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.