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AfDB spearheading Africa’s economic growth

A LARGE chunk of AfDB funding went to infrastructure development, including road construction.

THE just-ended African Development Bank (AfDB) annual meetings and the 41st meetings of the African Development Fund meetings in Abidjan, Ivory Coast were important to the stakeholders for several reasons.
Firstly, the annual meetings were a landmark as the AfDB celebrated its 50th anniversary and at the same time, witnessed the shift of power from outgoing president Donald Kaberuka to the incoming Akinwumi  Adesina, the former Nigerian Minister of Agriculture and Rural Development.
Dr Kaberuka said the AfDB has come of age, in the last 50 years to a world-class institution it is today.
“The way in which the president of this institution is elected is an example of how leaders of international organisations are elected, open to all, transparent, competitive and meritorious,” Dr Kaberuka said.
Dr Kaberuka, who congratulated Dr Adesina for a well-deserved victory, said he looks forward to the handover on September 1.
Dr Kaberuka said the work for a seamless transition began some months back, and the AfDB had every intention to ensure that the new president’s assumption of duty in September is as smooth as possible.
The African Development Fund mid-term review is due later this year, just like the post-2015 related activities, which will be an intensive period for the Bank.
The AfDB has returned to Abidjan – its statutory headquarters after 11 years in exile in Tunisia due to the war that had ravaged the Ivory Coast.
But Dr Kaberuka said the most important task now is to consolidate the return of the bank to its headquarters.
“We have succeeded wonderfully in the physical sense of the return; however we must now consolidate that process by implementing the complementary measures necessary.
“The African Development Bank is an institution which is very much prized by Africa,” he said.
On November 4, 1964, ministers from 23, then independent African States, convened in Lagos, Nigeria, for the inaugural meeting of the board of governors of the AfDB.
The young institution was assigned a dual mandate: the social and economic transformation of Africa, and the economic integration of the continent.
Fifty years on – that mission is as relevant today as it was then.
Along the way 26 non-African members have joined the ranks, and two of them in the last two years.
From the modest beginnings with just 10 staff members and an authorised capital of US$370 million, the AfDB has risen to become a world class institution, with robust financial strength and a solid operational record.
In meeting its mandate, the AfDB has committed around US$110 billion and leveraged much more in co-financing.
Today, the AfDB is AAA-rated, with an authorised capital of US$100 billion.
It attracts committed and first-class minds, and now boasts of nearly 2,000 staff members, operating across all 54 African countries.
Dr Kaberuka said at a moment of great changes in Africa, the golden anniversary provides an opportunity for a rededication to the dreams of the founders, and the aspirations of the people of Africa.
There are new challenges and there are old ones: from finding innovative ways of funding infrastructure, to building human capital, to combatting climate change and epidemics.
When the AfDB was established in 1964, the population of Africa was no more than 300 million people. That number has since tripled.  By 2040 it will be close to 2 billion people.
“At a moment like this one, we remember Madiba’s words: “after climbing a great hill, one only finds that there are many more hills to climb”.  I thank everyone inside and outside the Bank. Together we shall prevail,” Dr Kaberuka said.
According to the AfDB 2014 annual report, the bank realised a 15.3-percent increase in its operations turnover in 2014 compared to 2013.
Support to infrastructure accounted for over half of the US$7.6 billion invested in the regional member countries (RMCs) during the year, representing a 15.3-percent increase over the 2013 funding portfolio.
The report released on May 27 at the AfDB’s annual meetings in Abidjan says infrastructure projects (in energy, transport, and water and sanitation) were accorded priority over the four other operational domains – regional integration, private sector development, skills and technology, and governance and accountability.
The AfDB’s other funding approvals for the year were channelled to the finance sector which accounted for 17.9 percent of the loans allocated to the continent’s small and medium-scale enterprises (SMEs).
Agriculture, which accounted for 10.8 percent of the loans and grants, focused on enhancing food security and raising productivity.
The social sector received 8.3 percent of all approvals, with skills development, technological innovation, and improvement of health-care service delivery as key beneficiaries.
The bank’s efforts to diversify its client base helped extend AfDB public-sector lending to 11 countries, almost double the number in 2013.
The AfDB private-sector window helped leverage some US$19.5 billion in co-financing, more than double the year’s target of US$9 billion.
Furthermore, the AfDB’s move towards mobilising innovative financing for the development of infrastructure in Africa became a reality following the incorporation of the Africa50 fund in Morocco with a US$100 million seed capital in 2014.
One of the landmark initiatives launched by the AfDB to enhance its operations growth was the approval of its gender strategy in January 2014.
The strategy emphasises the reduction of gender inequalities, by strengthening women’s legal and property rights, promoting women’s economic empowerment, and enhancing knowledge management and capacity building for gender equality.
Some of the Bank Group’s operations that address gender in very specific terms include Malawi’s Sustainable Rural Water and Sanitation Infrastructure for Improved Health and Livelihoods Project, and Mozambique’s Economic Governance and Inclusive Growth Program.
In a situation similar to the 2008-2009 financial crises, the bank’s leadership anticipated and confronted the worsening situation. In view of this, the continent approved a strategy for “Addressing Fragility and Building Resilience in Africa, 2014-2019.”
The strategy was followed by the upgrading of the relevant unit to a department and the commitment of US$548.7 million to operations in countries facing fragile situations, including a US$41.7-million budget support to countries in fragile situations that are also affected by the Ebola epidemic.
It approved US$221.85 million for various initiatives in the affected countries – Guinea, Liberia and Sierra Leone. These included budget support, strengthening West Africa’s public health systems, technical assistance for effective crisis response, and emergency relief operations.
The bank launched a series of reforms to align its activities with the key objectives of the 10-year strategy with regard to the budget, decentralisation, organisational structure.
The four major rating agencies (Standard & Poor’s, Moody’s, Fitch Ratings, and the Japan Credit Rating Agency) reaffirmed the Bank’s AAA and AA+ credit ratings for its senior debt, reflecting its strong capital base, the firm support of its shareholders, and its prudent financial and risk management.
At the end of 2014, the bank’s paid-up capital stood at US$7.29 billion.
Dr Kaberuka put the inclusive growth orientation of the strategy in perspective, saying, “In a decade of seismic shifts in the global economy, Africa has defied the pessimists and experienced significant growth.”

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