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North Africa Regional Overview

Regional Overview

North African countries have always been an important player in the Bank Group’s history. They have all shown strong commitment through their presence in Khartoum, when newly independent African countries gathered to discuss the creation of a premier financial institution for Africans, by Africans. All manifested their support by signing the Agreement establishing the Bank in 1964, and all, with the exception of Libya, subscribed to the Bank’s capital stock, contributing upwards of USD 80 million (or about 40%) in funds so that operations could begin in 1967.

Such a significant contribution placed North African countries in a strategic position to play a key role in the management of the institution in its formative years. While the AfDB’s capital structure has changed with the admission of non-regional member countries in 1982, North African countries still hold roughly 18.25% of the total subscribed stock as of December 2014 and continue to play an important role in the Bank Group.

Bank Operations

North Africa’s early commitment to the Bank Group, coupled with its strong economic position, has made it the leading client and largest beneficiary of Bank’s support. North African countries have always had an appetite to collaborate with the Bank group in different ways, either through reform programs, economic development plans or institutional capacity building.

Since the beginning of its operations up to 2015, the Bank has approved loans and grants to the private and public sectors of North African economies totaling USD 27.83 billion, which represents about 30% of Bank’s total loans and grants approvals for all regional member countries.

Morocco, Tunisia, and Egypt are the Bank’s largest beneficiaries.

Country Total Volume of the Operations (million USD)
Algeria 2,653.55
Egypt 5,939.09
Libya 4.21
Mauritania 719.96
Morocco 10,448.51
Tunisia 8,062.63
Total 27,827.95

The Bank Group has also funded few regional operations including, five technical assistances targeting the Arab Maghreb Union (AMU) and an operation for the infrastructure investment (Argan) Fund. There have also been equity participations in two regional investment funds (MEFP II and III MEFP) investing in the three Maghreb countries (Morocco, Algeria and Tunisia).

Cumulative Loans and Grants by Country in North Africa (1968-2015)

Orientation of Bank Operations

Currently, the Bank’s operations are cast against the backdrop of North Africa’s specific economic, social and regional needs. Although dominated by middle-income countries with relatively good access to capital markets, the region still needs substantial investments in infrastructure and private sector development in order to propel broad-based and sustained economic growth. Moreover, capacity building, advisory services, and improved banking information systems in the sub-region are also benefiting from Bank Group support. Like the other parts of the continent, there are still substantive human development needs that must be addressed to ensure that quality of life improves and is evenly enjoyed by all. The Bank Group is closely linking its support in the region, to the evolving internal developments in the countries and also designing interventions responding to the challenges faced by the region especially in view of the current unsettling conflicts in and around the region.

Bank’s operations thus reflect such specific needs, as well as the areas which take into account national development plans and the Bank’s country strategy papers in which it can have the greatest development impact.

Active portfolio as of end 2015

Country No. of operations Volume of operations (USD million)
Algeria 10 8.84
Egypt 33 2,267.05
Libya 1 3.38
Mauritania 11 209.17
Morocco 36 2,398.92
Tunisia 33 1,474.43
Total 124 6,361.79

graph showing the Volume of Operations of the Active Portfolio for North Africa (end 2015)

The Bank’s Ongoing Portfolio in North Africa

As of December 2015, the Bank Group’s portfolio in North Africa comprised over 124 approved and ongoing operations, with a total net commitment value of USD 6.36 billion, displaying the importance of the portfolio. Clearly, energy, transport, and water supply are the dominant areas for Bank Group lending. Largely, this reflects North Africa’s growth performance and state of development – with demand for energy growing in parallel to meet household and private sector needs (industry, agriculture, tourism and transport). As these countries become increasingly integrated into the global economy, they will invariably face greater competition and a heightened need for connectivity with the rest of the world. This calls for infrastructure development especially in the areas of transportation and communications – roads, railways, air transport, etc. Over the next period, the Bank is strategically planning to continue to bridge North Africa’s infrastructure gap and unlock constraints on the growth of the regional economy. This could eventually tap into new opportunities for regional integration projects among the countries of the region.

The Bank’s Ongoing Portfolio by country at the end of 2015

In particular the Bank’s ongoing portfolio of technical assistance and economic and sector work in North Africa consists of 55 operations with a total value of USD 57.3 million. The Bank’s North Africa Department (ORNA) oversees two Trust Funds and one technical assistance Fund as follows. These are the Middle East and North Africa (MENA TF) Transition Fund, the Multi-donor Trust Fund for Countries in Transition (TFT) and the Middle Income Country Technical Assistance Fund (MIC TAF).

For Egypt as of 31 December 2015, the ongoing operations portfolio is comprised of 33 operations that amount to USD 2.27 billion in net commitments. The AfDB public sector window accounts for close to 90% of the net commitments, followed by private sector window (9%), and grants (1%). Active operations are dominated by the power supply sector, which accounts for 61% of approvals; multi-sector which accounts for 24.5%, the transport sector, which accounts for 6%; the social sector, which comprised close to 2.9%; and water resource and sanitation development, which represents 2.9%. The Bank also approved and disbursed the Economic Government and Energy sector reform program in the form of budget support for USD 500 million as well as approved in December 2015, the Country Strategy Paper (2015-2019) with a focus on two pillars, namely, infrastructure (for private sector competitiveness and sustainable and inclusive growth) and governance (for enhanced transparency, efficiency and fairness and increased private sector participation).

In Morocco, by end of 2015, the ongoing operations portfolio is comprised of 36 operations amounting to USD 2.4 billion. The public sector dominates the portfolio of Morocco. It is heavily oriented towards the infrastructure sector, which includes transport, energy, water and sanitation, irrigation and private sector projects in infrastructure projects. While social operations and multisector account respectively for 0.1 % and 4.1% of the portfolio. The Bank has approved in 2012 its strategy in Morocco (CSP 2012-2016), it mainly focuses on two pillars (i) governance; and (ii) infrastructure.

Mauritania is the only ADF country in the North Africa Region. The mining sector in Mauritania dominates the portfolio with almost 76%, whereas other sectors like agriculture, water and sanitation and governance accounts for 8%, 13% and 2%, respectively. The social sector in the country only benefits from 1% of the portfolio.

Tunisia’s portfolio is designed around a special focus on infrastructure operations, which represent 65% of the total portfolio. Transportation represents a key sector of the ongoing portfolio (49%), followed by support to the private sector development (16%), multi-sector operations (12%), water and sanitation (9%), energy (7%), agriculture (4%) and financial support to SMEs (3%).

Currently, cooperation between the Bank and Algeria focuses primarily on technical assistance, analytical work and capacity building (training, etc.). The Bank operates in various sectors, including governance of the public sector, financial sector, agriculture and ICT. The Bank’s portfolio comprises 10 technical assistance (TA) operations for a total amount of almost UA (USD 8.84 million. It focuses mainly on capacity building of public entities (Ministry of Finance, Ministry of Agriculture, etc.) and strategic studies.

There is only one active operation in Libya, financed by the MENA Trust Fund, titled “Leading the Way Program” for a total amount of USD 3.38 million. It aims at strengthening the efficiency and effectiveness of the Libyan institutions to deliver better governance as well as sustainable economic and social development. It is also extremely timely in the current context where different sides in the country are seeking to reconcile and form a national unity government.