AFRICAN DEVELOPMENT BANK GROUP

Annual Report 2015

Regional Member Countries

Non-regional Member Countries

1
2
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5
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7
8
9
10
11
12
13
14
15
16
17
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20
21
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1
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Algeria
AngolaBenin
Botswana
Burkina Faso
BurundiCabo Verde
Cameroon
Central African Republic
Chad
Comoros
Congo
Congo, Democratic Republic ofCôte d’Ivoire
Djibouti
Egypt
Equatorial Guinea
Eritrea
Ethiopia
Gabon
Gambia, The
Ghana
GuineaGuinea-Bissau
Kenya
LesothoLiberia
Libya
Madagascar
MalawiMali
Mauritania
Mauritius
MoroccoMozambique
Namibia
Niger
Nigeria
RwandaSão Tomé & Príncipe
Senegal
Seychelles
Sierra Leone
SomaliaSouth Africa
South Sudan
Sudan
Swaziland
Tanzania
Togo
Tunisia
UgandaZambiaZimbabwe

Argentina
Austria
BelgiumBrazilCanadaChina
Denmark
FinlandFranceGermany
India
Italy
Japan
Korea
KuwaitLuxembourg
Netherlands
NorwayPortugal
Saudi Arabia
Spain
SwedenSwitzerland
TurkeyUnited Arab Emirates (member of the ADF only)
United Kingdom
United States of America

AFRICAN DEVELOPMENT BANKAFRICAN DEVELOPMENT FUND

BOARDS OF GOVERNORSADBFifty-First
Annual Meeting

ADF
Forty-Second
Annual Meeting

Lusaka, Zambia
23-27 May 2016

REPORTby theBoards of Directorsof theAfrican Development Bankand theAfrican Development FundCovering the period
1 January to 31 December 2015

ADB-ADF/BG/AR/2015

Acknowledgments
The Annual Report 2015 was prepared by the Development Research Department of the Chief Economist Complex, under
the guidance of the Boards' Committee on External Communications and Preparation of the Annual Meetings, comprising
P.M.N. Mwangala (Chairperson), M. Turner (Vice Chairperson), and Members: M. Ketsela, M.R.J. Mahomed, D. O’Neill,
L. Sentore, and H.S. Tse. The Report Team would also like to thank the Senior Management Coordinating Committee forits guidance during the preparation of the Report.
Report Team: C.L. Lufumpa, Officer-in-Charge (Chief Economist and Vice President), Chief Economist Complex; K.C. Urama,
Senior Policy Advisor to the President on Inclusive and Green Growth; A. Shimeles, Acting Director; A. Simpasa, Officer-inCharge (Manager); and O. A. Salami (Task Manager) from the Development Research Department; M. Mubila, N. Letsara,P. Lartey, and L.K. Kouakou from the Statistics Department; R. Boadi, Assistant to the Secretary General; and Consultants:
P. Quarcoo, A. Portella, E. Muchapondwa, A. Ndungu, D. Birhanu, and Z. Bicaba.
Editing and Translation: O.L. Pinzi, Ag. Secretary General and Director; J. Edjangue, Manager; E. Alexander, Manager;
M. Ndagijimana, V. Mahan, and A. Tossa (French Translation), and E.W. Goro (English Editor) from the Language Services
Department; D. Short and N.R. Jewitt (Consultants).
Finance Team: O. Hollist, Ag. Director; N. Ngwenya, Manager; O. J. Onyango, J. Riadh and S. Oppong, from the Financial
Control Department.
Focal Points: The Report Team also thanks the focal points from all Departments and other Organizational Units: A. Abou-Zeid,
A. Abusharaf, Y. Ahmad, Z.G. Alemu, O. Ali, D. Amouzou, S. Atchia, F. Avwontom, T. Bhebhe, S.S. Boitumelo, T.A. Brient,
I. Budali, E. Change, H. Cisse, A. Coker, M. Comoe, K. Dairo, A. Dao Sow, F. Dennis, M. Diawara, D. ElHassan, S. Kamara,
O. Jammeh, B. Kanu, P. Kariuki, U. Keita-Tape, J. Kitakule-Mukungu, A. Lasri, B. Mikponhoue, L.C. Mohamed, S. Muller,
M. Nalubega, C. Nartey, O. Nicol-Houra, E. Nkoa, M. Ouattara, T. Owiyo, V. Robert, A. Rojkoff, P. Rugumire, E. Santi,
P. Santos da Costa, O. Shingiro, A. Singogo, F. Teufe, and N. Yeo.
Others: We also thank B. Kamgnia of the African Development Institute; P. Zimpita and U. Beegun-Ramduny of the Officeof the Executive Director representing Botswana, Malawi, Mauritius, and Zambia; I. Faye, J. Anyanwu, P. Gogo, V. Aka,and A. Nelson of the Development Research Department; C.L. Tawah of the Office of the First Vice President; J. Phillips,
L. Yattien-Amiguet, F. Njoku, and I. Ibrahim of the Communication and External Relations Department; and L. Sennett and
K. Juvonen of the Strategy and Operational Policies Department for additional inputs.
Cover Design and Photographs: Communications and External Relations Department.
Disclaimer: Designations in this publication do not suggest or imply any opinion on the part of the African Development Bank
Group concerning the legal status of any country or territory, or the delimitation of its frontiers.
Department of Development Research
African Development Bank
Avenue Joseph Anoma
01 BP 1387 Abidjan 01
Côte d’Ivoire
Telephone: +225 20 20 40 10
Website: www.afdb.org
ISSN – 1737-8990

ii

Annual Report 2015

Contents
Acknowledgments
Fast Facts
Letter of Transmittal
The President and Executive Directors
Composition of the Boards of Directors
Message from the President of the African Development Bank Group
Executive Summary

ii
vi
vii
viii
ix
x
xii

Part I

1

Chapter 13

1.1

Africa’s Growth Remains Resilient
1.1.1 Variations in Regional Economic Growth
Importance of Commodity Prices in Driving Growth in Africa
1.2.1 Evolution of World Commodity Prices
1.2.2 Short-Term Impact of Changes in Commodity Prices on Growth
Medium-Term Economic Prospects
Macroeconomic Conditions: Performance and Prospects
1.4.1 Fiscal and External Account Positions
1.4.2 Inflation and Exchange Rates
Africa’s Resilient Growth and Sustainable Development Goals

4
5
6
6
7
7
10
10
10
12

Bibliography

14

Thematic Focus of the Report

Africa’s Performance and Prospects in a Period of
Global Economic Turbulence

1.2

1.3
1.4

1.5

iii

Chapter 2

17

2.1
2.2

18
19
19
22
24

Energy and Climate Change: Implications for Inclusive andGreen Growth in Africa
Energy and Structural Transformation for Inclusive Growth in Africa
Energy Challenges and Opportunities for Inclusive and Green Growth in Africa
2.2.1 Low Access to Modern, High Quality, and Reliable Energy in Africa
2.2.2 The Climate Change–Energy–Structural Transformation Nexus
2.2.3	Africa’s Energy Potential can Support Structural Transformation
for Inclusive Green Growth
2.3
The Bank’s Operational and Strategic Agenda on Climate Change and Energy
2.3.1 Responding to the Climate Change Challenge
2.3.2 Support to the Energy Sector
2.4	Measures to Facilitate a Rollout of Modern Energy Resources for Inclusive
and Green Growth
2.5
Looking Ahead
Bibliography

32
33

Part II

35

Chapter 3

37

3.1
3.2

38
43
51
56
60
61
61
64

Bank Group Operations, Effectiveness and GovernanceBank Group Operations

3.3
3.4
3.5
3.6
3.7

Overview of Bank Group Operations
Bank Group Operations by Priority Sectors and Areas of Special Emphasis
3.2.1 Ten-Year Strategy: Areas of Special Emphasis
Bank Group Operations by Region
Leveraging Resources and Partnerships
The Bank Group and the Heavily Indebted Poor Countries Initiative
Looking Ahead: The Bank’s New Strategic Operational Orientation
Conclusion

Chapter 4

67

4.1
4.2
4.3
4.4
4.5

68
71
77
78
78

Institutional Reforms, Effectiveness and Corporate Management

iv

26
27
27
29

Institutional Reforms and Related Enhancements
Development Effectiveness and Quality Assurance
Policies and Strategies
Mid-Term Review of the ADF-13 Replenishment
Independent Evaluation of the Bank GroupAnnual Report 2015

4.6
4.7

4.8
4.9

Procurement and Fiduciary Services
The Bank as a Knowledge Broker
4.7.1 Development Research Activities
4.7.2 Statistical Knowledge Products and Activities
4.7.3 Training, Other Knowledge Management, and Capacity Development Activities
Intermediate Recourse Mechanisms and Administrative Tribunal
Deployment of Human Resources

79
80
80
81
82
83
85

Chapter 5

91

5.1

92
92
93
93
94
94
94
94
94
95
96
96
97
97

Oversight Functions and Strategic Responsibilities of the Boards

5.2

The Roles and Highlights of Major Activities of the Boards of Governors
5.1.1 The 2015 Annual Meetings
5.1.2 Election of a New Bank Group President
5.1.3 The Bank’s 50th Anniversary Celebrations
Roles of the Boards of Directors and Highlights of their Major Activities
5.2.1 Working Modalities and Supporting Committees of the Boards of Directors
5.2.2 Work Program of the Boards of Directors
5.2.3 Enhancing the Effectiveness and Efficiency of the Boards
5.2.4 Business Continuity and Response to Unexpected Events
5.2.5 Budget, Institutional Reforms, and Effectiveness5.2.6 Strategies and Policies to Enhance Operations
5.2.7 Developmental Thrust of Country Strategy Papers
5.2.8 Implementing Aspects of the Ten-Year Strategy
5.2.9 Field Missions

Part III101

Chapter 6

103

African Development Bank
African Development Fund
Nigeria Trust Fund

121
219
253

Annexes
Appendices

283
305

Financial Management and Financial Statements

ADB, ADF, and NTF Financial Management and Financial Statementsv

Fast Facts

African Development Bank Group

Constituent Institutions
Shareholders
MissionAuthorized Capitalas of 31 December 2015 (ADB)
Subscribed Capitalas of 31 December 2015 (ADB)
Paid-up Capitalas of 31 December 2015 (ADB)
Callable Capitalas of 31 December 2015 (ADB)
Total Reserves
as of 31 December 2015 (ADB)
Approved Operations, 2015

Of which:
Loans
GrantsHIPC Debt Relief
Equity Participation
Guarantees
Special Funds*
Approvals by Sector, 2015

Total Cumulative Approvals, 1967-2015

The African Development Bank (ADB)The African Development Fund (ADF)
The Nigeria Trust Fund (NTF)
54 African countries (Regional Member Countries)
26 non-African countries (Non-Regional Member Countries)
To promote sustainable economic growth and reduce poverty in Africa
UA 66.98 billion
UA 65.48 billion
UA 4.88 billion
UA 60.60 billion
UA 2.92 billion
241 operations totaling UA 6.33 billion, financed as follows:
ADB: UA 4.52 billion
ADF: UA 1.52 billion
NTF: UA 12.5 million
Special Funds*: UA 288.8 million
UA 4.77 billion (100 operations)
UA 471.4 million (87 operations)
UA 47.0 million (1 operation)
UA 64.3 million (4 operations)
UA 696.9 million (7 operations)
UA 288.8 million (42 operations)
Infrastructure: UA 3.08 billion (48.6 percent)Finance: UA 1.35 billion (21.3 percent)Multisector: UA 788.9 million (12.5 percent)Social: UA 595.9 million (9.4 percent)Agriculture and Rural Development: UA 514.6 million (8.1 percent)Industry, mining and quarrying: UA 3.1 million (0.05 percent)
4,974 approvals totaling UA 87.97 billion

Notes:* Special Funds: These are the approvals for the operations of the African Water Facility, the Rural Water Supply and Sanitation Initiative, the Global Environment Facility, the Global
Agriculture and Food Security Program, the Africa Growing Together Fund, the European Union Africa Infrastructure Trust Fund, the Fund for African Private Sector Assistance, theSustainable Energy Fund for Africa, the Middle East and North Africa Transition Fund, the Organization of the Petroleum Exporting Countries, and the Zimbabwe Multi-Donor Trust Fund.

vi

AFRICAN DEVELOPMENT BANK GROUP

President
27 April 2016
The Chairperson
Boards of Governors
African Development Bank
African Development Fund

Dear Mr. Chairperson,
In accordance with Article 32 of the Agreement Establishing the African Development Bank and Articles 8, 11, and 12of the General Regulations made thereunder, and pursuant to Article 26 of the Agreement Establishing the African
Development Fund and Articles 8, 11, and 12 of the General Regulations made thereunder, I have the honor, on behalfof the Boards of Directors of the Bank and of the Fund, to submit the audited financial statements of the African
Development Bank and the audited Special Purpose Financial Statements of the African Development Fund for thefinancial year ended 31 December 2015.
This joint report includes the administrative budget for the period commencing 1 January 2016 and ending 31 December
2016, as approved by the Boards of Directors, as well as a review of developments in the African economy and in theoperational activities of the Bank Group during 2015.
Please accept, Mr. Chairperson, the assurance of my highest consideration.

Akinwumi Ayodeji Adesina
Presidentof theAfrican Development Bank Group
andChairperson of theBoards of Directors

Avenue Joseph Anoma · 01 BP 1387 Abidjan 01, Côte d’Ivoire · Tel: +225 20 20 48 22 · Fax: +225 20 21 31 00 · Email: afdb@afdb.com · Internet: www.afdb.org

vii

The President andExecutive Directors

African Development Bank Group

Front row (seated), from left to right: Mr. Abdallah MSA (Comoros); Mrs. Soraya MELLALI (Algeria); Mrs.
Petronella Mukelabai Nawa MWANGALA (Zambia); Mr. Shahid KHAN (South Africa); Mr. Akinwumi Ayodeji
ADESINA (President of the Bank Group, and Chairperson of the Boards of Directors); Mr. Amadou
KONE (Côte d’Ivoire); Mr. Mohamed ZAGHLOUL (Egypt); Mrs. Mulu KETSELA (Ethiopia); and Mr. Hau
Sing TSE (Canada).
Back row (standing), from left to right: Mr. Bright Erakpoweri OKOGU (Nigeria); Mr. Mariano MUÑOZCARPENA (Spain); Mr. Tomoya ASANO (Japan); Mr. Abdelmajid MELLOUKI (Morocco); Mr. DominicO’NEILL (United Kingdom); Mr. Mahomed Rafique Jusob MAHOMED (Mozambique); Mr. Heikki
TUUNANEN (Finland); Mr. Leonard SENTORE (Burundi); Mr. Ronald MEYER (Germany); Mr. Tarik
AL-TASHANI (Libya); Mr. Alieu Momodou NGUM (The Gambia); and Mr. Matthew TURNER (USA).

viii

Annual Report 2015

Composition of the Boards of Directors
as of 31 December 2015

The Board of Directors of the African Development Bank
Chairperson: Akinwumi Ayodeji ADESINA
Executive Directors
Tarik AL-TASHANI (Libya)
Tomoya ASANO (Japan)
Mulu KETSELA (Ethiopia)
Shahid KHAN (South Africa)
Amadou KONE (Côte d’Ivoire)
Mahomed Rafique Jusob MAHOMED (Mozambique)
Soraya MELLALI (Algeria)
Abdelmajid MELLOUKI (Morocco)
Ronald MEYER (Germany)
Abdallah MSA (Comoros)
Mariano MUÑOZ-CARPENA (Spain)
Petronella Mukelabai Nawa MWANGALA (Zambia)
Alieu Momodou NGUM (The Gambia)
Bright Erakpoweri OKOGU (Nigeria)
Dominic O’NEILL (UK)
Leonard SENTORE (Burundi)
Hau Sing TSE (Canada)
Heikki TUUNANEN (Finland)
Mohamed ZAGHLOUL (Egypt)
Vacant (USA)

Alternate Executive Directors
Hussein Abdi HALANE (Somalia)
Saleh BARABBA (Saudi Arabia)
VacantBheki Sibonangaye BHEMBE (Swaziland)
Bernado ABAGA NDONG MAYIE (Equatorial Guinea)
Heinrich Mihe GAOMAB II (Namibia)
Alfredo MENDES (Bissau-Guinea)
VacantVacantOusman Sougui ABAKAR (Chad)
Abdenor BRAHMI (France)
Cornelius Karlens DEKOP (Botswana)
Miata BEYSOLOW (Liberia)
Maria das Neves Ceita Batista de SOUSA (São Tomé & Príncipe)
Eric HILBERINK (Netherlands)
Félicité Célestin OMPORO ENOUANY (Congo)
Thamer Mohammad ALFAILAKAWI (Kuwait)
VacantAli MOHAMED ALI (Djibouti)
Matthew TURNER (USA)The Board of Directors of the African Development Fund
Chairperson: Akinwumi Ayodeji ADESINA
Executive Directors
Tarik AL-TASHANI (ADB)
Tomoya ASANO (Japan)
Mulu KETSELA (ADB)
Shahid KHAN (ADB)
Amadou KONE (ADB)
Mahomed Rafique Jusob MAHOMED (ADB)
Soraya MELLALI (ADB)
Ronald MEYER (Germany)
Abdallah MSA (ADB)
Mariano MUÑOZ-CARPENA (Spain)
Dominic O’NEILL (UK)Hau Sing TSE (Canada)
Heikki TUUNANEN (Finland)
Vacant (USA)

Alternate Executive Directors
Hussein Abdi HALANE (Somalia)
Saleh BARABBA (Saudi Arabia)
VacantBheki Sibonangaye BHEMBE (Swaziland)
Bernado ABAGA NDONG MAYIE (Equatorial Guinea)
Heinrich Mihe GAOMAB II (Namibia)
Alfredo MENDES (Bissau-Guinea)
VacantOusman Sougui ABAKAR (Chad)
Abdenor BRAHMI (France)
Eric HILBERINK (Netherlands)
Thamer Mohammad ALFAILAKAWI (Kuwait)
VacantMatthew TURNER (USA)

Source: AfDB Office of the Secretary General.

ixMessage from the Presidentof the African Development Bank Groupand Chairperson of the Boards of Directors

Dr. Akinwumi Ayodeji Adesina
President of the African Development Bank Group

Following my election as President of the African Development Bank Group and subsequent assumptionof duty on 1 September 2015, I have rolled out my vision to accelerate the implementation of the Bank’s
Ten-Year Strategy during my tenure, building on the achievements of my predecessor, Dr. Donald Kaberuka.
Let me take this opportunity to express my appreciation to the Boards of Governors for giving me theprivilege and honor to serve the Bank Group and Africa. In fulfilment of the mandate entrusted to me,
I have the pleasure of presenting the 2015 Bank Group Annual Report.
The Annual Report notes the resilience of Africa’s economic performance in 2015 amid global and regional
headwinds, notably the persistent decline in commodity prices and the El Niño weather conditions inseveral African countries. Real GDP growth averaged 3.6 percent in Africa, the second highest after
emerging and developing Asia’s 6.6 percent. Africa was also home to five of the world’s fastest-growing
ten economies in 2015. However, there are numerous challenges confronting the continent. Inequality
remains high and poverty, hunger, and malnutrition are deeply entrenched, thus requiring concerted
efforts to accelerate inclusive growth and employment creation, especially among the youth.
To overcome these challenges, I have laid out a five-pronged priority development agenda, which I
call the High 5s, for a scaled-up implementation of the Ten-Year Strategy. These are: To Light Up andPower Africa, To Feed Africa, To industrialize Africa, To Integrate Africa, and To Improve the Quality oflife for the People of Africa.

xAnnual Report 2015

I am pleased to report that during the last quarter of 2015, the Bank Group worked with partners todevelop the New Deal on Energy for Africa, which seeks to build transformative partnerships to underpin
the achievement of universal access to energy by 2025. Similarly, the Bank Group convened the Dakar
High-Level Conference, which produced an Action Plan to tackle food insecurity and create an agroindustrialization process towards the transformation of Africa’s agriculture. We have also launched the“Jobs for Youth in Africa” initiative to increase youth employment, and the “Affirmative Finance Action
for Women in Africa” initiative to support women-owned enterprises. In addition, we will address thebarriers to integration of Africa’s markets by supporting regional value chains and investing in high-quality
regional infrastructure.
Despite the unfavorable global financial environment, the Bank Group enhanced the quality of its
portfolio while striving to maintain a strong financial position. The Bank Group’s AAA credit rating forsenior debt was reaffirmed with a stable outlook. This attests to the robustness of the measures put inplace to ensure sound capital adequacy and prudent financial and risk management. As a result, theBank Group was able to maintain the strategic focus on the priority areas of its Ten-Year Strategy. Total
commitments in 2015 increased by 25 percent to reach USD 8.8 billion, from USD 7 billion in 2014.
Almost half of the total approvals were for infrastructure development, a pre-requisite for inclusive growth.
We are pleased to complete the move to our Headquarters in Abidjan, Côte d’Ivoire, with 1,126 Bank
personnel having returned from Tunis by the end of 2015. We remain indebted to the Government andpeople of Tunisia for their warm hospitality during the 11 years we operated from Tunis. I also thankthe Government of Côte d’Ivoire for facilitating the Bank’s return to its Headquarters.
Finally, I wish to pay a special tribute to the shareholders and partners for their unequivocal support
during the year. I also express my appreciation to our Boards of Directors, to Management, and to staff
for their contributions and commitment throughout the year. As we begin consultations for the ADF-14
replenishment cycle, we will count on this support to enable us to carry out the mandate of building
an inclusive and sustainable future for the people of Africa.

Akinwumi Ayodeji Adesina
President of the African Development Bank Group andChairperson of the Boards of Directors

xiExecutive Summary

Executive Summary

The African Development Bank Group’s operations, sector
strategies and policy engagements in 2015 were guided by
the twin objectives of achieving inclusive and green growth
as enshrined in its Ten-Year Strategy (TYS). These objectives
are critical in creating better opportunities for the people,
particularly vulnerable groups, mainly children and women,
and in lifting millions out of poverty. In keeping with thisobjective therefore, the theme of the 2015 Annual Report is“Energy and Climate Change: Implications for Inclusive andGreen Growth in Africa”.
The Report is presented in three main parts. Part I examines
Africa’s economic performance and prospects within thecontext of global developments, and elaborates on the themeof the Report. Part II reviews Bank Group interventions in
the operational priority areas of the TYS. It also discusses
the development effectiveness of Bank Group operations,
examines the corporate management activities of the Bank’sorganizational units, and presents the governance structureof the Bank Group, paying particular attention to the activities,
oversight functions and strategic responsibilities of the Boards.
Part III presents the financial management and financial
statements. It also outlines the management of financial
performance in turbulent times.

Africa Maintained Resilience
Amid Global and Regional Headwinds
Africa’s economic performance has remained resilient amid
global and regional headwinds. Average real Gross Domestic
Product (GDP) grew by 3.6 percent in 2015, higher than the
global average of 3.1 percent, and the Eurozone average of
1.6 percent. In 2015, five African countries were among theworld’s ten fastest-growing countries with real GDP growthof 7 percent or higher. Despite this high growth, the numberof the poor in Africa has increased and inequalities persist.
Structural transformation in sectors that provide livelihoods tothe majority, such as agriculture and small businesses, remains
a crucial piece of the development puzzle, as it can raise overall
productivity, improve living standards, and reduce poverty.

xiiMacroeconomic Stability. The continent’s macroeconomic
balance has come under pressure due to weakening global
economic conditions and other adverse shocks. In 2015, thefiscal deficit is estimated to have risen to 6.6 percent of GDP
from 4.8 percent the preceding year. The widening fiscal deficit
mainly reflects a fall in revenues due to a decline in earnings
from commodity exports, coupled with an increase in capital
expenditure. The evolution in the external current accountposition mirrored the trend of the fiscal balance. For Africa
as a whole, the external current account deficit weakened
to 7.3 percent in 2015 from 4.8 percent in the previous year.
However, Africa’s prospects for 2016 and beyond appear
favorable, underpinned by strong domestic consumer demandand fiscal consolidation measures to contain the commodity
price shock. The downside risks in the medium term include
the continued decline in commodity prices and The El Niño
weather conditions that are expected to persist in a numberof African countries. On balance, growth in 2016 is therefore
projected to increase modestly to 3.7 percent, and accelerate
further to 4.5 percent in 2017.
Support from the Bank Group. The Bank Group is readyto assist Regional Member Countries (RMCs) weather the
headwinds confronting the continent by providing them withtimely countercyclical support to enhance the resilience ofeconomies. The Bank Group has also stepped up its analytical
capacity to provide economic intelligence, policy advice andrelated technical support to strengthen macroeconomic policy
management.

Energy and Climate Change Nexus
Energy and climate change. Africa’s ability to deliver
structural transformation for inclusive growth and achieve
the Sustainable Development Goals (SDGs) hinges on accessto affordable, reliable, sustainable and modern energy for all.
Today, over 645 million people in Africa do not have accessto electricity, 700 million have no access to clean cooking
energy, and 600,000 die each year from indoor pollution

Annual Report 2015

caused by a reliance on biomass for cooking. Energy sector the fragility situations and conflicts, among other factors.
bottlenecks and power shortages are estimated to cost about The Bank Group has been making concerted efforts to
2 to 4 percent of GDP annually, undermining economic growth, address the disbursement delays, including strengthening theemployment creation, and investment.
monitoring and reporting of recurring issues, and streamlining
the operational business processes affecting disbursements.
Africa is capable of achieving universal access to energy services
while reducing the carbon intensity of growth, thus lowering its Ten-Year Strategy Priority Sectors
contributions to global carbon dioxide (CO2) emissions. About The TYS emphasizes priority sectors comprising infrastructure
7.7 percent of the world’s proved conventional oil reserves, 7.6 (energy, transport, water and sanitation, and communications),
percent of proven natural gas reserves, and 3.7 percent of private sector development, regional integration, governance,
remaining coal reserves are in Africa. The continent has well and skills and human development.
over 10 Terawatts (TW) of solar potential, 350 Gigawatts (GW)of hydroelectric potential, 110 GW of wind potential and an Energy. The Bank Group’s total approvals for the energy
additional 15 GW of geothermal potential.
sector in 2015 amounted to UA 871.6 million, made up ofloan and grant approvals of UA 841 million (96.5 percent)The 2015 Paris Agreement on climate change committed to and other approvals of UA 30.6 million (3.5 percent). The
emission reductions consistent with staying well below the 2°C energy sector approvals represented 28.3 percent of total
threshold and to pursue efforts to limit temperature increase to Bank Group infrastructure approvals. To mobilize partnership
1.5°C above pre-industrial levels. The intersections between support and financing to close Africa’s huge energy deficit,
energy and climate-change policies could limit Africa’s ability the Bank held a High-Level Consultative Stakeholder Meeting
to harness its conventional energy resources, especially oil, in September 2015 where the New Deal on Energy for Africa
gas and coal. This calls for innovative policies and financing was articulated. The African Renewable Energy Initiative (AREI),
models that harness synergies and limit trade-offs. The Bank was also announced at the Climate Change Conference ofGroup has announced the New Deal on Energy for Africa and Parties (COP21) in December 2015.
a Transformative Partnership on Energy for Africa, to light up
and power Africa by 2025, while decoupling the continent’s Environment and Climate Change. One key area of the Bankeconomic productivity from carbon dioxide emissions.
Group’s activities in 2015 was the support towards climatechange adaptation and mitigation issues. The Bank GroupBank Group Operations, 2015
announced that it will triple its financing for climate-changeBank Group Approvals and Disbursements. As in the previous initiatives to reach USD 5 billion a year by 2020.
years, and in line with the Bank Group’s TYS, infrastructure
operations, mainly transport and energy, received the bulk of the Transport. In 2015, Bank Group total approvals for transport
resources. In 2015, total approvals of Bank Group operations sector operations amounted to UA 1.72 billion, with loans
amounted to UA 6.33 billion as at end-December 2015, a and grants accounting for UA 1.58 billion (91.9 percent). The
25.4 percent increase over 2014 approvals of UA 5.05 billion remaining UA 139.5 million (8.1 percent) represented financing
in 2014. Total Bank Group approvals for 2015 are made up through Special Funds. Approvals for the transport sectorof total African Development Bank (ADB) public and private represented the largest share (55.9 percent) of the UA 3.08
approvals (UA 4.52 billion), African Development Fund (ADF) billion total Bank Group approvals for all infrastructure operations.
approvals (UA 1.52 billion), Nigeria Trust Fund (NTF) approvals(UA 12.5 million) and Special Funds (UA 288.9 million).
Water and Sanitation. During the year, the Bank Group’s
interventions contributed to the development of the water
In 2015, Bank Group loan and grant disbursements (excluding supply and sanitation sector in the RMCs, with total operations
equity participation, guarantees, and Special Funds), amounted of UA 398.7 million approved for sustaining livelihoods in
to UA 3.03 billion. Since 2012, actual disbursements against several countries. The Bank Group continued to host andtargets have diverged, as indicated by the decline of the support three special and complementary initiatives: thedisbursement rate from 98 percent in 2012 to 81.9 percent Rural Water Supply and Sanitation Initiative (RWSSI), thein 2015. Disbursement delays have been caused by weak Multi-Donor Water Partnership Program (MDWPP), and theinstitutional and management capacity in some RMCs, and African Water Facility (AWF).

xiii

Executive Summary

Regional Integration. In 2015, total approvals for regional representatives, including Ministers of Agriculture, Finance and(multinational) operations amounted to UA 1.44 billion, a 34 Trade, and Central Bank Governors. The conference endorsed
percent increase from the 2014 approvals of UA 1.08 billion. Of an 18-point Action Plan for African Agricultural Transformation,
the total regional approvals, the largest share (40.2 percent) was which is guiding the preparation of the continental long-term
allocated to transport. This was followed by the finance sector strategy for agricultural transformation (2016-25).
(25.3 percent) for lines of credit and trade finance, and theenergy sector (23.8 percent), with smaller shares for multisector Gender. Implementation of the Bank Group’s Gender Strategy,
operations, agricultural, social, and communications sectors. 2014-2018, was accelerated in April 2015 with the establishmentof a network of 85 gender focal points throughout the Bank.
Private-Sector Operations. During 2015, energy and other Three capacity-building workshops were held to support the
infrastructure investments benefited significantly from the focal points in September and October 2015. During theBank’s private sector-financing window. Total Bank Group Dakar High-Level Conference on Agricultural Transformation
approvals of private sector-financed operations in 2015 in Africa in October 2015, the AfDB President announced
amounted to UA 1.56 billion, a marginal decline of 1.9 percent the “Affirmative Finance Action for Women in Africa” targetedfrom the UA 1.59 billion recorded in 2014. In 2015, of the at: (i) women-owned micro-enterprises, particularly those of
total private sector approvals of UA 1.56 billion, finance sector rural women; and (ii) women-owned small- and medium-sized
approvals (lines of credit, trade finance, etc.) accounted for enterprises operating in different economic sectors.
the largest share (42.9 percent), followed by energy (22.7
percent), with the remainder going to transport operations Countries under Fragile Situations. In 2015, the ADF(19.5 percent), agriculture (10.2 percent), and other sectors. Board approved UA 365.7 million in support of 16 countries
considered to be in fragile situations. The Board also approved
Supporting Economic and Governance Reforms. As at the Operational Guidelines for the implementation of the Strategy
end-December 2015, total approvals for governance-related on Fragility and the Transition Support Facility (TSF). In addition,
operations amounted to UA 788.9 million. Two of the approved the ADF has revised its approach to using the resources of theoperations include: (i) Niger’s Financial Reforms and Food TSF meant for critical capacity building interventions.
Security Support Programme (PAREFSA I) for UA 20 million;and (ii) Mali’s Emergency Governance and Economic Recovery The Bank Group’s new Operational Strategic Orientation.
Support Program (EGERSP) for UA 15 million.
The eighth President of the Bank Group, Dr. Akinwumi Ayodeji
Adesina, laid out a new strategic operational agenda for the Bank
Promoting Skills and Human Development. The sum of Group, outlined in the “High 5s”, aimed at providing a sharp
UA 595.9 million was approved to support various human focus on the Bank Group’s work as it implements the TYS. The
development and relief operations during 2015. One of the High 5s are to: Light up and Power Africa; Feed Africa; Integrate
operations highlighted is a grant of UA 23.9 million approved Africa; Industrialize Africa; and Improve the Quality of Life for thefor the Post Ebola Recovery Social Investment Fund Project People of Africa. These operational priorities are consistent with(PERSIF) for the three worst-affected West African countries the SDGs and therefore essential in transforming the lives of the(Guinea, Liberia, and Sierra Leone).
people of Africa through rapid, sustained, and inclusive growth.

Areas of Ten-Year Strategy Special Emphasis
The TYS also emphasizes support to the special areas ofagriculture and food security, gender mainstreaming, andaddressing fragility and building resilience. Operational
activities in these areas during 2015 are highlighted below.
Agriculture. Bank Group approvals in the agriculture sector
amounted to UA 514.6 million. In line with the TYS, theBank Group organized the Dakar High-Level Conferenceon Agricultural Transformation in October 2015 for over
600 participants, including 155 high-level Government

xiv

Implementation of the High 5s will require building on thefoundations of the existing Bank Group sector strategies
and policies, particularly the regional integration policy andstrategy, the private sector development strategy, the humancapital strategy, the financial sector development policy andstrategy, and the energy policy.

Institutional Reforms, Effectivenessand Corporate Management
Budget Reforms and Administrative Budget. In 2015, theBank’s management of the administrative budget was aimed

Annual Report 2015at achieving strategic prioritization of resources, efficient andeffective delivery of its development programs, aggregate
fiscal discipline, and establishing clear lines of accountability.
In addition, the implementation of budget reforms was anintegral part of a broader institutional reform agenda to improvecoordination, delivery and corporate performance.

Policy and Methodology for Bank Group Funded Operations;(ii) Bank Group Knowledge Management Strategy, 2015-2020;(iii) African Natural Resources Center Strategy, 2015-2020;(iv) Strategic Framework and Operational Guidelines for thePrivate Sector Credit Enhancement Facility; and (v) Regional
Integration Policy and Strategy (RIPoS).

Decentralization. During the year, the implementation of the
Decentralization Roadmap Action Plan (2011-2015) included
a review of the pilot Regional Resource Centers (RRCs) inEastern and Southern Africa which were established in 2012.
The findings from the review exercise were instrumental in the
Boards’ decision to approve the establishment of a third RRC
for the Northern Africa Region.

Mid-Term Review of the ADF-13 Replenishment. The
ADF Deputies met in Abidjan, Côte d’Ivoire, in November
2015 for the ADF-13 Mid-Term Review. The lower loan andgrant disbursement rates, and the slow uptake of innovative
financing were of major concern to the ADF Deputies. In
addition the Deputies stressed the importance of improving
gender balance within the institution, and at managementlevel in particular. On the whole, they agreed that most of the
Return to the Headquarters (HQ). By end-December 2015, commitments at the Mid-Term Review had been met undera total of 1,126 staff had been successfully moved and settled the ADF-13 replenishment, and that consultations for thein Abidjan. The Bank took advantage of its return to Abidjan ADF-14 should focus on addressing outstanding elements
to launch several projects for the renovation and rehabilitation in ADF-13 and accelerating the implementation of the TYS.
of its HQ facilities in Abidjan.
Independent Evaluation of Bank Group Operations. The
Development Effectiveness. During the year, the Bank independent evaluation of Bank Group operations deliveredGroup continued to make progress in establishing quality in 2015 provided evidence-based and credible informationsocial and environmental safeguards, enhancing the quality to shape the AfDB’s work in several strategic areas, andof its operations, and strengthening its ability to measure contributed to better decision making within the institution.
and manage for development results. The 2015 Annual During the year, three flagship evaluations were carried out:
Development Effectiveness Review was its flagship publication (i) Independent Evaluation of General Capital Increase VI, andfor highlighting development results. The AfDB also broadened African Development Fund 12th and 13th Commitments;
its results culture by monitoring the quality and level of (ii) Independent Evaluation of Policy and Strategy Making
confidence in project rating through its readiness reviews (RR), and Implementation; and (iii) Independent Evaluation of
implementation progress and review reports (IPR), and project Administrative Budget Management of the African Development
completion reports (PCRs). Data were published quarterly in Bank. Two thematic evaluations were also delivered in 2015:
the Quality Assurance Dashboard and circulated to senior (i) Evaluation of AfDB Assistance to SMEs; and (ii) an Evaluation
management and departments for follow-up action.
of the Bank’s Private Equity Investments. In addition, country
evaluations included an impact evaluation on rural water supply
The Bank as a Knowledge Broker. The Bank Group’s and sanitation in Ethiopia.
Knowledge Program in 2015 was implemented through the
production and dissemination of several knowledge products, Deployment of Human Resources. As at end-December
statistical publications, and capacity building activities. The 2015, the total AfDB staff strength stood at 1,841 with 1,168
knowledge products include flagship publications, books, males (63.4 percent) and 673 females (36.6 percent). The total
journals, working papers, data banks, and advisory services staff distribution was as follows: 1,215 professional staff, offor the benefit of the RMCs.
which 324 (26.7 percent) are female, and 587 general service
staff, of which 336 (57.2 percent) are female.
Policies and Strategies. The implementation of the TYS
entered its third year in 2015, with a focus on policies and Oversight Functions andoperational strategies that support inclusive and green growth. Strategic Responsibilities of the Boards
In 2015, the Bank Group approved the following five new Oversight Functions and Strategic Responsibilities.
policies, strategies, and operational guidelines: (i) Procurement Shareholder representation and oversight is ensured throughxv

Executive Summary

the Boards of Governors and the Boards of Directors. The
50th Annual Meeting of the Board of Governors of the Bankand the 41st Annual Meeting of the Board of Governors of theFund were held in Abidjan, Côte d’Ivoire, from 25 to 29 May
2015. The Annual Meetings coincided with the celebrationsof the 50th anniversary of the AfDB.
In the exercise of their statutory duties, the Boards ofGovernors adopted nine resolutions. Among the highlights
were: (i) the election of Dr. Adesina as the eighth Presidentof the African Development Bank Group; and (ii) the vote ofThanks to Dr. Donald Kaberuka, the outgoing President, forthe eminent services rendered to the African Development
Bank Group. In particular, the Governors paid glowing tributeto Dr. Kaberuka, for his inspiring and visionary leadership in

xvi

successfully overseeing the major redirection of the Bank
Group’s strategy over his ten-year presidency.

Financial Management
Strong Financial Position. In the face of continuing turbulencein the financial markets in 2015, the Bank maintained aconservative investment strategy, which helped to limit interest
rate and exchange rate sensitivity, thus reducing negative
impacts of the Bank’s exposure to financial markets. The four
key rating agencies, Standard and Poor’s, Fitch, Moody’s
and Japan Credit Rating Agency reaffirmed their AAA/Aaa
and AA+/Aa1 ratings of the Bank’s senior and subordinateddebts respectively, with a stable outlook. The high ratings
confirm the Bank’s efficient management, strong financial
position, membership support, capital adequacy and liquidity.

Annual Report 2015

Table 0.1

Summary of Bank Group Operations, Resources and Finance, 2006-2015(UA million)
Operations
Bank Group Approvals (b)NumberAmountof which HIPC
Disbursements
ADB Approvals (b)NumberAmountof which HIPC
Disbursements
ADF Approvals (b)NumberAmountof which HIPC
Disbursements
NTF Approvals
NumberAmountof which HIPC
Disbursements
Special Funds Approvals (c)NumberAmountResources and Finance(at year’s end)
ADB
Authorized Capital
Subscribed Capital (d)Paid-up Portion (d)Callable Portion
Borrowing (gross)
Outstanding Debt
Cumulative Exchange
Adjustment on Subscriptions
Reserves
Gross Income (e)Net Income (f)ADF
Subscriptions (g)Other Resources (h)NTF
Resources (gross)

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Cumulative
Total (a)137
2,596.88
257.491,239.03

100
3,097.64
153.17
1,615.68

133
3,528.73
159.87
1,860.91

181
8,064.49
372.56
4,083.59

139
4,099.75
202.952,510.70

184
5,720.29
1,350.85
3,174.11

199
4,253.75
248.003,379.53

317
4,385.78
22.32
3,133.95

232
5,049.92
3,156.96

241
6,334.69
46.96
3,025.00

4,974
87,973.15
6,158.28
51,440.06

38
1,045.37
102.21
548.4429
1,670.06
884.7558
1,807.01
113.75727.5384
5,604.07
112.772,352.29

59
2,581.13
144.14
1,339.85

59
3,689.43
1,178.04
1,868.79

48
2,080.46
134.582,208.17

65
1,831.70
9.64
1,430.78

79
3,201.30
1,938.53

99
4,518.23
1,619.17

1,609
51,329.18
3,158.22
29,607.03

84
1,544.57
155.28685.1654
1,381.75
153.17725.0062
1,665.34
17.95
1,124.92

77
2,426.96
259.091,726.43

65
1,456.72
29.99
1,165.84

87
1,831.86
171.93
1,296.65

98
1,890.17
112.21
1,169.60

156
2,269.55
12.68
1,702.21

112
1,592.91
1,215.30

98
1,515.12
46.96
1,398.36

2,938
34,807.80
2,936.91
21,583.98

5.43

5.94

2
28.16
28.16
8.45

3
5.70
0.70
4.87

2
29.53
28.83
5.02

3
10.88
0.88
8.67

3
14.10
1.20
1.76

5
31.17
0.96

2
11.49
3.13

2
12.50
7.47

97
451.4763.15
249.05

15
6.94

17
45.83

11
28.21

17
27.76

13
32.38

35
188.1250
269.0391
253.3639244.2242288.85330
1,384.70

21,870.00
21,794.00
2,357.78
19,436.76
6,088.75
5,870.47

21,870.00
21,693.16
2,351.53
19,341.63
6,803.17
6,198.87

21,870.00
21,765.14
2,356.01
19,409.14
7,160.81
6,707.28

22,120.00
21,817.58
2,359.32
19,458.25
10,703.22
10,580.64

67,687.46
23,924.62
2,375.63
21,548.99
12,231.34
11,980.57

66,054.50
37,322.00
3,289.06
34,032.95
12,231.39
12,902.96

66,975.05
65,215.04
4,962.68
60,252.36
13,373.32
13,278.80

66,975.05
65,210.13
4,962.34
60,247.80
13,326.00
12,947.44

66,975.05
65,133.22
4,864.52
60,268.70
14,353.42
14,375.95

66,975.05
65,482.51
4,884.41
60,598.10
16,452.47
16,449.27(155.74)
2,305.48
542.85194.03(160.08)
2,531.80
578.62323.67(161.03)2,475.47
564.45304.66(161.97)2,552.96
518.88231.16(162.57)
2,627.28
519.32213.66(160.63)2,536.18
489.18164.51(166.83)
2,667.44
553.64
198.62(172.65)
2,856.88
479.64180.33(173.54)
2,815.32
484.73151.69(168.84)
2,921.25
491.2093.16

14,314.51(776.38)

15,218.76(703.50)

16,566.02(656.59)

17,854.02(493.44)

19,030.32(437.23)

20,428.32(375.27)

21,622.28(400.28)

23,084.05(401.16)

24,921.04(542.91)

26,122.31(611.30)

286.12273.47286.78156.73160.86

162.74164.62165.77168.28169.88Sources: AfDB Statistics Department for data on operations; AfDB Financial Control Department for data on Resources and Finance.
Notes:(a)	The cumulative figures go back to the initial operations of the three institutions (1967 for ADB, 1974 for ADF and 1976 for NTF).
(b)	Approvals include loans and grants, private and public equity investments, emergency operations, HIPC debt relief, loan reallocations, guarantee and Post Conflict Country Facility.
(c)	These are approvals on the operations of the Africa Growing Together Fund, the African Water Facility and Rural Water Supply and Sanitation Initiative, Global Environment
Facility, the Global Agriculture and Food Security Program, the Climate Investment Fund, the Congo Basin Forest Fund, the Fund for African Private Sector Assistance,
the Zimbabwe Multi-Donor Trust Fund, the Migration and Development Trust Fund, the Microfinance Capacity Building Fund, the Nigeria Technical Cooperation Fund, theGovernance Trust Fund, the Sustainable Energy Fund for Africa, the Middle East and North Africa Transition Fund, the Special Climate Change Fund, and the Organization of
the Petroleum Exporting Countries.
(d)	Subscribed capital and paid-up capital for 2005 were restated to exclude shares to be issued upon payment of future installments.
(e)	Gross income for the year 2013 has been restated for dividend amounts reclassified from Other Income.
(f)	Net income is before distributions approved by the Board of Governors.
(g)	Subscriptions = Restated for the year 2005 to be amounts paid instead of amounts pledged.
(h)	Other Resources = Accumulated Reserves/Loss + Net Income/Loss for the year + Miscellaneous.
The conversion rates are those for 31 December of each year.
The conversion rates of the ADB, ADF and NTF Unit of Account (UA) to US dollar for various years are as follows:
2006
2007
2008
2009
2010

1 UA = 1.50440 US dollars
1 UA = 1.58025 US dollars
1 UA = 1.54027 US dollars
1 UA = 1.56769 US dollars
1 UA = 1.54003 US dollars

2011
2012
2013
2014
2015

1 UA = 1.53527 US dollars
1 UA = 1.53692 US dollars
1 UA = 1.54000 US dollars
1 UA = 1.44881 US dollars
1 UA = 1.38573 US dollars

Percentages in the charts and tables of the Report may not add up to 100 due to rounding.

xvii

Table 0.2

Summary of Bank Group Approvals, 2015
(UA million)
Bank Group Approvals by Sector
SectorAgriculture and Rural Development
Social
Education
HealthOther
Infrastructure
Water Supply and Sanitation
EnergyCommunication
Transport
Finance
Multisector
Industry, mining and quarrying
Urban Development
Environment
Total Approvals

ADB
NumberAmount14358.8011
234.49
2
64.4
1
0.30
8
169.7938 2,066.74
8
260.189463.65385.72
18 1,257.19
20 1,322.21
14532.922
3.06
99

4,518.23

ADF
NumberAmount12
113.4018351.47
5
74.80
3
18.47
10
258.2038
779.49460.60
18391.8916327.00319.87
27250.8998 1,515.12

NTF
NumberAmount
1
6.50
1
6.50
1
6.00
1
6.00
2
12.50

Special Funds
NumberAmount
5
42.42
5
3.42
3
2.39
2
1.03
26
228.62
13
71.89
8
16.04
1
1.23
4
139.46
4
9.35
2
5.04
42
288.85

Bank Group
NumberAmount31
514.6235595.897139.20721.16
21435.52103 3,080.84
26398.6735
871.584
86.95
38 1,723.64
27 1,351.43
43788.862
3.06
241 6,334.69

ADB
NumberAmount47 2,753.21
24 1,567.00
23 1,304.69
1
262.31
23 1,186.21
13
667.718359.382
159.12
5744.21
1
193.974550.24
34
25.63
24
19.01
24
19.01
10
6.62
10
6.62
2
234.05
4
64.27
4
64.27
7
696.861397.796299.07
99 4,518.23

ADF
NumberAmount33
787.4933
787.4933
787.493
144.00
1
54.00
2
90.00
53
445.74
12
36.10
6
20.75
6
15.35
16
214.14336.86
22158.64
1
41.00
6
49.11
1
0.82
1
46.96
1
46.96
98 1,515.12

NTF
NumberAmount
2
12.50
2
12.50
2
12.50
-

Bank Group
NumberAmount82 3,553.19
59 2,366.98
58 2,104.68
1
262.31
23 1,186.21
13
667.718359.382
159.128888.21
2
247.976640.2487471.37
36
55.11
6
20.75
6
15.35
24
19.01
16
214.14336.86
22158.64
10
6.62
10
6.62
3
275.05
6
49.11
1
0.82
1
46.96
1
46.96
4
64.27
4
64.27
7
696.861397.796299.0742288.85
241 6,334.69

Bank Group Approvals by Financing Instrument
Financing Instrument
Project Lending
Public and Publicly Guaranteed
Project Loans
Sector Investment and RehabilitationLines of Credit
Private Non-Publicly Guaranteed
Project Loans
Lines of Credit
Soft Commodity Finance Facility
Policy-Based Lending
Sector Adjustment
Structural Adjustment
Budget Support
GrantsTechnical Assistance
Project Cycle Activities
Institutional Supportof which Private Sector
Middle-Income Countries Grant
Project Grants
Structural Adjustment Grant
Budget Support Grant
African Food Crisis Response Grant
Transition Support Facility Grant
Special Relief Fund
Emergency Assistance
Emergency Post ConflictSpecial Debt Relief Grant
Loans for Institutional Capacity Building
Loan for Transition Support Facility
Project Preparation Facility
Debt and Debt Service Reduction
SFM Debt Alleviation
HIPC Debt Relief
Post Conflict Country Framework
Equity Participation
Public Equity
Private Equity
Guarantees
Public Guarantees
Partial Risk Guarantees
Private Guarantees
Loan Reallocations
Special Funds
Total Approvals
Source: AfDB Statistics Department.
Note: The conversion rate used is that for 31 December 2015: 1 UA = USD 1.38573.

xviii

-

-

-

-

2

12.50

Bujagali Hydropower Dam, Uganda.

