ADF-13 to be innovative, focused and strategic, says Bank President

25/09/2013
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The African Development Fund (ADF) and its donor-country partners opened on Wednesday, September 25 in Paris, the third and last round of the 13th replenishment of the ADF, the African Development Bank Group’s concessional window. In his opening remarks AfDB President, Donald Kaberuka, laid out the strategic directions for ADF-13, saying it will be innovative, focused and strategic.

Kaberuka started out expressing gratitude to ADF donors for trusting Africa as a reliable vehicle that has been over the last four decades standing by the Bank’s regional member countries and accompanying them on the road to development. This partnership has resulted in positive outcomes, with many African countries experiencing strong economic growth that has helped alleviate poverty.

“We have reversed the downward trend and African economic performance is on the upswing. What we are pursuing now is good quality, sustainable growth. The Bank and the Fund – strong institutions staffed by dedicated experts – are the vehicles for achieving that growth,” Kaberuka said.

However, Africa faces new challenges in a fast-changing world, Kaberuka continued. To tackle these challenges in an efficient manner, ADF-13 needs to adapt and tackle issues in innovative, focused and strategic ways. For Kaberuka, innovation will consist of putting in place innovative financing and reforms to the allocation system. “Previously all ADF-only countries had the same lending terms, but now we are introducing three different terms for the different ADF clients:

  • ADF-only regular, which are the most concessional;
  • ADF-only advanced, which are slightly less concessional; and
  • Blend/gap/graduating, which are the least concessional.

“We designed the structure this way to ensure that we provide the most concessional resources where the needs are the greatest while preserving the long-term financial sustainability of the ADF,” Kaberuka said.

In addition, ADF will come up with two innovative instruments for all its clients: the Partial Credit Guarantee (PCG) and the Private Sector Credit Enhancement Facility (PSF). These instruments will leverage the Fund’s scarce resources to attract commercial sources of financing.  

“The PCGs should be introduced in ADF- 13 on a pilot basis,” Kaberuka said. “They are intended to address the challenges faced by well-performing ADF countries with low or moderate risk of debt distress in their quest to mobilize domestic and external commercial financing. The Bank is ready to accompany them in this transition process. The product will serve in part to guarantee eligible countries’ debt service obligations and to ensure there is no reckless accumulation of debt.

“The second is the Private Sector Credit Enhancement Facility (PSF), for which we are seeking UA 165 million.* The PSF allows the Bank to lend four times as much in ADF countries, so we will have a greater impact on African development than previously. The PSF’s significance lies in its emphasis on the private sector, which will be the real development motor for ADF countries.”

More flexibility in fragile states

In order to be more effective, the Bank will focus on some of the crucial issues such as fragility, gender and governance. On fragility and post-conflict situations, the ADF will seek to address the root causes of fragility and be flexible in its intervention.

On gender, the Bank is strengthening its approach and intervention, which is illustrated by the recent appointment of a Special Envoy on Gender. The Envoy will guide the institution’s strategic directions on gender-related activities and internal capacity building, policy dialogue and advocacy among regional member countries.

As for governance, Kaberuka said that “it is the Bank’s conviction that governance and accountability promote inclusive growth. Therefore, ADF-13 will build on the results we achieved under ADF-12 in strengthening core state systems, public financial management systems and an enabling business environment.”

For Kaberuka, the ADF can make no sustainable positive impact if it is not strategic. To this end, he said: “the Results Measurement Framework (RMF) for 2013 to 2016 signals the Bank’s willingness to deliver results at every level of engagement, and to do so with close attention to cost efficiency and value consciousness. The RMF is strategically focused and aligned to the Bank Group’s Ten Year Strategy.”

Strategic approach is also about the “One Bank approach” that “no longer distinguishes between ADF strategy and Bank strategy,” the Bank Group President continued. “ADF-13 will take place during the first three years of the implementation of the Bank’s Strategy for 2013 to 2022. The strategy concentrates our efforts on addressing Africa’s needs and we are beginning to see some real impact,” he said.

The opening ceremony, also saw the intervention of the Director General of the French Treasury, Ramon Fernandez, who congratulated the ADF for its strong intervention in Mali to deal with the country’s new social and economic challenges. According to Fernandez, the Bank’s Fragile States Facility is an instrument that should be strengthened. Overall, he said that the ADF plays a key role in building the continent’s future. For this reason, he said, it should focus on areas where it can add value.