Hassatou N’Sele

The African Development Bank Group (AfDB) has pioneered a new asset to scale up climate finance without burdening cash-strapped governments. Under the leadership of Chief Financial Officer Hassatou N’Sele, the AfDB introduced a $750 million "hybrid" bond in January, the first ever issued by a development bank. Unlike regular bonds, hybrid bonds offer investors higher returns but come with slightly more risk, as they would be repaid after other debts if the bank faced financial difficulties. Notably, the hybrid bond does not confer shareholder voting rights, enabling development banks to maintain their mission and operational structure.

“Africa is one of the continents that is most affected by climate change and the least equipped to face climate shocks,” N’Sele tells TIME. “Sadly, less than 3% of our countries are able to access climate funds. This is one of the reasons why we decided to scale up our climate financing.” 

Despite initial skepticism regarding market interest in such bonds, the initiative was oversubscribed at $6 billion. “We proved that it works, that it is a viable instrument for multilateral development banks going forward,” she says. 

Other development banks are expected to follow suit with hybrid bonds of their own. “Everyone was looking closely at what AfDB was doing,” Benjamin De Forton, who is in charge of the debt capital markets desk at BNP Paribas in Paris, one of the note’s arrangers, told Bloomberg. “AfDB clearly demonstrated that there is a viable trade at a very interesting price.”