2010–A year of operational consolidation for the African Development Bank Group
If 2009 was the year the Bank played a countercyclical role by significantly increasing its assistance to regional member countries living under severe budgetary restraints, 2010 was the year of operational consolidation.
This is evident from the financial and operational analysis of the African Development Bank’s (AfDB) fiscal record for 2010 presented in Lisbon on 7 June in Lisbon, Portugal, at the Bank’s Annual Meetings.
This year's presentation had "a unique character for two reasons," said the AfDB's Vice President - Finance, Mr Charles Boamah. On the one hand, it was the first presentation after the sixth and largest increase in the Bank's general capital, and after the 12th replenishment of the African Development Fund (ADF).
On the other hand, it was taking place after the recent sociopolitical developments on the continent, especially in its northern region. These same changes have highlighted the acute challenges facing the continent. For Mr Boamah, these challenges demonstrate the relevance of Inclusive Growth, which is the theme of this year’s Meetings.
For his part, the AfDB’s Treasurer, Mr Pierre Van Peteghem, said that following the financial crisis inflation went from 10% in 2009 to 7.7% in 2010.
Describing recent developments within the Bank Group and Africa, Mr Van Peteghem said that, during 2010, Africa had begun to recover from the adverse effects of the global financial and economic crisis.
During 2010, as in prior years, he said, there was strict and consistence adherence to prudent financial and risk management policies, to assure the long-term financial sustainability of the Bank and its AAA ratings. In effect, the Bank’s management had demonstrated a strong capability to carry out its growth plan.
Mr Van Peteghem outlined the operational and financial success of the Bank Group.
Regarding the economic outlook for Africa, he said that Africa’s GDP grew by 4.9% in 2010 against 3.1% in 2009, driven by rising domestic demand, export earnings, foreign direct investment, remittances from migrants and development assistance.
However he warned that the growth rate was forecast to fall l to 3.7% in 2011, due in large part to the prevailing socio-political unrest in some countries. The forecast for 2012 was for 5.8% growth.
There are still regional disparities in growth rates, and benefits of growth are unequally distributed across the continent, highlighting the need for a more inclusive development approach.
Africa has experienced disparate economic performance. For example, the northern region’s growth rate was 4.6%, while in the western region it was 6.7%. The central region’s growth rate was 4.7%, in the eastern region it was 6.2%, and the southern region grew by 3.3%.
Financial strength and strong support from shareholders
Mr Van Peteghem also commented on the Bank’s financial status, as well as its market activities in 2010. Strong shareholder support, high risk-bearing capacity, robust liquidity position and prudent financial policy and management constitute the basis of the Bank's AAA rating in the financial markets.
The Bank´s high rating enhances its ability to provide financing at competitive prices in sustaining planned business growth. During the year, the Bank continued to refine its brand image with international investors, and mobilized resources at competitive rates in the global benchmark bonds.
In response to growing investor demand for “socially responsible” investments, the Bank initiated and implemented a highly successful investment program.
As far as the Bank’s operations were concerned, following a record operations results in 2009, approvals of the Bank Group in 2010 have generally been maintained high-pre-crisis levels.
High impact infrastructure projects
Consistent with its strategic priorities, Bank operations were mainly focused on infrastructure to help eliminate structural obstacles impeding economic growth in Africa.
Infrastructure projects totalled U.S. $ 4 billion on 70.9% of approvals of the AfDB Group in 2010. The transportation sector has enabled 15.9 million people to benefit from improved access to services.
Remarkable progress has been made in the areas of clean energy, food security, governance, and private sector operations.
On the energy sector, the Bank has enabled 16.5 million people to benefit from improved access to energy between 2009 and 2010.
Regarding the private sector, approved projects made significant foreign exchange savings for the beneficiaries. Some 306,600 jobs were created, 52,000 women-led operations have benefited from the opportunities offered.
Finally, governments have received US$ 15 billion in taxes and fees.
The fight against climate change
Regarding the fight against climate change and the development of low carbon economies, the Bank is establishing the Clim-Dev Africa Special Fund, with a US$145 million budget, and has been approached to manage the Africa Green Fund.
In this context, the AfDB intends to maintain its strategic goal as a "privileged partner of Africa”, as well as meeting the urgent needs for economic and social inclusion across the continent.
The financial statements are part of the 2010 Annual Report of the Bank Group. They are verified by both institutions for the period from January 1 to December 31, 2010, and the administrative budgets for the period from 1 January to 31 December 2010.
The Annual Report also outlines recent developments in the African economy and the operational activities of the Bank Group in 2010