Part I

Thematic Focusof the ReportSupport to Agricultural Research for Development of Strategic Crops in Africa.

Chapter 1
Africa’s
Performanceand Prospects
in a Periodof Global
Economic
TurbulenceChapter 1

Africa’s Performance and Prospects in a Period of Global Economic Turbulence

Chapter 1
Africa’s economic performance has remained resilient amid global and regional headwinds. Average real GDP grewby 3.6 percent in 2015 compared with 3.7 percent the previous year. Indeed, five of the world’s ten fastest-growing
economies with real GDP growth of 7 percent or higher were in Africa. It should be noted however, that the continentcontinues to exhibit significant regional variations in the patterns of growth but medium-term growth prospects appear
favorable, mainly underpinned by strong domestic consumer demand and robust public investment in infrastructure.
The downside risks to the outlook include the continued decline in commodity prices and the El Niño weather
conditions. In view of this, growth in 2016 is projected to increase slightly to 3.7 percent and accelerate further to
4.5 percent in 2017 as global and regional conditions improve and ongoing policy initiatives take hold. To contain theadverse effects of the commodity price shocks on growth and macroeconomic stability, countries are encouraged
to implement countercyclical policies and undertake structural reforms in order to create the conditions for growth,necessary to improve human conditions—an imperative for the agenda on Sustainable Development Goals (SDGs).

1.1

Africa’s Growth Remains Resilient

Africa has endured the global headwinds, but growth has
remained resilient. In 2015, Africa was home to five of theworld’s ten fastest-growing economies. However, economic
activity on the continent still exhibits substantial regional andcountry variations, portending differences in the drivers ofgrowth, state of macroeconomic prudence, and the virilityof policy responses. On average, Eastern African economies
have registered faster growth than their peers.
Africa’s economic growth has held firm amid global andregional headwinds. This reflects the resilience of its
economies, underpinned by years of steely macroeconomic
policy implementation and public infrastructure investment.
In 2015, real GDP growth in Africa averaged 3.6 percent
compared with 3.7 percent in 2014. This growth outturn was
higher than the global average and that of Latin America andadvanced nations, notably the Eurozone and the United States.
Only East Asia and Emerging Economies together posted
higher growth than Africa, making Africa the second fastestgrowing economy in the world. Table 1.1 below shows Africa’s
growth performance from a regional and global perspective.
In 2015, Côte d’Ivoire, Democratic Republic of Congo(DRC), Ethiopia, Tanzania, and Rwanda were among the ten
fastest-growing countries in the world with real GDP growth4

averaging 7 percent and above. This number increased fromfour countries (Côte d’Ivoire, DRC, Ethiopia, and Mozambique)recorded in 2014. Growth in these countries was largely driven
by strong public investment in infrastructure, which is expected
to remain buoyant in the medium term. Furthermore, strong
domestic consumption and expansion in the services sector,
especially retail, finance, and information, communications andtechnology, fortified Africa’s resilience. This signifies a gradualdiversification of African economies, which if supported bya sound policy environment, could become the continent’s
bedrock for sustained growth.
The continent’s growth also reflects developments in Foreign
Direct Investment (FDI) and other external financial flows. The
structure of FDI has changed over the years and is no longer
concentrated in extractive industries. About 48 percent of
total FDI inflows to Africa are now directed to non-resource
sectors, which reflects the emergence of other sectors asimportant investment and growth drivers.
Africa’s equity markets recorded net portfolio outflows. In
2014, net inflows amounted to USD 23.1 billion, but this figure
decreased to USD 13.4 billion in 2015, which represents
an outflow of about USD 10 billion during this period. The
decrease was mainly recorded in resource sectors, whichhave been impacted by the sharp decline in commodity
prices. This points to the importance of strengthening policy

Annual Report 2015

Chapter 1

Table 1.1

Real GDP Growth (percentage per annum)
Global Economy
United States
Eurozone
East Asia and Emerging Economies (a)Latin America and Caribbean
AfricaMemorandum items
Eastern Africa
Central Africa
Western Africa
Northern Africa
Southern Africa
Africa (excluding Libya)
Sub-Saharan Africa (SSA)
SSA (excl. South Africa)
Oil-exporting Countries
Oil-importing Countries

2000-2009
3.9
1.8
1.4
8.1
3.2
5.3

2010-2013
4.1
2.0
0.7
7.8
4.2
4.8

2014
3.4
2.4
0.9
6.8
1.3
3.7

2015(e)
3.1
2.4
1.6
6.6
-0.1
3.6

6.7
5.1
7.1
4.6
4.4
5.4
5.8
6.6
4.5
5.1

6.4
5.0
6.2
3.8
3.7
4.5
5.3
6.0
4.7
5.0

6.5
6.1
6.0
1.4
2.8
4.2
5.0
5.9
3.7
3.8

6.3
3.7
3.3
3.5
2.2
3.7
3.6
4.2
3.5
3.6

Source: AfDB Statistics Department and IMF (World Economic Outlook, WEO).
Notes: (a) Emerging and developing Asia in WEO’s classification. e: estimates.

buffers and sources of domestic revenues in order to containthe destabilizing effects on the economy triggered by volatile
external portfolio flows.

1.1.1 Variations in Regional Economic Growth

growth in 2015 compared to 9.2 percent in 2014. Still, thisgrowth rate was higher than the 7 percent deemed necessary
to significantly improve poverty levels. Thus, translating thisgrowth into tangible development outcomes is the remaining
challenge for the DRC, and concerted efforts are required toconsolidate the gains achieved so far.

Africa’s growth exhibits significant regional and country
variations, reflecting differences in resource endowments,
degrees of fragility, exposures to external shocks, and the Western Africa. Average growth in the region declined sharply
flexibility and strength of the policy responses to those shocks. to 3.3 percent in 2015 from 6 percent the previous year. The
slowdown in growth was mainly due to weaker performance inEastern Africa. Growth in Eastern Africa has been consistently the oil sector in Nigeria, the region’s largest economy, and in Niger,
higher than in other regions, despite some specific regional another commodity-dependent country. Although the share ofshocks, including security concerns and periodic variations in Ebola-affected countries is smaller in overall GDP in Western
weather conditions. Average growth in the region is estimated Africa, weak growth performance in Guinea (0.1 percent) andat 6.3 percent in 2015, marginally below the 6.5 percent in Liberia (0.4 percent), and severe contraction in Sierra Leone
2014. A contraction in output in Burundi and South Sudan, (-21.5 percent), also capped output growth in the region.
both of which experienced political instability in 2015, weighed
down the region’s economic performance. However, the full Northern Africa. Growth more than doubled in this region
extent of this contraction was moderated by higher growth to 3.5 percent in 2015 from 1.4 percent in 2014 on the backin other countries within this region, notably Ethiopia, Djibouti, of improvements in the political and economic environments,
Rwanda, and Tanzania.
especially in Egypt. Stronger business confidence in Egypt
led to an expansion of growth to 4.2 percent in 2015 fromCentral Africa. Average growth fell sharply to 3.7 percent from 2.2 percent in 2014. However, economic recovery in this
6.1 percent in 2014. The decline in oil prices contributed to the region was overshadowed by political instability in Libya,
fall in output growth in Congo from 6 percent to 1.2 percent, with attendant adverse effects on oil production and, terrorist
while lower metal prices led to a marginal decline in output attacks in Tunisia, which led to a contraction of about 15
growth of the DRC, whose economy registered 7.7 percent percent in the tourism sector in the country.

5Chapter 1

Africa’s Performance and Prospects in a Period of Global Economic Turbulence

Southern Africa. In 2015, growth slowed to an average of 2.2 previous year. The index of crude oil prices declined bypercent from 2.8 percent in 2014, making Southern Africa the about 64 percent on average in 2015 while price indices ofslowest growing region on the continent. Without exception, metals and agricultural raw materials fell by an average of 26
all countries in the region posted slower growth. In general, percent and 15 percent, respectively. Box 1.1 lists commodity
the region has experienced major structural shocks, stemming classifications while Figure 1.1 depicts the evolution in selectedlargely from an acute shortage of power supply and hostile commodity price indices.
weather conditions, which adversely affected agricultural
production and water levels for hydropower generation. Thiswas compounded by low commodity prices, leading to a
reduction in mining activities and lower foreign exchange
Box 1.1
Commodity Classifications
earnings, and to a depreciation in exchange rates. Even for
Mozambique, the region’s fastest-growing economy, growth
List of all commodities: aluminum, bananas, barley,
slowed down to 6.3 percent in 2015 from 7.2 percent thebovine, coal, cocoa, coffee, copper, cotton, crude oil, fish,
previous year. South Africa, the region’s largest economy,
fishmeal, hides, iron, lead, logs, maize, natural gas, nickel,
continued to experience lackluster performance due toolive oil, oranges, palm oil, peanuts, rapeseed, rice, rubber,subdued demand and low prices of metals, which accountsawn-wood, soybean meal, soybean oil, sugar, sunflower,
for a sizable share of the country’s exports. This problem wastea, tin, uranium, wheat, wool, and zinc.
compounded by challenges in electricity supply, which affectedeconomic activity in many sectors of the economy. In view
1. Food and agricultural raw materials: bananas, barley,of these constraints, the country’s real GDP growth declined
bovine, cocoa, coffee, cotton, fish, fishmeal, hides, logs,
to 1.3 percent in 2015 from 1.5 percent the preceding year.

1.2 Importance of Commodity
Prices in Driving Growth in Africa
Africa’s growth has largely been ascribed to the commodity
super-cycle. However, estimates indicate that only 21.4 percent
of Africa’s average growth of 4.2 percent over the past decade
could be explained by the rise in commodity prices. Therefore, thegrowth impact of the recent fall in commodity prices will, dependon its intensity and duration, and the strength of internal andexternal buffers that countries built up during the boom period.
There is broad consensus in global discourse that thecommodity price super-cycle has played an important rolein the ‘Africa Rising’ narrative. While this may be true for oilexporting countries, the effect of other commodities on growth
may be less pronounced. As the commodity price boom
tapers off, it will be instructive to conduct an assessment of
the effect of commodity prices on Africa’s real GDP growth. An
African Development Bank Group study (forthcoming) showsthat, although commodity prices have played a role in driving
growth, the magnitude has been lower than previously thought.

1.2.1 Evolution of World Commodity Prices
The pace of the decline in prices of key commodities
accelerated in 2015, following a more gradual decline themaize, olive oil, orange, palm oil, peanuts, rapeseed, rice,rubber, sawn-wood, soybean oil, soybean meal, sugar,
sunflower, tea, wheat, and wool.

2. Energy: coal, crude oil, and natural gas.
3. Metals: aluminum, copper, iron ore, lead, nickel, tin,uranium, and zinc.
Source: http://www.imf.org/external/np/res/commod/Table2.pdf

Figure 1.1

Evolution of Global Commodity Price Indices(2005=100)
All commodities

Non-energy commodities

Crude oil

150

100

50

0
1992 1995

2000

2005

2010

2015

Source: AfDB, IMF.
Note: Non-energy commodities include food and agricultural raw materials
and metals.

6Annual Report 2015

The global supply of crude oil is likely to remain high during
most of 2016. Besides higher-than-expected production
from Organization of the Petroleum Exporting Countries(OPEC) producers, falling costs of the US shale-oil industry
also present downside risks to the global oil market. Upsiderisks include the delayed implementation of the Iran Nuclear
Agreement. This could stoke a rebound in prices, although
the increase may not be sufficient to offset the impact of thecurrent excess supply. Consequently, prices could remain
depressed, as Figure 1.1 shows.
The recovery in the price of non-energy commodities is
expected to be equally slow. Downside risks to prices include
slower demand in China. For metal prices, upside risks include
closures of high-cost mines and delays in bringing on-stream
new cost-efficient production capacity. A recovery in global
demand, especially in struggling Europe and slowing China,
could boost prices in non-fuel commodities.

1.2.2 Short-Term Impactof Changes in Commodity Prices on Growth
The effect of changes in commodity prices on output in Africa
is presented in Figure 1.2, illustrating the evolution of growth
in real GDP plotted against percent change in a composite
index of commodity prices.

Chapter 1

Figure 1.2

Growth in Real GDP and Change in Commodity
Price Index (Percent)
GDP growth (LHS)

Growth of Commodity Price Index (RHS)
20

8

10
0

6

-10
4

-20
-30

2

-40
0

-50
1993

1998

2003

2008

2011

Source: AfDB.
Note: Sample of countries: Algeria, Angola, Benin, Botswana, Burkina
Faso, Burundi, Cabo Verde, Cameroon, Central African Republic, Congo,
Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Gabon, Ghana, Guinea, The
Gambia, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar,
Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger,
Nigeria, Rwanda, São Tomé & Príncipe, Senegal, Seychelles, Sierra Leone,
Somalia, South Africa, Sudan, Swaziland, Tanzania, Togo, Tunisia, Zambia,
and Zimbabwe.

countercyclical policy and adjustment measures may be required
for affected countries in order to cushion the economy from adecline in domestic revenues generated by falling commodity prices.

Figure 1.2 highlights co-movement between growth in real
GDP and fluctuations in commodity prices. The effect ofcommodity price shocks on real GDP growth appears to 1.3
Medium-Term Economic Prospects
be higher during downturns than in boom periods. This istrue even after accounting for other global economic factors. Despite continuing challenges to global growth and volume
Estimates by the Bank Group show that in the short run, a 1 of trade, growth in Africa is expected to remain favorable
percent change in the price index of all commodities translates on the back of steady diversification, supported by public
into 0.15 percent growth in real GDP.
infrastructure investment. Growth performances will also
continue to vary within the different regions of the continent.
Furthermore, since commodity prices increased by anaverage of 6 percent from 2010 to 2014, this implies that a Recovery in the global economy is expected to remain weak.
0.9 percentage point gain in growth may be attributed to the Apart from the slowdown in China and other emerging markets,
commodity boom during this period. This accounts for 21.4 the protracted low commodity price environment continues
percent of Africa’s average growth of 4.2 percent recorded to raise concerns on global growth in the medium term. The
during the same period. This figure also correlates with the gradual rise in the US benchmark interest rate and prospects
McKinsey (2010) findings, that 24 percent of growth in Africa of further increases could lead to tightening of global financial
between 2000 and 2008 was from natural resources.
conditions, which could result in higher borrowing costs for
African countries. Growth in some emerging economies could
With such magnitude of the change in commodity prices on also weaken, amplified by the slowing economy in China andgrowth, the severity of the fall in commodity prices will depend deep recession in Brazil. Against this background, the global
on its duration and the strength of internal and external buffers economy is projected to grow by 3.2 percent in 2016 andcountries built up during the boom period. In general therefore, further strengthen to 3.5 percent in 2017.

7

Chapter 1

Africa’s Performance and Prospects in a Period of Global Economic Turbulence

Table 1.2

Real GDP Growth Outturn and Projections (percentage per annum)
Global Economy
United States
Eurozone
East Asia and Emerging Economies (a)Latin America and Caribbean
AfricaMemorandum items
Central Africa
Eastern Africa
Western Africa
Northern Africa
Southern Africa
Africa (excluding Libya)
Sub-Saharan Africa (SSA)
SSA (excl. South Africa)
Oil-exporting Countries
Oil-importing Countries

2014
3.4
2.4
0.9
6.8
1.3
3.7

2015(e)
3.1
2.4
1.6
6.6
-0.1
3.6

2016(p)
3.2
2.4
1.5
6.4
-0.5
3.7

2017(p)
3.5
2.5
1.6
6.3
1.5
4.5

6.1
6.5
6.0
1.4
2.8
4.2
5.0
5.9
3.7
3.8

3.7
6.3
3.3
3.5
2.2
3.7
3.6
4.2
3.5
3.6

3.9
6.4
4.3
3.3
1.9
3.8
4.0
4.7
3.9
3.4

5.0
6.7
5.5
3.8
2.8
4.5
4.9
5.6
4.6
4.4

Source: AfDB Statistics Department and IMF (World Economic Outlook, WEO).
Notes: (a) Emerging and developing Asia in WEO’s classification.
e: estimates. p: projections.

Despite these factors noted above, growth in Africa is
expected to remain favorable. Real GDP is forecast to increase
to an average of 3.7 percent in 2016 and further expand by
4.5 percent the following year. The continent’s economic
growth is poised to continue to outpace that of advanced
economies, as well as of Latin America and the Caribbean.
Only East Asian economies are likely to expand at a fasterrate. In this regard, Africa is likely to maintain its position as
the second fastest-growing regional economy in the world,but economic performance will continue to exhibit regionalvariations (see Table 1.2).

2017. The commodity price boom, which had fueled past
growth in the region, is tapering off, and countries in the region
must now search for alternative sources of growth. Public
investment in infrastructure must continue apace to open
up opportunities for private sector participation. Following
successful presidential elections in Central African Republic,
the peace dividend will be an important factor to underpin
growth in the near term.

Eastern Africa. Economic growth is forecast to reach an
average of above 6 percent over the next two years, higher
than in other African regions. This growth forecast is anchoredConsumer spending, especially in retail and other services, on strong manufacturing activity, buoyant consumer spending,and public investment in infrastructure will remain key drivers higher intra-regional trade and continued investment in publicof growth in Africa. Over the past five years, the construction infrastructure. Regional shocks, including the conflicts in
sector (underpinned by large public infrastructure projects) has Burundi and South Sudan, are the main downside risks tocontributed about 3 percentage points to Africa’s growth. The growth in the region. Generally favorable growth prospects inservices sector (driven mainly by expansion in retail, financial, Rwanda and Ethiopia should continue to prevail even though
and information, communications and technology industries) the latter is experiencing renewed drought. The Ethiopian
has contributed about 2 percentage points. In comparison, the Government has, however, taken measures to avert a foodextractive industries (mining, quarrying, oil, and gas) accounted and humanitarian crisis. Public infrastructure could be thefor about 1 percentage point. This shows that diversification main lever maintaining growth in 2016 at above 8 percent
is taking root in a number of countries, as sources of growth and 6 percent in Ethiopia and Rwanda, respectively.
are not wholly anchored on the extractive industries.
Western Africa. Strengthening political stability in Côte d’Ivoire
Central Africa. Average growth is projected at 3.9 percent and the declaration of the end of the Ebola crisis in Guinea,
in 2016 and it is expected to expand further to 5 percent in Liberia, and Sierra Leone could provide impetus to the region’s

8Annual Report 2015

Chapter 1

Access to electricity allows school children extra time to study at home in Egypt.

economic performance. Average growth for the region is
projected to recover to 4.3 percent in 2016, and increase further
to 5.5 percent in 2017. Preserving these gains will therefore be
key, especially in Côte d’Ivoire where growth in 2016 is projected
at more than 8 percent. Guinea and Liberia are also projected
to grow by 4 percent and 2.8 percent, respectively, in 2016,
signifying the rapid recovery from the harsh effects of the Ebola
outbreak. This underscores the importance of countercyclicalinterventions, which helped limit the impact of the Ebola crisis.
In Nigeria and Ghana, the decline in commodity prices could
further trim growth and constrain fiscal space for expandedsocial spending. On the other hand policy reforms are gaining
momentum in Ghana, and the economy is projected to expandby 5.8 percent in 2016 and by 8.7 percent in 2017. In Nigeria,
the authorities have also instituted wide-ranging measures todeal with the fiscal gap created by the decline in oil revenues
and, to consolidate recent improvements in non-oil sectors.

However, given the intensity of the oil-price shock, economic
growth in Nigeria is forecast to be lower at 3.8 percent in 2016
before picking up the pace to 5 percent in 2017 as current fiscal
measures initiated by the Government take effect.
Northern Africa. In this region, economic growth is expected
to remain subdued in the medium term. Growth in the region
is projected at 3.3 percent in 2016, increasing to 3.8 percent
the following year. Foreign Direct Investment, especially in
Morocco and Egypt, could be a core driver of this growth.
However, the region remains immersed in post-Arab Springfragility. High rates of youth unemployment and security
concerns could be the main challenges to growth and social
cohesion in the region. In particular, the tourism sector could
experience further setbacks due to recent terrorist attacks in
Egypt and Tunisia while the prolonged conflict in Libya also
constitutes a risk to medium term economic recovery.

9

Chapter 1

Africa’s Performance and Prospects in a Period of Global Economic Turbulence

Southern Africa. Growth will continue to be affected bybroad-based weakness in the region as the effects of the El
Niño weather conditions permeate different sectors of theeconomy, especially those linked to the performance of the
agriculture sector. Furthermore, nearly all countries in theregion are exposed to the commodity price shock, which
has led to steep depreciation of exchange rates in somecountries. Other downside risks include persistent electricity
supply shortages across the region, exacerbated by drought.
In 2016, average growth in Southern Africa is projected to fallto 1.9 percent but recovery is forecast at 2.8 percent in 2017,the highest in three years. This recovery is predicated on therestoration of reliable electricity supply conditions following
the completion of ongoing hydropower investment projects.
Recovery is also dependent on the current fiscal consolidation
measures in a number of countries taking hold. In South Africa,
the region’s largest economy, addressing structural challenges
and restoring investor confidence will be critical stimulating
growth and job creation, especially among the youth.

decline in commodity exports, coupled with an increase incapital expenditure.

1.4 Macroeconomic Conditions:
Performance and Prospects

1.4.2 Inflation and Exchange Rates

For oil-exporting countries, a sharp fall in revenues poses thegreatest risk to the budget. The fiscal deficit for this groupof countries reached 8.1 percent of GDP in 2015 from 5.3
percent in the preceding year, and it is expected to remain
at this elevated level in 2016 as the effects of lower oil prices
continue to be felt. Similarly, the current account deficit foroil-exporting countries more than doubled to 7.3 percent of
GDP in 2015 from 2.9 percent in 2014. Although the fiscal
deficit for oil-importing countries also widened to 4.4 percent
in 2015 from 4 percent the previous year, this is much lower
than in their oil-exporting peers. For oil-importing countries,
the increase in the deficit was mainly on account of lower
revenues from non-oil commodity exports, especially minerals,
whose prices also declined in 2015 but the impact was lesssevere than for oil-exporting countries. In 2015, the passthrough effect of low oil prices helped to limit the loss in export
earnings of other commodities in oil-importing countries. As
The Bank Group has an important role to play in assisting a result, the current account deficit narrowed marginally tocountries weather the headwinds buffeting the continent, 7.3 percent in 2015 from 7.9 percent in 2014.
especially those emanating from the fall in commodity prices
and structural problems. The experience gained in dealing In 2016, the current account deficit for net oil exporters iswith the global financial meltdown and the recent Ebola forecast to narrow to 6.4 percent, and tighten further to 5.4
crisis demonstrates the Bank Group’s capability to deploy percent of GDP in 2017. The improvement in the externalcountercyclical measures in stabilizing internal and external account position is premised on slow recovery in commodity
macroeconomic and social conditions in Regional Member prices and improved foreign inflows. Similarly, in net oil-importingCountries (RMCs).
countries, the deficit is projected to narrow but will remain
relatively elevated at about 6.4 percent between 2016 and 2017.

The pressures felt on the fiscal and external account positions
were not strongly reflected on the inflation front, largely due
In the medium term, fiscal and external imbalances will remain to contractionary monetary policy. Thus, in 2015, average
high, largely due to domestic factors and external shocks. inflation for Africa as a whole remained broadly stable at 7.3
In resource-rich economies, the persistence of the external percent compared with 7.2 percent recorded in 2014. In oilcurrent account deficit hinges on the duration of the decline exporting countries, average inflation rose to 8.8 percent fromin commodity prices.
8.2 percent in the previous year, mainly on account of exchange
rate depreciations induced by the oil price shock. In oil-importing
1.4.1 Fiscal and External Account Positions
countries, the benefits of lower oil prices were reflected in the
Generally, African countries have maintained sound fiscal easing of average inflation to 5.2 percent in 2015 from 5.6
and monetary policies, which have contributed to broad percent recorded in 2014. However, in some countries thatmacroeconomic stability. However, as noted above, the depend on metal exports, the effect of lower oil prices was
unfavorable global economic environment threatens to reverse mitigated by the fall in prices of these commodities. This resulted
these gains as evidenced by a widening of both fiscal and in heightened inflationary pressures as decline in revenues fromcurrent account deficits in 2015 (see Table 1.3). The increase metal exports led to widening of the fiscal deficit and stoked
in the fiscal deficit mainly reflects a fall in revenues due to a depreciation in the exchange rates, which fueled inflation.

10

Annual Report 2015

Chapter 1

Table 1.3

Regional Macroeconomic Indicators
Fiscal Balance (Percent of GDP)
Central Africa
Eastern Africa
Northern Africa
Southern Africa
Western Africa
AfricaMemorandum items
Sub-Saharan Africa (SSA)
Oil-exporting countries
Oil-importing countries
External Current Account (Percent of GDP)
Central Africa
Eastern Africa
Northern Africa
Southern Africa
Western Africa
AfricaMemorandum items
Sub-Saharan Africa (SSA)
Oil-exporting countries
Oil-importing countries
Inflation (Percent Change in Consumer Prices)Central Africa
Eastern Africa
Northern Africa
Southern Africa
Western Africa
AfricaMemorandum items
Sub-Saharan Africa
Oil-exporting countries
Oil-importing countries

2014

2015(e)2016(p)2017(p)

-2.2
-3.6
-11.1
-4.0
-0.2
-4.8

-4.2
-4.6
-13.3
-3.9
-2.9
-6.6

-4.0
-4.4
-12.1
-3.9
-3.6
-6.5

-2.9
-3.7
-11.3
-3.8
-3.3
-5.9

-2.2
-5.3
-4.0

-3.7
-8.1
-4.4

-3.9
-8.1
-4.0

-3.5
-7.3
-3.6

-7.6
-9.3
-5.1
-5.3
-1.8
-4.8

-10.2
-8.9
-9.3
-6.1
-4.6
-7.3

-10.4
-7.1
-7.5
-5.8
-4.4
-6.4

-10.6
-7.2
-6.6
-5.6
-3.2
-5.8

-4.8
-2.9
-7.9

-6.5
-7.3
-7.3

-6.0
-6.4
-6.4

-5.4
-5.4
-6.3

2.4
12.5
6.4
6.3
7.2
7.2

2.1
9.3
7.6
5.8
8.3
7.3

2.3
7.9
6.3
7.9
8.7
7.2

2.4
8.0
6.7
8.0
8.0
7.2

7.6
8.2
5.6

7.2
8.8
5.2

7.8
8.3
5.6

7.6
8.4
5.6

Source: AfDB Statistics Department.
e: estimates; p: projections

In the medium term, inflation is expected to remain stable at
7.2 percent both in 2016 and the following year. This stability
will be underpinned by a combination of fiscal consolidation
measures and tight monetary policy, supported by persistently
low oil prices. Although inflationary pressures are likely to easefor oil exporters, average inflation for this group of countries
will be higher than their importing counterparts as shown in
Table 1.3.

short-term fluctuations in the exchange rate. The tightening ofmonetary policy by central banks in these countries supported
the policy measures undertaken in the foreign exchange
market. In 2016, the authorities in Ghana and Zambia willcontinue to monitor developments in the foreign exchange
market and take appropriate stabilizing measures should
further currency depreciations be observed. In Nigeria, theauthorities introduced restrictions in the foreign exchange
market to manage escalating demand amid reduced inflows.
The policy responses to stem the effect of the weakness in The Nigerian authorities have eased some of the restrictive
domestic currencies varied considerably across different measures introduced in 2015. The net effect of these measurescountries. In Ghana and Zambia for example, the authorities will largely depend on the pace of the recovery in the price ofintervened in the foreign exchange market to smoothen oil in the year ahead.

11

Chapter 1

Africa’s Performance and Prospects in a Period of Global Economic Turbulence

1.5 Africa’s Resilient Growthand Sustainable Development Goals
For shared prosperity, African governments need to makeappropriate policy choices to accelerate structural change andfoster employment creation. In this regard, enhancing resource
mobilization is crucial for sustaining investment in critical growthenhancing sectors such as energy, and in financing efforts totackle poverty and the effects of climate change.

growth-enhancing infrastructure projects rather than spending
resources on unproductive public consumption. Ramping up
public infrastructure development is essential for creating a
conducive business and investment climate for a productive
and competitive private sector.

Indeed, Africa’s future economic growth will be driven by anactive private sector that has the capacity to create jobs andbe integrated into the global value chains. Current estimatesshow that the informal sector absorbs about 30 million ofOver the past decade and half, Africa’s economic growth has the young people entering the labor force annually andbeen strong and resilient but has also been characterized that about 85 percent of poverty in Africa emanates fromby episodes of volatility. The remaining challenge is to subsistence agriculture and the informal sector. Thus, efforts
ensure that growth is further strengthened, sustainable, to reduce poverty and foster inclusive growth must aim atand less volatile. This will hinge on stimulating structural creating conditions for the transitioning of Africa’s small-scaletransformation and fostering diversification away from the businesses and subsistence farmers from a state of informality
extractive sector. In this regard, African countries must to productive economic activities that can generate decent
make hard choices on the quality of investment by targeting jobs, especially for the youth, and raise incomes.

Students at the local organization in Liberia, Keep Educational Engagement Project, set up to provide education support to girls.

12Annual Report 2015

Chapter 1

Box 1.2

Highlights of Progress Towards the Achievement of Selected Millennium Development Goal Targets●●●●

Poverty declined in 24 out of 30 African countries for which data are available. However, sub-Saharan Africa still grapples with food deficiency, with
about 25 percent of its population suffering from malnutrition.
Overall, most African countries made significant progress in ensuring universal access to, and gender equality in, education. The net enrolment ratein primary education exceeded 90 percent in a number of countries including Algeria, Benin, Cabo Verde, Cameroon, Congo, Mauritius, Rwanda,
South Africa, Tunisia, and Zambia. However, primary school completion rates were modest at 67 percent and the quality of education remains low.

●● The quality of health outcomes improved in some countries with the under-five mortality rate declining across Africa from 146 deaths per 1,000 live

births in 1990 to 65 deaths in 2012. This represents a reduction of almost 56 percent against the MDG target of 66 percent. Infant mortality rate
fell from 90 deaths per 1,000 live births in 1990 to 54 deaths per 1,000 live births in 2014, an average decline of 40 percent against a target of
50 percent, albeit with wide variation across countries.
●●●●

On gender, the gap between men and women has also narrowed in political and leadership positions. Africa is leading the way in women’s representationin national Parliaments across the world. The number of women in national Parliaments has grown annually by about 15 percent over 2000-2014.
On maternal mortality, Africa still has the highest mortality ratio compared with the rest of the developing world, registering 289 maternal deaths
per 100,000 live births in 2014 compared to the global average of 210 maternal deaths per 100,000 live births in 2013. Only a small number ofcountries have made clear progress towards improving maternal health. Notably, Cabo Verde, Equatorial Guinea, Eritrea, and Rwanda reduced thematernal mortality ratio by more than 75 percent between 1990 and 2013, thereby meeting MDG 5. Overall, Africa lags behind other regions infactors such as the proportion of live births attended by skilled health personnel, high adolescent birth rates, antenatal care coverage and familyplanning. These factors have contributed to the high maternal mortality ratio on the continent.

●● The consumption of Ozone-Depleting Substances declined by 94 percent in Africa between 1986 and 2012, higher than the 86 percent average

decrease in developing regions, but still below the 100 percent average for developed regions. In effect, most African countries are on the righttrack in terms of reducing consumption of these substances.
●●

Since 2000, about 25 percent of Africa’s population has gained access to safe drinking water. However, this is the lowest figure globally. Low initialconditions and fast population growth account for this low rate of increase, and have challenged efforts, especially in sub-Saharan Africa. However,in Northern Africa, access to safe drinking water increased to 91 percent in 2015 from 72 percent in 1990.

Source: UNECA, AU, AfDB, & UNDP (2015). MDG Report 2015: Assessing Progress in Africa Towards the Millennium Development Goals.

Although the proportion of people living on less than USD 1.25 fully integrated into National Development Plans. Furthermore,a day declined to an estimated 43 percent in 2014(1) from Africa started from a position of disproportionately high level
56.8 percent in 1990, the absolute number of poor people of poverty relative to other regions. This made the task ofincreased to 420 million from 284 million over the same achieving the agreed MDG targets, especially on poverty,
period. This means that the pace of poverty reduction was particularly onerous. Tracking progress has also been a major
not sufficiently high to achieve the Millennium Development challenge due to a lack of reliable data recording.
Goal (MDG) 1 of reducing poverty by half by the end of 2015(see also Box 1.2 for highlights on progress towards achieving Therefore, the endorsement of the SDGs in 2015 byselected MDGs). Moreover, Africa’s high poverty profile is Heads of State and Government is an invitation to rethink
exacerbated by inequality in income and along non-income traditional development approaches in order to maximize
dimensions: gender, sector, and geography.
impact. Crucially, and unlike the MDGs, the SDGs arebroader in scope, giving greater flexibility for adjusting
Part of Africa’s inability to halve poverty and meet most MDG policy as conditions dictate. They also target underlying
targets stems from the fact that the prescriptions were not causes of poverty and inequality, and prescribe options on

13

Chapter 1

Africa’s Performance and Prospects in a Period of Global Economic Turbulencetackling different socio-economic and climatic problems ina systematic and broader context.

supported by evidence-based knowledge work alongsidecapacity building and innovation.

To achieve the milestones set out in the SDGs agenda, African Note:
1.	Poverty headcount data are obtained from World Bank’s PovcalNet
governments must therefore identify the right policies, anddatabase until 2011. The 2014 statistics are based on AfDB estimates.
sectoral and infrastructural synergies, to accelerate structuralchange and enhance productivity for employment creationand shared prosperity. However, in a financially constrained
environment, the success of attaining these new ambitious Bibliographygoals will highly depend on enhancing resource mobilization AfDB. Decomposing the Effects of Commodity Prices on Growth
capacity of African countries for investment in critical sectors
in Africa (forthcoming). African Development Bank, Abidjan,such as energy, and in financing efforts to tackle the effects
Côte d’Ivoire.
of climate change. In this regard, the Addis Ababa agenda International Monetary Fund (2015). World Economic Outlook:on “Financing for Development” agreed upon in July, 2015
Adjusting to Lower Commodity Prices. October. IMF,
heralded a new impetus for innovative sources of financing
Washington, United States.
development by galvanizing the international community McKinsey Global Institute (2010). Lions on the Move: The
to move from ‘billions’ to ‘trillions’. This will be fortified
Progress and Potential of African Economies. McKinsey &through effective partnerships and enhanced policy dialogue,
Company, Washington, United States.

14

Circle: Africa’s response to energy poverty and climate change requires acarefully considered dynamic mix of conventional and renewable energy.
Background: Ouarzazate Solar Power Plant, Morocco.

Chapter 2
Energy andClimate Change:
Implications for
Inclusive andGreen Growthin AfricaChapter 2

Energy and Climate Change: Implications for Inclusive and Green Growth in Africa

Chapter 2
Africa is capable of achieving universal access to energy services by 2025 while reducing the carbon intensityof growth, and cutting carbon dioxide (CO2) emissions. The continent is endowed with vast renewable and nonrenewable sources of energy, and with limited sunk costs in carbon-intensive energy infrastructures. Yet Africa is
the continent that is most vulnerable to climate change, while having one of the lowest levels of access to energy
in the world. The continent needs energy to grow and to improve the lives of its people. In Africa, 645 million people
have no access to electricity, and 700 million have no access to clean cooking energy. Many people use biomass
for cooking and 600,000 people die from the resultant indoor pollution. Lack of access means energy usage isinsignificant compared with the more developed world. Per capita electricity consumption in Africa averages 181
kWh compared with 13,000 kWh in the United States and 6,500 kWh in Europe. Power cuts and energy bottlenecks
add to the problem. Energy access must therefore be increased significantly if the continent is to meet the
Sustainable Development Goals (SDGs), especially Goal 7 on universal access to affordable, reliable and modern
energy services, and the reduction of CO2 emissions. African governments must play an increasingly active roleby allocating much more funding to the energy sector. It is also imperative to have an enabling environment inwhich the private sector can operate, either as Independent Power Producers (IPPs) or participants in publicprivate partnerships. To help expand energy access, the Bank is rallying the continent by spearheading a numberof initiatives, especially the New Deal on Energy for Africa that it proposed in September 2015. It is also working
on a process that will speed up structural transformation through increasing access to energy. It has initiatedprocesses of working with partners on the New Deal on Energy and also created the Transformative Partnershipon Energy for Africa. The goal is to light up and power Africa by 2025. The New Deal on Energy would speed up
access to energy, driving inclusive and green growth, and boosting industrialization. It would promote regional
power pooling, improve agriculture productivity, and spur job and wealth creation. At the same time, it will workto avoid increasing CO2 emissions while increasing energy access.

This chapter presents the theme for the Bank Group’s
2015 Annual Report, entitled Energy and Climate Change:
Implications for Inclusive and Green Growth in Africa. The
chapter reflects on how Africa can accelerate universal accessto energy services and still adapt to climate change and cut
CO2 emissions. The first section discusses the importanceof investment in energy infrastructure through its contribution
to inclusive growth in Africa. The second section deals withenergy access challenges and opportunities for expanding
supplies to achieve inclusive and green growth. The third
section focuses on the Bank’s operational and strategic
agenda on climate change and energy. The measures required
to facilitate a larger rollout of modern energy for inclusive andgreen growth are discussed in the fourth section. The final
section looks at strategies for fostering sustainable energy
supply.

18

2.1 Energy and Structural
Transformation for Inclusive Growthin Africa
Africa is lagging behind in inclusive growth, partly becauseof the dualistic nature of its economies, where so much
activity and employment in the informal sector is casualand poorly paid. For structural transformation to succeed,
the traditional agricultural and informal urban sectors needsignificant technological and institutional upgrades. Energy
infrastructure is a key enabler of structural transformationand inclusive growth.
Structural transformation is an important driver of inclusive
growth. As noted in Chapter 1, poverty reduction in Africa
has been slow compared with the rest of the developingAnnual Report 2015

world and has fallen short of the Millennium Development
Goal of reducing poverty by half by the end of 2015. The
structure of Africa’s economies is the main cause of thisvariance. African countries have a dual economic system—atraditional and subsistence economy, and a modern andrapidly growing economy, with few linkages between them.
Close to 70 percent of the labor force is employed in the
traditional economy, which includes the agricultural sector
in rural areas, and the informal sector in urban areas. In
some middle-income countries with relatively advanced
and better-organized economic systems, unemployment,
particularly among the youth, is also high and chronic. Bothtypes of economic models need to start a process of structuraltransformation by adopting basic technology and continually
upgrading the technology ladders to reverse these trends.

Chapter 2

2.2.1 Low Access to Modern,High Quality, and Reliable Energy in Africa

Africa’s primary energy demand and final consumption
remain relatively low. Energy access and security are at avery low level on the continent. In 2015, Africa’s primary energy
demand stood at 795 million metric tons of oil equivalent(Mtoe) while total final energy consumption is 577 Mtoe.(1)This represents about 6 percent of the share of global primaryenergy demand and total final energy consumption of 13,898
Mtoe and 9,352 Mtoe, respectively, which is relatively low.(2)There is a stark disparity in Africa’s energy use compared tothat of other regions of the world. Energy use per capita is
one-third of the average across the world (2.1 metric tons ofoil equivalent per capita) and only half the level of developing
Asia, the world’s second most energy-poor region.(3) However,Africa’s total final energy consumption is projected to show
Energy infrastructure is a key enabler of structural trans­ cumulative growth of 68 percent between 2007 and 2035,
formation. A key lever to Africa’s ability to deliver structural rising annually by 1.8 percent, higher than the expected global
transformation for inclusive growth and achieve the SDGs average increase of 1.4 percent.(4)is universal access to affordable, reliable, sustainable andmodern energy, both in the home and at the workplace. Bioenergy dominates primary energy demand and final
Such access can help companies penetrate new markets, consumption. The composition of primary energy demandenable farmers to diversify their income sources, and support and final consumption in Africa is driven largely by resource
agro-processing industries that link agricultural producers endowments and the costs of supply and generation capacity.
to national, regional and global markets. Consistent and In Africa, bioenergy is dominant in the energy mix, accounting
steady supplies of energy are essential for the processing of for about half of total energy use, in contrast to a proportion
natural resources, such as aluminum, copper, iron and nickel. of about a tenth at the global level.(5) Four out of five people in
However, energy poverty remains a major challenge and a Africa rely on solid biomass for cooking, typically with inefficientconsiderable gap exists between what is available and what stoves in poorly ventilated spaces.(6) The extensive use ofis required to achieve transformation.
firewood and charcoal causes deforestation, land degradationand change of land-use, and adds to greenhouse gas (GHG)
emissions. One-fifth of global emissions associated with
2.2 Energy Challenges andland-use changes originate in Africa.(7)Opportunities for Inclusive andGreen Growth in Africa

The opportunity costs of the lack of access to modern energy are
numerous and include poor agricultural yields and incomes, poor
health and educational outcomes, and missed life and business
opportunities. However, strategies for expanding energy accessshould integrate climate-change concerns to generate structuraltransformation for green growth. Energy resources are morethan enough to meet Africa’s needs and the continent has
major potential for renewable energy—hydro, solar, wind, andgeothermal power. Large energy projects have already been
installed in some countries. They include continuing efforts inCentral Africa to add a third dam (Inga III) of 4.8 Gigawatts (GW)
and major hydropower investments in Ethiopia.

