Development Effectiveness Review 2016

Accelerating the pace of change

Each year, the Annual Development Effectiveness Review (ADER) examines development trends in Africa, assesses the impact of the African Development Bank and outlines opportunities and risks that lie ahead. The ADER helps us to reflect on our performance and identify areas where we need to enhance our efforts.

This year’s ADER marks the beginning of a new era for the Bank with a new President and a sharpened focus on an interlocking set of critical priorities within the Bank’s Ten Year Strategy. We call them the “High 5s”: Light up and power Africa, Feed Africa, Industrialise Africa, Integrate Africa, and Improve the quality of life for the people of Africa.

ADER 2016 is structured around these vital issues, while maintaining the indicators and targets of the existing Results Measurement Framework (RMF). In Part 1 of the report, each chapter focuses on one of the High 5s, examining Africa’s progress and challenges and weighing the contribution that the Bank is making. In Part 2 of the report, Chapter 6 focuses on the Bank’s performance in managing its portfolio and Chapter 7 on the Bank’s organisational efficiency.

As well as using the indicators and targets of the existing RMF to gauge the Bank’s impact, ADER 2016 examines the immediate prospects for African development. By combining Level 1 and Level 2 of the RMF within each chapter in Part 1, we can better explain the connections between Africa’s key developmental challenges and the action the Bank is taking to address them.

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Part 1: AfDB’s vital role in Africa’s transformation

The African Development Bank remains optimistic about the continent's prospects. Africa is dynamic and resilient. In Part 1 of the report, we examine the factors that have built that resilience, the obstacles that persist and the policy actions required to overcome those obstacles.

Now, more than ever, the Bank is committed to pursuing its objectives of ensuring that Africa achieves inclusive growth and helping it make the transition to green growth, in line with the overarching priorities of our Ten Year Strategy.

In this part of the report we focus on five critical areas of the Ten Year Strategy, the High 5s: Light up and power Africa, Feed Africa, Industrialise Africa, Integrate Africa and Improve the quality of life for the people of Africa. In each of the five chapters we examine Africa's progress and challenges (Level 1) and the Bank's contribution (Level 2) in these key areas.

This part uses 32 indicators from Level 1 of the One Bank Results Measurement Framework to show performance in 2015, with traffic light symbols to indicate how African countries have progressed compared with other developing countries.

We also report on the Bank's contribution to Africa's development in the period 2013-15, using 36 indicators from Level 2 of the same framework. Traffic light symbols show whether we reached or fell short of our targets. In addition, this part sets out some of our plans and targets for the next three years.

Chapter 1: Light up and power Africa

To grow and prosper, Africa needs modern energy systems that provide an adequate, affordable supply of power to every home, business and service provider. Energy is also crucial for achieving the AfDB's other development objectives. But access to energy in Africa is rising far too slowly: about 635 million people still have no electricity. This yawning energy gap is also an opportunity, however. African leaders can tap the continent's enormous energy potential, especially from renewable sources.

This chapter outlines the scope of Africa's energy challenges and opportunities, and the Bank's response. It shows why it is crucial to improve not just access but also distribution, extending the benefits of electricity to the remotest communities. The Bank, through its Ten Year Strategy (TYS), has improved energy production and access via sector level interventions, project preparation support and transaction advisory work. We recognize that much more needs to be done, however.

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Chapter 2: Feed Africa

Agriculture, the most important sector in Africa's economy, contributes 15 percent of GDP. More than 70% of Africans depend on agriculture for their livelihoods. If its full potential were unlocked, agriculture could vastly improve the lives of millions of Africans - creating jobs, increasing prosperity and reducing hunger. Much of this potential remains untapped, however, and productivity is low, contributing to persistent poverty and deteriorating food security.

This chapter starts by looking at Africa's agricultural potential and the progress made since 2010 in productivity and food security. As food demand increases and consumption habits change, net food imports are rising rapidly. This shows that there is a broader opportunity to transform agriculture into a vibrant agribusiness sector.

The African Development Bank's work in agriculture has delivered better seeds, irrigation and sustainable technologies, and greater access to finance and to markets. We show that Bank projects have increased yields, production levels and incomes for farmers, resulting in more dynamic local economies. However, the Bank has recognised that substantive transformation will require a more concerted effort that draws on the strengths of the Bank and its partners.

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Chapter 3: Industrialise Africa

Africa is still relying for economic growth on agriculture and the export of raw commodities. Although industrialisation is growing, Africa's share of global manufacturing is less than 1%, putting the continent at the bottom of the global value chain. Consequently, economic growth has not been creating enough jobs for the growing number of youth.

