debt policy reactions to shocks. Emergency and trade finance will be used to secure the essential fertiliser, food and energy supply systems, as well as assisting vulnerable populations, especially vulnerable women, and to stabilise markets.

Essential spending and vulnerable households will be protected by securing priority public spending and using focused social protection to soften the impact of the crisis on vulnerable groups, especially women and youth, while cutting dependence on broad subsidies and avoiding worsening fragility. To support resilience building, policy space had been reserved for medium-term reforms that will decrease reliance on volatile external fertiliser, food and energy markets, while creating the means to diversify supply chains and set up regional solutions, as well as strengthening fiscal resilience and the readiness to respond to crises.