Fossil fuels dominate modern energy consumption. Inline with previous trends, fossil fuels such as oil, gas, andcoal accounted for about 50 percent of consumption in 2015,
and dominated modern energy use in Africa.(8) Though high,this is nevertheless better than the global average proportionof 80 percent.(9)All sectors are potentially constrained by lack of energy.
In Africa, economic development is at an early stage, and 67
percent of total energy-use occurs in the residential sector
compared with an average of 25 percent in other developing
countries.(10) The transport sector accounts for only 11 percent
of final energy consumption while productive uses (including
industry, agriculture and services) together account for only 21

19

Chapter 2

Energy and Climate Change: Implications for Inclusive and Green Growth in Africa

Map 2.1

Access to Electricity in Africa% Access to electricity
No data
0% to 15%

Notes:
Northern Africa
Abundance of oil, gas, wind, and solar,
is a golden opportunity. Universal accessis close to be attained.
Sub-Saharan Africa
Major challenge is high dependence on
traditional biomass, very low access tomodern energy, energy supply shortfall
and rapid urbanization.
Landlocked countries
Main challenges are delays in imported
energy and inadequate strategic reserves.
Island states
Heavy reliance on imported oil, a major
challenge that leads to a high cost ofenergy supply.
South Africa
Despite having the largest energy system,
South Africa is grappling with ensuring anadequate energy supply in electricity.

Source: AfDB (2014) Development Effectiveness Report on Energy.

20

15% to 40%

40% to 60%

More than 60%

Annual Report 2015

percent.(11) The share of energy consumption in transport andproductive uses in the continent is much lower than in otherregions of the world. For instance, transport accounts for 27
percent globally and 33 percent in Organisation for Economic
Co-operation and Development (OECD) countries, while
industry alone accounts for 30 percent globally and 48 percent
in China. Electricity comprises just 10 percent of Africa’s total
final energy consumption, compared with 18 percent globally,and 22 percent in China and OECD countries.(12)

Chapter 2

Figure 2.1

Total Electricity Generation in Africa,
by Fuel Type, 2015-2025 (TWh)
Gas

Coal

Renewables

Oil

Nuclear

400

300

200

Access to electricity in Africa is low and variable. Africa,
which accounts for 16 percent of the world’s population, is100
ranked among the lowest in the world in terms of access to
0electricity, with 645 million people without access. Nearly
2015
2020
2025
80 percent of people lacking access to electricity across(13)
sub-Saharan Africa are in rural areas.
As noted, 700
Source: International Energy Agency (2014; 2015)
million people have no access to clean cooking energy. The
electrification disparities between African countries are also
wide (see Map 2.1). In the Democratic Republic of Congo,
Liberia, Malawi, and Sierra Leone, fewer than one in ten people per kilowatt-hour.(20) The high cost and erratic supply makes
have access to electricity.(14) As noted, per capita power doing business in Africa more expensive, with damaging
consumption in sub-Saharan Africa (excluding South Africa) consequences for economic growth, investment and tax
is the lowest among all continents, and is estimated at 181 revenues.(21)kWh per annum, compared with 6,500 kWh in Europe and13,000 kWh in the United States.(15) On average, electricity Lack of access to modern energy hampers progressive
consumption per capita is less than what is needed to power social outcomes. Agricultural production and productivity
a 50-watt light bulb continuously.(16)in Africa are constrained by limited access to modern
energy services. Power is needed for irrigation, agriculture
Electricity generation capacity in Africa is low. Installed mechanization (e.g. land preparation, cultivation andgrid-based power generation capacity in Africa has been harvesting), post-harvest storage and processing, andsteadily increasing, reaching 194 GW in 2015.(17) Estimates transport facilities. Energy is needed to pump, transport,suggest that gas-fired generation capacity is now 38 percent treat, and distribute water, particularly in the production ofof the continental total, followed by coal-fired (24 percent), drinking water through the use of desalination, and wateroil-fired (18 percent), renewables including hydropower (17 and waste-water treatment plants. Lack of electricity in overpercent), and nuclear (1 percent).(18) Figure 2.1 portrays actual 90 percent of Africa’s primary schools is a factor in children’s
electricity generation by fuel type.
educational under-performance.(22) This undermines theireducational outcomes and life chances that lead to productive
Power cuts reduce production and slow down growth. lives. The health-care sector is also affected because uneven
Power shortages cost Africa 12.5 percent in lost production power supply and power cuts prevent the use of life-saving
time, compared with 7 percent in South Asia. The cost to equipment and the refrigeration of medications. In the home,industry of power cuts is even lower in other regions of the people are forced to use stoves, which are often not justworld. More than 30 African countries experience frequent inefficient but harmful—indoor pollution causes an estimatedpower cuts and load shedding. Resultant opportunity costs 600,000 fatalities each year,(23) half of whom are children underamount to as much as 2 to 4 percent of Gross Domestic the age of five years. In many rural areas, where electricity
Product (GDP) annually, and undermine sustainable economic is either unavailable or unaffordable, efficient cooking stoves
growth, jobs and investment.(19) The lack of reliable grid are often the only alternative way to mitigate the dangers (seeelectricity in many countries often compels companies to example in Box 2.1 of Ghana’s Toyola Energy Limited, which
use expensive diesel generators that cost about USD 0.40 promotes efficient cooking stoves).

21

Chapter 2

Energy and Climate Change: Implications for Inclusive and Green Growth in Africa

Box 2.1

Ghana’s Toyola Energy Promotes Efficient Cooking Stoves
Most urban households in Ghana cook on charcoal, using inefficient, polluting stoves. Toyola Energy was set up in 2006 to supply efficient charcoalburning Coalpot stoves and other energy systems to low-income households in Ghana. The Coalpot stove is made in five different sizes. The domestic
sizes range from 270 to 360 mm top diameter and their cost ranges from GHC 10 to 12 (USD 6.60 to USD 8). The commercial sizes range from 460 to
510 mm top diameter and their cost ranges from GHC 40 to 50 (USD 26 to USD 33). All retail prices are subsidized by carbon finance. Toyola gives up
to two months credit to its direct customers, and to its dealers and sales agents who can pass the credit on to their customers. Seventy-five percent ofcustomers use credit, 20 percent pay cash, and the rest pay through barter. About one-third of credit customers use a “Toyola money box” to reserve
their savings on charcoal, and use this money to make their credit payments. Charcoal savings have been assessed using kitchen performance tests
with the same households using their original stove and a medium-sized domestic Coalpot. The Coalpot was found to save one-third of charcoal, an
average of 0.5 kg per day. Thus, the stoves currently in use are saving about 26,000 metric tons of charcoal each year, which saves on the use ofwood to make charcoal.

Source: www.ashden.org/winners/toyola11

2.2.2 The Climate Change–Energy–Structural
Transformation Nexus
Climate change affects energy systems. Climate andenergy are intrinsically linked, and changes in one are likely
to affect the other. Climate change affects energy resource
endowments, production, infrastructure and transportation.
Droughts or floods can severely affect water inflows, which
can have a knock-on effect on the power generation capacityof energy production units. When it comes to production, four
major challenges arise: reduced productivity in hydropower,
shortage of cooling water for thermal power plants, reduced
availability of traditional biomass, and reduced yields forbioenergy projects. Climate concerns will impose a new setof conditions on the design, operation, and maintenance ofexisting and planned infrastructure.
Energy systems affect climate change. On the other side,
an increase in energy usage and output has the potential
to affect climate change, hence the climate change–energy
nexus. The predominant use of non-renewable energy, suchas oil and coal, and traditional wood-based energy, suchas charcoal and biomass, increases CO2 emissions that
contribute to climate change. Energy intensity of GDP andcarbon intensity of energy systems continue to drive GHG
emissions globally. GHG emissions from the energy sector
represent roughly two-thirds of all human-created GHG
emissions, and CO2 emissions from the sector have risenover the past century to ever higher levels.(24) Effective actionin the energy sector is needed to tackle climate change.
Africa’s action on climate and energy is aligned with
global action. As the most vulnerable continent, Africa

22

pressed for a binding Agreement at the 2015 United Nations
Framework Convention on Climate Change Conference ofParties (UNFCCC COP21) climate negotiations held in Paris.
The resultant Paris Agreement on climate change committed
to emissions reductions consistent with staying well below the2˚C threshold and to pursue efforts to limit the temperature
increase to 1.5°C above pre-industrial levels. Scientificevidence suggests that, if global average temperatures
increase beyond 5˚C, large areas of sub-Saharan Africa
would not be able to grow crops such as sorghum, millet,
and maize. Longer and more severe droughts could occur insome areas. In others, productivity levels would be lower asa result of unpredictable rainfall and/or flooding, induced by
global warming. While Africa must also adapt, global activities
that reduce CO2 emissions will be central to the success of
the Paris Agreement.
Address the climate change–energy structural trans­
formation nexus. Africa is ranked as the lowest contributor
to global CO2 emissions compared with other continents(below 4 percent). However, increased economic activities
have increased its carbon footprint over the past decade.­(25)
This trend is likely to continue as African countries seek
to expand energy supply to sustain increased economic
production and meet the needs of its growing middle classand wider populations.(26) To remain on the path to green
growth, Africa will have to address the climate change
energy problem.
Decouple African GDP from fossil fuels. Given Africa’s heavy
reliance on fossil fuels, global agreements on climate change are
set to adversely affect its structural and industrial transformation

Annual Report 2015

Chapter 2Hydropower Project, Sierra Leone.

by seeking to constrain and penalize fossil fuel combustion.
Over time, and with a careful strategy for guaranteed universal
access to energy, Africa will need to decouple its GDP fromfossil fuels. This is achievable if sustainable ways can be foundto significantly reduce the energy intensity of GDP and thecarbon intensity of energy systems in the continent. For the
first time in at least 40 years outside of an economic crisis,(27)the global economy grew by around 3 percent in 2014, but
energy-related CO2 emissions stayed flat. The drop in energy
intensity of the global economy stemmed from improved energy
efficiency and structural changes in some economies, suchas China.(28) In the same spirit, Africa could initially consider
the pursuit of practical measures to improve energy efficiency
in the industry, building and transport sectors, e.g. retrofittingbuildings, transforming industrial production processes, anddeploying more efficient transport systems.(29)

Reduce the carbon intensity of African energy systems.
Without necessarily compromising its agenda for universal accessto energy, Africa should emulate China’s new proactive role on
climate change. Existing models show that the externality costsof the path of “grow first and clean up later” are economically,socially, and environmentally unsustainable.­(30) Africa should
therefore look to “smart” growth, which saves it from costly futureenvironmental externalities.(31) Initially, Africa can use the clean
technologies which are being developed to reduce emissions fromfossil fuels released into the atmosphere, e.g. chemically washingminerals and impurities in coal-fired electricity generation, andcarbon capture and storage technologies to capture CO2 from fluegases. In due course, Africa can meet most of its future energy
needs from renewable sources, thereby allowing for such actions
as a gradual reduction in the use of the least-efficient coal-fired
power plants and a ban on the construction of new ones.(32)

23

Chapter 2

Energy and Climate Change: Implications for Inclusive and Green Growth in Africa

Flooding—Direct Impacts of Extreme Events in Niger.

Africa needs financial and technological support to deal 2.2.3 Africa’s Energy Potential can Support
with energy and climate-change issues. Given Africa’s Structural Transformation for Inclusive Green Growth
climate vulnerability and relatively clean record on CO2 Africa is capable of achieving universal access to energy
emissions, the onus is on the international community to services by 2025, while reducing the carbon intensity of growth
support the continent. Some African countries have already and lowering its contribution to global CO2 emissions. The
received support from the Clean Technology Fund, which continent is endowed with vast renewable and non-renewableprovides resources to scale up the demonstration, deployment sources of energy, and with limited sunk costs in carbonand transfer of low-carbon technologies with a significant intensive energy infrastructure. This provides the potential
potential for long-term savings in GHG. In addition to other for cost-effective integration of low-carbon options into thesuch funds, Africa should receive the funding pledged under energy mix. There are well over 10 Terawatts (TW) of solar
the Paris Agreement. International climate-change regimes potential, 350 GW of hydroelectric potential, 110 GW of wind
and values should be characterized by equity, and should potential and an additional 15 GW of geothermal potential.­(33)
provide funding and technology transfer mechanisms that These are supplemented by coal and gas that offer some ofreach the most vulnerable countries. Accordingly, climate its cheapest electricity. Primary energy sources are more thanadaptation must be mainstreamed into Africa’s development enough to meet Africa’s needs in the long run.
path. The continent will generally need to take advantageof the synergies between energy infrastructure investments Opportunities exist for Africa to add value to commercial
and climate financing at the global level to push its agenda energy and meet domestic demand. Africa is a net exporterfor universal access to energy.
of commercial energy and produces 7 percent of the world’s

24Annual Report 2015

total.(34) However, the continent is a net importer of refined
petroleum fuels. Potential economic value creation is lost,
given that crude oil refining could generate downstream
economic activity and create jobs. Also, shipping of crude oil
across the world and importing refined fuels wastes energy
and increases CO2 emissions. Africa can add value by buildingrefineries to meet domestic demand.
Africa can capitalize on opportunities associated withclimate change. The response to climate change offers thecontinent an opportunity to drive the economic transformationthat it needs: climate-resilient transformation includes lowcarbon development that boosts growth and bridges theenergy deficit, while reducing poverty. The Intended Nationally
Determined Contributions (INDCs) have provided African
governments with a vehicle to set out their ambition for thetransition to development. All African countries prioritizedenergy in their INDCs as one key sector through which they
can achieve low-carbon and climate-resilient development.
As a result, the continent’s responses to climate change
require pragmatic choices of suitable energy mixes that meetdevelopment needs, while still reducing CO2 emissions.(35)
Africa is set to embrace renewable energy for additional
generation capacity. Renewable projects can improveenergy security by reducing the reliance on imported fuels anddiversifying the power mix. The introduction of such projects

Chapter 2

can be expedited through decentralization. Renewables canalso provide access to remote and unserved populations.
Hydropower has an important part to play in the deploymentof other renewable energy systems. Climate-change impacts
and other adverse environmental and social factors would
require mitigation. Renewable energy resources are expected
to constitute about 50 percent of new power generation
capacity to be built in sub-Saharan Africa by 2040. The shareof other renewables (excluding bioenergy) in the total energy
mix is expected to increase from less than 2 percent to 9
percent by 2040.(36)
Examples of best practice exist on the continent. Several
African countries have already embarked on ambitious programs
that integrate climate action with sustainable development,
and are funding them with their own resources. Ethiopia’s
Climate-Resilient Green Economy Strategy aims to achieve
middle-income-country status by 2025, while developing agreen economy where one of the pillars is expanding renewableelectricity generation. This should enable the country to leapfrog
to energy-efficient technologies in transport, industry, andbuildings.(37) Another example is Rwanda. Its climate-resilient,
green-growth approach combines sustainable, wealth creationand poverty reduction measures, and includes one of theworld’s most ambitious renewable energy strategies, with atarget of 50 percent of power generated from renewable energy
by 2017, from a base of just 4 percent in 2008.(38)Azito Power
Expansion Project,
Côte d’Ivoire.

25

Chapter 2

Energy and Climate Change: Implications for Inclusive and Green Growth in Africa

Solar Panel
Electricity
Generation,
Madagascar.

Africa is already investing in more energy generation.
These instances of best practice are not isolated. Large energy
projects have already been implemented in many countries toenhance energy provision.(39) In Central Africa, there are ongoing
efforts to add a third dam (Inga III) of 4.8 GW, under the Grand
Inga continental flagship project—a multi-phase hydropower
station to be built on the Congo River. The targeted generation
potential is approximately 44 GW. Ethiopia has also invested
heavily in large-scale hydropower public investments—the Beles
II (460 MW), Gilgel Gibe II (420 MW), Gilgel Gibe III (1.87 GW)
and the Grand Renaissance (6 GW) dams. The Lake Turkana
Wind Power Project in Kenya, which will be one of the largest
wind farms in Africa when completed, is constructing a 428km publicly owned transmission line needed to add 300 MWof power on the Kenyan grid. The Noor I Concentrated Solar
Power plant in the Sahara Desert is the first phase of a large
solar thermal power plant that is intended to generate 160MWof electricity to benefit more than 1 million people in Morocco.

power are driving the renewables revolution from below.(40) An
example is M-KOPA in Kenya, which has used a combinationof solar and mobile technology to bring affordable solar
technologies to off-grid villages. Solar power is now available
through home systems paid for through a combination of
low deposits and installments rather than the full retail priceof USD 200 in one go. These transactions are supported by
the mobile-phone payment method M-Pesa, an innovative
money-transfer system. In electricity supply, these innovations
combine to replicate how mobile phones usage developedin Africa, leapfrogging landline installations. People are able
to access off-grid renewable energy immediately instead of
waiting for a grid connection.

New business models attractive to the private sector are
emerging. As well as the large energy projects, innovation
is taking place through smaller energy projects. Innovative
companies responding to household demand for lighting and

The Bank plays a catalytic role in financing and leveraging
additional resources, including concessional climate financing
from global funds. It supports both Regional Member Countries(RMCs) and Regional Economic Communities (RECs), through26

2.3 The Bank’s Operational andStrategic Agenda on Climate Change
and Energy

Annual Report 2015prioritizing the development of the regional energy infrastructure.
Under the Climate Change Action Plan, it supports the RMCs
in their quest for climate-change adaptation and mitigation,and hosts special interventions such as the African Renewable
Energy Initiative. The Bank is rallying the continent, particularly
through the proposed New Deal on Energy for Africa, tosupport universal access to energy.

2.3.1 Responding to
the Climate Change Challenge
The Bank supports climate adaptation and mitigationin Africa. Under the Climate Change Action Plan (CCAP)(2011−2015), the Bank helped member countries strengthen
their capacity for climate-change adaptation and mitigation.
This involved the mobilization of resources from existingand proposed sources of climate finance, the private sector,
and market mechanisms. (The Bank’s interventions in 2015
are described in Chapter 3, Section 3.2 and Chapter 4,
Section 4.2).
The Bank played a coordinating role around the COP21
processes. The Bank played a significant role in the lead
up to the COP21 negotiations. It co-sponsored the Africa
Pavilion in Paris to amplify Africa’s voice on climate change
from a common standpoint. The Bank also fully supported
the Africa Adaptation, and Loss and Damage Initiative,
launched in Paris.
The Bank’s climate funding will triple to USD 5 billion per
year. The Bank has successfully channeled climate financefrom global facilities. This includes the Scaling-Up Renewable
Energy Program for Low Income Countries (SREP), and the
Clean Technology Fund (CTF). These are programs under theaegis of Climate Investment Funds (CIF), as well as from the
Global Environmental Facility and the Sustainable Energy Fundfor Africa (SEFA). The Bank has announced a commitment
to triple its climate finance to reach USD 5 billion per year by
2020, in alignment with the Paris Agreement and the SDGs.
Under the second phase of the CCAP (2016-2022), INDCs
by African countries will largely influence the Bank’s climatechange related interventions on the continent.

2.3.2 Support to the Energy Sector
The Bank’s lending to the energy sector exceeded USD 1
billion. These lending interventions are guided by the Bank’s
Energy Sector Policy. AfDB has an active energy portfolio ofover USD 11 billion. Lending to energy sector projects, bothpublic and private, exceeded USD 1 billion in 2015. Resources

Chapter 2committed to energy by the Bank have contributed to an
estimated 145 million people gaining access to electricity since
2000. Over three-quarters of the energy portfolio supports
public sector projects. The portfolio is composed largelyof generation projects, as well as distribution projects andsupport for regional energy interconnections. Further details
about the Bank’s recent operations in the energy sector areprovided in Chapter 3, Section 3.2.
The Bank hosts special large energy projects. In addition
to these broader initiatives, the Bank hosts the Sustainable
Energy for All (SE4ALL) Africa Hub in partnership with the
African Union Commission, NEPAD and the United Nations
Development Programme (UNDP). It also hosts the Secretariatof the African Energy Leaders Group. The Bank Group is
one of the architects of the Programme for Infrastructure
Development in Africa (PIDA), and a key financier for the PIDA
Priority Action Plan. It is also actively engaged in the new Africa
Renewable Energy Initiative (AREI), and is expected to playa key implementation role (Box 2.2). The Bank cooperates
with key stakeholders in the energy sector, such as theWorld Bank Group, the European Commission, and bilateral
donors including the USA (especially through the PowerBox 2.2

AfDB to Support the African Renewable
Energy Initiative
Africa launched the African Renewable Energy Initiative(AREI) on the sidelines of the Conference of Parties (COP21)
in December 2015 in Paris. The initiative’s overarchinggoals are to help achieve sustainable development,enhanced well-being and sound economic development
by ensuring universal access to sufficient amounts of clean,appropriate and affordable energy. The initiative aims to
produce 300 GW of electricity for the continent by 2030.
In addition, the project’s goal is to help African countries
leapfrog current systems towards renewable energy,
particularly those that support low-carbon development
strategies while enhancing economic and energy security.
The initiative is expected to deliver 10 GW of new andadditional renewable energy generation capacity by 2020and later mobilize potential to generate at least 300 GW.
The AREI complements the Bank’s proposed New Deal on
Energy for Africa that has the target of universal accessto energy by 2025.

27

Chapter 2

Energy and Climate Change: Implications for Inclusive and Green Growth in Africa

Africa Initiative launched by US President Obama, which have financing in the continent’s energy sector. The New Deal on
helped projects expected to generate over 4,300 MW of new, Energy is designed to coordinate and build on existing andcleaner electricity), the UK, France, Germany, and multilateral emerging initiatives, which are not always fully aligned with eachagencies such as the International Renewable Energy Agency other, to achieve impact, scale, and speed. The New Deal on(IRENA), among others. The Bank works with the United Energy is designed to focus on five interrelated and mutually
States Agency for International Development (USAID) and reinforcing principles: raising aspirations to solve Africa’s energy
the Swedish International Development Cooperation Agency challenges; establishing the Transformative Partnership on(SIDA) on the provision of co-guarantees.
Energy for Africa; mobilizing domestic and international capitalfor innovative financing in Africa’s energy sector; supporting
The proposed New Deal on Energy for Africa. In addition African governments in strengthening energy policy, regulation
to hosting special large energy projects, the Bank and its and sector governance; and increasing the Bank’s investments
partners articulated the New Deal on Energy for Africa.(41) in energy and climate financing (see Box 2.3).
The goal of the New Deal on Energy is universal access toenergy in Africa by 2025. At the same time, it aims to decouple The specific goal of the New Deal on Energy is to add 160
Africa’s economic productivity from CO2 emissions in line GW of new generation capacity via the grid, deliver 130 million
with the SDGs. Universal access to energy by 2025 requires new grid connections and 75 million off-grid connections
connecting 205 million households and almost doubling grid and increase access to clean cooking energy for aroundgeneration capacity.(42) To drive and achieve this goal, the 130 million households.(43) The New Deal on Energy will play
Bank has worked with governments, the private sector, and a catalytic role in accelerating structural transformation inbilateral and multilateral energy sector initiatives to develop and the energy sector for inclusive green growth in Africa. It will
launch a Transformative Partnership on Energy for Africa—a also help unlock the potential for industrialization and wealthplatform intended for Public-Private Partnerships for innovative creation, agricultural transformation, regional power pooling to

Box 2.3

What Underpins the New Deal on Energy?
1.	Raising aspirations to solve Africa’s energy challenges. The New Deal on Energy calls on partners to raise aspirations and mobilize the political
will and financial support to solve Africa’s energy challenges. This is a pre-requisite for achieving the SDGs, and for implementing the global climatechange deal reached at the UN Summit (COP21) in Paris in December 2015.
2. Establishing a Transformative Partnership on Energy for Africa. The New Deal on Energy will be implemented through a partnership designed toprovide a platform for coordinated action among partners (private and public) and for innovative financing. The Partnership will unlock Africa’s energy
potential, and eventually foster a transition to low-carbon energy futures. It will help reduce duplication and pool resources to achieve economies
of scale in Africa’s energy investments.
3.	Mobilizing domestic and international capital for innovative financing in Africa’s energy sector. To achieve universal access by 2025, innovative
mechanisms are required to mobilize an additional USD 40 to 70 billion annually in domestic and international capital. This is a significant increaseon the USD 22.5 billion invested in the sector in 2014. Achieving this scale of energy financing requires collective action by all stakeholders—public
and private—to create enabling conditions for financial flows, to develop bankable projects, reform utilities, and enhance African countries’ absorptive
capacities.
4.	Supporting African countries in strengthening energy policy, regulation and sector governance. The New Deal on Energy will build on, andfurther scale up the Bank’s investments in the “soft” infrastructure of national governments and institutions, to enhance energy policies, regulations,
incentive systems, sector reforms, corporate governance, and transparency and accountability in the energy sector.
5. Increasing the African Development Bank’s investments in energy and climate financing. Between 2011 and 2015, AfDB invested some USD
6 billion in the energy sector. Under the New Deal on Energy, the Bank will increase its investments to provide finance and guarantees, co-financing
and syndication. Between 2016 and 2020, the Bank will invest about USD 12 billion and leverage about USD 50 billion in public and private financing
for investments in the energy sector. In addition, it will triple its climate finance to about USD 5 billion per annum, and leverage about USD 20 billion
in private and public sector investments in climate mitigation and adaptation by 2020.
Source: AfDB (2016).

28

Annual Report 2015

integrate energy supply in Africa, and job creation, ultimately
improving the quality of life for Africans.

Chapter 2●●

The New Deal on Energy will leverage financing for energy.
The New Deal on Energy must close the finance gap of USD 55
billion a year in sub-Saharan Africa. Potential sources of funding
include domestic tax revenue, official development assistance,and other sources such as funds recovered from stemming illicit
financial flows out of Africa. Multilateral Development Banks(MDBs) such as the African Development Bank, the WorldBank and bilateral finance agencies, could also leverage theirbalance sheets with greater co-financing arrangements andthe use of partial risk guarantees for public and private sector
investors. By focusing on project development, pipelines ofbankable projects can be developed for financing from theAfrica50 Fund (see Chapter 5, Section 5.2.5 for more details
on the Africa50 Fund).

2.4 Measures to Facilitatea Rollout of Modern Energy for
Inclusive and Green Growth
The Bank has already embarked on a path that demonstrates
its commitment to rolling out modern energy for inclusive andgreen growth. Ways to overcome existing obstacles and thereby
expand energy supplies for inclusive and green growth include:
setting up the right enabling policy environment; equipping utility
companies for success; increasing the number of bankableenergy projects; increasing the funding pool to deliver new
projects; funding “bottom of the pyramid” energy accessprograms; accelerating major regional projects and driving
integration; and rolling out waves of country-wide energy“turnarounds”. What the existing and emerging projects andprograms have lacked, and urgently need, is sufficient, innovative,
and appropriate financing. They also need to be bankable andsupported by appropriate policy and regulatory environments,
pricing incentives and coordination in order to increase thescale and speed at which energy is provided to the continent.
This section of the Report outlines the measures required tofacilitate a larger rollout of modern energy for inclusive andgreen growth through principles espoused in the proposed
New Deal on Energy for Africa in identifying and overcoming
the obstacles to universal access. The New Deal on Energy
has identified seven strategic themes, each of which is
supported by a series of flagship programs that the Bank
intends to launch.­(44) These areas are outlined below.

●●

Setting up the right enabling policy environment. A
range of critical interventions for the removal of abstacles
to universl access to energy include the following: advisingand supporting governments on setting up efficient sector
regulation and governance, focusing on cost-reflective tariffs,
building credible counter-parties, and ensuring appropriate
risk allocation. Energy efficiency policies curb inefficientconsumption while safeguarding essential supply. Therefore
adoption of energy efficiency and saving measures is a key
enabler to power sector decarbonization. In some cases, thesepolicies will need to be complemented by other power sector
reforms to facilitate the transition to low-carbon technology andmaintain system reliability. The required reforms will mostly bearound sector deregulation and price policies to attract private
sector investment in the energy sector. This has successfully
happened in the information and telecommunications sector
with transformational results. In particular, African governments
need to consider a gradual withdrawal of subsidies to lossmaking power utilities and oil-based products such as
kerosene and other fuels, then redirect them to productiveenergy investment, social protection and targeted connectivity
for the poor. African governments could bridge the energy
investment gap if they channeled approximately 2-3 percent
of GDP, corresponding to 7.5-10 percent of fiscal revenues.­(45)
On the production side, for example, the challenges facing
oil and gas operations in Africa continue to be varied andnumerous e.g. fraud, corruption, theft, limited infrastructure,protectionist governments, and lack of skilled resources,
among others. Regulatory uncertainty and delays in passing
enabling laws continue to severely inhibit sector development
in many countries around the continent.
Enabling utility companies for success. Power sector
utilities constitute a major fiscal burden for many countries.
Utilities will need technical assistance to enable restructuring(privatization and concession) for improvement (loss reduction
and revenue recovery). This would help to streamline theoverly centralized and inefficient energy systems, dominatedby publicly run energy utilities. Additionally, the governanceof power utilities has been identified as being at the heart ofAfrica’s energy crisis. Therefore, reform remains essential toallow them to capitalize on investment and the low-carbon
technological innovation. Two components lie at the heart ofcreating more efficient and stable energy markets: unbundlingpower generation, transmission and distribution is one, andprivatization is the other. South Africa provides a good example
through its Renewable Energy Independent Power Producer
Procurement Programme launched in 2011 (see Box 2.4).

29

Chapter 2

Energy and Climate Change: Implications for Inclusive and Green Growth in Africa

Box 2.4

debt financing. These can be sourced from bond markets(corporate bonds, government infrastructure bonds,
diaspora bonds and external sovereign bonds), sovereign
wealth funds, resource-backed infrastructure financing
and international development finance. Schemes such as
sovereign wealth funds and resource-backed infrastructure
financing are better tailored for resource-exporting countries.

South Africa’s Renewable Energy Independent
Power Producer Procurement Programme
The Renewable Energy Independent Power Producer
Procurement Programme is a flagship project of the
Department of Energy launched in August 2011 tocontribute towards the renewable energy power generation
target, and to stimulate the renewable industry in South
Africa. A total of 5,243 MW across the four Renewable
Energy Bid Windows has been procured from 79
Independent Power Producers (IPPs) in less than four
years. This represents an investment of some USD 16
billion in economic infrastructure, which will contribute toeconomic growth, job creation and security of electricity
supply. The Department has already announced its intention
to secure 6,300 MW in future renewable energy bid
windows. Bidders are invited on the tariff and identifiedsocio-economic development objectives. Tariffs have
dropped over the four bidding phases with average solar
photovoltaic tariffs decreasing by 68 percent and thoseof wind by 42 percent, in nominal terms.

●●●●

Sizably increasing the number of bankable energy
projects and increasing the funding pool. One of theconstraints associated with rollouts of modern energy
has been the lack of a critical mass of bankable projects.
Aggregating project development capital, and channeling it
through highly capable private sector organizations involved
in world-class project development, including private sector
financing and legal institutions, will help increase the numberof bankable energy projects. Also, the finance pool needs
to be scaled up to create greater leverage on the financial
markets by buying down certain categories of risk for theprivate sector.
●●

●●

30

Funding “bottom of the pyramid” energy access pro­grams. Increasing funding for the development of on- andoff-grid project organizations will support the accelerationof the rollout plans. Domestic taxes can only realisticallycover about half the financing gap in sub-Saharan Africa.
The challenge for governments, therefore, is to increase
resource mobilization through other measures, such aspension funds and other institutional investors, recover andprevent the loss of finance through illicit financial transfers,
combat tax evasion and avoidance, and ensure cautious

Accelerating major regional projects and driving inte­
gration. Accelerating the plans will also be supported bystrategic identification of major regional projects, particularly
those with regional interconnections included in theirmandate, and systematically drive them to completion. Someof Africa’s huge energy resources require collective action.
For example, the continent’s water resources are mostly
shared, so that damming must be negotiated or financed
regionally. Examples include the Kariba Hydropower Damshared by Zambia and Zimbabwe, and the Regional Rusumo
Falls Hydroelectric Project on the border of Rwanda andTanzania. Collective action would reverse the blockages insituations where most regional power pools are hampered
by lack of funding, political instability, and weak cross-borderregulations. A strong case can be made for a continental
approach to energy infrastructure, which is key to integration.
This will require strengthening strategic infrastructure—thebackbone of the pan-African smart grid—through the supportof continental institutions such as the African Development
Bank, the African Union and the UN Economic Commission
for Africa, in public trust. In that way, regional power pools canbe left to handle the feeder and more regional infrastructure.
Continental public goods would thus be insulated from the
day-to-day conflicts between sovereign nations and future
political leaders who may not always act in the interest of
their citizens. PIDA provides a strategic framework for thedevelopment of regional and continental energy infrastructurein Africa (see Map 2.2).
Rolling out waves of country-wide energy “turn­arounds”. A central theme bringing all elements together
is the systematic implementation of full-country turnaroundprograms. The Bank plans to coordinate major development
institutions to launch end-to-end energy system
turnarounds, in close collaboration with the Heads ofState, Ministers of Energy and Ministers of Finance. These
programs will include energy system planning, restructuringof the national regulatory environments, matching donors
to targeted interventions, and bringing in the private sector
to drive the development of capacity and connections.

Annual Report 2015

Chapter 2

Map 2.2

Energy Generation and Transmission Projects of the Programme for Infrastructure Development in Africa
PIDA Priority Action Plan 2020

PIDA 2020-2040

PIDA 2030-2040

1
Gourbassi
Millennium Dam
5250 MWSambagalou
64MW

Gibe III Dam
1870 MW
Gibe IV Dam
1479 MW

2

Fomi
88 MW
Kaleta II
117 MW

7

Bumbuna 3 Dam
350 MW

Lom Pangar Dam
120 MW

Soubré
300 MW

3

Memve Ele Dam
200 MW
Optimal development of Inga
43200 MW

Ruzizi IV Dam
210 MW

Batoka Gorge
1600 MW
1 North Africa transmission
2 Sudan-Ethiopia transmission
3 Tanzania-Kenya transmission

4

Rusumo Falls
61 MW
Stiegler’s Gorge Dam
2100 MW

6
5
Cahora Bassa Dam
1245 MW
Mphamda-Nkuwa
1500 MW4 North South transmission corridor
5 South Africa-Mozambique transmission
6 Central Africa transmission
7 West Africa power transmission corridor

Source: AfDB (2014) Development Effectiveness Report on Energy.

31Chapter 2

2.5

Energy and Climate Change: Implications for Inclusive and Green Growth in Africa

Looking Ahead

In looking ahead, the Bank has demonstrated that meeting its
transformation goals is achievable. It is clear that regional andcontinental actions with the support of partners are needed
to develop Africa’s largely untapped energy potential if thegoals of the proposed New Deal on Energy for Africa, andthe initiated Transformative Partnership on Energy for Africa
to escalate universal access by 2025, are to be met. A large
gap exists between investment needs and actual outlays in the
power sector, especially in sub-Saharan Africa. In this respect,
the Bank is developing strategies towards fast tracking energy.
An enabling environment for the private sector to operate in,either as IPPs or participants in Public-Private Partnerships,
is a way forward.

Notes:
1.	International Energy Agency (IEA) (2014).
Calculated from 2012 actuals and 2020
projections.
2.	IEA (2015). Calculated from 2013 actuals
and 2020 projections.
3.	IEA (2014).
4.	IEA (2014).
5.	IEA (2014; 2015); calculated from 2012
and 2013 actuals, and 2020 projections.
6.	IEA (2014).
7.	Africa Progress Panel (2015).
8.	IEA (2014).
9.	IEA (2015).
10.	IEA (2014).
11.	IEA (2014).
12.	IEA (2014; 2015).
13.	IEA (2014).

32

Africa should vigorously push its agenda for universal accessto energy. The continent should keep its contribution to global
CO2 emissions relatively small as demand for energy grows
through: (i) the development of its large hydro resources;(ii) gradual replacement of coal-based power generation withfossil fuels with lower carbon emissions, such as natural gas
and nuclear power; and (iii) the development of its significant
geothermal, wind, and solar potential. African governments
need to show leadership by promoting energy investment as
a top priority and creating conditions that are conducive to
private sector investment in the energy sector. Appropriate
policy frameworks, regulations and incentive structures
are required to unlock the huge potential of Africa’s energy
resources and to meet the development needs for modern
energy services. The Bank has already embarked on thepath to unlocking this energy potential to provide universal
access by 2025.

14.	Africa Progress Panel (2015).
15.	African Development Bank (AfDB) (2016).
16.	IEA (2014).
17.	AfDB (2016); IEA (2014).
18.	IEA (2014), calculated from 2012 actuals
and 2020 projections.
19.	Africa Progress Panel (2015).
20.	Wakeford and Urama (2015).
21.	Africa Progress Panel (2015).
22.	Africa Progress Panel (2015).
23.	Africa Progress Panel (2015).
24.	IEA (2015).
25.	Wakeford and Urama (2015).
26.	Hove, Barbi, and Urama (2015).
27.	IEA (2015).
28.	IEA (2015).
29.	IEA (2015).

30.	Wakeford and Urama (2015).
31.	Wakeford and Urama (2015).
32.	IEA (2015).
33.	AfDB (2016).
34.	IEA (2014).
35.	IEA (2014).
36.	Wakeford and Urama (2015).
37.	Africa Progress Panel (2015).
38.	Africa Progress Panel (2015).
39.	Africa Progress Panel (2015).
49.	Africa Progress Panel (2015).
41.	AfDB (2016).
42.	AfDB (2016).
43.	AfDB (2016).
44.	AfDB (2016).
45.	ICA Trends 2014; Africa Economic
Outlook; World Bank.

Annual Report 2015

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Outlook 2013, Special Thematic Edition: Structural
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statistical-review-downloads.html (accessed 18 May 2015).
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OMFIF, London, United Kingdom.
Intergovernmental Panel on Climate Change [IPCC] 2014.
Climate Change 2014: Synthesis Report. Fifth Assessment
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Karekezi, S. and Kithyoma, W. (2003). Renewable Energy inAfrica: Prospects and Limits. The Workshop for African
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33

Menengai Geothermal Development Project, Kenya.

Part II

Bank GroupOperations,
Effectivenessand GovernanceRehabilitation and Expansion of Cuamba City
Water Supply System, Mozambique.

Chapter 3
Bank
Group
Operations

Chapter 3

Bank Group Operations

Chapter 3This chapter presents an overview of the Bank Group’s performance during 2015 in its lending operations, and further
examines other non-lending areas of interventions. The Bank Group conducts its lending operations for projects andprograms through three windows: the African Development Bank (‘the Bank’, or ‘ADB’), the African Development Fund(‘the Fund’, or ‘ADF’) and the Nigeria Trust Fund (‘NTF’). In 2015, total approvals of Bank Group operations amounted
to UA 6.33 billion, for 241 operations, as at end-December 2015, an increase of 25.4 percent over the 2014 approvals.

3.1 Overview ofBank Group Operations

UA 2.97 billion—65 percent above the UA 1.80 billion target.
Similarly for the private sector, actual approvals of UA 1.55
billion exceeded the target of UA 1.50 billion by 3.3 percent.

The Bank Group’s operations in 2015 were guided by thetwin objectives of achieving inclusive and green growth as The rise in ADB public sector operations is mainly related to
stipulated in the Ten-Year Strategy (TYS). During the year, an increase in borrowing from the sovereign window by ADBBank Group operations at end-December 2015 increased eligible countries as well as the accommodation of newly eligibleby 25.4 percent over the operations at year-end 2014. Thisis significant, compared to the 15.1 percent increase in Bank
Group operations at end-2014, compared to 2013, and a
Figure 3.1
3.1 percent increase at end-2013 over end-2012. As in the
Bank Group Total Approvals by Window*,
previous years, infrastructure operations, mainly transport
2013-2015 (UA billion)
and energy, received the bulk of Bank Group’s resources.
Overview of Bank Group Operations by Financing Window.
In 2015, total Bank Group operations amounted to UA 6.33 billion,
Figure 3.1 shows the distribution of this amount, compared withthose of the two previous years, by financing window.
For the ADB window, total approvals amounted to UA 4.52
billion, comprising public sector approvals of UA 2.97 billion(representing 65.7 percent of the total) and private sector
approvals amounting to UA 1.55 billion (34.3 percent of
the total). The total approvals for the ADB window in 2015
increased by 41.1 percent compared to 2014. In termsof distribution, ADB public sector operations increased
substantially by 78.3 percent in 2015 relative to 2014 while
ADB private sector operations increased by only 0.9 percent
over the same period (see Table 3.1).
The performance of ADB financing in 2015 for both the public
and private windows was equally high relative to the targets forthe year. For the public sector, actual approvals amounted to38

Bank Group
6
5
4

ADF

5.05
4.52

4.39

3.20

3
2

ADB

6.33

1.83

2.27
1.59

1.52

1
0
2013

2014

2015

Source: AfDB Statistics Department.
* Notes:
1.	There are three Financing Windows: ADB, ADF and NTF.
2.	NTF approvals are not shown as they are negligible, measured in UA
millions, when compared to ADB and ADF scales measured in UA
billions. NTF approvals were: UA 31.2m (2013), UA 11.5m (2014) andUA 12.5m (2015).
3.	For completeness, the Special Funds financing mechanism is includedin Total Bank Group Approvals. Special Funds approvals, also notshown in the chart, were: UA 253.4m (2013), UA 244.2m (2014), andUA 288.9m (2015).

Annual Report 2015

Chapter 3

ADF countries from sub-Saharan Africa for ADB resources. The
revision of the Bank Group’s credit policy enabled ADF-eligible
countries to access ADB resources, and thus contribute tolowering the risk of concentration of Bank lending mainly
towards countries in Northern Africa. The increase in the levelof activities of the ADB private sector window is linked to the
Bank’s scaling up of its non-sovereign operations, including
through the trade finance facility, the partial credit guarantee
instruments, and the Private Sector Credit Enhancement Facility.

Employability and Integration in Growth Sectors in Togo; and(ii) the UA 6 million loan for the Water Loss Reduction and
Performance Improvement of Drinking Water Systems in Benin.
These approvals were 8.8 percent above the UA 11.5 million
approved in 2014 (see Table 3.1).

Figure 3.1 shows that approvals for Special Funds accounted
for UA 288.9 million and represented 4.6 percent of total Bank
Group approvals. These were for the African Water Facility(AWF), the Rural Water Supply and Sanitation Initiative (RWSSI),
Table 3.1 shows that ADF approvals stood at UA 1.52 billion, the Global Agriculture and Food Security Program (GAFSP),
representing a decrease of 4.9 percent against the 2014 the Africa Growing Together Fund (AGTF), the European
position. This performance was 5.4 percent below the ADF Union–Africa Infrastructure Trust Fund (EU-AITF), the Fund fortarget of UA 1.6 billion for 2015. The relatively lower level of African Private Sector Assistance (FAPA), the Enhanced Private
approvals in 2015 can be explained by the ADF-13 cycle Sector for Africa (EPSA), the Middle East and North Africa
financing modalities, which permitted front-loading of the ADF (MENA) Trust Fund, and the Zimbabwe Multi-Donor Trust Fundresource envelope in 2014, the first of the three-year cycle, (ZimFund). Others included the Global Environment Facility
with allocations declining gradually in subsequent years.
(GEF) and the Sustainable Energy Fund for Africa (SEFA),
specifically related to energy and climate-change operations.
For the Nigeria Trust Fund (NTF), two operations wereapproved in 2015 amounting to UA 12.5 million: (i) The Table 3.2 on financing instruments shows that total loans andallocation of UA 6.5 million loan was for Support for Youth grants amounted to UA 5.24 billion, representing 82.7 percent

Table 3.1

Bank Group Total Approvals by Window, 2014-2015 (UA million)
2015 Operations
Window
ADB Private
ADB Public
ADB Total**
ADF
NTF
Special Funds (SF)*Bank Group2014
Operations
1,536.21
1,665.09
3,201.30
1,592.91
11.49
244.22
5,049.92

Actual
1,549.54
2,968.68
4,518.23
1,515.12
12.50
288.85
6,334.69

Target1,500.00
1,800.00
3,300.00
1,602.00
25.00
4,927.00

Percentage Change (%)
Against 2014
Against 2015
Operations
Target
0.9
3.3
78.3
64.9
41.1
36.9
-4.9
-5.4
8.8
-50.0
18.3
25.4
28.6

Source: AfDB Statistics Department.
* SF: see the list in the text above.
** ADB total amount may not add up due to rounding.

Table 3.2

Bank Group Total Approvals by Financing Instruments in 2015 (UA million)
Financing Instruments
Loans & Grants
Other Approvalsof which: Special Funds
Private Equity Participation
Public & Private Guarantees
HIPC Debt Relief
Total Approvals

ADB
3,757.10
761.13

ADF
1,468.16
46.96

NTF
12.50
-

46.96
1,515.12

12.50

64.27
696.86
4,518.23

Bank Group
5,237.76
1,096.94
288.8564.27
696.8646.96
6,334.69

Source: AfDB Statistics Department.
* Total approvals amount may not add up due to rounding.