Africa has many of the ingredients of industrial success. To unleash this potential, African countries must embark on a bold agenda driven by private sector-led investments in industrial transformation. There is a real opportunity for Africa to create jobs and promote inclusive economic transformation through domestic manufacturing and a commodity-based industrialization process.

This chapter reviews Africa's progress on key enablers such as a conducive economic environment, economic diversification, competitiveness and access to capital. The chapter also covers the Bank's role in Africa's industrial transformation. Our support is focused on promoting enterprise development and helping to improve the business environment. Our operations have supported job creation and provided economic opportunities.

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Chapter 4: Integrate Africa

Regional integration has been at the heart of Africa’s political agenda for many years. With 1 billion people, Africa has a combined GDP of more than $3.4 trillion. Such a market could create huge opportunities for producers on the continent. To make it a reality, African governments and regional economic communities need to cooperate to make it easier to move goods, services, people, money, energy and knowledge across borders.

However, regional integration is by no means easy to implement and Africa’s regional integration challenges are well known. In the first part of this chapter we review some of these challenges and the extent to which African countries trade with each other. The continent’s physical landscape makes connection between communities, countries, and even entire regions difficult.

We believe that linking African countries is critical to Africa’s economic transformation. For this reason, as the continent’s leading financier of infrastructure, we have a strong focus on regional connectivity. In the latter part of this chapter, we track our contribution to regional integration. We are not only investing in infrastructure such as roads, transmission lines, pipelines and communications networks, but also crafting and implementing coherent policies that open up borders.

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Chapter 5: Improve the quality of life for the people of Africa

In recent decades, African countries have designed ambitious policies aimed at boosting education, health, access to water, labour market opportunities and other factors that improve quality of life. In this chapter we show that while most countries have made advances in at least one area, progress has not been sufficient. Overall poverty rates are still hovering around 43%. By some estimates, more than half of Africa’s youth are unemployed, underemployed or inactive. Health and education outcomes are among the lowest in the world and the continent’s population has insufficient access to sanitation and safe drinking water. While economic growth has been relatively strong, it has not been rapid or inclusive enough to create jobs. More Africans need to see the benefits of economic growth in their daily lives.

Our Ten Year Strategy was designed to bring about Africa’s economic transformation, built on growth that is both inclusive and green. In this chapter we demonstrate our contribution to improving access to basic services that are a catalyst for productivity and growth in other important sectors of activity. Our support to education helps young Africans develop the skills they need to find jobs, establishing the foundations of a productive workforce and creating opportunities for employment. We conclude by assessing Africa’s progress and our contribution in promoting gender equality, strengthening governance and accountability, building resilience in fragile situations and addressing climate change.

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Part 2: AfDB’s performance as a development institution

We strive to continually improve the design and supervision of our projects, so that they make the best possible contribution to our goals of promoting inclusive and green growth. We want our projects to deliver better results and to deliver them more quickly. Part 2 reviews how effective the Bank is as a development institution.

We are committed to continue driving institutional efficiency and turning the Bank into an organisation that responds speedily to clients' needs, with a sharp focus on accelerating development impacts. The Bank recently adopted a new business development and delivery model to improve its ability to scale up work in the five priority areas of its Ten Year Strategy. This redesign of the operating model is aimed at improving proximity to clients, becoming more cost-efficient, increasing revenue and accelerating development impact on the ground.

Chapter 6: Quality of Bank operations

The Bank needs to keep its portfolio of operations under close scrutiny to ensure they perform well and to maximise development outcomes and returns on investments. This chapter assesses how we manage our portfolio of projects across the continent. We also look at progress in strengthening our results at the country level, and how well we are bringing gender and climate into the mainstream of our strategies and projects.

We assess how well we are managing our portfolio of projects to ensure that we are making the best use of our resources, using 22 indicators from Level 3 of our One Bank Results Measurement Framework.

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Chapter 7: The organisation’s efficiency

This chapter assesses how efficient we are as a development institution. The 15 indicators show the progress we have made in reforming and strengthening our structures and management processes, to ensure that we deliver high-quality, sustainable results. The results also provide evidence of areas where the Bank needs to make improvements to deliver effectively on its ambitious agenda.

We also look at how well we manage ourselves as an organisation. We use 15 indicators from Level 4 of our RMF to measure how far we have come in improving our structures and management processes to achieve value for money for our partner countries.

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