Loans: AFD’s main financing tool

Private resources for development are drying up. In response to this strong trend, AFD has significantly increased the volume of its financing. 84% of the EUR 9.4bn committed in 2016 were in the form of loans.
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Infotep, vocational training in Dominican Republic
AFD allocates different types of loans. Their terms are determined by the nature of the project and its environment (political, economic, social, environmental impact and context) and the quality of the borrower (sector of activity, rating, guarantees).

Our loans to States

Loans contracted or guaranteed by States are called sovereign loans. To benefit from them, States must be in a position to borrow and have a low level of debt. 

Another possibility: a country whose debt has returned to a low level following a debt relief program, in the context of the Heavily Indebted Poor Countries (HIPC) Initiative. This is, for example, the case with Senegal.

Our loans to local authorities, companies and NGOs

“Non-sovereign” loans are intended for local authorities, public institutions and NGOs, without a State guarantee.

AFD also allocates loans to private sector companies with public service remits. This type of financing is increasingly used for large-scale infrastructure operations.   

Our soft loans

Soft or “concessional” loans are loans whose interest rate is lower than the market rate. 

AFD can offer this type of financing when the project represents a real opportunity for the country: it provides a way of going further than usual practices or than national regulation in a specific field.

One example is the EUR 40m loan allocated to Burma in October 2016 to improve water supply infrastructure in the city of Mandalay. 
It is the budget contribution from the French State which allows us to offer this type of tool. However, to avoid any unfair competition, AFD’s operations are determined by the principle of subsidiarity. This means that we only intervene when we are sure that the local financial system does not have the capacity to finance the planned operation alone.   

Our variable loans

AFD also offers loans with variable repayment terms and maturities. These “countercyclical” loans are, for example, indexed on the international price of a raw material. The objective: reduce the vulnerability of agricultural actors to fluctuations on international markets.

On the same principle, we are working on introducing a range of loans whose margins vary depending on the borrower’s performance in terms of social and environmental responsibility, or with repayments indexed on raw material prices.

of our financing is in the form of loans (2016)
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Grants: For the development of the poorest countries
Distribution of drinking water in Kinshasa

AFD uses grants to finance actions in the social sector (health, education), rural and urban development initiatives, and infrastructure projects. 

C2D: A mechanism to relieve indebted countries
"Excellence Learning school" in Niamey, Niger

The Debt Reduction-Development Contract (C2D) is a tool to restructure the debt of certain countries. In practical terms, once a Heavily Indebted Poor Country has signed a C2D with AFD, the country continues to service its debt until repayment. At each payment on the due date, AFD transfers the equivalent amount to the country in the form of a grant. This amount is used to finance poverty reduction programs.

Financing NGO projects
Technical college, students, learners, education, vocational training, Nouakchott, Mauritania

The direct financial cooperation between AFD and CSOs today covers a wide range of instruments tailored to the specific characteristics of CSOs and their added value: support for innovation (Sectoral Innovation Facility for NGOs, financing from the French Facility for Global Environment, FFEM), financing for operations in fragile, crisis and post-crisis contexts (APCC), and support for their initiatives, via the CSO Initiatives mechanism.

FEXTE: A cooperation instrument
Woman on a building site of construction, Colombia

FEXTE meets the development needs of middle-income countries, feeds into dialogue on public policies, and promotes French expertise.

Guarantees: An instrument to mobilize local instruments
Sewing workshop in Abidjan neighbourhood, Niamey, Nigeria

The guarantees allocated by AFD facilitate financing for small businesses and microfinance institutions in developing countries. They also help French SMEs set up abroad. This means that they are an effective tool for promoting investment and job creation.

Adapt'Action: Working together to tackle climate change
Brazil, Curitiba, Souza

Following the Paris Climate Agreement, AFD has launched Adapt’Action to support countries seeking technical assistance for the institutional, methodological and operational implementation of their commitments to the fight against climate change.

Interactive map

This map is for illustrative purposes only and does not engage the responsibility of the AFD Group
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