39

Chapter 3

Bank Group Operationsof total approvals. The remaining UA 1.10 billion (17.3 percent)comprised approvals for Special Funds (discussed above),
ADB private equity participation, ADB public and private sector
guarantees, and approvals for debt relief under the Heavily
Indebted Poor Countries (HIPC) initiative. The private equity
participation of UA 64.3 million went to finance the following
four multinational operations: CEC Africa Investments Limited,
Atlantic Coast Regional Fund, AfricInvest Fund and Alitheia
Identity Fund. Total ADB guarantees of UA 696.9 million
were made up of a public partial credit guarantee (UA 397.8
million) to Cameroon and ADB private guarantees (UA 299.1
million). The private guarantees were provided in support offive multinational financial intermediaries and a heavy-fueloil-power project in Sierra Leone. The UA 47 million for debt
relief was provided to Chad, following the country’s attainmentof the HIPC completion point.

investment demonstrates the importance that the Bank
Group attaches to addressing Africa’s infrastructure deficit
and its commitment to promoting inclusive and sustainable
development.

Figure 3.2 also shows that the finance-sector operations
received an allocation of 21.3 percent of the total Bank Groupapprovals. These were mainly in the form of lines of credit(LOCs), guarantees and trade finance targeted at alleviating
credit constraints faced by businesses on the continent
especially micro-, small-, and medium-sized enterprises(MSMEs). The MSMEs account for more than 45 percent of
employment and 33 percent of GDP in Africa. Hence, theBank Group’s participation through lines of credit therefore
serves to guarantee MSMEs access to financing fromfinancial intermediaries. The resources allocated to multisector
operations, including public finance management and other
Sector Distribution of Bank Group Operations. In 2015, governance-related operations, represented 12.5 percent
Bank Group operations continued to be aligned with the TYS, of total Bank Group approvals. These approvals strengthen
which emphasizes infrastructure investment in the key sectors governments’ fiscal control, transparency and accountableof transport, energy, water and sanitation, and communications use of public resources, modernize the taxation system
for the transformation of African economies. Figure 3.2 depicts and enhance revenue collection, boost domestic resource
the distribution of total Bank Group approvals to various mobilization, and facilitate the restoration of public service
sectors. The chart shows that, of total Bank Group approvals delivery.
of UA 6.33 billion, UA 3.08 billion (48.6 percent) was allocatedto infrastructure projects, with transport (27.2 percent) and The chart also shows that the social sector received 9.4
energy (13.8 percent) accounting for the largest share. This percent of total Bank Group approvals for interventions in
was followed by water and sanitation (6.3 percent) while skills development, technological innovation and infrastructure
allocations to the communications sector accounted for only improvement. Trends based on evidence suggest that Africa’s
1.4 percent. The relatively large allocation to infrastructure structural transformation has been held back by low human

Figure 3.2

Sectoral Distribution of Total Bank Group Approvals, 2015
(UA 6.33 billion)
Industry 0.05%
Multisector 12.5%

Communication 1.4%

Energy 13.8%
Finance21.3%

Social 9.4%
Agriculture 8.1%

Source: AfDB Statistics Department.

40

Infrastructure
48.6%

Transport
27.2%

Water Supply& Sanitation 6.3%

Annual Report 2015

capital, especially a shortage of appropriate skills. By helping
to ease the skills constraint faced by the private sector, theBank Group continues to demonstrate its commitment tofacilitate sector-wide structural transformation in Africa.
In Figure 3.2, the agriculture sector accounted for 8.1 percent
of total Bank Group approvals. This does not take into accountinvestments in rural infrastructure that indirectly support
agriculture but are included in the share of the infrastructure
sector. However, this share is relatively low and should be
increased to boost rural incomes and improve food security.
Equally, the share of the sectoral allocation to industry is
relatively insignificant at less than 1 percent. This should bescaled up in order to catalyze the pace of industrialization in
Africa. Accordingly, the Bank Group also needs to support
private sector operations and financial market development
to increase Africa’s share in global value chains.

Chapter 3

Figure 3.3

Bank Group (BG) Loan & Grant Disbursement
Targets vs. Actual Achievements, 2011-2015*
BG Loan & Grant Disbursement Targets
BG Loan & Grant Disbursement Actuals

3,750

3,500

3,250

3,000
2011

2012

2013

2014

2015

Source: AfDB Budget and Programming Department.
* Total loan and grant disbursements exclude Special Funds, equity
participation, and guarantees.

Bank Group Disbursements. The performance of Bank
Group disbursements has varied over time. In 2015, Bank
Group loan and grant disbursements, excluding equity The relatively low disbursement rate was mainly due toparticipation, guarantees, and Special Funds, amounted to delays occasioned by a number of factors. Notable among
UA 3.03 billion (Figure 3.3)—a 4.2 percent decrease compared these were the weak institutional and management capacity
to 2014. Over the past five years, the actual disbursement in some Regional Member Countries (RMCs), and delays
closely matched the target only in 2012. However, between in procurement and in meeting disbursement conditions.
2012 and 2015, actual disbursements against targets showed Other causes of disbursement delays included fragility
a wider margin, as indicated by the decline of the disbursement situations, conflicts, political transitions, and, in a few cases,
rate from 98 percent in 2012, to 81.9 percent in 2015. The anti-corruption investigations. In other cases, delays arose
recent decline in the disbursement rate must be addressed. from complex country processes for obtaining parliamentary
ratification for contracting loans. To address the delays in
Table 3.3 presents Bank Group actual and target loan and disbursements, the Bank Group has made concerted efforts,
grant disbursements by financing window for 2015. It shows including strengthening the monitoring and reporting of
the disbursement rate for ADF operations at 92.2 percent recurring issues, and streamlining of operational businesscompared with 74.9 percent for the ADB window, and only processes to improve disbursements. An inter-departmental
49.8 percent for the NTF window. The disbursement rate for working group was also tasked to update disbursement
all Bank Group interventions was 81.9 percent during the year. profiles and fine-tune the process for setting targets at

Table 3.3

Bank Group Disbursements in 2015: Actual vs. Targets (UA million)
Window
ADB Private
ADB Public
ADB Total
ADF
NTF
Bank Group

ActualDisbursements
602.391,016.78
1,619.17
1,398.36
7.47
3,025.00

TargetDisbursements
842.001,319.00
2,161.00
1,516.00
15.00
3,692.00

Disbursement
Rate (%)
71.5
77.1
74.9
92.2
49.8
81.9

Source: AfDB Statistics & Financial Control Departments.

41

Chapter 3

Bank Group Operations

regional, country, and sector levels. Accordingly, institutional others. These reflect the areas of priority in the Results-based
disbursement targets have been objectively reviewed and Country Strategy Papers of the respective countries.
further cascaded down to country offices and sector divisions.
The purpose is to promote ownership and accountability ADF Approvals by Country. From the total ADF loan andacross all business segments and ensure that the Bank Group grant approvals of UA 1.12 billion, 43.8 percent was allocatedachieves more robust and realistic disbursement targets.
to multinational operations, while the remaining 56.2 percent
benefited 28 ADF recipients. The distribution of loans and
ADB Approvals by Country. Of the UA 3.76 billion ADB loan grants to these 28 RMCs is illustrated in Figure 3.5. Basedand grant approvals, 68.4 percent was allocated to public on ADF performance-based allocation (PBA) and debtsector operations and the remaining 31.6 percent went to sustainability analysis (DSA) criteria, the figure shows thatprivate sector operations. Figure 3.4 illustrates the distribution some ADF countries (Tanzania, Kenya, Ghana, Madagascar,of these approvals by recipient countries. Among these, in etc.) received only concessional loans. Others, including
2015, Congo was classified as an ADB country in transition, Sudan, Democratic Republic of Congo (DRC), Mali, and Côte
and Cameroon, Kenya, and Zambia became blend countries— d’Ivoire, received only grants. The rest, including Burkina
eligible for both ADB and ADF resources. Also, following Faso, Malawi, and Eritrea received a combination of loans
approval of the Bank Group’s revised credit policy in May and grants. The three blend countries, Cameroon, Kenya,
2014, a number of ADF-only RMCs (Senegal, Tanzania, and and Zambia, which are eligible for ADF performance-based
Uganda) were able to access the ADB public non-concessional allocations, are not reflected in Figure 3.5 because they did
resources for financing their operations. These countries not use their ADF allocations to finance any projects in 2015.
used the additional ADB resources to finance their operations For example, Zambia had front-loaded its 2015 allocation
in infrastructure, particularly transport, energy, water and earlier in 2014 to partly finance the Kariba Dam Rehabilitation
sanitation (including climate-resilient sanitation programs), and Project. Similarly, the records show that the two ADB countries
in agriculture, skills development and entrepreneurship, among in transition during 2015, Congo and Nigeria, did not use

Figure 3.4

ADB Loan and Grant Approvals by Country,
2015 (UA million)
PrivateADF Loan and Grant Approvals by Country,
2015 (UA million)

PublicMultinational
Egypt
AngolaTanzania
TunisiaSouth Africa
MoroccoNamibia
ZambiaCôte d’Ivoire
SenegalGhana
UgandaKenya
Cameroon
Seychelles
RwandaSierra Leone
Congo
Cabo Verde
Nigeria
Algeria
Mozambique
Madagascar
Mauritius
Djibouti
Somalia

Loans

GrantsEthiopia
Tanzania
Kenya
Sudan
Burkina Faso
Ghana
Congo, Dem. Rep. ofMadagascar
Zimbabwe
MalawiGuinea-Bissau
Central African Rep.
Niger
MozambiqueMali
EritreaChad
Benin
Sâo Tomé & Príncipe
Côte d’Ivoire
Togo
Comoros
Djibouti
Sierra Leone
South Sudan
Gambia, The
Somalia
Cabo Verde

0

100

200

300

400

Source: AfDB Statistics Department.
Note: Private sector amounts exclude Equity Participation,
Special Funds and Guarantees.

42

Figure 3.5

500

0

50

100

150

200

Annual Report 2015

their ADF allocations to finance any projects in 2015, as theirrelatively smaller ADF allocations had also been front-loaded
for financing operations in 2014.

3.2 Bank Group Operations
by Priority Sectors and Areas ofSpecial Emphasis

Chapter 3

Figure 3.6

Total Bank Group Approvals for
Infrastructure, 2015 (UA 3.08 billion)
Transport 55.9%

Water Supply& Sanitation 12.9%

Energy28.3%
This section reviews Bank Group operations with a focus
on priority sectors and areas of special emphasis in the
TYS. The areas of focus include infrastructure (energy,transport, water and sanitation, and communication); private
sector development; regional integration; governance andCommunication 2.8%
accountability; and skills and technology. The three areas of
special emphasis under the TYS are gender, agriculture andSource: AfDB Statistics Department.
food security, and States in fragile situations. States in fragile
situations specifically benefit from budget support operations
to address fragility and other socio-economic challenges insome of the deprived areas of the continent.
percent) in the form of loans and grants. The remainder(UA 30.6 million) was financed through equity participation,
Energy. During the year, the Bank Group continued to play guarantees and Special Funds, particularly from the EU-AITF
its leading role in Africa’s energy sector, in partnership with and SEFA. Energy-sector approvals represent 28.3 percent
other African institutions and international partners. This of total infrastructure approvals (Figure 3.6). Some of thewas facilitated through the Programme for Infrastructure key energy sector projects approved include: (i) the Kenya–
Development in Africa (PIDA), the African Hub for the Tanzania Power Interconnection Project (UA 102.8 million);
Sustainable Energy for All (SE4ALL) initiative, and the (ii) the Uganda Rural Electricity Access Project (UA 80.2 million);
African Energy Leaders Group. The Bank Group’s focus on and (iii) The Gambia River Basin Development Organisationenergy highlights the extent of Africa’s energy deficiency—a (OMVG) Energy Project (UA 97 million). These projects are
considerable impediment to the continent’s development. To expected to ease the energy requirements in each of thesemobilize partnership support and financing to close Africa’s countries.
huge energy deficit, the AfDB held a High-Level Consultative
Stakeholders Meeting in Abidjan, Côte d’Ivoire in September The Kenya–Tanzania Power Interconnection Project will
2015, where the New Deal on Energy for Africa was presented improve the supply, reliability, and affordability of electricity
and discussed. The ambitious goal of this initiative is to ensure across the Eastern Africa region. It will allow the linkage of theuniversal access to energy by all the RMCs by 2025. Details Eastern Africa Power Pool to the Southern African Power Pool.
of the New Deal on Energy are discussed above in Chapter 2. It is also projected to link Egypt and Sudan in Northern Africa
which will help the two countries to replace some of the highThe proposed African Renewable Energy Initiative (AREI), was costs of thermal energy production with cheaper and cleaner
announced at the Climate Change Conference of Parties hydropower while also reducing greenhouse gas emissions.
(COP21). It received endorsement from African Heads of Stateand Government and Ministers of Environment, the G7 (Elmau The Uganda project is envisaged to improve access to
Summit), and the G20 (Energy Summit). At the Conference, electricity for rural households, small- and medium-sized
the AfDB announced that it would triple its financing to climate- enterprises and public institutions (rural health centers, schools
change initiatives by 2020 up to USD 5 billion a year.
and local administration offices) in the project area. In a country
where only 8 percent of the rural population has access toBank Group total approvals for the year in the energy sector electricity, this project is aimed at contributing to inclusive
amounted to UA 871.6 million, with UA 841 million (96.5 growth and poverty reduction, especially among the rural poor.

43

Chapter 3

Bank Group Operations

Box 3.1

Renewable Energy Project for OMVG States
Approved in September 2015, this renewable energy
project seeks to provide the four OMVG member stateswith renewable, clean, and affordable energy, while
simultaneously promoting regional integration through thesharing of energy and improved electricity supply quality.
By increasing electricity supply, the project will expand
household access to more reliable energy, boost businesscompetitiveness in each of the countries, stimulate
economic growth and create jobs, thereby contributing
to poverty reduction. The interconnection network will
also contribute to the expansion of the power pool system,
creating a regional electricity market that will reduce theaverage cost of electricity generated in each of the OMVG
member states. Further, the effects of using hydropower
will curb fossil fuel consumption by a significant marginand consequently reduce greenhouse gas emissions in
support of the COP21 objectives.

Box 3.2

Selected Transport Operations Approved in 2015
The Transport Sector Support Program in Tanzania
comprises interventions mainly in the roads subsector,
but also includes feasibility studies in the railway and airtransport subsectors. The road improvements will provide
access to agricultural products in Tanzania, thereby
spurring growth in productivity. The roads will also serveas links to neighboring Malawi, Mozambique, Zambia, andDRC, and will facilitate cross-border trade, and deepen
regional integration.
The Chinsali–Nakonde Road Project forms part of the TransAfrica Highway and the North–South Corridor (NSC). The
NSC is a priority corridor, which services eight countries
in the region—Tanzania, DRC, Zambia, Malawi, Botswana,
Zimbabwe, Mozambique, and South Africa.
The Tunisia Road Infrastructure Modernization Project(PMIR) seeks to rehabilitate 719 km of classified roads,
most of which are in the country’s inland governorates. The
project will also upgrade some civil engineering structureson the classified network to make them more resilient to
the effects of climate change.

44

The environmentally friendly OMVG Energy Project targets The
Gambia, Guinea, Guinea-Bissau, and Senegal. The project isdesigned to harness the immense potential for clean energy,
thus fostering affordable energy for the region’s inhabitants(Box 3.1).
Environment and Climate Change. Climate change
mitigation and adaptation are at the core of the landmark Paris
Agreement reached at the December 2015 Climate Change
Conference (COP21) in which the Bank Group participatedactively. For details on Bank Group’s 2015 activities in thisarea and at COP21, see section 2.3.
Transport. In November 2015, the Bank Group organized
the first AfDB Transport Forum: “Sustainable Transport for an
Integrated Africa”. The Forum noted that green and inclusivetransport is critical in stimulating sustainable growth, given thatgreen transport means cleaner and more efficient vehicles,
less air pollution, less congestion and more green jobs. These
goals are in line with the objectives of the recently concluded
COP21 on Climate Change. At the Transport Forum, the
AfDB also reiterated its commitment to work with the RMCs
in ensuring that transport plays a catalytic role in promoting
Africa’s participation in agribusiness and global manufacturing
value chains, facilitating regional integration, and providing
opportunities for social inclusiveness.
In 2015, Bank Group total approvals for transport sector
operations amounted to UA 1.72 billion, with loans and grants
accounting for UA 1.58 billion (91.9 percent). The remaining UA
139.5 million (8.1 percent) represented Special Funds financing,
specifically from the Africa Growing Together Fund (AGTF).
Approvals for the transport sector represented the largest share(55.9 percent) of the UA 3.08 billion total Bank Group approvals
for all infrastructure operations (see Figure 3.6 above).
In Box 3.2, three approved transport operations are highlighted:(i) the Tanzania Transport Sector Support Program (UA248.0 million); (ii) the Chinsali–Nakonde Road Rehabilitation
Project in Zambia (UA 172.8 million); and (iii) the Tunisia Road
Infrastructure Modernization Project (UA 152.9 million).
Water Supply and Sanitation. The importance of water security
for sustainable economic and social development in Africa ishighlighted in the TYS. During 2015, the AfDB continued tosupport water supply and sanitation infrastructure services andinstitutions that contribute to socio-economic development
and resilience to water-related disasters and climate change inAnnual Report 2015

Chapter 3

Map 3.1

Major National and Regional (Multinational) Energy Sector Projects Approved by the Boards in 2015

TUNISIA

Natural Gas Transport and Distribution
Network Dev., UA 38.5 million• Construction of natural gas
transportation and distribution networks
in order to connect 19 local
communities in the western region to
the national natural gas supply system.
• Help reduce existing disparities between
the western region and the otherregions of the country by facilitating
industrial development and job creation.

KENYA-TANZANIAPower Interconnection Project, UA 102.8 million• Improve the supply, reliability and affordability ofelectricity in the two countries throughcross-border exchange of cheap and cleaner
surplus power and also from countries in the
Eastern Africa region.
• Encourage the private sector investing in
generation of electricity by facilitating powertransfer through the interconnection.
• Allow for the interconnection of the EAPP to the
SAPP and further in the future to Egypt and Sudan
in Northern Africa.

GAMBIA, GUINEA,GUINEA-BISSAU, SENEGALThe Gambia River Basin Dev. Organ.
(OMVG) Energy Project, UA 97 million• The interconnection will enable evacuationof hydropower from power plants in the
OMVG-ECOWAS area, including the 242
MW Kaleta plant in Guinea and the 128
MW additional plant in Sambangalou,Senegal.
• This pooling of hydropower will help end
persistent problems of power shortages andheavy dependence on imported petroleum
products for the production of electricity.
• Using hydropower will substantially curb
fossil fuel consumption and, consequently,
greenhouse gas emissions

UGANDA

Rural Electricity Access Project,
UA 71.2 million• Improved access to electricity forhouseholds, commercial and businessenterprises and public institutions (healthcenters, schools, and administration offices)in the proposed project areas.
• Improve the livelihoods and economic
opportunities in rural communities, andprovide better access to social services.
• Connect Bugala Island to the national grid.

BURUNDI, RWANDA, and DRC

The Ruzizi III Regional Hydropower Plant
Project, UA 98.5 million• Enable the construction of a run-of-river
dam straddling the Ruzizi River between the
DRC and Rwanda, as well as a 147 MW
power plant and distribution station.
• Electricity generated will feed into the East
African Power Pool (EAPP).
• Provide reliable and affordable power andincrease the region’s access to electricity
by about 300 percent.

45

Chapter 3

Bank Group Operations

Box 3.3

The Three Water Initiatives
African Water Facility (AWF). The AWF is owned by the African Ministers’ Council on Water (AMCOW), and has been operational since 2006. The AWF
mobilizes funds for water resources development activities in Africa. Since 2006, AWF has funded 96 national and regional projects in 51 countries. In
2015, it celebrated ten years of operation and prepared its new long-term strategy to guide its future focus and operations. The AWF, which views itself
as a “Project Preparation Facility”, was named the Project Preparation Facility of the Year at the Africa investor (Ai) CEO Infrastructure Developers andInvestment Summit in 2015. The AWF’s achievements in 2015 include: (i) three new project approvals, one of which is supporting the DRC, considereda State in a situation of fragility; (ii) EUR 100 million mobilized for strengthening the financial base for the sector; and (iii) a Special Initiative for Climate
Change which will trigger further investments to improve water supply and sanitation.
Rural Water Supply and Sanitation Initiative (RWSSI). This initiative was conceived by the Bank in 2002 and adopted by the RMCs and donors in2005 as the framework for increased financing to water supply and sanitation (WSS) in rural areas in Africa, with a view to universal access. Indeed, thelaunch of the RWSSI saw an increase in the demand for rural WSS funding. In addition to the new approval in 2015 by the RWSSI Trust Fund (TF) for the
Water Sector Reforms and Institutional Capacity Development Program in Sudan (UA 15.6 million), the RWSSI-TF contributed EUR 3 million to support
the implementation of the National Post Ebola Recovery Strategies in Guinea, Liberia, and Sierra Leone. This was in response to building resilience toEbola in the countries affected by the epidemic through the sustainable improvement of water and sanitation for the most-vulnerable segments of the
population. The RWSSI-TF is also co-financing the “Sanitation Atlas” project that will provide evidence-based policy support to facilitate decision-making
for boosting and sustaining sanitation service delivery throughout Africa.
Multi-Donor Water Partnership Program (MDWPP). This program was also launched in 2002 to operationalize the AfDB’s Integrated Water Resources
Management (IWRM) Policy in AfDB-supported operations in the RMCs. The MDWPP catalyzed the establishment of both the above key initiatives—the
AWF and the RWSSI—that have resulted in strengthening AfDB and RMC capacity for IWRM. The MDWPP also enabled the AfDB to play a key role inpromoting dialogue with regional actors on critical water-sector issues.
In 2015, the MDWPP financed: (i) the editing and publication of the report entitled: “Unlocking Africa’s Transboundary Water Potential” on AfDB’s rolein achieving regional integration through transboundary basin development and management; (ii) a study on the Investment Guarantee Fund for the
Water Sector; and (iii) co-financing the “Sanitation Atlas” project referred to above.

urban, peri-urban, and rural areas. In carrying out this mandate, the Rural Water Supply and Sanitation Initiative Trust Fund
as in previous years, the AfDB continued its administrative and (RWSSI-TF), the Africa Growing Together Fund (AGTF), andsupport roles for the three special and complementary initiatives: the Zimbabwe Multi-Donor Trust Fund (ZimFund).
the Rural Water Supply and Sanitation Initiative (RWSSI), theMulti-Donor Water Partnership Program (MDWPP) and the Two of the largest Water Supply and Sanitation operations
African Water Facility (AWF) depicted in Box 3.3.
approved—one in Tanzania and another in Angola—are
highlighted: (i) the Arusha Sustainable Urban Water andDuring the year, the Bank Group took action to tackle the lack Sanitation Delivery Project (UA 150.2 million); and (ii) theof access to water of acceptable quality in both urban and rural Angola Institutional Support for the Sustainability of Urban
areas. Its interventions contributed to sustaining livelihoods in Water Supply and Sanitation Service Delivery (UA 89.7 million).
several countries with total operations worth UA 398.7 million, The Arusha project provides safe, reliable and sustainableapproved for the development of the water supply and sanitation water and sanitation services thus contributing to improved
sector in the RMCs. Total approvals comprised UA 326.8 million health and social well-being, and raising the living standards(82 percent) for loans and grants, with the remaining UA 71.9 of the beneficiaries. The Angola project aims to improvemillion (18 percent) drawn from Special Funds, comprising the water-sector governance, and strengthen institutional capacity
African Water Facility (AWF), the Global Environment Fund (GEF), and efficiency in the water- and sanitation-sector institutions
the Organization of Petroleum Exporting Countries (OPEC), at the central and provincial level.

46

Annual Report 2015

Regional Economic Integration. The Bank Group continues
to foster regional and economic integration on the continent
by increasing the effectiveness of its support to the RMCs,
Regional Economic Communities (RECs) and other regionalorganizations, and the private sector. Through policy andstrategic commitment, the Bank Group promotes regional
integration to create larger, more attractive markets, link
landlocked countries to international markets, and support
intra-African trade. These interventions are aimed at realizing
the AfDB’s vision for stability, integration, and prosperity in
its RMCs by growing African economies that are robust,competitive, diversified and sustainable, and able to participate
fully in global trade and investment.
In November 2015, the Boards of Directors approved the
new Regional Integration Policy and Strategy (RIPoS) for theperiod 2014-2023. Its focus is on creating larger and more
attractive markets, linking landlocked countries to international
markets, and supporting intra-African trade to foster thecontinent’s development. The RIPoS will operationalize
the TYS, which reaffirms the Bank Group’s commitment toChapter 3

promote regional integration in Africa, identified as one of thefive core operational areas.
In 2015, total Bank Group approvals for regional (multinational)
operations amounted to UA 1.44 billion, a 34 percent increaseover the 2014 approvals of UA 1.08 billion. The total approvals
in 2015 were made up of loans and grants of UA 1.07
billion (74 percent), with the remaining UA 375.3 million (26percent) financed by equity participation, guarantees, andfive Special Funds. The Special Funds were made up of the
Global Environment Facility (GEF), the Rural Water Supply andSanitation Initiative (RWSSI), the African Water Facility (AWF),
the Fund for African Private Sector Assistance (FAPA), andthe Sustainable Energy Fund for Africa (SEFA).
Of the total multinational (regional) Bank Group approvalsof UA 1.44 billion, the largest share (40.2 percent) was
allocated to transport. This was followed by the financesector (25.3 percent), for lines of credit to MSMEs, tradefinance, guarantees, and equity participation; the energy
sector projects (23.8 percent); and with the remaining 10.7

Investment inclimate-resilient
road infrastructure,
Zambia.

47

Chapter 3

Bank Group Operations

percent allocated in smaller shares to operations in agriculture,
multisector, social, communications, and water supply andsanitation sectors (Figure 3.7).
Among the regional operations, the largest approved project
was Phase II of the Ketta–Djoum Road Corridor (UA 147.0
million), an important segment of the highway linking thecapitals of Congo (Brazzaville) and Cameroon (Yaoundé).
Apart from helping to boost trade between the two countries,
the project is aimed at consolidating regional integration inCentral Africa by providing highway interconnectivity linking
Cameroon, Congo, DRC, Gabon, Equatorial Guinea, andCentral African Republic. This project also has a biodiversity
component aimed at raising the awareness of the local
community on protective measures to safeguard classified
forests and parks, and strengthening land management
capacity, thereby fostering green growth.
Two of the largest regional project approvals offering lines ofcredit to MSMEs and trade finance were: (i) FirstRand Bankin Southern Africa (UA 72.5 million), discussed below under
the section on Private Sector Operations, and (ii) Standard
Chartered Bank (SCB) Risk Participation (UA 71.1 million). The
goal of the SCB approval is to increase its risk participationagreement (RPA) facility from USD 200 million to USD 300
million coinciding with the maturity of the original facility in May
2016. The facility is an unfunded risk-sharing arrangementthat requires the AfDB to disburse funds only when there isa payment default on a guaranteed trade transaction. The
increase in the facility limit would enable issuing banks on thecontinent to receive more trade finance support from SCB.
This is the largest RPA facility the Bank has signed with any
confirming bank under the Bank’s Trade Finance Program.
The AfDB’s support for regional power pools is in line with
the TYS emphasis on energy (infrastructure) and regional
integration for Africa. A key regional project approval in thisregard was the Kenya–Tanzania Power Interconnection Project(UA 102.8 million), which is to be connected to the Ethiopia–
Kenya transmission system. This forms part of the Eastern
Africa Electricity Highway with a transfer capacity of 2,000
MW. When completed, it will serve as a major link for powertransfer between the Eastern Africa Power Pool, and countries
in the North such as Sudan and Egypt. The expected powerline’s completion is in early 2017. The project will contribute to:(i) improved power supply in Kenya and Tanzania and in the
Eastern African region in general; and (ii) reduced operation
costs of energy production by replacing some of the high cost

48

Figure 3.7

Sectoral Composition of Regional Operations
Financed in 2015
Multisector 4.1%
Social 1.8%

Agriculture 4.2%
Communication 0.5%

Finance25.3%
Transport
40.2%

Water Supply& Sanitation
0.1%
Energy 23.8%

Source: AfDB Statistics Department.

thermal energy production with cheaper hydropower. This will
also help to reduce greenhouse gas emissions.
Private Sector Operations. The establishment of the Africa50
Infrastructure Fund in 2013 and its eventual incorporationin Morocco in 2014 was a significant stage in the Bank’s
shift towards mobilizing innovative private and public sector
financing for infrastructure development, from both in Africa
and externally. Today, Private investments in the energy
sector in Africa are also benefiting from a rapid growth inIndependent Power Projects, in which over USD 4 billion isallocated annually by private sector investors across subSaharan Africa. As a result, during 2015, energy and otherinfrastructure investments have been beneficiaries of private
sector operations.
Total Bank Group approvals for the private sector in 2015
amounted to UA 1.56 billion—a marginal decline of 1.9 percent
from the UA 1.59 billion private sector-financed operations in2014. The 2015 approvals were made up of loans and grants,
equity participation and guarantees amounting to UA 1.55
billion, and two Special Funds totaling UA 10.93 million. The
two Special Funds were the GEF and FAPA.
In 2015, of the total private sector approvals of UA 1.56
billion, finance operations accounted for the largest shareof 42.9 percent, followed by energy (22.7 percent), with theremaining shares going to transport operations (19.5 percent),
agriculture (10.2 percent), and other sectors (see Figure 3.8).

Annual Report 2015

Chapter 3

Figure 3.8

Private Sector Operations
by Sector, 2015
Multisector 3.1%

Agriculture 10.2%
Industry 0.1%
Transport 19.5%

Water Supply& Sanitation
1.0%

The Ghana Airports Company Limited (GACL) capital
investment program entails the construction of a new modern
terminal at Kotoka International Airport in Accra to increase
its capacity from 2.4 million to 5 million passengers per year,
and the rehabilitation of other airports that it also manages
in Kumasi, Tamale, Ho, and Wa. The project will strengthen
the transport sector in Ghana and in the region as a whole
by increasing the capacity of existing airports and improving
the quality and efficiency of airport operations.

The final private sector example, CEC Africa (CECA), wasestablished in 2013 as a pan-African company with a mandate
Communication
0.5%
to develop, finance and operate power projects across subSaharan Africa. In 2015, the Board approved CECA’s “Blue Flare”
Finance 42.9%
Energy 22.7%
project in Sierra Leone. CECA is strategically placed across theenergy value chain, with investments in distribution, hydropower
Source: AfDB Statistics Department.
and thermal generation, and renewable energy. CECA also
benefited from the Private Sector Credit Enhancement Facility
to provide support for the high-risk environment in the country.
The large share for finance came in the form of lines of credit The Bank’s investment will support the growth of local African
mainly to MSMEs, trade finance, and guarantees to some of utility and offer a platform for additional project development
the largest financial intermediaries for on-lending activities to as well as job creation.
financially constrained firms that would otherwise not have
had access to financing due to the lack of guarantees.
Supporting Governance and Accountability. Overall,the Bank made notable progress in delivering governanceThree projects supported by private sector funding in the support in 2015. As at end-December 2015, total approvals
finance, transport, and energy sectors are highlighted. The for governance-related operations amounted to UA 788.9
first, in finance, is Banco de Poupança e Crédito in Angola million. Of this amount, UA 689.3 million (87.4 percent)(UA 231.5 million), the largest project. A second example, the represented loan and grant approvals, and the remaining
Ghana Airports Company Limited Project (UA 85.5 million), UA 99.6 million (12.6 percent) was from other approvals
is in transport, and the third is the multinational CEC Africa made up of UA 47 million for HIPC debt relief at completion
Investments Limited (UA 36.2 million) Project, which is an point for Chad, UA 47.6 million from the Private Sector Risk
energy operation. An outline of each of the three selected Participation Agreement Facility (PSF-RPA), and UA 52 million
projects is provided below.
from the Middle East and North Africa (MENA) Trust Fund.
Almost three-quarters of the volume of lending for 2015 were
The Banco de Poupança e Crédito (BPC) was granted a ten- Program-Based Operations (PBOs) against 27 percent foryear (with a two-year grace period) Government-guaranteed institutional support projects.
line of credit (LOC) of up to USD 325 million to enable it toincrease its loan portfolio by USD 800 million over the next The Governance Strategic Framework and Action Plan 2014five to seven years. The BPC will target mainly medium- 2018 (GAP II), approved by the Boards in 2014, serves as
sized enterprises and some large corporations involved in the key programming instrument for governance operations
priority sectors including water, agriculture, and industry. To within the overall framework of the TYS. The GAP II outlines
enhance the effectiveness of its interventions, the AfDB will three main pillars that enable the Bank Group to deliver its
also provide advisory services to BPC, especially in setting work and improve the quality of governance in Africa. Theseup Environmental and Social Management Systems. The include: (i) public sector and economic management; (ii) sector
project will contribute to stimulating the diversification and governance; and (iii) investment and business climate. In
competitiveness of the Angolan economy, which largely addition, governance interventions have also contributed todepends on oil.
other priority areas of the Bank Group’s TYS, encompassing

49

Chapter 3

Bank Group Operationsprivate sector development, gender mainstreaming, programs
addressing states of fragility, and the bolstering of economic
resilience.

at enhancing the competitiveness of Tanzania’s power sector
that has historically suffered from weak economic and financial
governance.

Public Sector and Economic Management (PSEM). Bank Group
interventions for PSEM have been directed at the continued
strengthening of government policies and institutional capacity
to enhance the transparent and accountable use of publicresources, and the ability of citizens to hold governments
accountable. In this regard two key operations were undertaken
in 2015. In Niger, the Bank Group supported the implementationof the Financial Reforms and Food Security Support Programme(PAREFSA I) through a PBO loan worth UA 20 million using the
ADF window. Its objective is to support the creation of conditions
conducive to inclusive growth through enhanced food security.
The Bank Group also approved a total of UA 15 million financingof Mali’s Emergency Governance and Economic Recovery
Support Program (EGERSP). The financing was drawn fromthe Transition Support Facility (TSF). The EGERSP is part ofa coordinated effort by the international community to restore
the Government’s authority and support economic recovery toreverse the deteriorating humanitarian situation resulting from thevarious crises over the last three years. These PSEM interventions
reflect the Bank Group’s commitment, responsiveness, andflexibility in addressing fragility and emergency situations.

Investment and Business Climate. Interventions in thisarea have focused on strengthening legal and institutionalframeworks through improved investment codes, andthe creation of robust judicial systems for better contract
enforcement and resolution of disputes. The Bank has also
supported the strengthening of policy, legal, and institutionalframeworks for Public-Private Partnerships (PPPs). Examples
include the technical assistance grants for the Ethiopia
Institutional Support Project for Public-Private Partnerships(ISP-PPP) for USD 1.6 million, and the Namibia Institutional
Strengthening for Public-Private Partnerships Project (ISPPP)
for USD 2.8 million.

Sector Governance. In continued efforts to improve sector
governance specifically aimed at addressing procurementrelated corruption at the sector level, the Bank Group provided
support towards the strengthening of procurement policies
and the legal frameworks in a number of the RMCs. For
example, a PBO totaling UA 50 million drawn from the ADF
was approved for the Power Sector Reform and GovernanceSupport Programme in Tanzania. This operation was aimed

Promoting Skills and Human Development. In 2015, imple­
mentation of the AfDB’s Human Capital Strategy (2014-2018)
gathered pace. This strategy provides a framework for the
Bank Group’s vision to harness human resources to support
the competitiveness of African economies. For the review
period, the AfDB approved various innovative operations
aimed at capacity building, including skills development,
promoting entrepreneurship, creating jobs, and promoting
equal opportunities for men and women. As exemplified below
this also included consolidating the gains attained during the
campaign against the Ebola virus disease in 2014, with the
Post Ebola Recovery Social Investment Fund Project (PERSIF).
In total, as at end-December 2015, UA 595.9 million had been
approved for various operations. The bulk of the financing—UA
592.5 million (99.4 percent)—was through loans and grants.
The remaining UA 3.4 million (0.6 percent) was sourced fromthe RWSSI Trust Fund and FAPA. Box 3.4 provides a summary

Box 3.4

Selected Approved Projects in 2015 for Skills Development
The Kenya Support to Technical Vocational Education and Training Project (UA 41 million) will train middle-level engineering and applied sciences faculties
in 33 Technical Training Institutes (TTIs). The Skills Development and Entrepreneurship Project in Zambia (UA 21.4 million) will contribute to job creation,
the promotion of gender equality and poverty reduction, in particular supporting women and youth through skills development and entrepreneurship.
In Sudan, the Capacity Building for Improved Quality of the Education System (UA 15.3million), aims to enhance skills development among teachersand education managers and promote the use of technology to enhance the quality of education. The Support Project for Youth Employability andIntegration in Growth Sectors in Togo (UA 14.5 million) will contribute to creating conditions for more inclusive economic growth by boosting youth
employability and promoting entrepreneurship in growth sectors. In Eritrea, the Support to Skills Development for Employability and Entrepreneurship
Project (UA 13.5 million) aims to improve formal technical/vocational education and training, and to offer basic skills training programs to youths andadults, with an emphasis on gender equality.

50

Annual Report 2015

Chapter 3

Catering trainees
at the Zanzibar
Institute for Tourism
Developmentwith the Supportof the Alternative
Learning and Skills
Development
Project, Tanzania.

of this genre of interventions within the different operations
undertaken in Eritrea, Kenya, Sudan, Togo, and Zambia.
The single largest operation for job creation was the UA 144.3
million approved for Tunisia’s Regional Development and
Job Creation Support Programme (PADRCE). This seeks
to establish a climate that is conducive to accelerated job
creation and inclusive growth through regional development.
This program is expected to bridge regional disparities aswell as reduce Tunisia’s unemployment, which stands at 13.3
percent, with youth unemployment at an a particularly highlevel of 31.2 percent. Specifically, the program’s beneficiaries
will include: (i) the inhabitants of the interior region; (ii) about
58,000 higher-education graduates annually; (iii) women andyouth beneficiaries of microcredit interventions; and (iv) the
235,000 families targeted by social assistance to alleviate theburden of high unemployment.
Other social sector operations approved in 2015 were aimed
at supporting reconstruction efforts in Central African Republic(CAR), and the protection of basic services in Malawi. In
CAR, the Support Program for Reconstruction of Grassroots
Communities, Phase 1 (PARCB-1) totaling UA 15 million, was
AfDB’s most significant intervention in support of the country’s
transition, following outbreaks of unrest. The program involves
the rehabilitation of vocational training and learning centers
to promote the socio-economic reintegration of communities,
including the half a million unemployed and out-of-school
youth in the project area, as well as facilitate increased accessto social services. In Malawi, the AfDB approved a project of
UA 19 million for the Protection of Basic Services. Amongother objectives, this project is expected to: (i) improve accessto quality health and education services; (ii) increase theparticipation of poor households in the Public Works Program;and (iii) increase transparency in the delivery of basic social
services.
Three countries in West Africa (Guinea, Liberia, and Sierra
Leone) had suffered from the outbreak of the Ebola virus
disease in 2014, which damaged their economic and social
fabric. In 2015, the ADF Board approved a grant of UA 20.4
million for the Post Ebola Recovery Social Investment Fund
Project (PERSIF). PERSIF complements the Bank Group’s
earlier interventions for alleviating the pressure resulting fromthe outbreak, and strengthening subsequent responses tofuture epidemics. It is also geared at restoring basic social
services and improving people’s livelihoods.

3.2.1 Ten-Year Strategy: Areas of Special Emphasis
In addition to the five operational priorities, the TYS alsoemphasizes support to the special areas of agriculture andfood security, gender mainstreaming, and States in situationsof fragility. Operational activities in these areas during 2015
are highlighted below.
Agriculture. Agriculture employs 65 percent of Africa’s labor
force and accounts for 32 percent of its GDP. It is therefore a
key priority for reducing poverty and hunger, raising household

51

Chapter 3

Bank Group Operations

incomes, spurring GDP growth, and creating jobs. In linewith its emphasis on agriculture as one of the TYS focal
areas, the Bank Group organized the Dakar-High Level
Conference on Agricultural Transformation in October 2015
for over 600 participants, including 155 high-level Government
representatives, ranging from Ministers of Agriculture, Finance,
and Trade, and Central Bank Governors, as well as other policy
makers, business leaders, members of civil society, and otherstakeholders. The conference endorsed an 18-point plan ofaction, summed up in “Feeding Africa: An Action Plan for
African Agricultural Transformation: Summaries Work Streams
1-26”. The Action Plan is guiding the preparation of thecontinent’s long-term strategy for agricultural transformation(2016-2025).

NERICA Rice Project, Benin.

The Action Plan called on governments to demonstratestrong commitment, and to take critical steps towards thetransformation of Africa’s agriculture (Box 3.5).

Box 3.5

Feeding Africa: An 18-point Action Plan for African Agricultural Transformation
In October 2015, African leaders met in Dakar, Senegal, at a high-level conference called to kick-start agriculture as an engine of growth by mappingout an ambitious action plan. The conference outlined a shared vision for African agricultural transformation, based on the following goals:
Eliminating extreme poverty.
Ending hunger and malnutrition.
●● Turning Africa into a net food exporter.
●● Moving Africa to the top of global value chains.
●●●●

The Action Plan is to be implemented with AfDB as the focal point, working closely with co-conveners and development partners: AU, FAO, UNECA, and
the World Bank. Highlights of the 18-point Action Plan, include the following:
The conference agreed to increase the number of nutrition programs across Africa to end malnutrition and hunger. The synergy needed was createdfor effective partnerships to achieve this objective.
●● The program will involve establishing a strategic partnership with US President Obama’s Feed the Future Initiative, Grow Africa of the World Economic
Forum, the Big Win Philanthropy, the FAO, Scaling Up Nutrition, the World Food Programme, the Bill and Melinda Gates Foundation, the Global Panelon Agriculture and Food Systems for Nutrition, as well as the private sector in general, to deploy innovative approaches to addressing malnutrition.
●● The Bank Group will work with partners to leverage USD 3 billion in financing for women farmers, agribusinesses, and other women-owned
enterprises. This will include the establishment of a USD 300 million facility to de-risk financing to women-owned businesses by commercial banks
and microfinance institutions.
●● The Bank Group will also triple its climate financing to USD 5 billion annually by 2020 by working closely with the African Union, the African Ministerial
Conference on the Environment, the United Nations Environmental Programme, and the G7 for the establishment of the Africa Renewable Energy Initiative.
●● Under the plan, Central Banks in Africa will set aside Special Funds to allow farmers to access credit at reduced interest rates, and also for long‑term
agricultural loans with longer-term maturity.
●● The Bank Group will scale up skills enhancement for youth in agriculture and establish an African Youth in Agriculture Financing Facility to support
young commercial farmers and other youth in agriculture.
●●

Source: AfDB.

52

Annual Report 2015

Other stakeholders who attended the conference included
program and task managers, entrepreneurs, women and youth
leaders of non-governmental agricultural organizations in ruraland urban communities in Africa. Their testimonies revealed
their experiences at the conference, and what they perceived
to be the benefits they expect to derive from it (Box 3.6).
In 2015, Bank Group approvals in the agricultural sector
amounted to UA 514.6 million. Of this, UA 472.2 million(91.8 percent) was through loan and grant approvals and the

Chapter 3

remaining UA 42.4 million (8.2 percent) was financed throughSpecial Funds, specifically the Global Agriculture and Food
Security Program (GAFSP), the Global Environment Fund
(GEF), and the Fund for African Private Sector Assistance(FAPA). One of the largest operations approved was the Green
Morocco Plan Support Programme (PAPMV-2), a public sector
initiative, for UA 94 million. Phase 2 of the Programme aims at
improving sustainable natural resource management throughgreen governance in the agricultural sector and developmentof agricultural sector value chains (see Box 3.7).

Box 3.6

Testimonies from Stakeholders at the Dakar Conference on Feeding Africa
On 23 October 2015, delegates attending the Dakar conference on transforming African agriculture expressed enthusiasm about the new commitments
to agribusiness.
“You need high-profile events like these to get things done. It was important for the new President of the AfDB to make this strategic decision at this earlystage on assuming office because it has drawn attention across Africa and encouraged political and technical buy-in” said Ikhide Imumorin, Program
Leader at Cornell University’s College of Agriculture. Imumorin continued: “By bringing in Central Bank Governors, Ministers of Finance and Agriculture,and regional development banks, this will certainly achieve results.”
During the conference, the AfDB President announced the creation of a USD 300 million financing facility to channel more funds to African women inagribusiness and provide bank guarantees. Claudius Kurtna, a youth agribusiness entrepreneur from Kenya, who also attended the conference, hailed
the President for emphasizing the role of the youth and women in agriculture. He added: “It was not a youth event on agriculture, but the President
has driven it like one and we are very happy. This has marked the start of a big change in Africa.” Kurtna noted that his organization managed to sign
agreements for business expansion and was looking for further commitments in agribusiness.
Oluwatosin Ariyo, who is currently overseeing an initiative funded by the British Government to improve the status of women in agriculture in rural Nigeria
said his organization hoped to “tap into the strong commitments reached at the conference to bolster programs under implementation in Nigeria”.
He continued: “This conference has brought agriculture to the fore. The financial sector will begin to connect the dots that have been missing in thewhole value chain, and the fund created by the AfDB will help to reduce interest rates on agribusiness loans. This will enable more women to benefit.”
Source: AfDB.

