2010 Annual Report - Investing in Infrastructure

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With more than 70 percent of its total approvals targeting the infrastructure sector in 2010, the African Development Bank has confirmed its leadership in this area.

Approvals in 2010 for infrastructure projects amounted to some USD 4 billion, representing the largest sectoral allocation. Transportation attracted the most funding (47.6 percent), followed by energy supply (34.1 percent), water supply and sanitation (17.1 percent) and communication (1.2 percent).

These figures continued to reflect the institution’s alignment to its Medium- Term Strategy (2008–2012), which positions the infrastructure sector as a core operational area. This support has specifically focused on large, transboundary infrastructure projects and programs that promote regional integration.

In the energy sector, the AfDB serves as a lead financier for energy-related investments in Africa. It approved with global funding totaling more than USD 1.3 billion for 14 new operations in the energy sector during the year. Of these projects, 11 were public sector operations, for a total commitment of more than USD 1.1 billion.

In the transport sector, to ensure that infrastructure projects do not exceed initial costs (a recurring concern), the AfDB has begun to review the practice of project procurement and implementation in its member countries, to reduce exposure to volatile international construction costs. It has also strengthened its efforts to partner with other donors and provide supplementary loans.

Moreover, the Bank started aligning its transportation infrastructure portfolio with the objectives of its Agriculture Sector Strategy (2010–2014), which was approved in 2010. Eight road projects approved during the year seek to reduce transportation costs, thus lowering the costs of agricultural inputs, improving accessibility to markets, and increasing farm gate prices of products.

As regards water and sanitation, the Bank continued to place a high priority on supporting the sector in the context of increasing water scarcity exacerbated by climate change, environmental degradation, rapid population growth, and urbanization. The agricultural sector’s productive capacity and its ability to feed the continent’s population relies on an adequate water supply. Moreover the resilience of this sector directly impacts Africa’s progress toward, Millenium

Development Goals, such as those relating to GDP growth, poverty, health (including child mortality and maternal health), education, and gender.

The AfDB’s interventions in this area focus on water resource sustainable development and management across the continent. By year-end 2010, the AfDB was financing 69 ongoing water and sanitation operations in 32 African countries, totaling about USD 2.7 billion. Total approvals of loans, grants, and special funds for all water and sanitation operations in 2010 amounted to USD 700 million. The interventions cover drinking water supply, water resources management, sanitation and hygiene, capacity building, and policy reform programs.

The main innovation is the enhanced water supply and sanitation engagement in Fragile States.

The AfDB has intensified its engagement in fragile states and is undertaking a study to develop guidelines and tools for improved delivery of water supply and sanitation systems in these most vulnerable countries.

Finally, two ICT projects were approved during the year totaling some USD 50 million: the Satelite O3B multinational project, which consists of the construction and operation of a constellation of eight middle earth orbit satellites over Africa, and a feasibility study for a Technology Park in Praia Cape Verde, for enhancing the business climate through improvement of the ICT infrastructure in the country.