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Annual Development Effectiveness Reviews 2019

Each year, the Annual Development Effectiveness Review (ADER) provides an overview of Africa’s development and assesses the contribution the African Development Bank (AfDB, or the Bank) has made to that progress. The ADER is an important tool that helps the Bank take stock of where we are performing well and where we can do better.

The theme of this year’s ADER is Africa’s integration. Greater integration across the continent can drive progress towards economic growth and poverty reduction. We explore progress toward this goal and explain how our operations are contributing to this progress. The ADER also reviews progress on the other four High 5s and our crosscutting priorities of governance, fragility, gender and climate change, including their contribution to our Integrate Africa objectives.

The ADER assesses progress against the Bank’s Results Measurement Framework (RMF) for 2016–2025, monitoring the contribution of our activities to our High 5 prioritie —Feed Africa, Light Up and Power Africa, Industrialise Africa, Integrate Africa, and Improve the Quality of Life for the People of Africa— and to our long-term goals of promoting inclusive and green growth. It also measures the progress we have made on strengthening our portfolio and reforming our internal systems and processes, to position us better to deliver development results for Africa.

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Chapter 1: Integrate Africa

Regional economic integration in Africa took a major step forward with the adoption of the Agreement establishing the African Continental Free Trade Area (AfCFTA), which entered into force in May 2019. Greater integration provides African producers with access to larger markets and encourages trade and investment. This in turn creates jobs, boosts productivity and encourages diversification. In addition, Africa’s cities, with their dynamic consumer and labour markets, are becoming increasingly attractive investment locations.

However, despite some landmark achievements, intra-Africa trade remains low. Significant barriers to trade remain, such as the high cost of trading across borders. There have been notable efforts to improve infrastructure connectivity and create conducive policy environments for business. Regional economic communities continue to promote integration, but progress is needed in many areas. The Bank is a champion of economic integration, trade and investment. Our Regional Integration Strategic Framework supports the African Union’s Agenda 2063 and the establishment of AfCFTA. Through our investments, we will continue to deliver enhanced social and economic opportunities across the continent.

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Chapter 2: Light up and power Africa

Energy is at the heart of development. It helps businesses thrive, powers essential services and makes communities safer, particularly for women and girls. Reliable and affordable energy encourages investment, growth and job creation. Energy is also key to Africa’s transition to green growth. The continent’s rich renewable energy potential needs to be harnessed to address chronic capacity shortages and achieve the Sustainable Development Goals (SDGs).

Regional energy integration is high on Africa’s development agenda. While only 8% of power is currently traded across borders, this share is steadily growing. Access to electricity is also improving — 52% of the population across African countries now have access to electricity. The Bank is helping Africa integrate its energy resources, increase its renewable energy capacity and improve access to reliable and affordable power. Major interconnection and renewable energy projects are under way. The Bank is committed to working with governments, regional organisations and the private sector to identify priority projects and expedite the integration of Africa’s power systems.

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Chapter 3: Feed Africa

Transforming Africa’s agriculture sector is central to economic growth, poverty eradication and food security. However, the continent faces significant barriers to achieving its potential. Boosting regional trade and harnessing new technologies will help add value and raise incomes.

Although there have been significant improvements in Africa’s net agricultural trade balance, progress on reducing the incidence of hunger and malnutrition has been slow. The Bank has played a leading role in supporting agribusiness, innovation and nutrition initiatives. In 2018, 19 million people benefited from Bank projects. Yet more needs to be done if we are to reach the Feed Africa target to end hunger by 2025.

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Chapter 4: Industrialise Africa

Industry plays a vital role in economic development. It increases the value created in an economy, boosts productivity and creates jobs. While manufacturing has doubled in Africa over past decade, the bulk of its value remains concentrated in a few countries, such as South Africa and Morocco. However, there have been positive trends towards greater regional integration of industrial value chains and increased intra-Africa investment. Strengthening regional ties can spur further industrial growth.

Africa’s global competitiveness is improving, and 49% of the population now has access to finance. However, progress has been slow on key industrial indicators. Africa’s economic diversification remains low, despite growth in some promising non-extractive sectors like tourism and ICT. In 2018, Bank private sector projects benefited 1.2 million people across the continent, half of whom were women. The Bank continues to support micro, small, and medium-sized enterprises (MSMEs) and to promote transformational, high-value industrial projects.

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

Improving the quality of life for the people of Africa is at the core of the Bank’s work. As the continent’s population grows, we are working to ensure that Africans have the skills they need to obtain decent jobs and establish sustainable businesses in the global economy. We support countries in improving access to quality services like health, education, and water and sanitation, which is crucial to improving the lives of all Africans.

This chapter shows that while Africa’s economic growth continues to strengthen, 40% of Africans live below the poverty line, and inequality remains high. Meeting Africa’s rising demand for jobs will require strong and sustained economic growth and structural change. The Bank is working with governments, academic institutions and the private sector to increase skills in science and technology. In 2018, our projects provided 1.2 million people with jobs and 8.2 million people with improved access to water and sanitation.

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Chapter 6: Cross-cutting and strategic issues

The Bank has a set of cross-cutting and strategic issues that are integrated across its operations, knowledge work and policy dialogue to maximise development impact: governance and institution building, fragility, climate change, and gender equality. All these issues are critical to our High 5 priorities, the SDGs and our overall objective of promoting inclusive and green growth in Africa.

Africa is making steady progress in many of these cross-cutting areas. Overall, the quality of governance has improved, but there are challenges ahead in meeting the demands of a rapidly growing young population. The Bank is helping African countries to improve the efficiency and transparency of their public financial management (PFM), especially in fragile situations, to support social services and to improve business climates. Our projects are helping countries build resilience to climate change and supporting women’s access to finance to help expand their businesses.

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Chapter 7: Improving our development impact and efficiency

The quality of the Bank’s performance is critical to achieving results. Our aim is to maximise our impact by mobilising more investment resources and to improve the quality of our portfolio by attracting and nurturing the right talent.

This chapter shows that, overall, the Bank has made important progress towards delivering better development results and driving improved value. We remain committed to continuously improving the quality of our operations through impactful reforms. We have made great strides in ensuring that cross-cutting issues like gender and climate inform the design of our programmes — climate finance now accounts for 32% of our approvals. Reforms under our DBDM have increased accountability, streamlined processes and supported talent and diversity in our workforce. We have successfully expanded our footprint at country and regional office levels, bringing us closer to our clients and making us better able to deliver outcomes against our High 5 priorities and the SDGs.

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