AfDB Boards of Directors approve Mid-Term Review of the Group’s Medium-Term Strategy

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The Boards of Directors of the African Development Bank Group (AfDB), on 18 May 2011, approved the Mid-Term Review of the Bank’s Medium-Term Strategy (MTS) for 2008-2012.

The Review’s aim is to evaluate progress against the objectives contained in the MTS, and to initiate consideration of a longer-term strategy beyond 2012.

The launch of the MTS coincided with the onset of the global economic crisis in 2008.  The AfDB responded fast and flexibly to the changed needs of its clients as a result of the crisis.  It took measures such as front-loading resources, restructuring the loan portfolio, and offering fast-disbursing instruments to assist its Regional Member Countries to cope with the short-term effects and to mitigate longer-term impacts.

Overall, the measures translated into a significant increase in its 2009 lending to Units of Account 8 billion (US$12.6 billion), compared to UA3.5 billion in 2008 and UA3.1 billion in 2007.

During the crisis, the AfDB’s operational focus remained firmly on the core priorities set out in the MTS.  Those core areas are infrastructure, the private sector, governance and higher education.

Between 2008 and 2010, those four areas accounted for 88.4 percent of the Bank’s total commitments, or UA13.7 billion from a total of UA15.5 billion.

Investments in sovereign infrastructure operations accounted for 51 percent, the private sector 25 percent, and governance approximately 22 percent.

While approvals in higher education, science and technology (HEST) accounted for less than 2 percent of total lending, which is not consistent with its importance for Africa, the Bank’s resources leveraged additional funding with its strategic partners.  Co-financing resulted in a total of some UA19.16 billion in 2009.

The major expansion in private sector operations has so far been a notable feature during the current MTS period, including in low-income countries.  The Bank is undertaking a review of its policy for Private Sector Development, which will help fine-tune private sector interventions during the rest of the MTS period.

Fragile states continued to receive Bank Group support, and this has proven crucial to their economic and financial stability.

While financial rigour was maintained throughout, the AfDB nevertheless recognises the need for close attention to risk management as its portfolio grows.

The Bank led the initiative to bring together Africa’s finance ministers and central bank governors to consider Africa’s response to the crisis, to provide advice to African heads of state and to introduce African perspectives into the G20’s discussions.

The resulting Committee of Ten (C10) continues to meet regularly to consider Africa’s economic priorities and its strategies for engaging with the rest of the world.

The AfDB has boosted its work on knowledge generation and advice and its flagship publications are now among the key sources of information on African development.

The African Economic Conference, which the AfDB organises jointly with the Economic Commission for Africa, is now a calendar forum for African development.

As the global financial crisis progressed, the need for Bank resources grew.  Negotiations for a General Capital Increase began, which resulted in a 200 percent increase in 2010.  Negotiations for a replenishment of the African Development Fund concluded at the end of 2010 with a 10 percent increase.

The coincidence of those two exercises highlighted the interdependence of the two main windows of the institution, the Bank and the Fund, emphasised the importance of the ‘One Bank’ approach.

The move towards a policy and outcome based approach, rather than an instrument led one, has important implications for Group policies, which will be addressed over the next few years.

Climate change has come to the forefront in Africa during the period.  Its impact on the continent is much more apparent, and so is the need to respond effectively to its particular needs.

To this end, African leaders have asked the AfDB to host a Green Fund for Africa to bring resource to bear on climate change.

During the first three years of the MTS, the Group has implemented a number of institutional reforms and policies, and also undertook a fine-tuning of the management structure.  More progress is needed, especially in decentralisation and tailoring decentralisation to the particular country circumstances.

The AfDB has set up a dedicated unit to strengthen its management for results.  Progress has been achieved in the use of country systems and donor harmonisation, and more remains to be done.

Raising the quality of the Bank’s human resources was a key premise of the MTS, and between 2008 and 2010, the institution recruited 753 staff, equivalent to 42 percent of the current total workforce. 

However, important skills gaps remain to be tackled, including in the field offices.

Current events in some Regional Member Countries have underlined the challenges for both African development and for the AfDB.  No other multilateral development bank has faced the difficulties the AfDB has in its location, and it is a tribute to its staff that it has continued to deliver efficiently in the face of such challenges.

The key conclusions of the Mid-Term Review are:

  • The strategic focus on the four flagship areas remains relevant and will guide Bank operations for the remaining period
  • The Bank should pay special attention to HEST and emerging imperatives such as food security and climate change
  • The Bank should further emphasise private sector development, which is key to growth, job creation and poverty reduction
  • The Bank should be anticipatory, responsive and flexibility, especially with respect to major political and social developments unfolding in regional member countries, including North Africa, while protecting its achievements
  • The Bank should sharpen its focus on providing timely knowledge solutions to regional member countries on policy issues of high relevance
  • The Bank should build stronger strategic partnerships in order to maximise development impact
  • The Bank should improve on both delivery and results through continued institutional reform
  • The Bank should strengthen its work on promoting gender equality and women’s economic empowerment
  • The Bank should initiate work on a success plan to the MTS