The African Development Bank – going for growth

The African Development Bank (AfDB) is consciously contributing to Africa’s development and it is achieving results. By Kofi Ansah

ACCORDING to the Bank’s Annual Dev­elopment Effectiveness Review (ADER) 2015, 70 per cent of the Bank’s in­dicators are on track. The publication, part of a series produced by the Bank’s Quality Assurance and Result’s De­partment, provides an overview of Af­rica’s development achievements and tre­nds, reviews the AfDB’s contribution to development results on the continent, and looks at how well the Bank manages its operations and own organisation.

The fifth edition of the publication was issued at the 50th Anniversary Annual Meetings of the Bank in Abidjan, Côte d’Ivoire last month. As Africa’s premier development finance institution, the AfDB has a portfolio of operations valued at more than $31.7bn. Through lending, technical expertise and policy advocacy, the AfDB supports Africa’s development in five priority areas: infrastructure, regional integration, private sector development, skills and technology, and governance and accountability.

The Bank’s support helps to create the con­d­i­tions in which Africans can identify and implement innovative solutions to their development challenges. Infrastructure remains the Bank’s highest priority, absorbing the lion’s share of its resources. “We invest heavily in transport infrastructure, helping to put in place the backbone highway network to link African countries to each other and the feeder roads that link business and households to markets and services,” says the review.

“Over the past two years, we have built or rehabilitated over 6000km of road and provided 32 million people with improved access to transport. Projects like the 175km road between Wacha and Maji in Ethiopia have dramatically reduced transportation costs for farmers, raising rural incomes,” it adds. AfDB is also investing in railways, airports and port facilities.

In the energy sector, the Bank has funded over 1.3 GW of new power generation capacity, while providing 10 million people with electricity connections. “We are mak­ing substantial investments in renewable energy, such as Africa’s largest wind power project in Lake Turkana in Kenya, and we are helping African countries to access international climate funds and leverage private-sector finance for clean energy projects,” the review says.

While acknowledging that Africa is making gradual progress, the report notes that the continent’s energy deficit remains large. The overall electrification rate increased from 38 per cent in 2005 to 42 per cent in 2013, even as populations grew at a faster rate. Average electricity consumption also edged up, from 666 to 690 kWh/year. However, Africa is still far behind other developing regions, it states. “The Bank’s approach to supporting the energy sector has evolved over the years. The 1994 Energy Sector Policy concentrated primarily on institutional reforms and capacity development in the energy sector, with the goal of helping to unlock private investment. We helped to improve pricing policies, management practices and maintenance regimes,” the review says.

The review states that after a few years, however, it became clear that private investment was not forthcoming, and therefore the Bank decided to support its regional member countries by scaling up its investments in major infrastructure development. “For the past two decades, some 12 per cent of AfDB investments have gone into the energy sector. Most went towards building national generation capacity and distribution networks, with an emphasis on rural electrification to promote inclusive growth,” it notes.

Since 2009, the Bank has contributed to financing over 1,900 MW of new generation capacity and over 15,000 km of trans­miss­ion lines, according to the review. “Through these efforts, we have provided 567,000 people with new electricity connections and over 14 million people with improved access to electricity,” the review states. On private sector development, AfDB aims to build an environment in which African business can innovate and flourish. The Bank’s Private Sector Strategy 2013–2017 focuses on improving Africa’s bu­siness climate and promoting enterprise dev­elopment.

“Through our budget support operations and technical assistance, we are helping African countries to modernise their business regulations and make their tax systems more effective. We are also helping to create a sustainable market in micro-finance for household enterprises and small business,” it says. Over the past two years, it has provided 17,900 microcredits and created 1.2 million jobs, of which 340,000 were for women. The Bank’s private sector window is providing finance for more established businesses, with a focus on public-private partnerships, particularly in the infrastructure sector. AfDB’s work in the agriculture sector focuses on lifting productivity and in­creasing food security, while conserving the natural resource base.

Over the past two years, the Bank has delivered improved water management across 53,000 hectares of land and planted or reforested over 440,000 hectares. “Through our support, over 2.3 million people now use improved agricultural technologies. A key objective of our strategy is to link farmers to agri-businesses, to create more sophisticated value chains and increase rural incomes. We are paying close attention to promoting resilience in the face of climate change. For example, we are helping seven West African countries manage their natural resources better through irrigation schemes, pastoral facilities, storage and market infrastructure, and new production facilities for fisheries and aquaculture,” the Bank says.

The Bank is also investing in the technical and vocational skills of young Africans, to equip them for gainful employment and successful entrepreneurship. AfDB’s sup­port has a strong focus on science and technology, to promote more innovative, knowledge-based economies. “Over the past two years, we have provided vocational training to 5,430 young people and constructed over 1,480 classrooms and educational support facilities,” the review says.

The Bank is rapidly expanding its investments in this area, with projects to transform systems of vocational training in Congo, Mauritania, Mor­occo, Rwanda, Tanzania and Zim­bab­we, while supporting a network of centres of excellence in biomedical science, to help address the skills gap. The review is bullish about Africa’s growth prospects, saying they remain positive for the coming years, driven by a rapidly growing and urbanising population, sh­ifting patterns of trade and investment and improvements in economic management. It however urges African governments to change the structure of their economies. We have yet to see a change to the structure of African economies. We need to accelerate the pace of innovation, turning agriculture into an occupation of opportunity, rather than necessity, and creating new jobs and business opportunities in manufacturing,” it states.

The review states that the Bank Strategy 2013–2022 “gives us a clear direction for our support of economic change over the coming years. Infrastructure remains our highest priority. We will help to finance transport, power, water and communications infrastructure, to put in place the conditions for inclusive and green growth. We will continue to search for innovative solutions to Africa’s infrastructure deficits, including through new, clean energy technologies. We will work with African countries to help boost their competitiveness and accelerate investment flows.

“We will help to develop innovative models for increasing access to mic­ro­finance and for public-private part­nerships. We will help to link up African businesses across national boundaries, so that they can create new value chains and achieve economies of scale. We will continue to pilot innovative solutions to border management and trade promotion, and we will continue to invest in regional power pools to lower the cost of energy.”

Building skills and promoting technology is central to AfDB’s vision for Africa’s development. It believes that Africa has shown its capacity to take new ideas and apply them in creative ways to its unique development challenges. New technologies need to be accompanied by innovative business models.

With the lack of technical skills across Africa remaining a critical constraint on economic change, the Bank aims to intensify its efforts to equip young Africans with the skills they need to succeed in a knowledge-based economy. AfDB also recognises the major impact Africa’s changing climate will have in the coming years on agricultural productivity, food and water security.

To mitigate this effect, will take measures to “help African countries put in place the policies and institutional capacity to adapt to these ch­allenges, with a strong focus on sustainable management of natural resources.”

Looking ahead, 2015 promises to be a landmark year for the international development community. The Bank hopes to see the adoption of new Sustainable Dev­elopment Goals at the UN Summit in Sep­tember, alongside new international commitments on financing for development in Addis Ababa in July and on climate change in Paris in December. “As usual, the AfDB will be at the centre of these events, helping to ensure that the African voice is heard.” 

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