Box 3.7

Green Morocco Plan Support Programme, Phase 2
In October 2015, the Bank approved a sector budget support loan of UA 94 million to Morocco to finance the second phase of the Green Morocco Plan
Support Programme. This is in line with the Bank Group’s TYS. Adopting a participatory, inter-sector approach, this support recognizes agriculture as
an innovative business sector, which complements and creates synergies with other sectors, but also gives value to its stakeholders, especially womenand youth. The program’s specific objective is to improve sustainable natural resource management through green governance in the agricultural sector
and the inclusive development of agricultural sector value chains.
The program includes an insurance scheme for women farmers in cooperatives to promote equality with men over access to this scheme. It also
promotes gender budgeting in the area of agricultural value chains. Land tenure for women is encouraged in the allocation of valuable agriculturalplots to women farmer groups through Public-Private Partnerships, as well as the provision of accessible and affordable financing to rural women.

Source: AfDB.

53

Chapter 3

Bank Group Operations

Gender. Following the approval of the Gender Strategy, an
action plan to operationalize it was developed and adopted
in December 2014. The implementation of the strategy was
accelerated in 2015 with the establishment of a network of
85 gender focal points throughout the Bank in April 2015.
The role of the focal points is to ensure that gender equality
and empowerment are: (i) integrated into the Bank Group’s
day-to-day operational business processes; and (ii) thatthese are appropriately addressed in the AfDB’s projects,
Country Strategy Papers (CSPs), Regional Integration Strategy
Papers (RISPs) and Project Appraisal Reports (PARs), throughmainstreaming. Three capacity-building training workshops
were held to support the focal points in September and October
2015. The aim of the workshops was to equip focal points
with common skills and tools to enable them to effectively
champion gender mainstreaming in their departments/units.
In all, 62 of the 85 gender focal points appointed received
training. Of these, 27 are based in the field offices. In addition,
the gender focal points have formed an institutional network
for information sharing, joint approaches, and peer support.

This will be further strengthened through a Gender Communityof Practice, scheduled for launch in 2016.
The Coordinating Committee on Gender Equality wasestablished to address specific needs for better results
measurement and reporting of Bank Group operations. The
Bank Group is the secretariat of the African Finance Ministers
Community of Practice (CoP) on financing for gender results.
The first meeting of the CoP took place at the AfDB’s Annual
Meetings in Abidjan in May 2015. Another initiative supporting
the Gender Strategy involves reform of the AfDB’s approaches
in relation to the Country Gender Profile (CGP). The CGP
seeks to identify gaps and propose revisions for improving thequality and inclusivity of operations. As part of the CGP, three
separate work streams have been developed, each focusing
on a key operational need or product of the AfDB. The firstis aimed at supporting CSP preparation (e.g. Uganda’s new
Country Gender Profile). The second proposes addressing
sector- and project-specific issues from a gender perspective(e.g. energy sector in Côte d’Ivoire’s Gender Profile). The third

Leaders of various community-based organizations that have been instrumental in the Ebola response in Liberia.

54

Annual Report 2015

addresses gender and economic issues to promote inclusive
growth (e.g. Rwanda’s Country Gender Profile).

Chapter 3

arrears, while Pillar III of the TSF constitutes resources set
aside for capacity building and technical assistance.

Additionally, the Africa Gender Equality Index was launchedat the Bank Group Annual Meetings in Abidjan in 2015. The
index is a compilation of data from various sources, reflecting
the status of women around Africa along three dimensionsof equality: economic opportunity, social development, andlaws and institutions. Its purpose is to track progress along
these dimensions to determine whether over time there is
improvement or deterioration in the status of women.

To strengthen the Fund’s support for all the RMCs eligible for the
TSF resources, the ADF Board had approved a new Strategy
for Addressing Fragility and Building Resilience in Africa (20142019) in June 2014. This was one of the outcomes from therecommendations of the consultative process conducted by
the High-Level Panel for Addressing Fragility in Africa. In January
2015, the Board approved the Operational Guidelines for the
implementation of the Strategy and the Transition Support
Facility (TSF). Therefore, 2015 marked the first year that theAt the Dakar High-Level Conference on African Agricultural ADF began implementing a new operational framework in its
Transformation held in October 2015, the President announced engagement with countries in fragile situations. The conceptual
a new initiative called the Affirmative Finance Action for Women framework of the Operational Guidelines contains several
in Africa (AFAWA). This is a proposed USD 300 million facility that innovations that shaped the Fund’s engagement with countries
will leverage USD 3 billion to de-risk financing of women-owned in fragile situations in 2015. This includes the introduction ofbusinesses by commercial banks and microfinance institutions. a traffic light system for all the RMCs to monitor fragility and
The objectives of this initiative are in line with the 18-point Action guide the Fund’s engagement in countries, in states of fragility.
Plan of the Dakar Conference and the target beneficiaries
are: (i) women-owned micro-enterprises, particularly for rural The systematic application of the new traffic light system has
women involved in small-scale and commercial agriculture changed the AfDB’s business model. Thus, in 2015, all CSPs
and along the agriculture value chain; and (ii) women-owned and RISPs were informed by fragility assessments using thesmall- and medium-sized enterprises (SMEs) operating in traffic light system, and more than 80 percent of operations
several sectors of the economy (agribusiness and food industry, approved in 2015 in high-risk countries integrated a fragility
technology and telecommunications, extractive and creative perspective. For instance, in Madagascar, the new Interimindustries, and energy).
Country Strategy Paper approved in 2014 was prepared,
and all short and medium term projects approved since then,In 2015, work began on the development of a Gender Marker respond to the priorities of the fragility assessment based on
System to systematize mainstreaming of gender in the AfDB’s the traffic light system. The new projects underscore access
operational business processes. The Gender Marker System to basic social services, private sector participation, youth
seeks to codify existing practices and identify clear entry points employment, food security, and women’s empowerment.
to strengthen existing provisions. As part of this exercise,
operations that have potential for high gender impact will With the approval of the Operational Guidelines, the Fundreceive attention through the adoption of gender action plans has also revised its approach to using Pillar III resources offor specific project designs.
the TSF, meant for critical capacity-building interventions,building on lessons learned from the past and the findings
Countries in Situations of Fragility. The 16 countries eligible of the Independent Evaluation conducted in 2014. One offor Pillar I of the Transition Support Facility (TSF) are the the beneficiaries of the application of the new model was a
RMCs considered to be in fragile situations. These countries technical assistance project (UA 1. 4 million) in Zimbabwe forare: Burundi, CAR, Comoros, Côte d’Ivoire, DRC, Guinea, the “Support to the Beef and Leather Value Chain”, which
Guinea-Bissau, Liberia, Madagascar, Mali, Sierra Leone, leverages co-financing from the Fund for African Private
Somalia, South Sudan, Sudan, Togo, and Zimbabwe. Pillar I Sector Assistance (FAPA). This project seeks to address
refers to supplemental top-up (additional) resources to ADF fragility and build resilience in the country, placing emphasis
performance-based allocations. Accordingly, the ADF Board on value-addition and employment creation.
approved UA 365.7 million for these countries to finance theiroperations. Pillar II of the TSF represents funds that are set Special Programs to Address Fragility. The AfDB has de­vel­
aside to support arrears clearance for eligible countries with oped special flagship programs and initiatives focusing on

55

Chapter 3

Bank Group Operations

Box 3.8

The Special Programs in the Horn of Africa and the ECOWAS Region
The Horn of Africa Initiative. In June 2015, the Boards approved Phase III of the Drought Resilience and Sustainable Livelihoods Program in theHorn of Africa (DRSLP III) for USD 30 million, targeting Djibouti and Sudan. The DRSLP is a long-term program to build the resilience of communities
to drought and climate change, improve their livelihoods and promote regional integration in the Horn of Africa. The Bank Group had committed USD
115.6 million to Phase I under the DRSLP approved in December 2012, and USD 104.3 million for Phase II (DRSLP II) in November 2014.
Based on wide consultations and studies, the program addresses the root causes of the drought, which drives the fragility of the region. In this regard,
Phase III of the program will develop infrastructure for: (i) water harnessing and management; and (ii) agriculture and livestock production, health, andmarketing. It is also designed to build the capacity of the inhabitants and governments of the participating countries to better cope with the effects ofclimate change, resource scarcity and related resource-based conflicts. Direct and indirect beneficiaries of the overall program are estimated at 20 million
agro-pastoralists affected by drought and land degradation, half of whom are women.
ECOWAS Region Programs. The Boards approved two Special Programs in this region in the energy and transport sectors. The energy sector operation,
discussed earlier, is The Gambia River Basin Development Organisation (OMVG) Renewable Energy Program (UA 97 million), approved in September 2015,
which seeks to deal with fragility and provide the four OMVG member states with renewable, clean and affordable energy. At the same time, it aims topromote regional integration through the sharing of energy and improved electricity supply quality. The second is the multinational road project linking Mali
to San-Pédro in Côte d’Ivoire (UA 140.4 million), to address fragility situations in both countries in the region. It will contribute to improving competitiveness,diversifying their economies as well as reducing poverty, and further assist in the emergence of San-Pédro as a key transit port for neighboring landlocked
countries such as Mali and Burkina Faso.

development challenges facing the vulnerable and dis­ad­vantaged populations in regions and countries affected bydisasters and fragility. In 2015, the Boards approved threesuch special programs, including one in the Horn of Africa,
and two in the ECOWAS region (Box 3.8).

Figure 3.9

Total Bank Group Approvals by Region, 2015
(UA 6.33 billion)
Multinational 22.8%

Central Africa 9.6%
Eastern Africa
18.3%

3.3 Bank GroupOperations by Region
This section of the Report presents the regional distributionof Bank Group resources. In 2015, among the regions, thelargest share of Bank Group operations was undertaken in
the Southern Africa region. The largest approvals were in
infrastructure, despite variations in the sector distribution ofother operational priorities within the regions. The emphasis
on regional integration is also highlighted by the approval of
key projects and programs in energy inter-connections andinter/intra-regional transport networks.

Western
Africa10.8%

Southern Africa 20.8%

Northern Africa 17.7%

Source: AfDB Statistics Department.

distribution of total Bank Group approvals shows that, among
Bank Group Approvals by Region. As outlined above, the the regions, the largest share of 20.8 percent of approvals was
Bank Group operations cover all 54 RMCs and the five regions. allocated to Southern Africa. This was followed by Eastern
However, variations exist in terms of the volume of operations Africa (18.3 percent), Northern Africa (17.7 percent), Western
accross the regions. As reflected in Figure 3.9, the regional Africa (10.8 percent), and Central Africa (9.6 percent). The

56

Annual Report 2015

Chapter 3

Table 3.4

Total Bank Group Approvals by Region, 2014-2015
2014
Regions
Central Africa
Eastern Africa

Northern Africa
Southern Africa

Western Africa

Countries
Cameroon**
Central African Rep.
Chad
BurundiComoros
Djibouti
Eritrea
Ethiopia
Algeria*Egypt*
Angola*Botswana*
LesothoMadagascar
Benin
Burkina Faso
Cabo Verde*Côte d'Ivoire
Gambia, The

UA million
371.35Share
7.4

UA million
606.23

Share
9.6

%
Change in
Approvals
2015
63.3

South Sudan
Sudan
Tanzania
Uganda652.1112.9

1,158.75

18.3

77.7

Morocco*Tunisia*South Africa*
Swaziland*Zambia**Zimbabwe
Niger
Nigeria***
SenegalSierra Leone
Togo

391.36

7.7

1,121.20

17.7

186.5

1,220.70

24.2

1,318.33

20.8

8.0

1,337.05

26.5

686.61

10.8

-48.6

1,077.36
5,049.92

21.3
100.0

1,443.58
6,334.69

22.8
100.0

34.0
25.4

Congo*
Congo, Dem. Rep. of
Equatorial Guinea*
Kenya**
RwandaSeychelles*
Somalia

Gabon*
Sâo Tomé & Príncipe

Libya*
Mauritania
Malawi
Mauritius*
Mozambique
Namibia*
Ghana
GuineaGuinea-Bissau
Liberia
Mali

Multinational
Total

2015

Source: AfDB Statistics Department.
Notes:* ADB countries.
** Blend countries.
*** In transition to ADB in 3-5 years.
( ) ADF countries.

share of multinational operations was the largest overall at
22.8 percent, and is worthy of specific note as it reflects thesignificance of projects and programs in the Bank Group’s
regional integration agenda.

In terms of sector distribution of the region’s total Bank Groupapprovals, the largest share of 65.6 percent was allocatedto the finance sector, followed by 20.1 percent to support
multisector operations, while the remaining 14.3 percent wasallocated in smaller shares to operations in communications,energy, social, agriculture, and water and sanitation sectors.

Table 3.4 provides a breakdown of operations in 2014 and2015 for beneficiary countries in each of the five regions. By
comparison with 2014, Northern Africa recorded the highest The finance sector support included the partial credit guarantee ofincrease in total Bank Group approvals followed by Eastern UA 397 million provided to Cameroon for currency risk-hedging
Africa and Central Africa. Western Africa recorded a decrease to cover the country’s payment related to cross-currency swaps
in approved operations in 2015, as explained below.
executed with commercial banks. The partial credit guarantee
was to finance Cameroon’s development projects, in particular
Central Africa Region. Of the eight countries in Central Africa, its Three-Year Emergency Plan, and certain long-term investment
two (Gabon and Equatorial Guinea) are ADB-eligible countries projects identified in the country’s 2015 budget. For the multisector
while Cameroon is a blend country, eligible for both ADB and operations, one of the larger approvals, worth UA 38 million, was
ADF resources. Congo was in transition towards ADB eligibility allocated for an institutional support project in DRC, mainly aimed
up to end-2015 when it became an ADB country. The remaining at enhancing private sector development through skills transfers
four countries (CAR, Chad, DRC, and Sâo Tomé & Príncipe) in beneficiary institutions and businesses, especially the youth andare ADF-eligible, and borrow mainly from the ADF window. The women. Another large operation was the UA 30.9 million allocatedfour ADF-eligible countries are also classified as countries in for the Central African Backbone Information and Communication
fragile situations, which also makes them eligible for financing Technology (ICT) project, also in Cameroon. This project was one
from the Transition Support Facility (TSF). For the Central Africa of the two ICT operations that the Bank Group approved in 2015.
region, total Bank Group approvals amounted to UA 606.2 It is aimed at extending coverage of the national optical fiber
million in 2015, a 63.3 percent increase over the level in 2014. network in the neighboring countries—Congo, Nigeria, and CAR.

57

Chapter 3

Bank Group Operations

Eastern Africa Region. Among the 13 countries in this region,
Seychelles is the only country eligible to access financing fromthe ADB window. Six other countries—Burundi, Comoros,
Eritrea, Somalia, South Sudan, and Sudan—are ADF-eligible
and also classified as countries in fragile situations. This meansthat they are eligible for TSF financing as well. Kenya qualified
to become a blend country in September 2015, which makes
it eligible for both ADF and ADB financing. Tanzania andUganda were assessed as eligible for ADB financing under
the revised Bank Group Credit Policy, and received some
non-concessional ADB resources for financing parts of theirinfrastructure projects.

for the region. An additional 24.8 percent was allocated tothe social sector to support technical and vocational skills
development, employment, drought and other emergency
relief operations. The remaining 8.8 percent was allocated to
the finance sector in the form of locs to MSMEs, agriculture,and multisector operations.

One of the signature projects for this region was the Arusha
Sustainable Urban Water and Sanitation Delivery Project inTanzania (UA 150.2 million). This project was designed toincrease access to safe, reliable and sustainable water andsanitation services in Arusha. This will also lead to reductionof water-borne diseases and associated health-care costs
Bank Group total approvals for Eastern Africa amounted to UA (Box 3.9).
1.16 billion, which was 77.7 percent more than the amountapproved in 2014 (see Table 3.4). Infrastructure financing in Northern Africa Region. Home to six countries, the Northerntransport, water and sanitation, and energy accounted for the Africa is one of Africa’s most developed region. However, itlargest share (66.3 percent) of total Bank Group approvals still faces numerous socio-economic challenges since theupheavals that began in Tunisia in December 2010. These
events reverberated in other countries in the region in theensuing “Arab Spring”. Although five of the six countries areBox 3.9
ADB-eligible (only Mauritania is an ADF-only country), neither
Arusha Sustainable Urban Water and
Libya nor Algeria has borrowed from the Bank in recent years.
Sanitation Delivery Project
To help with the new social problems in the region, Bank Group
total approvals increased by 186.5 percent to UA 1.12 billion
The objective of the project is to provide safe, reliable,from UA 391.4 million in 2014. Multisector operations for public
and sustainable water and sanitation services in Arusha
finance management and governance-related operations had
city, Tanzania, and thereby contribute to better health,thelargest share (40.6 percent) of the regional Bank Group
improved social well-being, and higher living standards
total approvals, followed by infrastructure (34.2 percent),
for the beneficiaries. The project will improve the existing
mainly transport and energy, while social sector operations ininfrastructure and enhance the operational, commercial,regional development and job creation interventions accounted
and service delivery efficiency of the public utility company,for12.9 percent. Bank Group approvals to agriculture took
the Arusha Urban Water Supply and Sanitation Authority
a 12.1 percent share while the remaining small share (0.2
(AUWSA).
percent) went to the finance and industry sectors.
About one million people will benefit over the project’s
lifespan. Improved access to water and sanitation
services will complement other social services and boost
socio-economic activities in the city while providing anenvironment that is conducive to business. The projectwill also provide climate adaptation benefits in relation
to water sources management and should lead to the
reduction of water-borne diseases and associated healthcare costs. Furthermore, the construction phase will offer
job opportunities. The project will provide capacity building
to AUWSA and will support the public utility in adopting the
National Gender Policy and in the provisions addressing
the needs of vulnerable groups.

58

Two large operations were the key highlights of interventionsin Northern Africa. As mentioned above, the operations
include the Regional Development and Job Creation Support
Programme (PADRCE) in Tunisia (UA 144.3 million), and Phase
2 of the Green Morocco Plan Programme (UA 94 million).
The PADRCE programme is expected to bridge regional
disparities as well as reduce the rate of unemployment. The
Green Morocco Plan Support Programme will contribute to
the strengthening of agricultural sector competitiveness forinclusive and green growth in the country as noted above.
A third project, the Tunisia Natural Gas Transmission andDistribution Network Development Project, was financed at
UA 38.5 million. This project will enhance climate-change

Annual Report 2015

mitigation and adaptation, especially among the SMEs, thetertiary sector and households in the project area throughincreased access to more-affordable and less-polluting fuel(Box 3.10).
Southern Africa Region. Of the 12 countries in the region,
half are ADB-eligible; five are ADF-only countries, and the other,
Zambia, was classified in 2014 as a blend, eligible for both
ADB and ADF financing. The 12 countries are members of theregional economic bloc, the Southern African Development
Community (SADC). In 2015, total Bank Group approvals forthe region increased by 8 percent to UA 1.32 billion from theUA 1.22 billion approvals made in 2014. The largest share of
47.6 percent of total Bank Group approvals for the region wasfor the financing of infrastructure operations (energy, transport,
and water and sanitation). This was followed by the financesector, with a share of 37.6 percent for operations covering
mainly LOCs and trade finance for the benefit of MSMEs. The
remaining 14.8 percent was allocated to the social, agriculture,industry, and multisector interventions.
The highlights were the two large LOCs, of which UA 262.3
million was offered to the Development Bank of Namibia (DBN),
and UA 231.5 million was made to Banco de Poupança eCrédito (PBC) of Angola, profiled above. The purpose of
the LOC to the DBN was to finance projects in key priority
sectors, including infrastructure, manufacturing, logistics
and tourism. The financing approved to PBC was aimed attargeting mainly medium-sized enterprises that often facefinancing constraints. Some large corporations involved in
the country’s priority sectors, including water, agriculture, andindustry, are also expected to benefit from this financing. The
approval of UA 172.8 million for Zambia’s Chinsali–NakondeRoad Rehabilitation Project has already been mentioned
above. This road is a segment of the Trans-Africa Highway
and the North–South Corridor (NSC)—a priority transportroute servicing eight countries, and important for promoting
trade in the region.
Western Africa Region. As the largest region, with 30 percent
of Africa’s population, the Western Africa region comprises
15 countries and also has the highest number of countries
classified as States in fragile situations, with access to both
ADF and TSF resources. Of the 15 RMCs in this region,
13 are ADF-eligible; the remaining two—Cabo Verde andNigeria—were in the transition phase of becoming ADB-eligible
countries up to end-2015 when Cabo Verde became an ADB
country, but Nigeria remains in transition until end-2018, when

Chapter 3

Box 3.10

Natural Gas Transmission and Distribution
Network Development Project in Tunisia
This project aims to connect 19 municipalities in Tunisia
to the natural gas supply system (STEG) through theconstruction of 260 km of transmission network and 404
km of distribution network. The main beneficiaries of the
project will be small- and medium-sized industries, small
businesses and 13,450 households in the project area.
They will substitute natural gas for the currently usedheavy fuel, diesel, and Liquefied Petroleum Gas (LPG).
Consumption of natural gas instead of these fuels would
help the project beneficiaries to cut expenditure on fossil
fuels and reduce air pollution by limiting the emission of
the equivalent of 47,000 metric tons of CO2 per year. In
the construction phase, about 1,900 direct temporary jobs
will be created and in the operational phase, 900 jobs willbe created, 200 of which will be direct permanent jobs.

it will also become an ADB country. The seven countries infragile situations are Côte d’Ivoire, Guinea, Guinea-Bissau,
Liberia, Mali, Sierra Leone, and Togo.
In 2015, total Bank Group approvals for the Western Africa
region amounted to UA 686.6 million, 48.6 percent lower thanin 2014. The year 2014 was exceptional as the approvals
included some large private sector-financed projects (UA503 million) for Nigeria. In 2015, infrastructure operations
took up 45.6 percent of the regional Bank Group approvals
channeled to transport, energy, and ICT projects. Agriculture
was allocated 28.9 percent of the approvals while 15.9 percent
went to multisector operations. Lines of credit to the financesector for MSME, and support to the social sector, accounted
for 7.4 percent and 2.3 percent, respectively.
In infrastructure financing, a total of UA 85.5 million wasapproved for the Ghana Airports Company Project to improvethe country’s aviation industry and enhance regional integration,
while UA 48.7 million was allocated to the Digital Technology
Park Project in Senegal. This project aims to promote Senegal
as a call-center destination (see Box 3.11). The Budget
Support Program for the energy (infrastructure) sector in
Burkina Faso attracted UA 20 million financing and seeks tomake the supply of electricity and petroleum products more
efficient in the country.

59

Chapter 3

Bank Group Operations

Box 3.11

Senegal Digital Technology Park
This Digital Technology Park allocation of UA 48.7 million is the larger of only two ICT project approvals in 2015. The other is the Central Africa OpticalFiber Backbone Project—Cameroon Component (UA 30.9 million).
The Digital Technology Park, to be set up in the rapidly urbanizing Diamniadio Commune of Senegal, will include a data center, business process
outsourcing facilities, an ICT enterprise incubator, training, research, and audio-visual and content-production centers. The project is expected to
produce 35,000 direct jobs and a further 105,000 indirect jobs by 2025, modernize government ICT services, diversify the economy into tech-enabledbusinesses, support academic technology-based research, and simplify provision of ICT services for the people in Senegal. It will also attract inward
investment, providing a focal point for the development of an ICT cluster in Francophone West Africa.

3.4 Leveraging Resources
and Partnerships
This section reviews the resources mobilized through Thematicand Bilateral Trust Funds which represent other sources forfinancing, particularly for pre-investment feasibility studies,project cycle work, and capacity-building activities. Whilethe largest share of Thematic Trust Fund approvals wasallocated to infrastructure operations, in 2015 the largest
share of Bilateral Trust Fund approvals went into financing
capacity-building activities.
The bulk of Bank Group financing for low-income RMCs islargely through the ADF replenishment. For the three-year
ADF-13 cycle (2014-2016), available resources from thereplenishment for allocation to the 40 ADF-eligible RMCs
amount to UA 5.11 billion, with a third (UA 1.7 billion) estimatedto be available in 2015 for financing projects and programs in
ADF-eligible RMCs. In addition, the Bank Group has continued
to leverage other sources of financing, mainly through Special
Funds and Technical Cooperation Trust Funds. These resources
are used mainly for financing pre-investment feasibility studies,enhanced project cycle work, and capacity-building activities.
In March 2015, the Board of Directors approved theestablishment of the Bill and Melinda Gates Trust Fund tobe hosted by the Bank. This is the first bilateral fund witha non-sovereign entity, and is aimed at providing a formal
structure to the long-standing collaboration between the two
institutions in order to increase activities in agriculture, waterand sanitation, and health-related areas.

Figure 3.10

Sectoral Distribution of Thematic Trust FundApprovals in 2015
Capacity Building 1.6%
Human Development 2.5%

Infrastructure 92.6%

Source: AfDB Statistics Department.

Figure 3.11

Sectoral Distribution of Bilateral Trust FundApprovals in 2015
Private Sector
Development 4.0%
Infrastructure
18.1%

Gender
2.6%

Capacity Building 75.3%

In 2015, the Bank Group managed 40 Trust Funds (TFs) indifferent currencies for a cumulative total value of UA 865
Source: AfDB Statistics Department.

60

Climate Change 3.3%

Annual Report 2015

million. Thematic Trust Funds (TTFs), which are linked tothemes aligned with the TYS operational priorities, represented
87 percent of total TF resources, and Bilateral Trust Funds(BTFs) accounted for the remaining 13 percent.
As at end-December 2015, Thematic Trust Fund (TTF)
approvals amounted to UA 17.7 million. Similar to 2014, TTF
approvals in 2015 for infrastructure operations made up thelargest share (92.6 percent). This included the single largest
approval (UA 11.5 million) by ZimFund for the Zimbabwe
Urgent Water Supply and Sanitation Rehabilitation Project,
Phase 2. The remaining smaller share (7.4 percent) was for
operations in support of climate change, human development,
and capacity building (Figure 3.10).

Chapter 3

relief schedule. Under the MDRI, however, countries that havereached their HIPC completion points receive 100 percent
cancelation of their ADF loans disbursed as at end-2004 andthe debt still outstanding is canceled when the RMCs reach
their respective HIPC completion points.
In April 2015, Chad became the 30th RMC to reach the HIPC
completion point, and this was the major development within
the HIPC/MDRI debt-relief initiatives. Of the total amountof HIPC debt relief provided to Chad, the Bank Group’s
assistance amounted to UA 47 million. This amount will
provide Chad with the much-needed resources and leverage
to address the numerous socio-economic challenges facing
the country. In reaching the completion point, Chad had also
fulfilled the requirements for additional debt relief under the
MDRI from the African Development Fund, the International
Development Association (IDA) of the World Bank, and theEuropean Union.

Approvals by Bilateral Trust Funds stood at UA 11.8 million
as at end-December 2015. The largest share (75.3 percent)supported capacity-building operations, including UA 3.8
million for a strategic partnership to address fragility in the
RMCs; and UA 1.7 million support to the ADF Policy Innovation Three pre-decision point countries—Eritrea, Somalia, andLab during the ADF-13 Mid-Term Review and the preparations Sudan—are yet to start the process of qualifying for debt relief
for the ADF-14 consultation processes. Figure 3.11 shows that under the HIPC Initiative. Progress towards HIPC decisionsmaller Bilateral Trust Fund shares were allocated to support points by these countries has been slow. Zimbabwe, on
infrastructure (18.1 percent), private sector development the other hand, has made some progress, and intensified(4 percent), and gender (2.6 percent).
its efforts during the year to reach the HIPC decision point.
This was through the assistance of the Bank Group under its
Transition Support Facility to achieve full re-engagement with
3.5 The Bank Group and the Heavily
the Bank and the broader international financial community.

Indebted Poor Countries Initiative

The status of the Bank Group’s participation in implementing
the Heavily Indebted Poor Countries (HIPC) initiative andMultilateral Debt Relief Initiative (MDRI) is examined in thissection. The highlight of activities in this domain during theyear was the Bank Group’s approval that Chad had reachedthe HIPC completion point. This qualified the country forirrevocable HIPC debt relief and MDRI debt relief simultaneously.

3.6 Looking Ahead: The Bank’s
New Strategic Operational Orientation

In looking ahead, the new President, Dr. Akinwumi Ayodeji
Adesina, laid out his agenda for the Bank Group and Africa
as a whole in what is expressed as the High 5s: Light Up andPower Africa; Feed Africa; Integrate Africa; Industrialize Africa;and Improve the Quality of Life for the People of Africa. These
The Bank Group is a key participant among multilateral strategic operational priorities provide a sharp focus on thedevelopment banks in debt-relief programs within the Bank Group’s work as it implements the TYS. The objectives
framework of the Enhanced HIPC Initiative, and the MDRI. are also consistent with the United Nations Sustainable
The objective of these initiatives is to reduce the external debt Development Goals (SDGs), thereby creating a platform forburden of eligible countries to a sustainable level in order to transforming the lives of the people of Africa through rapid,
free up resources for poverty reduction and development sustainable, and inclusive growth.
projects and programs. Under the Enhanced HIPC Initiative,
eligible countries are relieved of up to 80 percent of their annual Africa has made significant progress in the last decade anddebt servicing obligations to the Bank Group until the debt a half, during which per capita incomes increased by nearly
relief committed is fully delivered in the final year of the debt 50 percent in many countries. It has now reached a point for

61

Chapter 3

Bank Group Operations

Figure 3.12

Alignment of the High 5s with the Ten-Year Strategy and the Sustainable Development Goals
UN Sustainable Development Goals (SDGs)

AfDB Ten-Year Strategy 2013-2022
Operational priorities

1 NOPOVERTY

2 NOHUNGER

3 GOODHEALTH

4 QUALITYEDUCATION

5 GENDER
EQUALITY

CLEAN WATER
6 AND
SANITATIONAfDB ‘High 5’ priority areas
Areas of special emphasis

Infrastructure
Development
SDG
3 4

5

Light Up &Power Africa
6

7

9

10

Fragile States

Regional Integration

7 RENEWABLE
ENERGY

JOBS AND
8 GOODECONOMIC GROWTH

AND
9 INNOVATIONINFRASTRUCTURE

10

11

12

REDUCEDINEQUALITIES

13 CLIMATEACTIONSUSTAINABLE CITIESAND COMMUNITIESBELOW
14 LIFEWATERRESPONSIBLE
CONSUMPTION

15 LIFEON LAND

SDG
6 9

Private Sector
Development
SDG
5 8

AND
16 PEACEJUSTICE

17 PARTNERSHIPSFOR THE GOALS

17

8

7

9

SDG
6 9

17

Industrialize Africa

GenderGovernance &Accountability
SDG
5 7

5

Integrate Africa
Agriculture &food security

16 17

SDG
3 4

SDG
5 7

8

9

Feed Africa

9

16

SDG
2 5

Skills & Technology

Improve the Quality of Lifefor the People of Africa

SDG
4 5

SDG
3 4

9

10 17

5

6

8

10 11

Source: AfDB Strategy and Operational Policies and External Relations and Communications Departments.

bold actions and determination to harness the full potential of generate foreign exchange through exports to other regions
the continent to end hunger, extreme poverty and malnutrition. of the world. By increasing investment and know-how in the
Increasing investment in infrastructure, especially in the power energy sector, the Bank Group will contribute to unlocking thesector. Leveraging on Africa’s agriculture potential to foster an continent’s energy potential, both conventional and renewableagro-industry-led industrialization, and accelerating regional sources, in order to drive the much-needed industrialization.
integration are part of the critical areas that need renewed The Bank Group will work with various partners to develop acommitment and bold visions. In this connection, the High 5 framework that takes into account the different energy sources,priority areas underpin the TYS and the SDGs.
geographic conditions, regulation and pricing, technologies,
distribution mechanisms, and beneficiary characteristics inFigure 3.12 is a schematic illustration representing the linkages line with its Energy Policy and future Energy Strategy. In thisbetween the High 5s, the TYS and the SDGs. A brief review regard, a number of initiatives were lined up and announced
is presented below on each of the High 5s.
in 2015. These include the New Deal on Energy for Africa,
the Transformative Partnership on Energy for Africa, and theLight Up and Power Africa. Energy is a strategic sector, Africa Renewable Energy Initiative. All of these initiatives entail
indispensable for modernizing and transforming economies. a change in the Bank Group’s approach to the development
Africa is the lowest energy producing and utilizing region in of the energy sector, and will be critical for achieving thethe world. Yet, it has vast untapped energy potential, which, ambitious target of providing universal access to energy
if fully exploited, can address its energy needs as well as by 2025.

62

Annual Report 2015

Feed Africa. Africa has enormous potential for agricultural
production to feed itself and the world, yet it is a region
with one of the largest populations of malnourished andhungry people. Africa’s food market is projected to increase
to USD 1 trillion in 2030 from USD 313 billion in 2010.
However, poor infrastructure, inadequate mechanization,
limited access to credit, fertilizers, and technologies, as wellas insecure land tenure systems and gender disparities inland ownership, undermine the attainment of this potential.
The AfDB is uniquely positioned to lead broad-based regional
and international partnerships to transform Africa’s agriculture
and agribusiness. The Bank Group will accelerate support
for agricultural transformation across Africa to increase
productivity, lower food prices, and thus enhance foodsecurity, revive rural areas and, in particular, create productive
jobs. All of this is in line with the recently adopted Dakar
Action Plan for African Agricultural Transformation (October2015). In rolling out the Action Plan, the Bank Group’s
investments in agriculture are envisaged to quadruple froma current annual average of USD 612 million to about USD
2.4 billion.

Chapter 3

2014-2023, acknowledges the opportunities provided byregional integration in boosting infrastructure to defragment
Africa’s small markets, increase regional trade, stimulate
industrialization, and enhance the movement of people andinvestment flows. The Bank Group will focus on addressing
the barriers separating African countries, creating regional
value chains and leveraging complementarities in order totap into the continent’s huge market potential. By working
together with the RMCs, the AfDB will build on the lessons
learned by investing in high-quality regional infrastructure.

Improve the Quality of Life for the People of Africa. Despitesustained positive economic performance in Africa for nearly adecade and half, many countries still face widespread poverty,socio-economic inequality and gender disparities. Lack of
economic opportunities for the youth also fuels migration, bothinternaly and externaly. Across Africa, the high level of youth
unemployment has become a key driver of fragility and politicalinstability, thereby pushing Africa’s young people to migrate
mainly to Europe and United States. Decades of researchacross developing countries and advanced economies showthat employment is the main pathway out of poverty. Creating
Industrialize Africa. As a primary commodity exporter, Africa jobs could improve the quality of life by providing incomes toremains at the base of the global value chain. This cannot meet the basic necessities (such as shelter, food, health, andcontinue if Africa is to be primed as a global growth pole. education), and reducing poverty and inequality.
Harnessing Africa’s commodities for industrialization involves
adding value to soft and hard commodities and developing Accordingly, the Bank Group aims to accelerate the creation
forward and backward linkages to the commodity sector. of jobs, particularly for the youth, across the continent. This
The Bank Group is well positioned to lead other partners will both improve their living conditions and help to stem thein the process of industrializing Africa and developing the perilous journeys made by some of them particularly across
African private sector to create wealth from natural assets. the Mediterranean to Europe in an attempt to escape poverty
In line with the Bank Group’s Private Sector Strategy, the and growing unemployment. The Bank Group proposes to
AfDB will target improving the capacity of Africa’s producers, develop innovative flagship programs within the context of theparticularly manufacturers and related industries, to compete Jobs for Youth in Africa Strategy to open up opportunities forwith imported products in local markets, linking them to youth employment. Notably, these flagship programs will create
regional and international markets. It will also support the jobs for the youth in key job-rich sectors such as agriculture,development of small- and medium-sized enterprises, special industry, and ICT. For example, industrialization schemes sucheconomic zones, and foster access to social and economic as Skills Enhancement Zones will link industrial clusters with
infrastructure as the basis for industrial growth.
talented young graduates to ensure that skills match the needsof the labor market. These initiatives are targeting over 50
Integrate Africa. Integrating Africa’s economies is key to million young people over a ten-year period and the creationachieving competitiveness and broadening and strengthening of 25 million direct jobs, which could inject an additional
the quality of growth. Yet regional integration continues to face USD 30 billion into African economies. The Bank Group willpolicy, regulatory, institutional, and infrastructure challenges. also continue to invest in programs for improving access toOvercoming these challenges requires increasing availability basic services such as water and sanitation, strengtheningof quality regional infrastructure services, particularly in health systems, higher education, science and technology,energy, transport, transboundary water and ICT. The Bank while creating economic opportunities for the extreme poor
Group’s Regional Integration Policy and Strategy (RIPoS) through effective social-protection mechanisms. The Ebola

63

Chapter 3

Bank Group Operations

3.7

Conclusion

This chapter has presented an overview
of the performance of the Bank Groupduring 2015 in its lending operations,highlighting the key achievements, bothby sector and within the frameworkof Africa’s five regions. Considerable
strides have been made, laying a strong
foundation for the ongoing delivery of theTYS, while also addressing actual andpotential fragility in Africa. It also outlines
the alignment of the High 5s with the TYS.
Among the major achievements of
the year is the 25.4 percent increasein Bank Group operations in 2015
over the level in 2014. During 2015,
Bank Group operations were alignedwith the TYS, which emphasizes
infrastructure investments, as nearly
half (48.6 percent) of total Bank Groupapprovals was allocated to infrastructure
projects, with transport (27.2 percent)and energy (13.8 percent) accounting
for the largest share. Another majorachievement was the leadership role
played by AfDB in introducing the New
Deal on Energy for Africa initiative to
A Young Cattle Farmer, Ben Arous, Tunisia.
achieve universal access to energy
by 2025, and announcing the African
crisis was a wakeup call for the continent and the Institution. Renewable Energy Initiative at the Climate Change Conference
The Ebola crisis required a coordinated international response of Parties (COP21) in Paris, France, in December 2015.
to be mounted. Other areas that need attention are the public The AfDB provided technical assistance to the RMCs andhealth-care systems and the challenges of rapid urbanization, logistical support for delegates during the COP21 negotiation
especially urban housing, to ensure a slum-free Africa.
processes. Accordingly, the AfDB played a significant role incontributing to the positive outcome of the COP21 global
Once finalized and fully operational, these High 5s will agreement, which reflects Africa’s interests on issues ofrepresent a new strategic orientation for the Bank Group in climate change. The Bank Group also organized a High-Level
the implementation of the TYS. However, the High 5s and Ministerial Conference in Dakar, Senegal, which produced an
the TYS are not mutually exclusive and their implementation 18-point Action Plan to tackle food insecurity and create an
will require building on the foundations of existing sector agriculture-led industrialization process in Africa.
strategies and policies, particularly the Regional Integration
Policy and Strategy, Private Sector Development Strategy, The low disbursement rates constitute a major challenge
Human Capital Strategy, and Financial Sector Development to the Bank Group. While in 2012 the actual disbursement
Policy and Strategy. It will also be anchored on the Energy closely matched the target level, from 2012 to 2015 actual
Policy and the future Energy Strategy, underpinned by the disbursements against targets showed a wider margin, withproposed New Deal on Energy for Africa initiative.
the disbursement rate declining from 98 percent in 2012, to64

Annual Report 2015

Chapter 3

81.9 percent in 2015. The Bank Group is addressing thischallenge by strengthening the monitoring and reportingof disbursement delays, while streamlining its operational
business processes through institutional and management
capacity building to improve the disbursements rates. Also,
among the pre-requisites for rapid industrialization andregional integration, the Bank Group continues to provide
support to the RMCs through policy advice and dialogue topromote and encourage diversification into processing andsmall manufacturing of primary products and away from solereliance on primary commodity exports.

65

Headquarters Building: Internal Office Space and External View.

Chapter 4
Institutional
Reforms,
Effectivenessand Corporate
Management

Chapter 4

Institutional Reforms, Effectiveness, and Corporate Management

Chapter 4This chapter reports on the institutional reforms, development effectiveness, and the corporate management activitiesof the AfDB’s organizational units in 2015. On institutional reforms, it highlights the Bank’s budget reforms andpresents updates on its decentralization, the return to Headquarters, information technology, business continuity, andthe 2013 Institutional fine-tuning exercise. Regarding development effectiveness, the chapter examines Bank Group
activities on climate change and environmental sustainability, enhancing the quality of operations, and managing fordevelopment results. It also presents the summary performance scorecard in 2015 and how the AfDB contributes
to Africa’s development effectiveness, while highlighting the role that the Bank Group played in advocating for
Africa’s development interests in regional and global platforms. Further, on corporate management activities, thechapter presents a summary of the Bank Group’s policies and strategies approved in 2015, outlines the activitiesof the independent evaluation function and those of the different fiduciary and accountability units that provide
intermediate recourse mechanisms, examines the Bank Group’s role as a knowledge broker, while also presenting
its knowledge products. In addition the chapter covers progress made in implementing the ADF-13 replenishmentcommitments. An update on the deployment of human resources for the implementation of corporate activities isalso provided towards the end of the chapter.

4.1 Institutional Reforms
and Related Enhancements
This section outlines the status of institutional reforms
undertaken in 2015, enhancements in information andcommunication technology, business continuity risk-mitigation
plan, and implementation of changes associated with the2013 fine-tuning of the organizational structure.
Budget Reforms and Administrative Budget. In 2015, BankManagement undertook a reform of the administrative budget
to achieve strategic prioritization of resources, efficient andeffective delivery of its development programs, aggregate
fiscal discipline, and establish clear lines of accountability.
In this regard, the Bank in recent years instituted several
initiatives to reform the broader institutional agenda to improvecoordination, delivery and corporate performance.
Provision was made for intensive staff training and workshops
on key budgeting tools and processes such as the Activity
Time Recording System (ATRS), the Cost Accounting System(CAS) and the Strategic Resources Assessment System(SRAS). This included the following actions:

68(i)	Establishment of a network of department-levelbudget focal points to assist managers with budget
planning and management. Each Complex has been
assigned a budget coordinator to ensure that theright level of technical capacity is available for better
budget planning, execution, monitoring and reporting.
(ii)	Commencement of preparation of budget proce­dures
and business process guidelines to create a common
understanding of process-related reforms. Oncecompleted, the guidelines were to be disseminatedto all staff through training and workshops.
(iii)	Preparation of comprehensive Complex Framework
Papers (CFPs) that discuss strategic orientation
and resource needs at each Complex level, which
are designed to better align work programs withcorporate priorities. The use of CFPs has beenfurther consolidated by linking them to performance
contracts signed by Vice Presidents at the beginningof the budgeting exercise. Based on the CFPs,
execution of Complex work programs, budget
efficiency and effectiveness are monitored regularly.

Annual Report 2015

The Cost Accounting System (CAS). The first half of 2015 wasdedicated to familiarization, testing and the further fine-tuningof the new CAS system introduced in 2014. The second halfof the year focused on the generation and dissemination ofvarious reports to managers for budgeting the unit costs ofdeliverables, efficiency analysis and benchmarking to support
decision-making.

Chapter 4

be better engaged in regional policy dialogue and regional
portfolio management, as Bank staff now work more closelywith Regional Economic Communities (RECs) and otherregional bodies. The positive findings from the review havebeen instrumental in the Boards of Directors’ approval forthe establishment of a third RRC for the Northern Africa
Region, thus marking an endorsement of the full-fledged
operationalization of the RRC model. Going forward, thisdecision will assist the AfDB in improving the efficiency andeffectiveness of the delivery model.

