Country Resource Allocation

During the consultations on the ADF-12 replenishment, ADF Deputies reaffirmed the centrality of the performance-based allocation (PBA) system as the core mechanism for allocating the Fund’s scarce concessional resources to eligible regional member countries (RMCs), so as to ensure that proportionally more resources go to those recipients best positioned to utilize them more effectively. During the ADF-12 period the Fund will continue to use the PBA framework to allocate UA 3.83 billion.

The PBA framework allocates resources to countries on the basis of performance and need. Performance is measured by the Country Performance Assessment (CPA), while need is measured by per capita income (an indicator of a country’s poverty level) and population size. The CPA is a weighted average of Clusters A-C of the Country Policy and Institutional Assessment (CPIA) at 26 percent; the country Portfolio Performance Assessment at 16 percent; and Cluster D of the Country Policy and Institutional Assessment (Governance Rating (GR)) at 58 percent. The CPIA score and GR are determined using the CPIA Questionnaire. In addition, the system provides all countries with a basic minimum allocation of UA 5 million for the whole 3-year cycle.

In addition to their performance-based country allocations, eligible post-conflict countries are entitled to receive supplementary financing under the Fragile States Facility in support of their recovery and in recognition of their status of exceptional need. A separate envelope of resources under ADF-12 is available for regional operations to promote regional integration in Africa.

The allocation of ADF resources to ADF-eligible RMCs is a four-step process:

• First, resources are set aside for the Regional Operations envelope, the Fragile States Facility, and to ensure a minimum initial allocation of UA 5 million for the three-year cycle for all countries.
• Second, remaining resources are allocated to eligible countries using the PBA formula which has two main determinants, country needs and country performance.
• Third, a discount is applied to all allocations in the form of grants, and the discounted amount is partially reallocated among ADF-only countries excluding Fragile States.
• Fourth, debt relief to eligible RMCs under the Multilateral Debt Relief Initiative is deducted from beneficiary countries’ allocations, while resources provided by donors to compensate ADF for foregone reflows are re-allocated to all ADF-only RMCs.

At the end of the process, a floor of UA 5 million for the three-year cycle is applied to all final allocations.

For more detailed information on the resource allocation process under ADF-12 please visit Allocating ADF-12 Resources.

The AfDB organized a seminar on aid allocation systems in a changing Africa on 16-17 February 2012.