GCI VI-On the Impact for the Poor

320 million of the world’s extreme poor – those living on less than US$1 per day – call the African continent home. In the wake of the world’s ongoing Financial and Economic Crisis, it is their lives whose access to the fundamental elements of normalcy – from education, sanitation, and healthcare, to employment generating opportunities – that have been most severely compromised.

The African Development Bank Group, through its commitment to provide compassionate, vigilant, and effective leadership to African countries, has responded swiftly to crisis related needs in Africa by accelerating and restructuring ongoing programs; advancing the approval of new projects; and making greater use of fast-disbursing instruments. While such measures have been critical to prevent countries from backsliding on the economic and social progress of the last decade, GCI VI, which seeks to significantly increase the Bank’s capital will play a decisive role in impacting the lives of the poor in Low and Middle Income Countries, areas with pockets of severe poverty that face a number of development challenges.

What’s at Stake: Boosting Private Sector Led Growth in Low Income Countries

60% of the Bank’s Private Sector Portfolio benefits, either directly or indirectly, Low Income Countries (LICs). These transactions help create employment opportunities in rural areas, develop rural infrastructure, and provide access to finance. Furthermore, the ADB strategically invests in transactions with a pro-poor focus, giving priority to those projects that articulate development outcomes and additionalitly and complementarity, thereby acting as a force multiplier in the poorest and most fragile states.

A GCI will allow the Bank to substantially increase its support to countries affected by the global downturn, enabling the ADB to scale up its commitment to those who desperately need it. LICs will continue to benefit through synergies between the ADB’s non concessional lending and the ADF’s concessional resources; through increases in net income allocation that benefit them directly; and through innovative adjustments to the Bank’s Enclave Policy, which will allow ADF countries to borrow ADB resources.

ADB Private Sector Operations

• Have transformed Côte d’Ivoire from a net importer to a net exporter of electricity, generating US$ 12 million in profit and paying an estimated US$ 76 million in taxes to the government over an eight year period, while stabilizing electricity flow resulting in a more stable production of goods and services
• Helped 20,000 – 30,000 families through the financing of the Rwandan Development Bank, including the financing of 15 microenterprises, 14 hotels, and 8 schools
• Established a Ghanaian palm oil refinery & fractionation plant with a capacity of 100 tons per day, supporting 1,500 out growers and small holder farmers, and contracting a significant number of women in their workforce  
• Provide credit to the poorest segments of the Congolese population, including more than 50,000 micro entrepreneurs with an expected loan portfolio of US$ 26 million  
• Are contributing to the creation of more than 50,000 jobs by 2015 through the Bank’s Pan-African Infrastructure Development, generating US$1 billion per annum in taxes and government levies

Hidden in Plain View: Pockets of Poverty in Middle Income Countries

40% of Africa’s poor live in Middle Income Countries (MICs). Much like Low Income Countries, MICs face a number of similar development challenges: a number of African MICs are small countries, some landlocked, others islands, with limited resources, small budgets, and comparatively low social indicators. Above all, they too struggle with pockets of poverty hidden in plain view, an obstacle that must be addressed in order to create the conditions conducive to sustainable economic growth. In MICs like Botswana, Namibia, and Swaziland, the HIV-AIDS virus infects more than 15% of the population. In Morocco, there are more than 933 shantytowns and 400 under-developed districts throughout the country. In most ADB countries, poverty in rural areas also remains stubbornly high, with informal credit the dominant – and elusive – form of credit for agricultural production, the main economic activity of the poor.  

ADB Projects have:

• Directly impacted & improved sewage capacity for more than 20% of the population of Mauritius, reducing waterborne diseases by 50%
• Promoted financial sector reforms in Morocco, strengthening the micro-credit sector and improving access to finance for women, who comprise 66% of micro-credit beneficiaries
• Helped to provide credit in agricultural development for roughly 12,000 men and women in rural parts of Egypt
• Added value and improved competitiveness: the Bank’s loan to a Djiboutian cereals facility has improved turnaround time in the storing and processing of cereals, empowering local and indigenous companies, creating new business opportunities, and supporting regional integration efforts  

Creating Opportunities and Reducing Poverty Through Regional Integration and Catalytic Projects

Experience has taught us that MICs can play a critical role for regional integration, by serving as engines of growth, conduits of capital, centers of knowledge and excellence, with significant spillover effects in neighboring countries, serving as agents of stability and creating gateways to global markets that help create opportunities for the poor.   

Our projects are:

• Transforming the Damietta Port in Egypt into a handler of the world’s largest containers in the Mediterranean, significantly lowering operating costs and sailing times for trans-shipment activities, thereby benefiting trade across Africa  
• And filling huge financing gaps in cross-border infrastructure, such as through the EASSY, an initiative to construct and operate a submarine fiber-optic cable along the East coast of Africa, connecting 20 coastal and land-locked countries to each other – and the world