The Activity Time Recording System (ATRS). Greater effort wasmade to improve the rate of utilization of the ATRS, which isthe cornerstone for the success of the CAS. Group training
and monthly personalized walk-in sessions were conducted In consolidating the gains from decentralization, the Bank
to assist staff in filling time sheets in the ATRS. These sessions Group maintained its presence in 38 RMCs and is working
have contributed to the increase of the proportion of staff on enhancing the 2012 delegation of authority to the field.
completing their ATRS from an average of 64 percent in 2014 The revision aims at improving the AfDB’s capacity for timely
to 73 percent in 2015. The Bank aims to continue with training support to operations and decision-making by field-based staff.
and other capacity-building initiatives to reach a target of 80 Strengthened Field Offices (FOs) managed a larger share ofpercent in 2016.
the AfDB operations portfolio, with projects managed locallyincreasing from 51 percent in 2014 to 60 percent of the total
Budget Policies, Processes, and Procedures. Preparation active portfolio in 2015. Although operational staff in the fieldof the Budget Manual began in 2015 and is expected to decreased from 49.6 percent in 2014 to 40.6 percent of thebe completed and published by end-2016. The manual will total staff in 2015, project supervision led by FOs increased
increase knowledge and understanding of the Bank’s budget slightly from 52.5 percent in 2014 to 53 percent in 2015.
policies, processes, and procedures by budget stakeholders
and focal points, and also facilitate capacity building for Return to Headquarters. The return of the Bank and its staff
managers, budget staff, and new staff.
to the Headquarters in Abidjan, which began in September
2013, continued throughout 2014 and 2015. By endThe Strategic Resource Assessment Software (SRAS). This December 2015, a total of 1,126 staff had been successfully
software is meant to assist managers to validate budget moved and settled in Abidjan. Only 79 staff members were
submissions. SRAS is also instrumental in the preparation still in Tunis, awaiting relocation to Abidjan once the necessaryof the Program and Budget Document (PBD). Therefore, the arrangements are completed. The Bank took advantage ofBank intensified training sessions on SRAS for its management its return to Abidjan to launch several projects to renovate
staff. To achieve full integration of its budget infrastructure, and rehabilitate its facilities in Abidjan. The rehabilitation of thethe Bank has started preparatory work to bridge SRAS, CAS, Headquarters building included the renovation of fire safety
and SAP (Systems, Applications and Products)—the Bank’s systems, electrical and thermal installations, modernization
current main management software.
of interior fixtures (partitions, false ceilings, floors, walls, etc.)
and procurement of more ergonomic furniture for enhanced
Decentralization. In 2015, Bank Group operations were staff comfort. Other infrastructure renovation projects
enhanced as it was the final year of implementing the being finalized include: (i) the rehabilitation of Cité BAD’s 81
Decentralization Roadmap (2011-2015). Implementation apartments; (ii) the rehabilitation of the President’s villa; andof the Roadmap Action Plan included a review of the pilot (iii) the construction of a new 300-spot parking lot at theRegional Resource Centers (RRCs) in Eastern and Southern Headquarters building to be completed in 2016. This will
Africa that were established in 2012. The outcomes of this complement the rented 230-spot parking lot adjacent to thereview reinforced many of the findings from the 2014 Mid-Term Centre de Commerce International d’Abidjan (CCIA) building.
Review of the Roadmap. The establishment of the RRCs
has become an essential platform for Bank Group support Information Technology. During the year, the Bank continuedof its activities in Regional Member Countries (RMCs). The the implementation of key priority projects in its Information
RRCs have also provided the AfDB with the opportunity to Technology Strategy (ITS), with focus on the supervision69

Chapter 4

Institutional Reforms, Effectiveness, and Corporate Managementof the installation and provision of IT infrastructure in the (ii)	Chairing weekly meetings of the Emergency Management
Headquarters building. Installation of the Bank’s network
Team to manage crisis situations (terrorist shootings inconnectivity services and a unified wireless network has
Bardo, Tunis); the effect of the political crisis in Burundi
been completed for all locations (Tunis, Abidjan, Pretoria,
on the Burundi FO, and the evacuation of international
Nairobi, and all FOs). The use of a unified communication
staff family members to safer locations while ensuringsystem has improved the Bank’s overall performance anda minimum disruption of activities;
greatly contributed to sustaining the staff productivity during
the return to Abidjan.
(iii)	Conducting the mandatory yearly Bank-wide BC testingand exercises at the Bank’s BC site in South Africa,
The capacity for videoconferencing improved with 1,000
to reaffirm the Bank’s readiness to cope with major
simultaneous connections, including 500 units installed
disruptions and to consolidate the resilience of its
at the CCIA and Headquarters buildings. This resulted ininfrastructure and BC risk-mitigation response.
an increase in the number of corporate meetings held via
videoconferencing which rose to 2,895 in 2015, a 20 percent Update on the Fine-Tuning of the Organizational Structure.
increase relative to the previous year. Almost all recruitment The Bank Group’s organizational structure has undergoneinterviews for candidates based outside Côte d’Ivoire were held some institutional fine-tuning since 2013 when reforms were
via videoconferencing. The enhancement of facilities, especially instituted to enhance its capacity to implement its Ten-Yearfor meetings and corporate interviews, led to savings of about Strategy (TYS). The following is an update on the 2015
UA 18.8 million in 2015 in travel and related expenses.
activities of the newly created organizational units.
Business Continuity Management. As part of the BusinessContinuity (BC) risk-mitigation plan, a Bank-wide BC review
process was initiated in 2015. This comprised training
workshops and Business Impact Analysis (BIA). The review
process involved managers, Directors and BC coordinatorsfrom all departments at Headquarters (HQ).
Following the strong measures taken by the Bank in 2014
both at its HQ and FOs to prevent the risk of staff andtheir families contracting the Ebola Virus Disease (EVD), theBank took further steps in 2015, principal among them theestablishment of an EVD isolation unit outside the CCIA
building in Abidjan. The Bank also developed and instituted
special guidelines to handle potential cases of contagion inits community. To support staff, learn how it was coping andhow best to provide help, the Bank sent delegations to theFOs in Liberia and Sierra Leone where the disease had struck.
The visit enabled specialists and Management to dialogue with
their counterparts, learn lessons for dealing efficiently withissues arising from the disease, and prepare for the future
should similar situations arise.
Other achievements included delivery of normal BC activities
as planned for in the BC work program for 2015:(i)	Conducting BC workshop/training sessions in FOs(Burundi, Malawi, Rwanda, Mozambique, Tunisia,
Uganda, Zambia, Zimbabwe, and Ethiopia);

70

●●

●●

●●

The Transition Support Department (ORTS) continues tobe an effective focal point for all issues related to Bank
Group operations in States under fragile situations.
The ORTS has been fully staffed and is responsible
for applying the Transition Support Facility (TSF) andconducting all fragility analyses.
The Business Development Department (COBD) wasestablished to proactively build the Bank’s business.
However, its first and primary mandate was to design,
structure, operationalize and raise funds for Africa50—
the new innovative infrastructure project delivery vehicle.
This primary mandate of COBD expired when Africa50
was incorporated and held its Constitutive General
Assembly meeting on 29 July 2015 at its host locationin Casablanca, Morocco. The COBD still exists, but
its work in business development is limited and iscurrently focused on establishing regional PublicPrivate Partnership hubs that would support businessdevelopment in the regions. Its full mandate will bedecided in the ongoing reforms in 2016 on the newBusiness Delivery Model.
The Group Chief Risk Officer (GCRO) consolidated
the Bank’s risk management activities in 2015
through: (i) actively monitoring the loan portfolio andproviding periodic reports on credit risk, to the Board
Committee including the Annual Portfolio Credit Review;

Annual Report 2015(ii) co-leading implementation of the Private Sector
Credit Enhancement Facility (PSF) framework approvedby the Board; (iii) producing an annual Market Risk
Review presented to the Audit and Finance Committee(AUFI), ensuring internal consistency of the Bank’s asset
and liability management policies and guidelines; and(iv) providing assessment of the Bank’s Internal Controls
for Financial Reporting (ICFR) and Fiduciary Risks (FR).
In addition, GCRO led the preparation of the MultilateralDevelopment Bank (MDB) exposure exchange with
the Inter-American Development Bank and the World
Bank, which was approved by their respective Boardsof Directors and jointly signed in 2015.
●●

The African Natural Resources Center (ANRC) delivered
a number of products in 2015 to build the RMCs’ natural
resource management capacity. First, in collaboration
with the African Legal Support Facility (ALSF) and theAfrican Development Institute (EADI), guidelines were
provided for governments to improve the capacity
to negotiate mega extractive contracts. A training
manual intended to guide contract negotiations was
also produced. Second, a simplified tool to manage
compliance with European Union regulations to deal
with illegal fishing was introduced. This is expected tosecure revenue and jobs, and to boost trade. Third, theANRC provided a policy guide on options to leverage
extractive projects to improve human development.
Further, the ANRC initiated country support programsin Guinea’s mining sector, as well as in Tanzania’sand Mozambique’s gas sectors. The programs aredesigned to strengthen the capacity of governments
to implement extractive projects. The ANRC strategy
was approved in 2015.

Chapter 4●●

The Delivery and Performance Management Office (COPM)
continued to support Senior Management and Operations
Departments through its flagship reports produced in2015, namely, the Executive Dashboard and the Portfolio
Flashlight Report. These provide early warning on delivery
slippage or poor performance, and propose corrective
measures. Through such publications, the COPM assisted
in instilling a higher sense of urgency for delivery andgreater transparency on performance. Accordingly, COPM
contributed to the strong Bank Group performance of UA
6.33 billion at end-2015, exceeding the annual target of
UA 4.93 billion by 28.6 percent, and representing a 25.4
percent increase over the 2014 approvals of UA 5.05 billion.

4.2 Development Effectivenessand Quality Assurance
During the year, the Bank Group continued to make progressin establishing quality social and environmental safeguards,
enhancing the quality of its operations, and strengthening its
ability to measure and manage for development results. Notably,
the AfDB contributed to the positive outcome of the COP21
global agreement, which reflects Africa’s interests on issuesof climate change, as also addressed elsewhere in this Report.

Climate Change, Environment, and Social Sustainability.
Africa’s economic transformation underpins the vision of
the Bank Group and the RMCs. The focus is to ensurethat growth is socially inclusive and pursued in a mannerthat is both economically empowering and environmentally
sustainable. The AfDB acknowledges that achieving this vision
is contingent on implementing environmental, social andclimate-change safeguards. Following the Boards’ approvalof an Integrated Safeguards System (ISS) in 2013, the AfDB●● The Financial Sector Development Department (OFSD)
has made considerable progress in streamlining procedures
prepared the Financial Sector Development Policy and and guidelines that make the ISS fully operational and effective.
Strategy (2014-2019), approved by the Board in 2015. These achievements include the following:
The OFSD’s mandate is to facilitate Africa’s growthfinancing. This mission rests on two pillars: (i) financial(i)	Both the Environmental and Social Assessment
inclusion of the underserved; and (ii) extending Africa’s
Procedures (ESAP) and Guidance Materials were
financial systems. During the year, OFSD continued
formally endorsed by Management in 2014; theto support on-lending to priority sectors such as
ESAP is currently publicly available online;
agribusiness and micro-, small-, and medium-sizedenterprises (MSMEs) through lines of credit to financial(ii)	Relevant knowledge documentation on key issues of
institutions and the use of guarantees largely derived
upgrading and use of country systems and involuntaryfrom executed risk participation agreements (RPAs)
resettlement have also been published to strengthen
under the Bank’s Trade Finance Program.
the capacity of the AfDB operational staff;

71

Chapter 4

Institutional Reforms, Effectiveness, and Corporate Management(iii)	The capacity of the RMCs has been enhanced
through regional training programs organized in
Tunis, Nairobi, Dakar, and Pretoria. The programs
drew upon a broad spectrum of experts in thesecountries and from elsewhere in Africa.

technical assistance and advisory services tointegrate green growth measures and to secure
funding from climate funds to handle the incremental
costs of green growth measures. Four of theseprojects are from the private sector.

With the rollout of the ISS, the AfDB continues to ensure that allits operations are assessed up-front and managed according
to the established environmental and social sustainability
objectives. In the area of climate change, the AfDB continued
to play a key role in championing the African agenda in 2015
as demonstrated by the following outcomes:

Enhancing the Quality of Operations. The Bank Group is
continuously improving the quality-at-entry of strategies andoperations by promoting a strong results culture. The ultimate
objective is to improve the effectiveness and efficiency of
AfDB interventions.

(i)	Over 60 climate change-related knowledge products,
comprising books, working papers, briefs, flagshipdocuments, and newsletters were produced. The
AfDB also provided technical assistance to the
RMCs and logistical support of up to USD 2
million for delegates during the COP21 negotiation
processes. The AfDB has invested a similar amount
per annum over three years, beginning with COP19,
held in Warsaw, Poland, in 2013.

As part of broadening the ownership of results in the Bank
Group, the Readiness Review (RR) is in the process of being
fully delegated to the Vice President, Operations for Country &Regional Programs & Policy (ORVP). Several training sessions forCountry Program Officer (CPO) focal points have been organized
to ensure sufficient capacity to coordinate and undertake theRRs by the RRCs. The RR methodology was also aligned to
the new Presidential Directive (PD 02/2015) on implementationand cancelation of Bank Group Sovereign Operations.

With the support of the UK’s Department for International(ii)	Effective and full implementation of the Climate Development (DfID) Trust Fund, the Bank Group is progressing
Safeguards System (CSS) tool, which enables steadily with the Task Manager Academy. This initiative provides
the AfDB to better manage climate change risks, a comprehensive training program for all Task Managers invulnerability, and adaptation across all of its charge of designing, approving, and supervising operations.
interventions on the continent.
Initial modules on concepts, business practices and instruments
have already been designed. Consultations with departments(iii)	The implementation of the AfDB’s Climate Change on the content and rolling-out modalities are currently being
Action Plan (CCAP) for 2011-2015, which has led undertaken. In addition, the AfDB is developing an online
to the mobilization of about USD 6.5 billion. Based Results-Based Logical Framework e-course for projects.
on Climate Finance Tracking, USD 3.8 billion ofthis amount has so far been allocated to mitigation The Bank Group is also working on reviewing the preparation
activities while USD 1.6 billion has been allocated and drafting of Country Strategy Papers (CSP). One of theto adaptation operations.
main innovations in the new approach is the adoption of the
new results tools for country strategies, which will improve(iv)	Training of more than 600 international development the AfDB’s strategic alignment and tracking of results in aexperts in Africa in climate-change-related issues comprehensive manner at the country level. These results tools
and support to eight countries to help mainstream were discussed in-depth by experts at the MDB meeting on
climate-change issues into their Results-Based Country Strategies: Emerging Practices to Enhance Quality
Country Strategy Papers (RBCSPs).
and Results, hosted by the AfDB in Abidjan in June 2015.
The new CSP process is being piloted in Mozambique, and(v)	Training of more than 150 AfDB staff, officials and key lessons learned will inform upon prior to Bank-wideprivate sector practitioners from the RMCs on implementation.
integration of green growth measures in project
development. Ten projects, which were presented The Bank Group is enhancing its results culture by monitoring
during training sessions, are being provided with the quality and level of confidence in project rating through72

Annual Report 2015

its RR, Implementation Progress and Results report (IPR),
and Project Completion Reports (PCRs). Data are publishedquarterly in the Quality Assurance Dashboard and circulated
to Senior Management and departments for follow-up action.

Chapter 4

distribution networks, with emphasis on rural electrification.
As noted in Chapter 2, the focus on rural electrification is inline with the TYS energy infrastructure pillar, aimed at bringing
reliable and affordable power to rural areas, where accessremains particularly limited.

Lastly, the AfDB is continuing to support operations staff in theirendeavor to enhance quality-at-entry of operations through The “Development Effectiveness Review on Ethiopia,
the Quality Assurance Helpdesk and on-demand requests for 2015” evaluated the AfDB’s contribution to the country’s
support and training for departments. In view of the success development by examining progress in inclusive growth andof these initiatives, the Bank Group is currently in the process poverty reduction, and the challenges encountered in theof institutionalizing the quality assurance clinics, which provide process. The report notes that from 2005 to 2013, AfDB
tailor-made support to Task Managers.
investments have made a substantial contribution towards
expanding Ethiopia’s road infrastructure and improving
Managing for Development Results (MfDR). The AfDB access to transport for over 7.5 million people. Further, thehas significantly strengthened its focus on measuring and Bank Group’s contribution helped the country to provide
managing for development results. In addition to the 2015 nearly 40,000 people with electricity.
Annual Development Effectiveness Review (ADER), the AfDB
also produced a thematic report on energy and two country The “Development Effectiveness Review on Sierra Leone,
reports on Ethiopia and Sierra Leone.
2015”, provided a review of the country’s progress in managing
the transition from conflict, and of the lessons that the
The ADER series are structured around the AfDB Results AfDB learned from delivering support effectively in a fragile
Measurement Framework (RMF), which is a corporate environment. For example, during the Ebola crisis, the AfDB
management tool designed to demonstrate how the Institution’s swiftly mobilized emergency budget support and technicaloperations impact development effectiveness in the RMCs. assistance amounting to USD 60 million for the country’s
The RMF tracks about 100 performance indicators aggregated emergency relief and reconstruction.
into four interconnected criteria: (i) development progressin Africa (Level 1); (ii) AfDB’s contribution to development in During 2015, the AfDB continued to reinforce the tools,
Africa (Level 2); (iii) operational performance (Level 3); and processes, and systems that underpin its Results Measurement(iv) organizational efficiency (Level 4).
Framework, including the Results Reporting System (RRS),
developed in 2013. The RRS tracks portfolio performance
The 2015 ADER focused on “Driving Development through by sector, region, and country, providing management with
Innovation”. The report showed that Africa’s growth prospects critical information to improve performance. The framework
remain positive, driven by a rapidly growing and urbanizing was refined in 2015 and will be ready for a full rollout once
population, shifting patterns of trade and investment, and the SharePoint infrastructure to integrate the information
improvements in economic management. However, to technology applications (SAP, Microsoft Exchange, and Oracle,
accelerate the pace of change and improve lives, Africa needs among others) is complete. Further, in fulfilment of the its
innovation and new home-grown ideas. The AfDB can play commitment to transparency and accountability in the use of
an important role to catalyze their pace, especially in shifting its resources, the Bank continued to publish monthly data inagriculture from mere subsistence farming to agribusiness. the International Aid Transparency Initiative (IATI) registry. To
It can also foster the right conditions for quality job creation fully establish a results-oriented culture across the institution,and business opportunities in manufacturing.
a training workshop on Results Based Management wasdeveloped and delivered to 25 Bank staff in Abidjan.
The thematic report on “2014 Development Effectiveness
Review on Energy”, launched in April 2015 and covering the As a development institution, the AfDB is committed toperiod 2009-2013, shows that the Bank committed over delivering value for money (VfM) and results to its clients, both
USD 13 billion over the past two decades to develop the public and private. In this respect, it led an initiative with fiveenergy sector in Africa. These commitments were directed of its partner MDBs to improve a collective understanding of
towards building national generation capacity and developing value for money, and commissioned a Concept Paper on VfM.

73

Chapter 4

Institutional Reforms, Effectiveness, and Corporate Management

In addition, the AfDB continued to invest in strengthening
national statistical capacity in the RMCs for evidence-based
policy making, within the framework of the Africa Community ofPractice for Managing for Development Results (AfCoP). Thisis carried out through: (i) strengthening capacity on managing
for development results in the RMCs and RECs, such as theCommon Market for Eastern and Southern Africa (COMESA)
and the West African Economic and Monetary Union (WAEMU),
in partnership with the Africa Capacity Building Foundation;and (ii) its flagship program, the Africa for Results initiative(AfriK4R), which aims to strengthen MfDR capacity to build

capable States and at enhancing regional integration throughthe use of MfDR.
Progress made at the four levels in the Results Measurement
Framework mentioned above is presented in Tables 4.1
and 4.2 below. The tables use a traffic light system todetermine scores on the progress made at the four levels:(i) Development progress in Africa (Level 1); (ii) the Bank
Group’s contribution to development in Africa (Level 2);(iii) the Bank Group’s operational performance (Level 3); and(iv) AfDB’s organizational efficiency (Level 4).

Table 4.1

Summary Performance Scorecard 2015
LEVEL 1: IS AFRICA MAKING DEVELOPMENT PROGRESS?
Inclusive growth● Economic inclusion● Spatial inclusion● Social inclusion● Political inclusion● Sustainable growth

Transition towards green growth● Building resilience● Managing natural assets● Reducing waste and pollution▲
LEVEL 2: ARE THE AfDB OPERATIONS MAKING AN IMPACT?									Regional integration				Private sector development				● Cross-border transport● Private Sector● Cross-border energy● Agriculture
Infrastructure development		
Skills & technology			Governance & accountability		● Transport● Vocational training● Financial management● Water● Education● Public sector transparency● Energy● Health● Competitive environment● ICT▲
LEVEL 3: ARE THE AfDB OPERATIONS MANAGED EFFECTIVELY?
Country-level results
Effective & timely operations● Country engagement● Quality of operations● Aid effectiveness● Portfolio performance● Learning from operations

Gender & climate change● Gender-informed operations● Climate-informed operations▲
LEVEL 4: IS THE AfDB AN EFFICIENT ORGANIZATION?
Moving closer to our clients
Engaging & mobilising staff● Decentralization● Human resources● Connectivity● GenderValue for money● Cost-efficiency● IT services

Source: AfDB Department for Quality Assurance and Results.
For Level 1, Africa’s relative performance is measured by comparing the continent’s progress with progress in its peer group (low and middle-income countries around the world); forLevel 2, the Bank’s performance is measured by comparing expected and actual achievements for all operations that have been completed, and for Levels 3 and 4, the Bank’s progressis measured against its performance in achieving its 2013 targets, set out in the Bank’s Results Measurement Framework. The traffic lights denote the following:
●
●
●
●

74

Good progress: On average, the group of indicators improved over baselines or reference groups.
Moderate progress: Results are mixed; on average, the group of indicators show moderate improvement.
Progress stalled or regressed: On average the group of indicators stalled or regressed.
Progress could not be measured.

Annual Report 2015

Chapter 4

Table 4.2

How the AfDB Contributes to Africa’s Development (Level 2)
2013-2015
EXPECTED
DELIVEREDINFRASTRUCTURE DEVELOPMENT● Transport—Roads constructed, rehabilitated or maintained (km)● Transport—Staff trained/recruited for road maintenance● Transport—People educated in road safety, etc.
● Transport—People with improved access to transport● of whom women (2)● Energy—Power capacity installed (MW)● of which renewable (MW)
● Energy—Staff trained/recruited in the maintenance of energy facilities● Energy—People with new or improved electricity connections● of whom women (2)● Energy—CO2 emissions reduced (metric tons per year)● Water—Drinking water capacity created (m3/day)● Water—Workers trained in maintenance of water facilities● Water—People with new or improved access to water and sanitation● of whom women (2)● ICT—People benefiting from improved access to basic ICT services● of whom women (2)REGIONAL INTEGRATION● Transport—Cross-border roads constructed or rehabilitated (km)● Energy—Cross-border transmission lines constructed or rehabilitated (km)
PRIVATE SECTOR DEVELOPMENT● Government revenue from investee projects and sub-projects (USD million)● SME effect (turnover from investments) (USD million)● Microcredits granted (number)● Microfinance clients trained in business management● Jobs created● of which jobs for women (2)● People benefiting from investee projects and microfinanceof whom women (2)● Agriculture—Land with improved water management (ha)● Agriculture—Land whose use has been improved: replanted, reforested (ha)● Agriculture—Rural population using improved technology● Agriculture—People benefiting from improvements in agricultureof whom women (2)2016-2018
EXPECTED

10,172
15,051
3,872,763
24,283,187
12,160,862
1,421
71
20
4,061,795
2,071,047
523,721
143,924
20,131
3,779,862
1,864,476
3,767,987
1,883,993

8,818
14,512
3,905,515
25,569,494
12,817,804
1,422
72
20
3,997,308
2,037,428
523,721109,115
21,655
3,696,741
1,816,940
3,767,987
1,883,993

87%
96%
101%
105%
105%
100%
102%
100%
98%
98%
100%
76%
108%
98%
97%
100%
100%

21,37534,195
1,120,966
49,666,553
20,791,134
3,961
1,205
8,821
37,695,068
15,679,239
9,406,435
3,644,919
51,78240,422,942
22,702,609
852,939
426,469

1,339
-

1,281
-

96%

6,858
2,556

442
170
138,879
1,437
1,272,876
343,873
5,671,500
2,860,577
149,786
177,200
599,113
15,238,996
7,274,400

992
205
153,047
1,436
1,256,809
334,624
5,714,164
2,884,218
136,634
257,592
1,217,056
17,435,967
8,348,802

225%
121%
110%
100%
99%
97%
101%
101%
91%
145%
203%
114%
115%

1,334
1,324
36,321
34,9451,228,218
609,924
4,138,708
2,070,287
217,116
397,3121,305,926
43,317,170
22,728,895

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Chapter 4

Institutional Reforms, Effectiveness, and Corporate Management

Table 4.2 — Continued

How the AfDB Contributes to Africa’s Development (Level 2)
2013-2015
EXPECTED
DELIVEREDSKILLS & TECHNOLOGY● People benefiting from vocational training● of whom women (2)● Classrooms and educational support facilities constructed● Teachers and other educational staff recruited/trained● People benefiting from better access to education● of whom women (2)● Primary, secondary, and tertiary health centers● Health workers trained● People with access to better health services● of whom women (2)GOVERNANCE AND ACCOUNTABILITY● Countries with improved quality of budgetary and financial management● Countries with improved quality of public administration● Countries with improved transparency, accountability and corruption mitigationin the public sector● Countries with improved procurement systems● Countries with improved competitive environment

2016-2018
EXPECTED

15,1586,454
1,357
22,435
1,172,365704,288784
12,64053,143,133
29,423,468

7,819
3,330
1,237
18,383
1,158,515
707,319697
15,24344,856,570
25,118,433

52%
52%
91%
82%
99%
100%
89%
121%
84%
85%

17
6
19

16
6
14

94%
100%
74%

9
14

5
8

56%
57%

562,603
278,453679
21,057
1,411,864
688,594
279
26,1107,364,838
3,131,850

Source: AfDB Department for Quality Assurance and Results.
Notes:.. = data not available; ha = hectares; km = kilometers; MW = megawatts; m3 = cubic meters; SME = small- or medium-sized enterprise; USD = United States dollars,
ICT = information and communication technology.
(1)	The performance indicator for governance applies different thresholds. Given the nature and attribution distance, the levels for the traffic lights are different from other indicators:
green, 75 percent and above, amber, 50-75 percent, and red, below 50 percent.
(2)	Gender-disaggregated figures are extrapolated from a subset of projects that have available data with baseline and actual data built in. As more projects have started to include
gender-informed design, these data are expected to become increasingly robust and complete.
(3)	UA figures from material converted at UA 1 = USD 1.38.
Legend:● Bank operations achieved 95% or more of their targets.(1)● Bank operations achieved 60-94% of their targets.
● Bank operations achieved less than 60% of their targets.
● Data not available to measure performance.

The Bank Group’s Engagement with Civil Society
Organizations (CSOs). The CSO Engagement Framework(CSO Framework) offers areas to deepen and improve
development results. Under the CSO Framework, the AfDB
interacts continually with numerous CSOs across the continent,
engaging with them through information sharing, consultation,
operational collaboration, and institutional partnerships. As aresult of the CSO Framework, the AfDB has institutionalized
CSO participation at its Annual Meetings. This commitment
provides the forum to discuss specific topics and/or highlightsome key achievements linked to the TYS. At the 2015
Annual Meetings, the Bank Group and the CSOs discussed
and shared experiences on transparency, accountability, andclimate change, and on the broader relationship between themand the Bank Group. The AfDB has started to develop a Planof Action to operationalize the CSO Framework.

how to implement the CSO Framework. The institution
is working towards adopting an AfDB-CSO “Charter” tore-energize the relationship and renew the compact between
the AfDB and CSOs. The CSO Charter would demonstrate
the Bank Group’s determination to focus more on CSOs andhelp them to contribute to AfDB’s operations. To increase
collaboration with CSOs, the AfDB has elaborated a mappingof CSOs in Africa to provide a broad overview of CSOs on
the continent. The process has led to the establishment of
an AfDB-CSO database that was launched during the 2015
Annual Meetings.

To improve communications with CSOs, a dedicated portal
has been established on the Bank Group’s website. The
Bank Group has also taken measures to increase the numberof CSOs able to access AfDB information and contributeto building CSOs’ knowledge and capacity, as well as
In 2015, the Bank Group launched the AfDB-CSO Committee, consolidating the work of the Bank Group in its role as awhich has the mandate to advise and inform the AfDB on knowledge broker.

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4.3

Policies and Strategies

Implementation of the Bank Group’s TYS entered its thirdyear in 2015, with a focus on policies and strategies that
support inclusive growth in Africa, and Africa’s transition
to green growth. Acknowledging the changing global aid
architecture, policies and strategies that enhance the financingof Africa’s development received special attention. During theyear, the Bank Group approved new policies, strategies, andoperational guidelines, as outlined below.

Chapter 4and (ii) strengthening the quality of the AfDB policy dialogue,
advisory services, and involvement in the development
debate. The implementation of the KMS will build on the
AfDB’s established knowledge assets, including its flagshippublications, policy dialogues, capacity-building programs,
and the knowledge management and learning ICT platform.

African Natural Resources Center (ANRC) Strategy. The
ANRC strategy (2015-2020) was approved by the Boards inJuly 2015. The strategy proposes two pillars: (i) integrated
natural resource development planning to protect theProcurement Policy and Methodology for Bank Group environment through sustainable development; and (ii) good
Funded Operations. The Boards of Directors approved governance of natural resources to support negotiations, local
a new Procurement Policy Framework in October 2015. content and transparency through public participation. WithThe new Framework comprises: (i) Procurement Policy for respect to the value chain, the Center’s program plans to focus
Bank Group Funded Operations (Policy); (ii) Methodology on the raw material stage that includes project development,
for Implementation of the Procurement Policy of the African but excludes the processing and post-processing stages.
Development Bank (Methodology); (iii) the Operations From a governance perspective, the program embodies
Procurement Manual for the African Development Bank the provision of advice on policies, laws, and institutional(OPM); and (iv) the Procurement Toolkit (Toolkit). The OPM and frameworks that regulate projects at the raw material stage.
the Toolkit will be uploaded on the Bank’s website as soon
as they become available. The new Procurement Framework Strategic Framework and Operational Guidelines for thewill be implemented in 2016.
Private Sector Credit Enhancement Facility (PSF). In May
2015, the Board approved the Framework and Guidelines for
The Procurement Framework is designed to support AfDB- the PSF. This provides an avenue for the African Development
financed operations and enhance procurement systems in the Fund (ADF) to invest in development results through the private
RMCs to enable them to obtain optimal value for money based sector by leveraging the Bank’s Private Sector Operations
on the mutually reinforcing principles of economy, efficiency, (PSO) capability to support private sector projects in ADFeffectiveness, and equity. The key feature of the framework eligible countries. To establish the PSF, the ADF provided
is the achievement of value for money by borrowers, based a seed contribution of UA 165 million under ADF-13. The
on a dynamic and differentiated fit-for-purpose approach to PSF is financially autonomous with a total separation of
procurement transactions. This approach includes the full its resources from those of the African Development Bankuse of borrower procurement systems for certain contracts, (ADB) and the ADF. The Bank’s triple-A rating would ensure aand customized methods and procedures for more complex highly catalytic PSF that leverages approximately three times
instances.
its capital resources. Accordingly, the UA 165 million seedcapital grant to the Facility will guarantee up to UA 495 million
Bank Group Knowledge Management Strategy. In June of PSO in ADF-eligible countries. The Operational Guidelines
2015, the Boards of Directors approved a Knowledge Manual for the implementation of the Facility is intended toManagement Strategy (KMS) for 2015-2020. With its ability guide staff and management in the day-to-day processing
to combine knowledge with funding, the AfDB increasingly and management of PSF operations. In addition to the PSF
complements its financing with knowledge products and capability, the Board also approved a list of projects to benefit
services, including analytical, advisory, and policy work. from the PSF. Furthermore, the administrator of the PSF was
The strategic objective of the KMS is to raise the AfDB’s appointed in 2015.
development effectiveness by providing and exchanging
innovative knowledge solutions for Africa’s transformation with Regional Integration Policy and Strategy (RIPoS). In
African countries. The KMS has two pillars: (i) reflecting the role November 2015, the Boards approved the new Regionalof knowledge in enhancing the effectiveness of Bank Group Integration Policy and Strategy (RIPoS) for the period
operations to address Africa’s pressing development needs; 2014-2023. This will help to operationalize the TYS, which

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reaffirms the Bank Group’s commitment to promote regional
integration in Africa. To this end, the strategy focuses on twocomplementary areas: supporting regional infrastructuredevelopment, and enhancing the continent’s industrializationand trade. The new policy and the strategy both focus on
creating larger and more-attractive markets, linking landlocked
countries to international markets, and supporting intra-African
trade to foster the continent’s development. The RIPoS will
guide the AfDB’s support to countries and regional institutionsin economic integration by leveraging the institution’s roles asa financier, catalyst, and knowledge broker. It places increased
emphasis on enhancing trade and industrial development
to create jobs and foster inclusive growth. It also places
greater emphasis on “soft” infrastructure issues such as
trade facilitation, policy reforms, and regional harmonizationof policies and regulations on infrastructure, trade, andinvestment.

4.4 Mid-Term Reviewof the ADF-13 Replenishment
The ADF Deputies agreed that most of the commitments
at the Mid-Term Review had been met under the ADF-13
replenishment. They stressed the importance of improving
gender balance within the institution, in particular atmanagement level.
ADF Deputies met in Abidjan, Côte d’Ivoire, in November
2015 for the ADF-13 Mid-Term Review. They were joined byGovernors and Representatives from Côte d’Ivoire, Ghana,and Malawi, and observers from other MDBs and International
Financial Institutions.
The Deputies highlighted a number of achievements madeby the Bank at the ADF-13 Mid-Term, starting with thesignificant progress in delivering on most of its commitments.
They also noted that the PSF was fully operational and thereis evidence of strong demand. They commended the AfDBTransition Support Facility’s vigorous response to crises suchas the Ebola outbreak in Guinea, Liberia, and Sierra Leone,
as an example of the TSF’s value added in country-specificsituations.

concern. Moreover, given the urgent need to offset the effects
of climate change, the Bank Group needed to play a key rolein mobilizing climate financing. They recommended that theFund continue supporting the RMCs through policy-based
financing and promoting domestic resource mobilization. The
Deputies welcomed the fact that the Bank Group has madesignificant progress in gender advocacy and mainstreaming
in its operations. Nevertheless, they stressed the need to
improve the gender balance within the Institution, particularly
at management level. They also noted that consultations for
ADF-14 should focus on addressing outstanding elements
in ADF-13 and articulating the new areas of emphasis toaccelerate implementation of the TYS.

4.5 Independent Evaluationof the Bank Group
During 2015, the Independent Development Evaluation of the
Bank Group completed 12 influential evaluations (not including
project-level evaluations). This marked the highest number inthe Bank Group’s 30-year history of independent evaluation.
These evaluations provided evidence-based and credible
information that helped to shape the Bank Group’s work inseveral strategic areas. The evaluations also helped the AfDB todemonstrate accountability to its stakeholders and contributed
to better decision-making. In addition, the AfDB stepped up
efforts to foster learning from, and use of these evaluations,through stronger communications, knowledge management,outreach, and dissemination—both inside and outside theinstitution. Activities to promote an evaluation culture, boost
the supply of evaluations in the RMCs, and strengthen the
demand for evaluation products were also enhanced.
The Bank Group completed three thematic evaluations,five Country Strategy and Program evaluations (ofCameroon, Senegal, Togo, Ethiopia, and Tanzania), three
corporate evaluations, and one cluster evaluation of powerinterconnection projects. The thematic evaluations were the
Evaluation of the AfDB’s Assistance to SMEs, the Evaluationof the Bank’s Private Equity Investments and a report on the
Bank’s Utilization of the Public-Private Partnership Mechanism.

The most notable independent evaluation conducted during
However, the Deputies drew attention to some areas that 2015 was an overall assessment of the Bank’s implementationneeded closer attention. The lower loan disbursement rates of the Sixth General Capital Increase (GCI-VI) and the African
and the slow uptake of innovative financing instruments (partial Development Fund 12th and 13th Replenishment (ADFcredit guarantee and partial risk guarantee) were of major 12 and ADF-13) commitments. This evaluation comprised78

Annual Report 2015

three components: (i) Independent Evaluation of General
Capital Increase VI and African Development Fund 12 and
13 Commitments: Overarching Review; (ii) Independent
Evaluation of Policy and Strategy Making and Implementation;and (iii) Administrative Budget Management of the ADB: An
Independent Evaluation. Highlights of the three commitment
evaluations are provided below:
Independent Evaluation of General Capital Increase VI and
the African Development Fund 12 and 13 Commitments. The
objectives of this evaluation were to draw conclusions andlessons about: (i) the relevance of the agreed commitments
vis-à-vis the Bank Group’s challenges and priorities;(ii) the efficiency of the process in reaching agreement
on a coherent and realistic portfolio of commitments;(iii) delivery of commitments (outputs such as documents
and the establishment of new structures or processes); and(iv) effectiveness of their implementation.

Chapter 4that the AfDB lacked an easy-to-navigate repository of active
policies and strategies.
Administrative Budget Management of the African Develop­
ment Bank: An Independent Evaluation. The objective of thisevaluation exercise was to assess the extent to which the
management of the Bank’s administrative budget provides
efficiency and effectiveness in delivering on its strategic
priorities and areas, to identify areas for further improvements.
The evaluation also assessed the extent to which key actions
recommended by the 2012 review of the budget reform had
been implemented. The evaluation found that budget reform
was relevant and adequately articulated, and integrated withother components of the Bank’s reforms. However, overall
implementation has been challenging, and the chronology andsequencing have not always respected either for the timetable
set out in 2007, or the overall logic of the reform. Althoughbudget tools have been enhanced, more effort is needed
to refine and improve the procedures for implementation.
Furthermore, because behavioral changes required for effective
implementation of the reforms were not adequately addressed,
the reform has had limited effect on Institutional efficiency andon key processes, notably the planning of budgets and work
programs. Resource allocation and strategic objectives havebeen aligned but up-front strategic priority setting and use of
results data should be strengthened.

Overall, the evaluation found that the Bank Group is delivering
on its commitments with respect to preparation of agreed
documents and establishment of agreed structures. However,about half the commitments are delivered late. Furthermore,
although the AfDB’s reform agenda is on course, the evaluation
could not conclude positively on the AfDB’s ability to resourcethese initiatives and ensure effective implementation to achieve
the desired benefits. It recommends that the Bank Groupshould focus on designing a thorough and robust planning, This evaluation of administrative budget management drew
execution and resourcing strategy before embarking upon four key lessons that are also relevant for other institutional
new and major reforms.
reforms. These are, ensuring: (i) external coherence; (ii) better
sequencing of the reforms; (iii) cultural and behavioral change;
Independent Evaluation of Policy and Strategy Making and and (iv) sponsorship and reform of the management structure
Implementation. This evaluation assessed the formulation, by Senior Management.
management and implementation of the AfDB policies andstrategies—the core regulatory instruments that govern
operational and institutional activities and programs. 4.6 Procurement and Fiduciary Services
The primary purpose of the evaluation was to support
improvement in the preparation and implementation of Procurement and Fiduciary Services are provided as direct
Bank Group policies and strategies, which serve as building assistance to the RMCs through rigorous assessments
blocks for its organizational and development effectiveness. and well-designed training and capacity-building activities
The evaluation found that there is generally a comprehensive in public financial management and procurement. These
coverage of issues of relevance to the AfDB and its RMCs in services generate positive impacts on other areas of the Bank
Bank Group policies and strategies. However, it highlighted Group’s work, such as project implementation and financial
a few concerns, especially the lack of a clear framework governance.
and agreed nomenclature to guide the preparation of these
documents, and the failure to clearly distinguish between the Sustainable economic development and social progress in the
purpose and content of strategies and policies, and what RMCs can be successfully achieved with better utilization ofshould trigger their formulation. The evaluation also found the funds disbursed for development projects and programs.

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Hence, the Bank Group continues to systematically support
capacity building and systems enhancement for proper publicfinance management and procurement. In specific cases of
the RMCs in transition, Bank staff work with the authorities
on AfDB-financed projects to put in place adequate mitigation
measures for successful project outcomes.

socio-economic realities in the RMCs. Some of the research
work was demand-driven. Core flagship and thematic
knowledge products to gain deeper understanding of thecontinent’s development priorities, opportunities, and challenges
were also produced. During the peak of the Ebola crisis, forinstance, a study was conducted highlighting the economic
impact of the disease. The evidence from the study facilitated
In 2015, as in previous years, the AfDB’s Procurement and internal discussion by Senior Management, and this enhanced
Fiduciary Services contributed to the design, preparation, the AfDB’s dialogue and advocacy in the affected countries.
appraisal, supervision, and completion of projects and Overall, significant progress was also made in delivering on
programs financed by the Bank Group. An additional area the core mandate of development research. Some of theof focus was the development of a new Procurement Policy knowledge products generated during the year included the
Framework, approved by the Boards of Directors in October following:
2015. Developed after wide consultations with the relevant
stakeholders, the framework aims to support AfDB-financed(i)	Key flagship publications: 2014 Bank Group
operations and enhance procurement systems in the RMCs.
Annual Report; 2015 African Development Report;
2015 African Economic Outlook; 2015 Africa
During 2015, the AfDB’s Financial Management arm continued
Competitiveness Report, and five editions of theto monitor compliance with safeguards related to the prudent
African Development Review, including a special
financial management of projects and programs supported byissue on Aid and Employment.
the Bank. This included the framing and revision of financial
management policies, guidelines, and rules to support the(ii)	Other publications: These included 34 economic
financial services function in the Bank. The AfDB’s emphasis
briefs; 12 journal articles published in internationallyon prompt submission of project audit reports resulted in an
reputed journals by staff; a book titled “Urbanization
improvement in the quality and timeliness of these reports.
and Socio-economic Development in Africa:
Challenges and Opportunities”; four chapters by staff
A number of fiduciary clinics were conducted in the RMCs,
in books published; and 20 working papers on issues
in collaboration with the Bank Group’s African Development
relevant to Africa’s socio-economic development.
Institute (EADI), to build capacity for procurement and financial
Two books on the low level of industrialization in
management. The training emphasized the achievement ofAfrica were also published through the “Learning tovalue for money for Bank-funded projects, and fitness-forCompete (L2C)” project, a collaboration between the
purpose arrangements.
Bank Group’s Development Research Department,
the Brookings Institution, and UNU-WIDER. The
L2C project, which addressed the theme “Why little
4.7 The Bank as a Knowledge Broker
industrialization in Africa?”, resulted in the publicationof the two books by Brookings Publishing House
In line with its Knowledge Management Policy, the Bankand Oxford University Press.
Group’s Knowledge Program in 2015 was implemented
through production and dissemination of development(iii)	Workshops and Conferences: 45 presentations
research products, statistical publications, and training andwere made to external stakeholders, including policy
capacity-building activities. The knowledge products included
makers in Africa, development partners, investors
flagship publications, books, working papers, data banks,interested in Africa’s development prospects, think
training and capacity building, and policy advisory services
tanks, and research centers working on issues
for the benefit of the RMCs.
relevant to Africa. Within the Bank, more than 30
research seminars were organized, showcasing
4.7.1 Development Research Activities
research work by Bank staff across different
During the year, the Bank Group’s research activities aimed
organizational units. High-level guest speakers wereat delivering high-quality knowledge products that reflect thealso invited to address key issues that were relevant

80Annual Report 2015

Chapter 4

to Africa’s development. Bank researchers and To strengthen development effectiveness, projects consideredexperts also attended other fora and international for financing by the Bank are reviewed and assessed from theconferences, including the UNU-WIDER Annual perspectives of additionality and development outcomes. In
Conference in Helsinki; the African Econometrics 2015, the Board revised and endorsed the Additionality andSociety Conference in Lusaka, and the African Development Outcomes Assessment (ADOA) Framework for
Economic Conference (AEC) in Kinshasa. These impact assessments of the Bank’s private sector projects.
events brought together researchers, policy A total of 62 ADOA notes were issued for some 40 private
makers, and development practitioners, including sector operations, representing an achievement of 103 percent
Africans in the Diaspora, to exchange knowledge against the 2015 target. This performance reflects the growthand experiences on different aspects of Africa’s in the number of operations in the active portfolio resulting, in
Renaissance. For the first time, the African Economic part, from the increased support to financial intermediaries in
Outlook was disseminated in three Nordic countries— the RMCs. The current ADOA framework was used to review 14
Norway, Finland, and Denmark—at the initiative of regional operations presented for the 2015 prioritization cycle.
the Authorities in these countries. In general, thedifferent events held in 2015 also provided Bank 4.7.2 Statistical Knowledge
staff with the opportunity to present their ongoing Products and Activities
research work and flagship publications, thereby Statistical capacity and knowledge work by the Bank Grouphas grown in focus and relevance in recent years, with somefurthering the Bank’s information management.
MDBs using it to benchmark their own activities.
The Bank Group also launched another path-breaking research
initiative on Structural Transformation of African Agriculture In September 2015, the Boards approved UA 10 million
and Rural Spaces (STAARS). This multi-year research project for financing the Multinational Statistical Capacity Building
is being implemented in collaboration with the African Program for Managing for Development Results (SCB-MfR)
Economic Research Consortium (AERC), Cornell University, Phase 4.2, covering the period 2015-2016. The program’s
the Partnership for Economic Policy (PEP), and the World aim is to provide technical assistance and financial support
Bank. Further, the Bank Group is finalizing the publication to all the RMCs and regional organizations at the nationalof findings from a study on “Housing Market Dynamics in and regional level. Its objective is to provide for continued
Africa”, jointly undertaken with UN-Habitat. The output from improvement in the quality, timeliness, and reliability ofthis study will shape the Bank’s strategy and interventions in statistics to support more effective economic management,
Africa’s housing sector.
inclusive growth monitoring, better-informed policy making,and design of programs and projects in the RMCs.
A number of research initiatives focusing on different aspectsof the TYS have been launched or concluded. These Some of the statistical knowledge products produced and/or
include: (i) an analysis of the electricity markets in Africa; managed by the AfDB in 2015 include the following:(ii) the operationalization of inclusive growth and financial●● The Africa Information Highway (AIH). The AIH wasinclusion; (iii) the assessment of the impact of centralized cash
registers on tax evasion, and a randomized experiment on thecreated by the AfDB in 2012 to increase the collection,
impact of detection probability on the behavior of tax payers,
management and dissemination of quality statistics on
both in Ethiopia; (iv) a study on the impact of communityAfrica, in response to calls by various stakeholders to
based health insurance for the utilization of modern healthimprove the availability and quality of statistics acrosscare services by self-employed people in Rwanda; andthe continent. The AIH has since enhanced data(v) revisiting development planning for Africa’s structural
management and dissemination in Africa significantly
transformation, and leveraging macroeconomic modeling andand in 2015 was recognized by the OECD-Paris21
debt sustainability analysis for policy dialogue and capacity(Partnership in Statistics for Development in the 21stbuilding, among others. The studies on Ethiopia and Rwanda
Century) as one of the most-innovative data initiatives inlay the groundwork for the replication of the impact evaluation
the world for informing the UN Sustainable Development(IE) methodologies and the use of the technical expertise
Goals (SDGs). Furthermore, the Board of the International
gained in other parts of the continent.
Monetary Fund (IMF) decided that they will rely on

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Institutional Reforms, Effectiveness, and Corporate Management

other issues, aims at estimating the investment needs
for Africa’s power sector. In 2010, the Bank took overleadership of this program from the World Bank andhas developed the Africa Infrastructure Knowledge
Program, based on the Africa Infrastructure Country
Diagnostic (AICD) methodology—a framework used
to maintain a database of infrastructure indicators. In
the energy sector, the purpose of the approach is to
update previous data assessments on performance,
and institutional and fiscal spending, while supporting
the AICD’s view of providing a more-inclusive energy
dialogue. The results from individual runs will be madeaccessible through the AfDB’s AIH.

the AfDB’s AIH for implementing the new enhanced
General Data Dissemination System (e-GDDS), which
was approved during the year. The IMF and the AfDB
will jointly implement the e-GDDS in all the RMCs using
the AIH infrastructure. In 2015, Botswana became thefirst country in the world to implement the IMF’s e-GDDS
using the AIH as the core data platform. The IMF alsoplans to use the AfDB AIH system as best practice tobe replicated in other regions of the world.
●●

●●

●●

82

The International Comparison Program for Africa (ICPAfrica). This is part of the global program to generate
Purchasing Power Parity (PPP) statistics to facilitatecross-country comparison of Gross Domestic Productand related economic aggregates. Managed by the
AfDB, Africa’s program is the largest component of thisglobal initiative. The PPP statistics were used in 2015
for poverty measurement in the context of the MDGs
and the SDGs.
The Action Plan to Improve Food and Agricultural Statis­
tics in Africa (2011-2015). This program seeks to improveavailability and quality of core data and indicators to inform
agricultural policies in the RMCs. The Africa Action Plan,
designed by the AfDB, the UN Economic Commission for
Africa (ECA), the UN Food and Agriculture Organization(FAO), and the African Union Commission (AUC), is partof the Global Strategy for Improving Agricultural and
Rural Statistics that was endorsed in February 2010by the United Nations Statistical Commission. In July
2013, the Boards of Directors approved the AfDB’sparticipation in the program as lead agency for the Action
Plan, which is partly funded by the EU, the DfID, andthe Bill and Melinda Gates Foundation. Since 2011, a
total of 48 RMCs have benefited from the initiative andare being assisted in developing Strategic Plans for
Agriculture and Rural Statistics (SPARS), intended tohelp mobilize and harness resources to generate thestatistics necessary to inform national development
policies. One of the components of this program is thefarm registration system, which has been rolled out infour RMCs. This system is expected to improve farm
productivity, including the selection of suitable crops forgiven types of soil and rainfall patterns.
Estimating the Investment Needs for the Power Sectorin Africa. In 2015, the AfDB continued to manage theenergy sector diagnostic studies program that, among

4.7.3 Training, Other Knowledge Management
and Capacity Development Activities
In 2015, a review of the Bank Group’s training, capacitybuilding, and knowledge-sharing activities was undertakenwith a view to improving the ability of the RMCs to respondto development challenges and strengthen their capacity forpolicy dialogue on key development issues, while enhancing
the development effectiveness of Bank-funded operations.
Some of the activities undertaken during the year and therelated achievements are outlined below.
●●●●

2015 Annual Meetings. The Permanent Committee
for Annual Meetings (PECAM) organized the statutory
Annual Meetings of the Boards of Governors under thetheme: “Africa and the New Global Landscape”. PECAM
also organized five “High-Level Events” on topical issues(such as climate change, Our Bank at 50), and an
additional 30 “Knowledge Events” that provided a forum
for policy makers and thought leaders to interact andexchange experiences on key development opportunities
and challenges on the continent.
Seminars and Workshops. Under the Joint Partnershipfor Africa (JPA) program, seven seminars on various
aspects of macroeconomic forecasting and modelingwere conducted jointly by EADI and the IMF. Theseseminars provided a forum for participants to exchange
country experiences and challenges in different areas ofmacroeconomic policy management. EADI also partneredwith the Bank’s other functional units for work on different
capacity-building activities, including 19 fiduciary clinic
workshops. Two seminars focusing on Procurement,
Financial Management and Disbursements were held,with the aim of building capacity for the definition ofAnnual Report 2015

robust and focused country programs through wellarticulated Country Strategy Papers (CSPs). Four otherworkshops were also organized in the RMCs on a variety
of issues, including infrastructure, governance, fragility,and project performance. In addition, EADI organized
three sessions on SME policies during a special training
workshop held in Seoul, Korea. This was designed topromote SMEs and develop capacity in the RMCs.

