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AfDB Presents 2006 Financial Results
The African Development Bank (AfDB) Group on Monday presented its 2006 financial results to participants of its Annual Meetings in Shanghai, China. Speaking on the occasion, Bank Group Vice President for Finance, Thierry de Longuemar, indicated that loans and grants from the non-concessional ADB window increased by 20.3% in 2006, while policy-based lending and private sector operations rose by 178% and 55% respectively.
The African Development Fund (ADF), the soft loan arm of the Bank Group also increased its approvals by 8.6% with 80 operations in 32 countries and 20 multinational projects worth over US$ 2.2 billion. The projects, Mr. de Longuemar said, were diversified across all regions and critical sectors.
Through joint financing and partnership, he continued, the Bank Group had amplified the impact of its own resources, with 34 co-financed projects worth over US$ 11.7 billion in 2006.
Mr. De Longuemar also added that the Multilateral Debt Relief Initiative (MDRI) had contributed to a reduction of the continent’s debt burden, advising that the Bank Group had mobilized US$ 8.54 billion for MDRI-related relief over a 50-year period.
He indicated that ongoing institutional reforms within the Bank Group would enable the institution to better deliver on its development mandate. The reforms, he said, focused on the infrastructure sector and on strengthening private sector development and competitiveness.
"Infrastructure development and regional development are key drivers for sustainable growth in Africa," he went on, adding that the "private sector is key to economic growth leading to poverty reduction."
Mr. de Longuemar also said that the institution’s strong financial conditions protected its bondholders, reporting that the Bank’s risk-bearing capacity made it possible for the institution to expand its operations with most of the resources going to development initiatives.
The Bank’s borrowing strategy provides African countries with cost-effective resources, he said, advising that the institution had established a track record in several capital market segments. The Bank was looking forward to widening its investor base in various capital market segments and the initiative to issue bonds denominated in African currencies was attracting support from some regional member countries of the Bank Group, he said, adding that successes in local currency projects would bring increased investor attention to the continent.
Meanwhile, a breakfast meeting of the Private Sector Department of the Bank Group earlier on Monday underscored the importance of corporate governance in the establishment of an attractive business environment for investors.
Addressing Annual Meetings participants, ADB Vice President for Infrastructure and the Private Sector, Mandla Gantsho, said the scandals and failures of some large corporations, as well as successes registered in many emerging markets particularly in Asia were indicative of the critical importance of corporate governance in creating conditions for business sustainability.
"Indeed from an economic perspective, without general compliance with good corporate governance practices, uncertainties will increase alongside high failure rate of enterprises, lower attractiveness of investment and increase capital flights. This will, in turn, make potential investors risk-averse, particularly with new businesses," Mr. Gantsho said. Corporate governance is also an important condition for ensuring entrepreneurship development because it contributes to improving the business environment and engenders compliance with key basic management principles, transparency, fairness and accountability, which are essential ingredients for greater predictability and less risky results.
Mr. Gantsho also indicated that the Bank Group, for its part, was making efforts to boost private sector development and promote entrepreneurship on the continent. In 2004, he said, the institution adopted a private sector development strategy that laid emphasis on corporate governance as an important prerequisite for promoting the sustainability of private sector operations, adding that the Bank Group was looking to assisting countries that are developing guidelines and codes using the international standards endorsed by African heads of state through NEPAD.
The Bank’s private sector strategy recognizes a triple role for itself - financier, advisor and partner with other key stakeholders. The enormity of the development challenge calls for a smart partnership approach to ensure that efforts and investment dollars go much farther through complimentary and synergistic efforts with all stakeholders, the Vice President concluded.