Chapter 4

Audit. To ensure a systematic and disciplined approach to theevaluation and improvement of risk management, control andgovernance processes of Bank Group activities, the Office of
the Auditor General (OAGL) developed a Long-Term Coverage
Plan (LTCP) 2015-2019. This aims at rationalizing allocation ofaudit resources by concentrating them on the high businessrisk and medium business risk areas of the Bank.

During the year, the OAGL conducted audits of 17 high-, ten
Special Projects. The AfDB approved UA 5 million medium-, and six low-risk activities. The high-risk areas include
financing to the African Economic Research Consortium the Board, the Presidency, the Finance, and the Corporate(AERC). The funds will be used for graduate training, Services Complexes. Areas deemed to be of medium risk include
enhancing the quality of research, increasing the the Treasury, Financial Control, Financial Risk Management, andcapacity of academic institutions under the AERC’s the Information, Communication, and Technology Services. Alltraining program, and enhancing communication and the other areas are classified in the low-risk category.
dissemination of its research activities. Support to the
AERC represents a viable partnership between the The OAGL also undertook six sovereign country portfolioAfDB and an external stakeholder involved in capacity related assignments in the RMCs. These country portfolio
development and generation of knowledge-based audits are aimed at allowing the Bank to form an overall
regional public goods. A PCR was also finalized following opinion as to the adequacy and effectiveness of the systems ofa project review of the Bank’s support to the African controls for Bank-financed projects. The Office also conducted
Capacity Building Foundation (ACBF). Among the lessons risk assessments in five FOs.
learned from the PCR is that the AfDB member countries
are showing increased interest in hands-on, country- Staff Integrity and Ethics. In 2015, the Staff Integrity andspecific training and technical support. In addition, there Ethics Office attended to all cases of allegations on staff
is continuous demand for effective macroeconomic, conduct reported, within three months at most. In all cases,
financial governance and accountability, and debt- Management’s response and action was swift, sending amanagement capacity in the RMCs. Accordingly, ACBF powerful message within the AfDB of zero tolerance for any
will continue to respond to the needs and priorities of unethical acts or misconduct. The investigations are now
African countries in these areas.
guided by an Internal Investigation Manual and a computerized
Case Management System. This has contributed to enhanced
The Bank Group continued to provide support to its e-Institute. management and monitoring of staff investigations. In addition,
The e-Institute is an online knowledge portal developed within a new reporting mechanism, the “speak up helpline number”,
the Bank and comprises a Learning and Course-Management accessible at no cost from all telephone operators in Côte
System. It provides a continent-wide distance and e-learning d’Ivoire, has been established to help Bank staff and interested
platform geared towards building a culture of continuous entities to report alleged misconduct. An awareness campaign
learning and helping to sustain knowledge exchange networks on misconduct for all FOs was also launched in the last quarter
among course participants.
of 2015, with completion expected in 2016.
●●

The Staff Integrity and Ethics Office also undertook a Bank4.8 Intermediate Recoursewide Staff Survey, and a proposed new Code of Ethics
was submitted to management for consideration. The
Mechanisms and Administrative Tribunal
proposed new Code takes into account all the changes
The intermediate recourse mechanism units of the AfDB and developments that have occurred in the Bank since thecontinued to perform their roles as agencies of corporate existing Code of Ethics was adopted in 1999.
restraint and responsibility in resolving conflicts and disputes, andimproving working relations among staff and management. This Ombudsman. During 2015, the Office of the Ombudsman
helped to enhance the effectiveness of Bank Group operations. received a number of grievance reports ranging from abuse

83Chapter 4

Institutional Reforms, Effectiveness, and Corporate Managementof authority to concerns with career development. As at endDecember 2015, the Office had handled a total of 64 cases ofwhich 28 percent were brought to closure within four weeks
of complaint. Of the 64 cases, 21 cases (33 percent) wererelated to career development and job security.

The Sanctions Appeals Board (SAB). The SAB is theappeals body of the Bank Group’s new sanctions system. It
is mandated to sanction companies that have committed actsof corruption, fraud and/or collusion during procurement underBank-financed projects and programs, following a decisionof the Sanctions Commissioner (SANO) and investigation by
the Integrity and Anti-Corruption Department (IACD).

Upon the return to Headquarters, the Office held various
coaching and empowerment sessions on issues ofconfidentiality in order to facilitate the settling in of staff. As The first two Appeal Cases were filed for consideration
part of the Outreach and Needs-based Mission, the Office with the SAB in August 2015. Furthermore, the Secretariat
undertook a field mission to the Senegal Field Office (SNFO) established fruitful collaboration and built strong network
to attend to a number of staff grievances. Most of the issues relationships with counterparts in other MDBs, resulting inraised were resolved and settlements made.
valuable experience sharing. These were organized throughquarterly conference calls and annual meetings held at the
Integrity and Anti-Corruption (IACD). The Bank strengthened Headquarters of each institution on a rotational basis. In thatits integrity and preventive strategy in 2015 while building on context, SAB was invited in May 2015 by the Inter-American
the lessons learned through its investigations in 2014. In Development Bank (IADB) to present and discuss the Bank
collaboration with Interpol and the Commonwealth Africa Group’s newly established Sanctions Systems. The SAB
Anti-Corruption Centre, the Bank organized Asset Recovery officials also participated in a panel discussion covering thetraining for participants from ten National Anti-Corruption issue of MDBs’ sanctions systems during the 33rd Cambridge
Agencies from the East African Association of Anti-Corruption International Symposium on Economic Crime, organized in
Authorities (EAAACA) and the Southern African Forum Against Cambridge (UK) in September 2015, as well as in the Annual
Corruption (SAFAC). Further, the Bank engaged CSOs in Meeting of MDBs in October 2015 in Geneva.
Western Africa and joined the United Nations Office on Drugs
and Crime to train civil society and government agencies in Compliance Review and Mediation (CRM). The CRM Unit
Africa on the United Nations Convention Against Corruption administers the Bank Group’s Independent Review Mechanism(UNCAC).
(IRM), which receives complaints from people who are, or are
likely to be, adversely affected by AfDB-financed projects.
The Bank continues to receive complaints through its The IRM registered three new complaints in 2015 while theconfidential hotlines and referrals from various Bank monitoring of five was ongoing. Several lessons emerged
departments. As at end-December 2015, 66 cases were from the handling of these complaints. First, there is a needreceived and 38 of these went into the investigations process for comprehensive environmental and social-impact studies tofollowing initial reviews for credibility, verifiability, and materiality. align the Bank’s operations with its vision for inclusive growth,particularly when projects are developed in highly dense urban
Investigations during 2015 led to the closure of 19 cases, and areas and occupied by vulnerable and poor people. Second,
four reports of “Findings of Sanctionable Practices” on entities it is necessary to streamline compensation processes throughfound to have engaged in these were submitted for the Sanction applying the AfDB policies in concurrence with respective
Commissioner’s determination. Three entities concluded national laws, careful consideration of resettlement options,
Negotiated Settlement Agreements with the Bank to resolve and community engagement and consultation.
allegations of sanctionable practices in Bank-financed projects.
These settlements resulted in debarments for the entities and In 2015 also marked the conclusion of the second review of
the imposition of fines totaling over USD 13.6 million, which the IRM that led to the adoption by the Boards of a revised IRM
will be used exclusively to finance integrity and anti-corruption Resolution together with Operating Rules and Procedures. The
programs and activities in the RMCs. Four debarred companies Rules are now characterized by: (i) simplified requirements forare undergoing implementation of an integrity compliance accessing the IRM; (ii) removal of the earlier limitation on the IRM
program. The program guarantees that companies strengthen in handling complaints related to private sector projects; andtheir integrity systems to ensure clean business practices before (iii) expansion of the IRM mandate to include an advisory function
they can bid for AfDB-financed projects.
in addition to its problem-solving and compliance-review mandate.

84

Annual Report 2015

Chapter 4

Administrative Tribunal. As an autonomous body, the Bank’s
Administrative Tribunal’s decisions are binding, final andwithout appeal. The Tribunal continued to perform its functionof settling disputes related to the AfDB staff. The Tribunal
comprises six judges, three of whom are needed to form aquorum to hear a case. The Statute of the Tribunal provides
for the independence of the Judges. In June 2015, the 25th
Judicial Session of the Tribunal took place in Abidjan. During
the Session, one Application filed in 2014 was heard andconcluded. A total of six new Applications on disputes are
pending for the next Judicial Session in April 2016.

4: Performance Management; and Lever 5: Reward andRecognition. During 2015, aspects of Levers 2, 3 and 4 of
the HRAP were implemented and are outlined below.

The AfDB Human Resources Action Plan (HRAP) was launchedin 2013 and covers the human resources element of the
Bank Group's TYS. The HRAP was to be implemented in
two phases, with Phase 1 starting from 2013 to end of 2014,
and Phase 2 from 2015 to end-2017. In February 2015, a
retreat was held to review the scope of the HRAP and its five
focus areas referred to as the HRAP strategic levers, namely
Lever 1: Strategic Staff Planning and Workforce Structure;
Lever 2: Selection, Onboarding, and Staff Retention; Lever
3: Talent Management, Learning, and Development; Lever

Lever 4: Performance Management. In the context of Lever 4,
implementation of the HRAP included a second relatively
lighter Staff Survey conducted in April 2015, following the one
undertaken in 2013. The results of this new survey indicateda slight decrease in “staff engagement” with the 2015 staff
engagement index at 64 percent compared to the 2013
survey of staff engagement at 66 percent. To address thischallenge and motivate staff members to ensure that they are
fully engaged, three town hall meetings were held, including
two with the new President. The aim was for him to share with

Lever 2: Selection, Onboarding and Staff Retention. The
implementation of this lever of the HRAP involved therecruitment for the 2015 Young Professionals (YP) Program
which, for the first time, was undertaken through an in-housepilot Assessment Center. Selected staff from various Complexes
were trained at the Center on competency-based interview andassessment skills. They were taken through a facilitated session
for the selection of successful candidates who would be placed
The Secretariat of the Administrative Tribunal conducted its in a pipeline for selection by the Complexes that requested
outreach and training programs in Uganda and Tanzania new YPs. The pilot Assessment Center was rolled out in thein March 2015, in collaboration with partners in the Staff third quarter of 2015 and will continue to be strengthened
Council (SCO) and the Staff Appeals Committee (APCU). and improved, based on feedback received. Increased efforts
The second part of the same program was conducted were made to recruit a more diverse YP workforce, encouragein the Angola, Rwanda, and Malawi Field Offices during female applicants and ensure their retention.
October and November 2015. The program was organized todialogue, share, enlighten, and inform participants about the Lever 3: Talent Management and Learning and Development.
AfDB’s recourse mechanisms, including its internal rules and The HRAP Lever 3 implementation took the form of enhanced
regulations, as well as formal and informal avenues for resolving staff learning through the placement of more products on
disputes among staff, and between staff and management. the AfDB electronic portal, the Knowledge and Learning
The reciprocal duties, obligations, and responsibilities of staff Management Services (KLMS). The KLMS portal was
towards the Bank were also covered. Ethical issues and Bank upgraded with more learning menus and offerings madepolicies on whistle-blowing, harassment, corruption, and available to all staff, no matter their location, with real-time
conduct befitting staff status as international civil servants, access to all learning and training opportunities. To facilitate thiswere discussed and appropriate feedback obtained.
process, the Bank set up collaborative arrangements with two
external partners: (i) the Korean Development Institute Masters
Studies program; and (ii) the YP Post-Graduate Certification
4.9 Deployment of Human Resources
Program with Bradford University. In addition, several in-house
tailor-made training courses were offered to upgrade the
The Human Resources Action Plan is the business plan for skills of staff from various departments, namely, African
the management of the Bank’s human resources, focused on Development Institute (EADI), Procurement and Fiduciary
establishing an attractive culture of professional satisfaction Services Department (ORPF), Private Sector Department
and personal advancement. Aspects of the Action Plan were (OPSD), Results and Quality Assurance Department (ORQR),
implemented during 2015.
and Transition Support Department (ORTS).

85

Chapter 4

Institutional Reforms, Effectiveness, and Corporate Management

staff and Management the 2015 Staff Survey results. These The breakdown also shows that, of the 587 general service
town hall meetings also served as fora to continue to inform staff, 395 were at Headquarters, of which 252 (63.8 percent)staff on the progress of the return to Headquarters, and share were female. There were 192 general service staff in the FOs,insights on the rationale for the proposed vision of the new of which 84 (43.8 percent) were female.
High 5 priorities within the context of the TYS.
In relation to the institutional key performance indicators (KPIs),
Staffing Ratio by Country and Gender. As at end-December female managerial staff (including three at Executive Level
2015, the total AfDB staffing stood at 1,841 with 1,168 males (EL)) totaled 39, representing 29.3 percent of 133 managerial(63.4 percent) and 673 females (36.6 percent), compared staff, against a target of 30 percent. Also, of the 720 total
with a total staff of 1,932 at end-December 2014. The total professional staff, female staff numbered 220, representing
staff at end-December 2015 is distributed as follows: 1,215 30.6 percent of the total and above the 30 percent target.
professional staff, of which 324 (26.7 percent) female, and For details, see Table 4.3 below on Staffing and Employment
587 general service staff, of which 336 (57.2 percent) female. Data by Country, as at end-December 2015.

86

Annual Report 2015

Chapter 4

Table 4.3

Staffing and Employment Data by Country (Management, Professional, and General Services Staff)
as at 31 December 2015

Regional Member Countries
Algeria
AngolaBenin
Botswana
Burkina Faso
BurundiCameroon
Cabo VerdeCentral African Republic
Chad
Comoros
Congo
Congo, Democratic Republic ofCôte d’Ivoire
Djibouti
Egypt
Equatorial Guinea
Eritrea
Ethiopia
Gabon
Gambia, The
Ghana
GuineaGuinea-Bissau
Kenya
LesothoLiberia
Libya
Madagascar
MalawiMali
Mauritania
Mauritius
MoroccoMozambique
Namibia
Niger
Nigeria
RwandaSâo Tomé & Príncipe
Senegal
Seychelles
Sierra Leone
SomaliaSouth Africa
South Sudan
Sudan
Swaziland
Tanzania
Togo
Tunisia
UgandaZambiaZimbabwe
TOTAL REGIONAL

VP/EL3
1
1
2
1
1
1
1
8

Dir.
1
1
3
1
1
2
3
1
1
1
1
1
2
2
1
1
3
2
1
29

Management and Professional Staff
At post as at 31 December 2015
Field Office Based Staff
International
FO FO Intnl.
Field
ResRep
PL Staff Office LP
Man. Other PL
5
1
3
1
2
3
25
5
4
4
1
37
3
5
1
8
1
3
5
30
3
4
8
1
1
1
2
1
2
9
1
2
4
2
9
1
4
1
7
6
76
5
1
4
1
9
1
7
1
3
10
10
11
5
2
4
2
12
1
2
3
21
9
8
8
4
3
1
4
30
1
9
11
3
1
4
3
8
5
1
10
1
5
7
4
15
2
5
8
7
2
2
5
1
7
1
7
1
6
2
2
7
1
3
7
28
5
7
2
18
3
5
3
30
1
4
8
8
1
2
8
1
1
10
3
4
2
1
2
2
3
1
1
11
3
9
1
5
2
2
29
1
3
3
13
1
14
8
5
9
1
6
6
1
16
1
4
2
63
563
22
134
176

Other Bank Staff
at Post
GS Staff
Total
EL & PL
& LP
9
3
33
9
47
13
54
3
5
16
2
10
14
89
6
18
1
34
11
20
44
13
4
55
4
7
13
24
35
12
6
17
7
2
13
50
28
48
19
1
19
2
9
1
24
10
34
43
29
25
995

% of
total
PL
0.7%
0.2%
2.7%
0.7%
3.9%
1.1%
4.4%
0.2%
0.4%
1.3%
0.2%
0.8%
1.2%
7.3%
0.5%
1.5%
0.0%
0.1%
2.8%
0.9%
1.6%
3.6%
1.1%
0.3%
4.5%
0.3%
0.6%
0.0%
1.1%
2.0%
2.9%
1.0%
0.5%
1.4%
0.6%
0.2%
1.1%
4.1%
2.3%
0.0%
4.0%
0.0%
1.6%
0.1%
1.6%
0.2%
0.7%
0.1%
2.0%
0.8%
2.8%
3.5%
2.4%
2.1%
81.9%

HQ
Reg
GS
5
18
19
1
9
1
7
3
105
1
2
2
23
6
10
1
1
5
1
3
2
22
2
9
7
3
6
106
2
1
383

FO
Local
GS
4
5
7
4
9
4
7
7
6
7
6
6
2
7
5
8
6
8
5
8
8
7
1
8
5
6
3
3
5
5
6
5
6
189

SABD
Advisors
to EDs
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
25

87

Chapter 4

Institutional Reforms, Effectiveness, and Corporate Management

Table 4.3 — Continued

Staffing and Employment Data by Country (Management, Professional, and General Services Staff)
as at 31 December 2015

Non-Regional Member Countries
Argentina
Austria
BelgiumBrazilCanadaChina
Denmark
FinlandFranceGermany
India
Italy
Japan
Korea
KuwaitNetherlands
NorwayPortugal
Saudi Arabia
Spain
SwedenSwitzerland
TurkeyUnited Kingdom
United States of America
TOTAL NON-REGIONALS

VP/EL3
1
1
2

Dir.
1
2
2
1
2
3
11

GRAND TOTAL
Number of Female Staff per Category
Percentage of Female Staff per Category

10
3
30.0%

40
11
27.5%

Source: AfDB Human Resources Management Department.
* Abbreviations:EL:
Executive Level
PL:
Professional Level
GS:
General Service
SABD: Advisors to Boards of Directors
HQ:
HeadquartersFO:
Field Offices

88Management and Professional Staff
At post as at 31 December 2015
Field Office Based Staff
International
FO FO Intnl.
Field
ResRep
PL Staff Office LP
Man. Other PL
1
4
1
2
29
1
2
5
2
1
1
7
45
2
7
5
2
9
3
5
6
1
2
1
1
3
1
2
1
1
1
1
1
3
1
3
8
5
26
5
20
157
4
26
83
25
30.1%

720
220
30.6%

26
8
30.8%

160
26
16.3%

176
31
17.6%

Other Bank Staff
at Post
GS Staff
Total
EL & PL
& LP
6
35
5
4
1
63
7
15
5
8
3
4
1
3
2
2
4
13
39
220

% of
total
PL
0.0%
0.0%
0.5%
0.0%
2.9%
0.4%
0.3%
0.1%
5.2%
0.6%
1.2%
0.4%
0.7%
0.2%
0.0%
0.3%
0.1%
0.2%
0.0%
0.2%
0.2%
0.3%
0.0%
1.1%
3.2%
18.1%

HQ
Reg
GS
1
8
1
2
12

FO
Local
GS
2
1
3

SABD
Advisors
to EDs
1
1
1
1
1
1
1
1
1
1
1
1
2
14

1,215
324
27%

100.0%

395
252
64%

192
84
44%

39
13
33.3%

Executive Directors’ Mission to Mozambique.

Chapter 5
Oversight
Functions andStrategic
Responsibilitiesof the Boards

Chapter 5

Oversight Functions and Strategic Responsibilities of the Boards

Chapter 5
Shareholder representation and oversight is ensured through the Boards of Governors and the Boards of Directors.
This chapter highlights how the oversight functions of the Boards were discharged in 2015, including key decisions
made and strategic directions provided to the Bank Group. All the activities reported in the previous chapters were
undertaken by Management under the guidance of the Boards.

5.1 The Roles and Highlightsof Major Activities of theBoards of Governors
The highest decision-making organs of the ADB (the Bank) andthe ADF (the Fund) are the respective Boards of Governors.
Each member country is represented on these Boards by
a Governor, usually a Minister of Finance or Planning, or aCentral Bank Governor, or a duly designated Alternate. Thissection outlines their roles and major activities in 2015.

sub-themes of “Climate Change: The Last Mile to Paris”, and“Financing Africa’s Transformation: From Billions to Trillions”.
The Annual Meetings were held in conjunction with the African
Development Bank’s marking of its 50th Anniversary.

The Governors’ Dialogue presented an opportunity for theGovernors to discuss with Bank Group Management theBank’s experience in implementing the Ten-Year Strategy(TYS), the return to the Headquarters in Abidjan, and othermajor developments on the continent. The Governors notedwith satisfaction that the African Development Bank Group
5.1.1 The 2015 Annual Meetings
had exceeded its lending targets for 2014, in spite of the
As mandated by the respective constitutive instruments, the challenges associated with the return to Headquarters. This
Boards of Governors of the Bank and the Fund meet once was a clear demonstration of the Institution’s resilience. They
every year at the Annual Meetings. During these meetings, commended the Boards of Directors, Management, andthey engage in dialogue with Bank Group Management on staff for this accomplishment. They also applauded the Bank
the financial health and performance of operations undertaken Group’s quick response to the Ebola crisis in parts of Westernby the Bank Group. The Boards of Governors also approve Africa, in particular the rapid mobilization of emergency funding
major policies and adopt resolutions on other key decisions to support treatment and stop the spread of the disease. The
and conclusions of the Annual Meetings. The Governors Governors acknowledged the joint efforts of the international
execute their mandate with the support of the following community in the region. They also underlined the importance
five subsidiary organs: (i) the Bureau; (ii) the Joint Steering of continuing coordinated support to contain the disease. They
Committee; (iii) the Steering Committee on the Election of stressed the importance of mitigating its direct and long-term
the President of the Bank; (iv) the Standing Committee on economic impacts, and of strengthening health systems
the Conditions of Service of Elected Officers; and (v) the and building capacity for interventions in case of future or
Governors’ Consultative Committee.
similar outbreaks. The Governors recommended a continued
focus on poverty reduction, inclusive, and sustainable growth,
The 50th Annual Meeting of the Boards of Governors of the internal and external human capital development, increased
African Development Bank and the 41st Annual Meeting of cooperation with regional Development Finance Institutions
the African Development Fund were held in Abidjan, Côte (DFI), and support for the commercialization of the agricultured’Ivoire, from 25 to 29 May 2015. A number of events and sector. The Governors noted that a continued emphasis on
activities were organized during this period, under the theme the infrastructure sector by the Bank Group, especially energy,“Africa and the New Global Landscape”. They included would help address the crippling energy crises in several
the Governors’ Dialogue and two high-level events on the African countries.

92

Annual Report 2015

Further, in line with the Financing for Development agenda,
the Governors called for increased innovation to crowd inprivate finance, as well as greater support for efforts aimed
at improving domestic resource mobilization and curbing illicit
financial flows. They urged the AfDB to continue investing inprograms and projects that promote climate resilience and lowcarbon development in Africa, and to channel climate-change
financing resources to the RMCs. In this regard, the Governors
commended the AfDB for supporting the active participationof African negotiators and other stakeholders in the design of
the New Climate Change Agreement adopted for COP21. The
Governors expressed strong support for AfDB’s participation in
the proposed innovative sovereign exposure exchange among
selected Multilateral Development Banks (MDBs), and urged
a speedy conclusion of the transaction. Agreements on theimplementation of the exposure exchange were concluded in
December 2015 and signed by all the MDBs involved.

Chapter 5

sector operations from USD 200 million to USD 2 billion perannum; (iv) the renewed focus on the economic integration of
the continent’s physical infrastructure; (v) the enhancement of
the Bank Group’s role in helping countries in fragile situations
achieve political stability and, additionally, sustained andinclusive economic development; (vi) the maintenance of
the Bank’s “triple A” rating, despite the global financial crisis;(vii) the maintenance of a strong field presence by operatingin 38 countries, where 50 percent of the AfDB’s portfolio wasmanaged; and (viii) the promotion of inclusion, notably throughthe appointment of a Special Envoy on Gender to champion
the Bank’s agenda on gender equality within the Institution
and through the mainstreaming of gender in its projects andprograms in the RMCs.

5.1.2 Election of a New Bank Group President
The highlight of the 2015 Annual Meetings was the electionof Dr. Akinwumi Ayodeji Adesina by the Board of Governors
as the eighth President of the Bank Group.

In exercising their statutory duties, the Boards of Governors
adopted resolutions pertaining to the following: (i) Updated
Revised Procedure for the Designation of the Members of Dr. Adesina, a Nigerian national, assumed office on
the Bureau and the Joint Steering Committee of the Board of 1 September 2015 after taking the oath of office administered
Governors; (ii) By-Election of Executive Directors of the African by the AfDB Governor and Minister of Finance for Zambia, theDevelopment Bank; (iii) Updated Rules for the Designation Hon. Alexander Chikwanda, in his capacity as Chairpersonof Members of the Standing Committee of the Boards of of the Board of Governors.
Governors on the Conditions of Service of Elected Officers;(iv) The Annual Report and Audited Financial Statements for In his inaugural speech, the new Bank Group President
the Financial Year ended 31 December 2014; (v) Allocation and presented his five-point vision, the High 5s, to drive theDistribution of Allocable Income of the African Development implementation of the Bank’s TYS: Light Up and Power Africa,
Bank for the Financial Year-Ended 31 December 2014; Feed Africa, Integrate Africa, Industrialize Africa, and Improve(vi) Distribution of Part of the Income of the Nigeria Trust Fund the Quality of Life for the People of Africa.
for the Financial Year-Ended 31 December 2014; (vii) Annual
Report and Audited Special Purpose Financial Statements for 5.1.3 The Bank’s 50th Anniversary Celebrations
the Financial Year-Ended 31 December 2014; (viii) Election of Under the patronage of His Excellency Alassane Dramane
the President of the African Development Bank; and (ix) Vote Ouattara, President of Côte d’Ivoire, the Bank’s host country,of Thanks to the outgoing Bank Group President, Dr. Donald two major events were held on the sidelines of the 2015
Kaberuka, for his eminent services to the Bank Group.
Annual Meetings to mark its 50th anniversary. These meetings
deliberated on the topics “A Single Market for Africa in our
The Governors paid glowing tribute to Dr. Kaberuka for his Lifetime” and “Our Bank at 50”.
inspiring and visionary leadership in successfully overseeing
the major redirection of the Bank Group’s strategy over his The Governors commended the Bank’s founders for theirten-year tenure. In particular, the Governors commended the foresight, and the past and present Boards of Directors andvarious accomplishments in the intervening period, including: staff for their immense contributions to the growth and maturity(i) the successful mobilization of USD 25 billion in the preceding of the Institution. They acknowledged the Bank Group’s status as
three replenishments of resources of the African Development Africa’s premier development financial institution. They expressed
Fund and the historical tripling of the Bank’s Capital Stock; confidence in the Bank Group’s ability to maintain its leading role(ii) the establishment of the Africa Growing Together Fund and in addressing Africa’s developmental issues in the post-2015
Africa50 initiatives; (iii) the scaling up of the Bank’s private era, its transformative agenda and growing financing activities.

93Chapter 5

Oversight Functions and Strategic Responsibilities of the Boards

5.2 Roles of the Boards of Directors
and Highlights of their Major Activities

Revisions to the terms of reference (TORs) of theStanding Committees of the Board. The Board approved
comprehensive revisions to the TORs of its Standing
The day-to-day decision-making organs of the Bank Group Committees to: (i) better align the committees to the structure
are the resident Boards of Directors of the Bank and the Fund, and operations of the Bank, which had significantly evolved
which act on delegated authority from the respective Boards and expanded since the TORs were last reviewed in 1992;
of Governors. This section provides an overview of the roles (ii) clarify the role of the committees as purely advisory organs
and highlights of the major activities undertaken in 2015.
whose conclusions and recommendations were ultimately to besubmitted to the Board for decision-making, where necessary;
5.2.1 Working Modalities and Supportingand (iii) streamline the modus operandi of each committee.

Committees of the Boards of Directors

In 2015, the work of the Boards of Directors was supported by Streamlining of procedures and processes for operations
seven standing committees: (i) the Committee on Administrative approval. Following extensive deliberations, the Boards adopted
Affairs and Human Resource Policy Issues (CAHR); (ii) the reforms to simplify the processes and procedures for approval
Audit and Finance Committee (AUFI); (iii) the Committee on of Bank Group operations by the Boards of Directors (see Box
Operations and Development Effectiveness (CODE); (iv) the 5.1 below). A review would be conducted by Management after
Committee on Administrative Matters Concerning the Board 12 months to take stock of the lessons learned and, if necessary,of Directors (AMBD); (v) the Committee of the Whole on the effect improvements. The reforms became necessary in order
Budget (CWHOLE); (vi) the Committee for the Enforcement of to: (i) better manage the significant increase in the work program
the Code of Conduct for Executive Directors (Ethics Committee); of the Boards; (ii) strengthen rigor in the review processes;and (vii) the Committee for the Preparation of the Bank Group (iii) increase efficiency by ensuring that more of the Boards’
Annual Report (ANRE). In addition, the Ad Hoc Working Group meeting time is devoted to consideration of strategic issues ofon the Return to the Headquarters continued to operate.
policy, planning, monitoring and results; and (iv) harmonize Bank
practices and procedures with those of other MDBs.

5.2.2 Work Program of the Boards of Directors

The year 2015 was a particularly busy and productive period
for the Boards of Directors. Executive Directors participatedin 152 formal and informal meetings, seminars, and briefings.
They approved a total of UA 6.28 billion in loans, grants, equity
investments, guarantees, technical assistance, and Special
Funds. Total Bank Group approvals, including other Special
Funds, and technical assistance that are approved by Senior
Management, amounted to UA 6.33 billion. To support andstrengthen their strategic responsibilities, the Boards took
other actions which fall under the following broad categories:(i) enhancing the effectiveness and efficiency of the Boards;(ii) ensuring business continuity and response to urgent andunexpected events; (ii) overseeing the budget and institutional
reforms and effectiveness; (iv) approving strategies and policies
to enhance operations; (v) assuring the developmental thrustof country strategy papers; (vi) overseeing the implementationof the TYS; (vii) undertaking Board field engagements; and(viii) supporting the Boards of Governors.

5.2.4 Business Continuity andResponse to Unexpected Events
Return to Headquarters. Through its Working Group on the
Return to Headquarters, the Board continued to oversee theimplementation of the roadmap for the effective return of theBank’s operations to its statutory Headquarters in Abidjan,
Côte d’Ivoire. The Board provided guidance on measures
to safeguard the interests of staff and sustain morale. It also
provided guidance on the adoption of realistic yet robustschedules, for the timely delivery of renovation works to
avoid cost overruns. Furthermore, the Board oversaw the
preparation and submission of a report on the implementationof the roadmap for the return to Headquarters as at April
2015. The final report will be submitted to Governors in 2016.

Sustaining the Bank’s Response to the Impact of the Ebola
Outbreak. In 2015, the Boards supported the Bank Group’s
efforts and its development partners in dealing with the effectsof the Ebola crisis in some parts of Western Africa. The Boards
5.2.3 Enhancing the Effectiveness andapproved several programs, including budget support andemergency and technical assistance to strengthen the health
Efficiency of the Boards
In 2015, the Boards approved the reforms presented below re­lat­ systems of the affected countries, particularly Guinea, Liberia,
ing to a number of its instruments, procedures and processes. Sierra Leone and the neighboring countries.

94Annual Report 2015

Box 5.1

Provisions for Further Simplification of theBoard Approval Process
A.	Revised Lapse-of-Time Basis (LOTB) approval is basedon the size of operations. This procedure is applicable
to operations below or equal to a threshold amount of
UA 30 million, including Multinational Operations andPrivate Sector Operations. With respect to Policy-BasedOperations, the threshold amount is UA 10 million.
B.	Approvals Based on Pre-Determined Criteria (PDC)
other than size. This procedure takes into consideration
pre-determined criteria, specifically risk, complexity, andinnovativeness, instead of the size of operations. In thiscase, non-risky, simple, or non-innovative operations,though submitted for consideration at a Board meeting,will not be discussed, regardless of the size.
C.	Approval through Agenda Setting. The agenda of Board
meetings will be used to complement the LOTB and
PDC approval processes. In this case, items will belisted on the agenda as follows:i) for consideration and discussion;ii)	for consideration but not for discussion(PDC operations);iii) for information.

5.2.5 Budget, Institutional Reforms
and Effectiveness
Budget Framework 2016-2018 and Three-Year Rolling
Work Program. The Board considered the Budget Framework
2016-2018, together with a Three-Year Rolling Work Program,and approved the administrative budget for 2016. However,the Board felt that it was incumbent upon Management
to maintain the financial sustainability of Bank Group
operations, especially through the rationalization of costs
and the growth of the revenue base. The Board called foran expeditious finalization and implementation of the Bank
Group’s new business-delivery model under preparation, andthe improvement of services and work processes. It alsoemphasized the need to: (i) improve institutional effectiveness,
including strengthening the field offices for greater delivery
on the ground; (ii) focus on States in fragile situations; and(iii) pay attention to staff welfare.

Chapter 5

Second Review of the Independent Review Mechanism(IRM). The Board considered the second review and accepted
the recommendations for the improvement of the IRM. These
include: (i) the need for Board oversight, for which CODE
was designated as the appropriate committee; and (ii) the
expansion of the mandate of the Compliance Review andMediation Unit (CRMU) and the IRM to include the provisionof advisory services to the Bank Group.
Mid-Term Review of ADF-13. The Board oversaw the
Independent Development Evaluation unit (IDEV)’s comprehensive
evaluation of the extent to which the Bank Group had met its
commitments under GCI VI, ADF-12 and ADF-13. The results
provided the basis for the ADF-13 Mid-Term Review meeting
held in Abidjan, Côte d’Ivoire, from 11 to 13 November 2015.
ADF Deputies were satisfied with the progress made towards
meeting the commitments under ADF-13. They supported theBank’s heightened focus on the High 5s. The Deputies agreed
that consultations on the fourteenth replenishment of ADF(ADF-14) could commence in March 2016.
Africa50. The AfDB established Africa50 as an investment
platform for the promotion and financing of infrastructure
projects mainly on energy, transport, water and sanitation,and information technology. It was designed to be a profitable
investment that pays dividends to its shareholders. Africa50
was incorporated at the Constitutive General Meeting on
29 July 2015 in Casablanca, Morocco, by 20 African countries
and the AfDB. A key decision taken at that meeting was theappointment of members of the Boards of Directors of the
Project Finance and Project Development vehicles of Africa50.
As at end-December, 2015, the subscribed capital of Africa50
from 21 African countries and the AfDB had reached USD 860
million, including USD 100 million from the AfDB. Arrangements
were being finalized for the mobilization of about USD 1 billion
additional subscriptions from international financial organizations,pension funds, insurance and reinsurance companies, as well
as sovereign wealth funds. In 2015, when it became operational,
Africa50 entered its active staff recruitment phase, including therecruitment of a Chief Executive Officer and senior staff. The
exercise was to be concluded in early 2016. The project pipeline
preparation began in 2015, as did the fundraising in member
countries. Additional preparations included plans to raise funds
from African Central Banks. Discussions were started with theregional Central Banks, namely, Banque Centrale des États del’Afrique de l’Ouest (BCEAO), Banque des États de l’AfriqueCentrale (BEAC), and Bank Al Maghreb of Morocco.

95Chapter 5

Oversight Functions and Strategic Responsibilities of the Boards

The development prospects of the organization arepromising. Africa50 has established strategic partnerships
with project developers in the conventional and renewableenergy sector, as well as the transport sector, which gives
it strategic relationships in the development of high impact
projects. In addition, Africa50 has established partnerships
with other international financial institutions such as theInternational Finance Corporation (IFC) of the World Bank,
Agence Française de Développement (AFD), and the ChinaAfrica Development (CAD) Fund. Through its shareholding
and strategic position, Africa50 is ideally placed to play animportant role in infrastructure development financing in Africa.

5.2.6 Strategies and Policies toEnhance Operations
Bank Group Knowledge Management Strategy, 2015-2020.
As noted in Chapter 4, the Board approved this Strategy in 2015.
Board Members expressed satisfaction with the selective natureof the Strategy, the particular emphasis on the Bank Group’s
comparative advantages and the framework for assessment of
results. They also stressed the need for a centralized IT platform
to ensure information sharing, both internally and externally.
African Natural Resources Center (ANRC) Strategy, 20152020. In approving this strategy, described in greater detailin Chapter 4, Board Members stressed the importance ofendowing the ANRC with the requisite financial and humanresources to make it a Center of Excellence and the first port ofcall for policy advice on issues relating to the natural resources
sector. The Board further suggested the importance of rigorous
monitoring and evaluation of the Strategy’s implementationby Management.
Strategic Framework and Operational Guidelines for thePrivate Sector Credit Enhancement Facility (PSF). In 2015,
the Board also approved the PSF, an innovative facility, designed
to facilitate private sector development in Africa. The facility isa timely and welcome initiative intended for maximum impact,
and the Board therefore recommended speedy implementation.

Programs in Support of Implementation of the Governance
Strategic Framework and Action Plan (GAP II), 20142018. In 2015, the Board approved several programs tofurther the objectives of this strategy, intended to strengthen
governance and accountability on the continent. These include
the Investment Climate and Forest Governance Support
Project (PACIGOF) which aims to strengthen the capacity ofprivate sector support institutions, promote private initiatives
and improve forestry sector governance in Congo. The Board
called for close collaboration with the authorities in the country
in the implementation of this project in order to eliminate illicit
practices and corruption in the forestry sector. The Board also
welcomed the Emergency Economic and Financial Reform
Support Programme (PUAREF), which seeks to contribute to
the creation of a favorable environment for the safe and efficientmanagement of the budget in Guinea-Bissau. Executive
Directors identified country leadership as a key to the successof the operation. The Power Sector Reform GovernanceSupport Program (PSRGSP) for Tanzania was also approved.
The PSRGSP underscores the importance the Bank places
on reforms to improve public finance management andstrengthening of institutional frameworks. In welcoming thisoperation, the Executive Directors stressed the importance ofbetter management of parastatals and public utility agencies
to foster economic development, efficiency and social equity.
Programs to Support Implementation of the Financial
Sector Development Policy and Strategy, 2014-2019.
The Board approved several programs that align with theobjectives of this Policy and Strategy, especially those that
foster financial inclusion by increasing access to financial
services, deepening and expanding the African financial
markets, and preserving the stability of the African financial
system. The most notable program was an equity investment
in Alitheia Identity Fund, based in Mauritius. The Fund aims toraise USD 100 million for equity investments in high-growthestablished small- and medium-sized enterprises (SMEs)
targeting those led and/or managed by women in ten Africancountries (Botswana, Ghana, Lesotho, Malawi, Namibia,
Nigeria, South Africa, Swaziland, Zambia, and Zimbabwe).
The Fund will contribute to inclusive growth on the continent
by promoting women’s access to risk capital and enhancing
the capacity of women fund managers in Africa.

Procurement Policy and Methodology for Bank Group
Funded Operations. The Board approved this framework
document and particularly hailed the introduction of the “valuefor-money” concept. The Board encouraged the Bank to use
borrower procurement systems where these processes are 5.2.7 Developmental Thrust of
deemed sufficiently robust. It also called for urgent measures Country Strategy Papers
to finalize the implementation of the Operations Procurement Country Strategy Papers (CSPs). In 2015, the Board
Manual and other auxiliary tool-kits.
approved several CSPs and emphasized the importance96Annual Report 2015of the alignment of CSPs with the Ten-Year Strategy. The
Board also asked for CSPs to be tailored to each country’s
specific circumstances, to be focused on regional integration
where necessary, to emphasize strong policy dialogue, andto address economic diversification and inclusion. The Board
recommended that CSPs need to be underpinned by strong
fragility analyses. For instance, in considering the CSP for
Guinea-Bissau (2015-2019), the Board called for better donor
coordination and close monitoring of Bank interventions.
Regarding the 2015-2020 Joint CSP and Country Portfolio
Performance Review (CPPR) for Cameroon, the Board
stressed the need for greater attention to green growth as wellas policy dialogue to elicit greater government commitment
towards debt sustainability. In the case of the CSP (20152019) for Botswana, the Board underlined the importance ofBank support for the country’s efforts to diversify its economy
from dependence on diamond mining to the promotion of
infrastructure projects, public-private partnerships, regulatory
reforms, capacity building, and the use of renewable energy.

5.2.8 Implementing Aspects of the
Ten‑Year Strategy

Chapter 5

natural resource management in the country; (iii) the Drought
Resilience and Sustainable Livelihoods Program in the Hornof Africa (DRSLP III), which is intended to strengthen theresilience of communities to drought and climate change,
improve the means of subsistence and promote regional
integration in the region; and (iv) the BAGRE Growth Pole
Support Project (PAPCB), which will support Burkina Faso’s
growth strategy, in particular the development of value chainsas part of the vision to modernize agriculture, economic
growth, and food security.
Enhancing Skills Development, Entrepreneurship,
Employability and Inclusion. In furtherance of the Bank
Group’s Human Capital Strategy (2014-2018), the Boards
approved several programs targeting capacity building
for skills development, entrepreneurship and employment.
These include the second phase of a program for Support toTechnical Vocational Education and Training for Relevant Skills
Development (TVET) for Kenya. The TVET aims to increase
access and equity, improve the quality and relevance oftechnical vocational education and training, and equip young
people with the relevant skills to compete in the labor market.
The Boards commended the continuity demonstrated bythis project, but stressed the need for a thorough evaluationof the first phase and the application of lessons learned
to similar projects in other countries. They also underlined
the importance of financial sustainability to ensure that the
program continued long after the Bank’s exit. Similarly, theBoards welcomed the Support to Skills Development for
Employability and Entrepreneurship in Eritrea. The objectiveof this project is to assist the Eritrean Government to fulfill
its commitment to improving equitable access to quality
and relevant technical education and vocational training in
the country.

Enhancing Development Impacts in Private sector Inter­
ventions. The Boards continued their support for the Bank
Group’s operations aimed at fostering the growth of the private
sector, particularly the SMEs. To get a better perspective on
the role of the private sector, they called for the determinationof the development impact of projects supported by linesof credit. In line with this, the Boards approved a number oflines of credit for disbursement to financial intermediaries andon-lending to SMEs. Since SMEs are seen as Africa’s engineof growth and job creation, the Boards emphasized the needto study the impact of these interventions on job creation,
economic transformation and the potential risks to market
distortion. Accordingly, the Boards called on Management
to include such indicators in future proposals.
The Boards also welcomed the Building Capacity for Inclusive
Service Delivery project in Sudan. This project aims to build
Renewed Focus on Agriculture and Food Security. In 2015, capacity and develop human capital to improve employability
the Boards approved a number of projects in support of AfDB’s and extend access and coverage of safety nets and healthendeavor to place agricultural development and food security services to the poor, particularly women and the youth. The
at the top of its transformative agenda, including the following: Boards affirmed the Bank Group’s continued engagement(i) the São Tomé & Príncipe Infrastructure Rehabilitation for in Sudan despite the difficult operating environment. They
Food Security Support Project (PRIASA II), which aimed emphasized the need for the evaluation of project risks andto modernize production systems, improve processing the Bank Group’s capacity to manage them.
and storage conditions as well as value chains, and create
employment for women and youth; (ii) the Green Morocco Plan 5.2.9 Field Missions
Support Programme (PAPMV-2), which was designed to foster Boards’ Consultative Missions. Within the framework of
economic diversification, improve livelihoods and sustainable annual consultations, members of the Boards undertook

97

Chapter 5

Oversight Functions and Strategic Responsibilities of the Boards

Field Mission in Zimbabwe.

missions to Congo, Mozambique, and Zimbabwe. The country
selection for these visits was informed by the theme chosen by
the Boards for the missions: “Natural Resources Management
and Governance, Finance Sector Management, and Private
Sector Development”.

Recommendations made following the missions included:(i) developing skills for more-effective policy dialogue withgovernments and civil society; (ii) strengthening coordination
with other development partners; (iii) supporting the creation ofstrong national institutions; (iv) building capacity in economic
governance; (v) developing the infrastructure necessary for
The visits were undertaken to assess the progress of Bank Group social, spatial and economic inclusion; (vi) exploring ways
financed projects and to engage governments, development to expedite country ratification processes for Bank Group
partners, the business community, and civil society actors on projects, and ways for supporting other governments to meetthe relevance and effectiveness of the Bank’s strategy and their obligations on counterpart-funding in a timely fashion; andpresence, and the ways that the Bank could help the three (vii) reforming the Bank’s procurement and other processes
countries meet their economic and developmental challenges. to address the slow implementation of projects.

98Educational systems in Africa are increasinglyoffering information and communication
technology in junior schools.

Part III

Financial
Management
and Financial
Statements

Chapter 6
ADB, ADF, and NTF
Financial Management and
Financial Statements

Management’s Report Regarding the Effectiveness of Internal Controls
Over External Financial Reporting
External Auditor’s Report Regarding the Effectiveness of Internal Controls
Over External Financial Reporting

African Development Bank
Financial Management
Financial Results
Financial Statements and Report of the Independent Auditor
Administrative Budget for Financial Year 2016

African Development Fund
Financial Management
Financial Results
Special Purpose Financial Statements and Report of the Independent Auditor
Administrative Budget for Financial Year 2016

Nigeria Trust Fund
Financial Management
Financial Results
Financial Statements and Report of the Independent Auditor

AFRICAN DEVELOPMENT BANK GROUPManagement’s Report Regarding the Effectiveness ofInternal Controls Over External Financial Reporting

Date: 30 March 2016

The Management of the African Development Bank Group is responsible for the preparation, fair presentation and overall integrity of the
published financial statements of the African Development Bank, the African Development Fund and the Nigeria Trust Fund (The Bank
Group). The financial statements for the African Development Bank and the Nigeria Trust Fund have been prepared in accordance with
International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board, while those of the African
Development Fund were prepared on a special purpose basis.
The financial statements have been audited by the independent audit firm KPMG, who were given unrestricted access to all financial records
and related data, including minutes of all meetings of the Boards of Directors and committees of the Boards. Management believes that
all representations made to the external auditors during their audit were valid and appropriate. The external auditors’ reports accompany
the audited financial statements.
Management is responsible for establishing and maintaining effective internal controls over external financial reporting in conformity withthe basis of accounting. The system of internal control contains monitoring mechanisms and actions that are taken to correct deficiencies
identified. Internal controls for external financial reporting are subject to ongoing scrutiny and testing by Management and internal audit andare revised as considered necessary. Management believes that such controls support the integrity and reliability of the financial statements.
There are inherent limitations to the effectiveness of any system of internal control, including the possibility of human error and the circumvention
or overriding of controls. Accordingly, an effective internal control system can provide only reasonable, as opposed to absolute, assurancewith respect to financial statements’ preparation and presentation. Furthermore, the effectiveness of an internal control system can changeover time.
The Boards of Directors of the Bank Group have established an Audit and Finance Committee (AUFI) to assist the Boards, among otherthings, in their oversight responsibility for the soundness of the Bank Group’s accounting policies and practices and the effectiveness ofinternal controls. AUFI, which is comprised entirely of selected members of the Board of Directors, oversees the process for the selectionof external auditors and makes a recommendation for such selection to the Board of Directors, which in turn makes a recommendation for
the approval of the Board of Governors. AUFI meets periodically with Management to review and monitor matters of financial, accounting or
auditing significance. The external auditors and the internal auditors regularly meet with AUFI to discuss the adequacy of internal controls
over financial reporting and any other matter that may require AUFI’s attention.
The Bank’s assessment of the effectiveness of internal controls was based on criteria established in “Internal Control - Integrated
Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the results ofthis assessment, Management asserts that the Bank Group maintained effective internal controls over its financial reporting as containedin the financial statements as of 31 December 2015. Management is not aware of any material control weakness that could affect thereliability of the 2015 financial statements.
In addition to providing an audit opinion on the fairness of the financial statements for 2015, the external auditors of the Bank Group
conducted an independent assessment of the effectiveness of the Bank Group's internal control over financial reporting as of 31 December
2015 and their opinion thereon is presented separately in this annual report.

Akinwumi A. Adesina
President
Charles O. Boamah
Vice President, FinanceOmobola Hollist
Acting Controller

Avenue Joseph Anoma, 01 BP 1387 Abidjan 01, Côte d’Ivoire
Tel: (225) 20 20 48 22 · Fax: (225) 20 21 31 00 · Email: afdb@afdb.com · Internet: www.afdb.org

104

KPMG Audit
Tour EQHO
2 Avenue Gambetta
CS 60055
92066 Paris la Défense Cedex
FranceTelephone:Telefax:
Internet:+33 (0)1 55 68 68 68+33 (0)1 55 68 73 00
www.kpmg.fr

African Development Bank Group
Avenue Joseph Anoma
01 BP 1387 Abidjan 01
Côte d’Ivoire

Independent Auditor’s Report to the Board of Governors of the African Development Bank
Group regarding the effectiveness of internal control over financial reportingYear ended 31 December 2015
Scope
We have examined the internal control over financial reporting of the African Development Bank (ADB), the African
Development Fund (ADF) and the Nigeria Trust Fund (NTF) (together the “Bank Group”) as of 31 December 2015,
based on criteria established in ‘‘Internal Control – Integrated Framework’’(2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO).
Management’s responsibilities
The management of the Bank Group is responsible for implementing and maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of such internal control. Management has asserted theeffectiveness of internal controls over financial reporting as of 31 December 2015.
Independent Auditor’s responsibilities
Our responsibility is to express an opinion on the Bank Group’s internal control over financial reporting based on
our procedures.
We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000,
issued by the International Auditing and Assurance Standards Board. That standard requires that we plan andperform our procedures to obtain reasonable assurance about whether, in all material respects, effective internal
control was maintained over financial reporting.
An assurance engagement includes obtaining an understanding of internal control over financial reporting, assessing therisk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control,

KPMG S.A.
Société française membre du réseau KPMG
constitué de cabinets indépendants adhérents de
KPMG International Coopérative, une entité de droit suisse.

Société anonyme d’expertisecomptable et de commissariat
aux comptes à directoire etconseil de surveillance.
Inscrite au Tableau de l’Ordreà Paris sous le n° 14-30080101
et à la Compagnie Régionale
des Commissaires aux Comptes
de Versailles.

Headquarters:
KPMG S.A.
Tour Eqho
2 avenue Gambetta
92066 Paris la Défense Cedex
Capital : 5 497 100 €.
Code APE 6920Z
775 726 417 R.C.S. Nanterre
TVA Union Européenne
FR 77 775 726 417

105

African Development Bank Group
Independent Auditor’s Report to the Board of Governorsof the African Development Bank Group regarding
the effectiveness of internal controls over external financial reporting

based on the assessed risk. It also includes performing such other procedures as considered necessary in the circumstances.
We believe that the evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our opinion.
Inherent limitation
An entity’s system of internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes,
in accordance with generally accepted accounting principles. An entity’s system of internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the entity are being made onlyin accordance with authorizations of management and directors of the entity; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, a system of internal control over financial reporting may not prevent or detect
misstatements. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
OpinionIn our opinion, the Bank Group, in all material respects, maintained effective internal control over financial reporting
as of 31 December 2015, based on criteria established in “Internal Control – Integrated Framework” (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission.
We have audited the financial statements of the African Development Bank, the African Development Fund and the
Nigeria Trust Fund as of and for the year ended 31 December 2015, in accordance with the International Standards
on Auditing, and we have expressed unqualified opinions on those financial statements.

Paris La Défense, 30 March 2016
KPMG Audit
A division of KPMG S.A.

Valéry Foussé
Partner106

Annual Report 2015

Chapter 6

THE AFRICAN DEVELOPMENT BANKFINANCIAL MANAGEMENT
Capital Subscription
The capital stock of the Bank is composed of paid-up andcallable capital. The paid-up capital is the amount of capital
payable over a period determined by the Board of Governors’
resolution approving the relevant General Capital Increase.
The Bank’s callable capital is subject to payment as and whenrequired by the Bank to meet its obligations on borrowingof funds for inclusion in its ordinary capital resources orguarantees chargeable to such resources. This acts asprotection for holders of bonds and guarantees issued by
the Bank in the unlikely event that it is not able to meet its
financial obligations. There has never been a call on the callable
capital of the Bank. A member country’s payment of the first
installment triggers the issuance of the shares corresponding
to the entire callable capital portion, and shares representing
the paid-up portion of subscriptions are issued only as andwhen the Bank receives the actual payments for such shares.
Following the Board of Governors’ approval of a 200 percent
increase of the Bank’s capital base in 2010, the authorized
capital of the African Development Bank was increased to
UA 67.69 billion with the creation of 4,374,000 new shareswith a par value of UA 10,000 each. Six percent of the shares
created under this Sixth General Capital Increase (GCI-VI), (UA2.62 billion), are paid-up, while 94 percent (UA 41.12 billion)
are callable. In accordance with the resolution governing thiscapital increase, the GCI-VI shares were allocated to regionaland non-regional members in such proportions that, when fully
subscribed, the regional group holds 60 percent of the total
capital stock and the non-regional group 40 percent.
The paid-up portion of the GCI-VI subscription is payable in eightequal annual installments for non-regional member as well as

regional member countries eligible to borrow from ADB, andtwelve equal annual installments for Regional Member Countries
eligible to borrow only from ADF. Some member countries haveelected to pay their subscription in fewer installments, opting
for an advance payment scheme, and will receive a discounton their GCI-VI subscription payment accordingly.
Prior to the GCI-VI and by resolution B/BG/2008/07 and B/
BG/2009/05, the Board of Governors authorized two special
capital increases to allow the Republic of Turkey and the Grand
Duchy of Luxembourg to become members of the Bank. On
29 October 2013, the Republic of Turkey was formally admitted
as the 78th member country of the Bank (the 25th Non-Regional
Member Country) after completing the formalities specified
in the Agreement establishing the Bank and in the General
Rules Governing the admission of Non-Regional Countries tomembership of the Bank. On 29 May 2014, the Grand Duchyof Luxembourg became the 79th member country of the
Bank – the 26th Non-Regional Member Country.
On 31 May 2012, by its Resolution B/BG/012/04, the Boardof Governors approved a special capital increase to permit
the membership of South Sudan. In April 2015, South Sudan
completed its membership process and became the 80th
member country of the Bank and the 54th Regional Member
Country.
As at 31 December 2015, the paid-up capital of the Bank
amounted to UA 4.99 billion, with a paid-in capital (i.e. theportion of paid-up capital that has been actually paid) level of
UA 3.73 billion, compared with UA 4.96 billion and UA 3.44
billion of paid-up and paid-in capital, respectively, at the endof 2014. The Bank’s callable capital at 31 December 2015
stood at UA 60.60 billion including UA 21.65 billion from nonborrowing member countries rated A- and higher, comparedwith UA 60.27 billion and UA 21.57 billion, respectively, asat the end of the previous year. The evolution of the Bank’s
capital over the past five years is shown in Table 6.1 below.

Table 6.1

Bank Authorized and Subscribed Capital, 2011-2015(UA millions)
Authorized Capital

2011
66,055

2012
66,975

2013
66,975

2014
66,975

2015
66,975Paid-up Capital
Callable Capital
Total Subscribed Capital

3,289
34,03337,322

4,963
60,252
65,215

4,962
60,24865,2104,865
60,26865,133

4,884
60,59865,482107

Chapter 6

African Development Bank

In accordance with the Bank’s Share Transfer Rules, shares green bond maturing in December, 2018. It also continued to
for which payment have become due and remain unpaid are build its curve in Australian dollars with a new AUD 300 million
forfeited after a prescribed period and offered for subscription transaction due February 2020 and three long-dated taps of
to member countries within the same membership group (i.e. existing lines for a total value of AUD 75 million.
regional or non-regional).
The Bank has also been active with various private placements,
Details of the Bank’s capital subscriptions at 31 December African currency-linked notes and uridashi transactions into
2015, are shown in the Statement of Subscriptions to the Japan. Euro Commercial Paper borrowings complete theCapital Stock and Voting Powers, which forms part of the range of markets utilized during the year.
Financial Statements included elsewhere in this Report.
As at 31 December 2015, the Bank’s outstanding borrowing
Bank Rating
portfolio stood at UA 16.45 billion compared to UA 14.38
The Bank monitors and manages its key financial strength metrics billion in 2014.
in a stringent manner and is rated by four major international
rating agencies. The Bank continues to attract high ratings from The 2016 borrowing program was approved for a maximum
all these agencies. For 2015, the rating agencies, Standard & amount of up to UA 6,192 million to be raised from debt
Poor’s, Moody’s, Fitch Ratings and the Japan Credit Rating markets plus an additional envelope of USD 300 million (UAAgency have once again reaffirmed their AAA and AA+ rating 214 million equivalent) under the Enhanced Private Sectorof the African Development Bank’s senior and subordinated Assistance (EPSA) facility.
debts respectively, with a stable outlook. Their rating reflects andconfirms the Bank’s strong liquidity and capital position, strong Green Bonds
membership support, its preferred creditor status, sound capital The Bank is committed to supporting climate-smart and low
adequacy and prudent financial management and policies.
carbon investments on the continent that produce visible
and sustainable outcomes. It is in this context that the Bank
Borrowings
launched its green bond program in 2013, targeting socially
The Bank raises resources from the capital markets mainly responsible investors (SRI) across the globe who want toto provide cost-effective resources to finance development make a difference with their investments by helping to financeprojects and programs in regional member countries. The climate change solutions in Africa.
top-notch credit ratings enjoyed by the Bank enables it toissue securities at attractive interest rates.
Taking advantage of the global focus on the United Nation’s 21stConference on Climate Change (COP21) held in Paris, France
The 2015 borrowing program was approved for a maximum of in December 2015, the Bank issued a new USD 500 million
UA 4,507 million, made up of two components: up to UA 4,302 3-year green bond transaction, highlighting its firm commitment
million to be raised in the capital markets, and an envelope of UA to leveraging climate finance to support African countries in
205 million under the Enhanced Private Sector Assistance (EPSA) their transition towards green growth. This represented thefacility. At year-end 2015, a total amount of UA 3,030.5 million Bank’s return to the USD green bond market, following two
was raised, representing 67.2 percent of the 2015 borrowing successful Swedish Krona transactions executed in 2014, andprogram with a weighted average maturity of 6.1 years.
a USD 500 million 3-year green bond issued in October 2013.
The transaction was oversubscribed and benefited from theTargeted efforts were made to canvass new investors, new strong interest from 32 different investors, 70 percent of whichcurrencies and new markets throughout the year. As a integrate environmental considerations in their investment
consistent and regular issuer of global benchmark transactions, strategy. Proceeds of the Bank’s green bonds support thethe Bank successfully priced two global benchmarks in 2015 financing of low carbon and climate resilient projects. The total
for USD 1 billion each, with a 5 and 2-year maturity, and also amount of ADB green bonds outstanding at the end of 2015
tapped its benchmark transaction maturing in October 2018 (including past private placement/uridashi issuance) stands attwice, for a total amount of USD 325 million, taking the new USD 1,329 million (UA 959 million). Full details of the Bank’s
outstanding of the line to USD 1,325 million. The year also eligible projects benefiting from green bond proceeds can be
saw the Bank return to the green bond market with a new found on its green bond website and annual newsletter.

108

Annual Report 2015

Chapter 6

Table 6.2

Overview of Themed Bond Activity in Each Sector(Amounts in UA millions)

Education
Food Security
Infrastructure
Water
Total

Cumulative
Disbursements
170.2
244.6
756.7
119.0
1,290.5

Themed Bonds
In addition to its green bond program, the Bank is also active
in issuing bonds linked to various social themes. Demand fromJapanese retail investors in 2015 has been focused around thetheme of food security with the Bank successfully printing a
new food security-linked uridashi bond in Australian Dollars andraising UA 56 million in the process. The Bank has also issued
an infrastructure-themed note to institutional investors in Japanfor UA 14 million. The proceeds of these themed bonds areincluded in the ordinary capital resources of the Bank and under
the terms of the bonds, an amount equal to the net proceeds ofthe sales are directed on a ‘best-efforts’ basis towards lending
to projects related to the relevant theme, subject to and inaccordance with the Bank’s lending standards and guidelines.
Table 6.2 above provides a snapshot of the Bank’s activity inthe sectors financed.

Total
Bonds
Issued
310.3
134.3
143.6
39.5
627.7

Total
Bonds
Outstanding
220.1
134.3
143.6
498.0

Maturity
Range of
Bonds Issued
3 to 6 years
3 to 5 years
7 to 10 years
4 yearsby the full faith and credit of the RMC in whose territory theborrower is domiciled. Multinational institutions are eligible for
SGLs if they are guaranteed by an RMC or by the RMCs inwhose territory or territories the projects will be executed.
NSGLs are loans made either to public sector enterprises,
without the requirement of a sovereign guarantee or to private
sector enterprises.
The Bank’s standard loan product has evolved over time, withterms that are increasingly more responsive to client needs.
The current standard loan product offered to sovereign andsovereign-guaranteed clients is the Enhanced Variable Spread
Loan (EVSL) which gives borrowers some degree of flexibility to
manage their interest rate risks. For non-sovereign-guaranteedclients the loan product offered is the Fixed Spread Loan (FSL).

The lending rate on the EVSL comprises a floating base rate
Financial Products(6-month LIBOR for USD and YEN, 6-month EURIBOR for EuroThe ADB offers an attractive and diversified menu of financial and 3-month JIBAR for ZAR), a funding margin that is a function
product options that allows borrowers to tailor their financing of the Bank’s cost of funding relative to LIBOR, EURIBOR or
requirements to their circumstances. The Bank’s financial JIBAR, computed every six months, and a contractual spread,products comprise loans (including those denominated in that was set at 60 basis points (bps) with effect from 1 January
local currency, and syndicated loans), lines of credit (including 2011. At a borrower’s request, the EVSL offers a free option tofor trade finance), agency lines, guarantees, equity and convert the floating base rate into a fixed base rate (amortizing
quasi-equity, trade finance, and risk management products. interest rate swap rate set at borrower’s request for disbursed
In addition to the aforementioned financial products, the Bank and outstanding loan balances). The repayment period forprovides technical assistance to its clients through grant funds. sovereign and sovereign guaranteed loans is up to 20 years,
Each of these products is briefly discussed below.
including a grace period not exceeding 5 years.

Loans
The ADB provides loans to its clients on non-concessional terms.
The Bank’s standard loans are categorized either as SovereignGuaranteed Loans (SGLs) or Non-Sovereign Guaranteed Loans(NSGLs). SGLs are loans made to regional member countries(RMCs) or public sector enterprises from the RMCs supported

The lending rate on the FSL comprises a floating base rate
(6-month LIBOR for USD and YEN, 6-month EURIBOR for
Euro and 3-month JIBAR for ZAR) which remains floating
until maturity date or a fixed base rate plus a risk-based
credit spread. NSGLs have a repayment period of 15 years
including a grace period not exceeding 5 years.

109Chapter 6

African Development BankIn December 2013, the ADB Board of Directors approved
the introduction of the Fully Flexible Loan (FFL) product tothe suite of products available to sovereign and sovereignguaranteed borrowers. The FFL embeds risk management
features currently offered through the Bank’s risk management
products in SGLs, thereby providing full customization flexibility
in interest rate and currency conversion to borrowers. With thisproduct, FFL borrowers will be able to, at any time after loansignature, (i) convert the lending currency for disbursed and/or undisbursed loan balances into another Bank-approved
lending currency, (ii) convert the base interest rate (fix, unfix
and re-fix the base rate) for disbursed and outstanding loanbalances and, (iii) establish interest rate caps or collars for
disbursed and outstanding loan balances. It also introduces amaturity-based pricing structure due to the lengthening of the
maximum tenor, grace period and average loan maturity (i.e.,
the weighted average time to repay a loan which considers,both, repayment dates and amounts in order to provide a
better estimation of how quickly a loan is repaid) of SGLs fromthe current 20 years (tenor), 5 years (grace period) and 12.75
years (average maturity) to 25 years, 8 years and 17 years,
respectively to allow borrowers to select loan profiles thatmatch their funding needs and debt management capacities.

efficiently in the relevant local currency market. These local
currency loans are offered under the FSL pricing frameworkwith a cost-pass-through principle for the loans to ensurethat the overall cost of funds is fully covered.

Lines of Credit
The development of a dynamic small and medium-size
enterprises (SMEs) sector in the continent is an important
objective of the Bank, as is the development of private financial
institutions (PFIs). To this end the Bank offers lines of credit forloans to PFIs for on-lending to SMEs. The terms of the linesof credit specify the conditions under which Bank funds will
be provided to the PFI for on-lending. The credit risks of the
sub-loans are borne by the PFIs.

Agency Lines

The Bank makes resources available for SMEs under agency
arrangements with local financial intermediaries. The selectionof individual projects for Bank support is largely delegated tothe intermediaries, which draw on Bank resources to makeloan or equity investments for the Bank’s account in projects
meeting pre-agreed criteria. As part of an agency agreement,
financial intermediaries are required to commit their own funds
in each investment in parallel with the Bank and to supervise
The lending rate of the FFL product is consistent with that of the investee companies. The financial intermediary acts only
the EVSL plus a maturity premium, where applicable. With in an agency capacity for the Bank when investing the latter’smaturity-based pricing, loans with maturity less than or equal funds and assumes no risk in this regard. The credit risk of
to 12.75 years will not attract a maturity premium. However, the borrower is borne by the Bank.
loans with average loan maturity greater than 12.75 years but
less than or equal to 15 years will attract a 10 bps maturity Guarantees
premium, while loans with an average maturity greater than Through the guarantee product, the Bank seeks to leverage its
15 years will attract a 20 bps maturity premium.
preferred creditor status to assist eligible borrowers to obtainfinancing from third party lenders, including capital markets.
Since the approval of the FFL, the Bank has conducted Guarantees also enable borrowers to obtain financing in theirextensive testing to ensure that the loan administration systems own local currency where the Bank is not able to provide
are properly equipped to handle all the new, innovative features such financing directly from its own resources. The Bank’sof the loan product. The FFL will thus fully replace the EVSL guarantees can generally be classified into two categories:
and be available as the Bank’s only standard loan product Partial Credit Guarantees (PCGs) and Partial Risk Guarantees
offered to sovereign and sovereign-guaranteed borrowers in (PRGs). PCGs cover a portion of scheduled repayments ofrespect of all loans signed on or after 3 March 2016.
private loans or bonds against all risks. PRGs cover private
lenders against the risk of a government, or a government
Other loan structures offered by the Bank include parallel owned agency, failing to perform its obligations vis-à-vis aand A/B loan syndications, and local currency loans. The private project.
Bank can provide local currency loans in the following RMC
currencies: Egyptian pounds, Franc CFA (XOF and XAF), Risk Management Products
Ghanaian cedis, Kenyan shillings, Nigerian naira, Tanzanian The Bank currently offers Risk Management Products (RMPs)
shillings, Ugandan shillings and Zambian kwacha. Lending to its borrowers only in respect of obligations outstanding toin these currencies is only offered if the Bank is able to fund the Bank or new Bank loans to enable them to hedge their

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Annual Report 2015

exposure to market risks including interest rate, currency
exchange and commodity price risks, thus allowing them tooptimize their debt management strategies. RMPs offeredby the Bank include interest rate swaps, currency swaps,
commodity swaps and interest rate caps and collars. These
products are available to borrowers at any time during thelife of the loan.

Chapter 6

Risk Participation Agreement

The Risk Participation Agreement (RPA) is both a funded
and a non-funded trade finance product that enables the
Bank to share risk with a select group of international andregional confirming banks, who provide documentary credit
confirmation services to African issuing banks, with the objectiveof supporting and expanding trade in Africa. Under this productthe Bank shares trade finance credit risk (generally no more
Equity and Quasi-Equity Participations
than 50 percent of a trade transaction exposure) on a portfolio
In addition to its participation in ADF, the Bank takes equity of eligible issuing bank trade transactions of partner confirming
positions in qualifying business enterprises in its RMCs as part banks. RPAs operate on a portfolio basis and do not requireof its strategic development financing mandate. The Bank’s the Bank to sign direct agreements with the local issuing banks.
ability to provide risk capital through equity and quasi-equity isa key element of its resource mobilization role. The use by the Trade Finance Lines of Credit
Bank of equity and quasi-equity participation as instruments The Trade Finance Line of Credit (TFLOC) is similar to theof investment has the objectives of promoting the efficient conventional line of credit offered by the Bank to local financial
use of resources, promoting African participation, playing institutions except that the TFLOC will be used to finance exclusivelya catalytic role in attracting other investors and lenders to trade-related transactions in the RMCs. Trade transactions
financially viable projects as well as promoting new activities and financed by TFLOC include, among others, pre-shipment andinvestment ideas. The Bank may invest in equities either directly post-shipment financing, capital expenditure, letters of credit
or indirectly, through appropriate funds and other investment discounting, factoring/forfaiting, import and export trade finance.
vehicles. Additionally, it may choose to invest via quasi-equity
instruments including redeemable preference shares, preferred Since most trade transactions have maturities of less thanstock, subordinated loans or convertible loans.
one year, the intermediary financial institutions are permitted
to utilize the line of credit as a revolving credit facility to trade
Trade Finance Program
finance clients until the final maturity of the TFLOC itself, which
In February 2013, the Board approved a Trade Finance in any case will not exceed 3.5 years. The facility is available
Program (TFP) of up to USD 1 billion for a four-year initial phase, to local banks engaged in trade finance in Africa.
to address the shortage of trade finance for Regional Member
Countries (RMCs) and to address the structural gap between Soft Commodity Finance Facility (SCFF)
the demand for trade finance and the market supply through The Soft Commodity Finance Facility (SCFF) is a funded trade
provision of liquidity and risk mitigation solutions to financial finance product that is used to support mainly the import andinstitutions actively involved in trade finance in Africa. One of export of agricultural commodities and inputs across the RMCs.
the significant institutional developments since the approval This includes, for instance, the provision of pre-export financingof the TFP was the establishment of the Financial Sector to commodity aggregators for the purchase and export of soft
Development Department (OFSD) in the last quarter of 2014, commodities. Commodity finance is usually structured andand subsequently, the President created a full-fledged Trade has credit protection in such forms as pledges of underlying
Finance Division within OFSD, charged with the responsibility commodity, assignment of proceeds, letters of credit, and privateof driving the Bank’s engagement in trade finance in Africa in or state guarantees. SCFF is provided directly to entities sucha more sustained and systematic way.
as commodity aggregators, which are not necessarily financial
institutions. These entities could include state-owned commodity
The TFP provides to eligible clients, funded and unfunded boards or agricultural cooperatives that meet the eligibility criteria
products including: (a) Risk Participation Agreements (RPAs), for Bank private sector borrowing. Intermediaries such as(b) Trade Finance Lines of Credit (TFLOCs), and (c) Soft commodity traders would not be direct counterparties of the Bank.
Commodity Finance Facilities (SCFFs). In addition to these, the
TFP makes selective use of equity and technical assistance Scaling Up the Trade Finance Program
instruments to enhance the risk-bearing and operational The financial performance of the program in 2015 was above
capacities of local financial institutions (FIs).
budget in all measures, and demand for trade interventions

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African Development Bank

from the RMCs remains strong. Going forward, in order Over the past few years the Bank has considerably enhanced
to consolidate the TFP into the Bank’s operations as a its risk management framework and end-to-end credit
core activity rather than as a program with a sunset clause, processes to ensure that its risk management functions remain
management has proposed the following changes aimed at robust. Some of the specific measures taken have included:
increasing both the size and product suite:(i) creation of the office of Group Chief Risk Officer, reporting
directly to the President of the Bank; (ii) strengthening of thea)	Utilise the current TFP limit of USD 1 billion for guarantee Credit Risk Committee; (iii) enhancement of the credit risk
products only. The funded trade finance instruments would assessment skills of Bank staff through training and hiring of
be treated like the Bank’s other lending instruments in experienced and competent credit officers; (iv) implementation
terms of allocation of funds for non-sovereign operations. of robust and optimized credit risk assessment models;(v) strengthening of the credit risk infrastructure by improvingb)	Introduce the following new products to meet the ever quality at entry; (vi) continuous efforts to fully implement theevolving clients’ needs: (i) direct guarantees that provide operational risk management framework which was recently
100 percent risk cover for single transactions; (ii) supply approved by the Board; and (vii) implementation of best-ofand value chain financing; and (iii) risk distribution breed solutions in the form of an integrated and workflowagreements (RDAs) to create more headroom by driven software platform that allows all stakeholders involved
catalysing other sources of financing and increasing in the credit risk assessment process to streamline their work
the capacity of the Bank to support more trade.
in order to enhance efficiency. The Bank has, additionally,strengthened the monitoring of the current portfolio andOther Financial Services
continued to proactively undertake portfolio restructuring
In addition to the products described above, the Bank may measures including cancellation of long-standing “signed
occasionally offer technical assistance through grant funds but not disbursed” loans to free up capital for new lending.
to supplement its financial products for both the public andprivate sector windows. The Bank’s technical assistance is The Bank continues to serve all its member countries, including
primarily focused on increasing the development outcomes of those under stress. To support such continued engagement,
its operations by raising the effectiveness of project preparation the Bank maintains capital buffers to provide some flexibility inwhich is vital in ensuring the best developmental and poverty- continuing its countercyclical financing role, while covering any
reducing outcomes for projects that receive Bank financing. In potential unexpected losses. Close collaboration with sister
addition, technical assistance may aim to foster and sustain institutions (the World Bank and IMF) has helped to improve theefforts in creating enabling business environments in order to coordination of current and future interventions in those countries.
promote private sector investment and growth.
Above all, the Bank has continued to explore measures toincrease portfolio diversification, an important step in its efforts
Risk Management Policies and Processes
to mitigate concentration risks within its current portfolio. The
The Bank’s development operations are undertaken within a risk Bank also improved its collateral management framework to
management framework which includes: (i) a clearly defined ensure that an adequate collateral value is maintained.
risk appetite statement for lending credit risk, (ii) a capital
adequacy and exposure management policy (iii) credit policy; During the year, the Bank entered into Exposure Exchange(iv) risk management governance framework; (v) credit risk Agreements (EEAs) with other Multilateral Development Banks
management guidelines; and (vi) an end-to-end credit process. (MDBs) with the objective of managing the risks in its loan
portfolio to optimize its balance sheet, reduce sovereignThe Bank seeks to minimize its exposure to risks that are concentration risk and increase lending headroom. The EEA
not essential to its core business of providing development involves a simultaneous exchange of equivalent credit risk on
finance and related assistance. Accordingly, the Bank’s defined reference portfolios of sovereign exposures, subject
risk management policies, guidelines and practices are to each participating MDB retaining a minimum of 50 percent
designed to reduce exposure to interest rate, currency, of the total exposure to each country that is part of the EEA.
liquidity, counterparty, legal and other operational risks, while Under the EEA, the MDB that originates the sovereign loans
maximizing the Bank’s capacity to assume credit risks to and buys protection continues to be the lender of record. An
public and private sector clients, within approved risk limits. exposure exchange does not affect the application of the112

Annual Report 2015

Chapter 6

normal sovereign sanctions policies by the buyer of protection.
The EEA has final maturities in 2030 with linear annual reductionof the notional amounts starting from 2025. As at 31 December
2015, the total notional amount of credit protection purchased
or sold on the relevant underlying single reference entities is
USD 4.47 billion (UA 3.22 billion). The participating MDBs have
paid no credit protection fee (i.e. guarantee premium) as theamount of exposure exchanged—purchased and sold—isnotionally the same at inception.

The external audit function is statutory and is regulated by
the International Standards on Auditing (ISA), issued by theInternational Federation of Accountants (IFAC) through theInternational Auditing and Assurance Standards Board. The
external auditors perform an annual audit to enable them toexpress an opinion on whether the financial statements of
the Bank present fairly the financial position and the results of
the operations of the Bank. They also examine whether thestatements have been presented in accordance with International
Financial Reporting Standards. In addition, as described above,
The Bank continues to be well capitalized. The stress testing the external auditors also carry out a comprehensive review
of its capital adequacy shows that it can adequately withstand and provide opinion on the effectiveness of the Bank’s internal
a number of extreme shock scenarios. The risks to the Bank’s controls over financial reporting. This attestation is provided bybalance sheet are actively monitored on a risk dashboard the external auditors as a report separate from the audit opinion.
developed in 2012.
At the conclusion of their annual audit, the external auditors
prepare a management letter for Senior Management and the
The policies and practices employed by the Bank to manage Board of Directors, which is reviewed in detail and discussed
these risks are described in detail in Note D to the Financial with the Audit and Finance Committee of the Board. The
Statements.
management letter sets out the external auditors’ observations
and recommendations for improvement on internal controls andFinancial Reporting
other matters, and it includes management’s responses andCorporate governance within the Bank is supported by actions for implementation of the auditors’ recommendations.
appropriate financial and management reporting. The
Executive Board of Directors makes strategic decisions and The performance and independence of the external auditors ismonitors the Bank’s progress towards achievement of set subject to periodic review by the AUFI Committee of the Board.
goals. While senior management manages the Bank’s day- There are key provisions in the Bank’s policy regarding the
to-day operations and activities, the Board provides oversight, independence of the external auditors including a requirement
advice and counsel on issues as wide-ranging as long-term for the mandatory rotation of the Engagement Partner, in cases
strategy, budgets, human resources, benefits management, where the term of the audit firm is renewed for a second andand new product development.
final five-year period. The incumbent external auditors areprohibited from providing non-audit related services, subject
Based on the COSO internal control framework, senior to certain exceptions if it is judged to be in the interest of the
management has put in place a robust and functioning Bank and if such services do not compromise the externalmechanism to be able to certify the effectiveness of the auditors’ independence. In any case, the provision of such
Bank’s internal controls over external financial reporting. This services requires the specific approval by the Audit andannual certification statement is signed by the President and Finance Committee.
Vice President, Finance, as well as the Financial Controller. A
separate attestation is also provided by the Bank’s external Anti-Corruption Regime within the Bank
auditors. The Bank has a comprehensive system of reporting The Bank has a robust regime for discouraging corruption.
to the Board of Directors and its committees which includes The prohibited practices under the Bank’s anti-corruption
periodic reporting by the Office of the Auditor General to the regime include not only bribery but also receiving bribes, fraud,
Audit and Finance (AUFI) Committee of the Board of Directors. coercive practices and collusion.

External Auditors

The Bank has three main anti-corruption legal instruments
The Bank’s external auditors are appointed by the Board of – its Procurement Rules, the Guidelines for Preventing andGovernors, on the recommendation of the Board of Directors, Combating Corruption and Fraud in Bank’s Operations, andfor a five-year term. Under Bank rules, no firm of auditors can the International Financial Institutions’ Uniform Framework
serve for more than two consecutive five-year terms.
for Preventing and Combating Fraud and Corruption. Each

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African Development Bankof these instruments defines the prohibited practices and Performance Management and Monitoringprescribes mechanisms for implementing anti-corruption In managing its operations the Bank uses quantified performancemeasures. The Procurement Rules prohibit the use of Bank measures and indicators that reflect the critical success factors
funds to finance corruption and the financing by the Bank in its business. These are monitored on a continuous basisof contracts corruptly procured. The Guidelines prescribe and results achieved are used to assess progress attained
preventive measures to be taken throughout the lending cycle. against stated objectives and to inform required action in
The Uniform Framework also prescribes preventive measures order to improve future performance. Management uses aand investigation procedures.
wide array of measures both at the corporate and business
unit level to monitor and manage performance. Some of the
The Bank’s anti-corruption implementation mechanisms key financial measures and indicators used by management
include the Integrity and Anti-Corruption Department which are discussed in Table 6.3, together with their relevance tohas an investigative and a preventive role, a Whistleblower the operations of the Bank.
and Complaints Handling mechanism including a hotline
administered by the Integrity and Anti-Corruption Department,
and protection for whistleblowers.
FINANCIAL RESULTS
The Bank has implemented the International Financial The highlights of the Bank’s financial performance in 2015
Institutions’ cross-debarment agreement by which it will apply include the following:
the sanctions of the other institutions and have its sanctions
applied by these institutions. A key step in this process has ●● Net interest margin (NIM) decreased in 2015 largely due tobeen the appointment of a Sanctions Commissioner, an
a 10.71 percent decline in interest income on investments
Alternate Sanctions Commissioner and the members of thefrom UA 169.87 million in 2014 to UA 151.68 million in
Sanctions Appeals Board.
2015. Interest income from loans increased by 2.51 percent
to UA 338.51 million. The treasury portfolio continued to
Finally, the Bank is collaborating with the OECD in an ongoing
perform well above its set benchmarks. Overall, net interest
initiative to support business integrity and anti-bribery efforts
income decreased by 6.06 percent during the year, while
in its regional member countries.
the gross earning assets increased by 6.8 percent.

Table 6.3

Key Financial Performance Indicators: 2015 and 2014
Definition
Average Return on
Liquid Funds
Total Debt toUsable Capital
Settlement Failure Rate
Timeliness of Preparation of
Financial Highlights
Impairment Loss Ratio– Non-Sovereign
Portfolio only

114

Importance to the business and management
This is a measure of the average return generated or lost due to the investmentof liquid funds. In other words, it is a measure of how profitable the liquid
assets are in generating revenue to the Bank, pending disbursement for project
financing.
This is a measure of the Bank’s financial leverage calculated by dividing its
total debt by usable capital. It indicates what proportion of equity and debt the
Bank is using to finance its operations.
This measures the efficiency of the funds’ transfer process. Timely settlementof financial obligations is important as a measure of the efficiency of the Bank’s
processes.
Reporting of key financial performance metrics in a timely manner aids
decision making by management and facilitates the required corrective action
to improve performance.
This KPI represents the impairment on loans as a proportion of the period-end
balances. The granting of credit is the main purpose of the Bank and is also
one of the Bank’s principal sources of income and risk. The loan loss ratio is
an indicator of the quality and recoverability of loans granted to non-sovereign
borrowers.

Achievement
2015

2014

1.42%

1.76%

58.47%

52.00%

0.16%

0.18%

Within one monthof period end

Within one monthof period end

3.92%

1.79%

Annual Report 2015

●●

●●

●●

In 2015, the Bank earned income before allocation anddistributions approved by the Board of Governors of UA
93.16 million compared to UA 151.69 million in 2014. Thisdecrease is primarily due to an increase in impairment onloans and the impact of the fair valuation of borrowingsand derivatives which are typically volatile. Adjusted for theeffects of the fair valuation of borrowings and derivatives,income before allocation and distributions amounted to
UA 142.68 million for 2015 compared to UA 181.52 million
in 2014.
Total Bank Group administrative expenses decreased to
UA 323.3 million in 2015 from UA 372.1 million in 2014,
primarily due to lower expenses related to the Bank’s return
to its Headquarters. Total manpower expenses (excluding
actuarial valuation effects of benefit plans) decreased by
UA 33.07 million (12.58 percent) from UA 262.94 million in2014 to UA 229.87 million in 2015. The Bank’s share of thetotal Bank Group’s administrative expenses amounted to
UA 122 million for 2015 compared to UA 123.16 million in
the previous year. Bank Group administrative expenses areshared between the Bank, the ADF, and the NTF, based ona predetermined cost-sharing formula driven primarily by
the relative levels of certain operational volume indicatorsand relative balance sheet size.
The Bank continues to maintain a strong capital position.
Despite the ongoing challenges in its operating environment,
the Bank continues to generate sufficient levels of income
to facilitate contributions on behalf of its shareholders toother development initiatives in Africa. The Bank’s reserves,
plus accumulated loan loss provisions on outstanding loan
principal and charges, stood at UA 3.35 billion at the endof 2015 compared to UA 3.19 billion at the end of 2014.

Distributions Approvedby the Board of Governors
In 2015, the Board of Governors approved distributions fromthe 2014 income to various development initiatives in Africa
amounting to UA 124 million. The beneficiaries of these
distributions are listed under Note N to the financial statements.
In accordance with the Bank’s accounting policies, such
distributions are reported as expenses in the year they areapproved by the Board of Governors. The Boards of Directors
have also agreed to recommend to the Board of Governors,
at its Annual Meeting in May 2016, distributions totaling UA 95
million from the 2015 income to various development initiatives
in the RMCs. If approved by the Board of Governors, such

Chapter 6

distributions, and any others that may be approved by the
Board of Governors during 2016, will be reported as expenses
in the 2016 financial statements.

Control of Administrative Expenses
In order to maximize the resources available for development
financing and technical assistance activities in its member
countries, the Bank has an ongoing responsibility andcommitment to ensure maximum efficiency in the managementof its administrative and capital expenditures. Accordingly, theBank continues to focus on a high level of budgetary discipline,
effective cost controls and proactive cost-recovery programs inthe management of its administrative and capital expenses. For
the year ended 31 December 2015, the Bank Group’s generaladministrative expenses, excluding the expenses related to thereturn of its operations to its Headquarters in Abidjan, charges
for depreciation and amortization, were UA 294.83 million,
compared to UA 321.46 million in 2014. For 2016, the Bank
Group’s administrative expenditure is budgeted at UA 358.49
million. Management will continue to explore and implement
effective and transparent cost management strategies in orderto ensure that cost outcomes are effectively tracked against
the Bank’s long-term strategic objectives.

Investments
The Bank maintained a robust investment strategy in 2015,
consistent with a frequently changing global financial market
environment which has been characterized by low interest
rates. The Bank continues to adopt a prudent investment
strategy, prioritizing capital preservation and liquidity overattempting to generate higher income by taking on additionalrisks. As such, the Bank continues to target high-quality
liquid assets with short maturities with a focus on secured
investments where possible. As a result, the credit quality
and liquidity profile of the Bank’s investments remains verystrong. Despite the backdrop of higher volatility in the global
financial markets in 2015, the overall impact on returns
remained limited.
The Bank’s cash and treasury investments (net of repurchaseagreements) as of 31 December 2015 totaled UA 9.61 billion,
compared to UA 7.35 billion at the end of 2014. Investment
income for 2015 amounted to UA 122.21 million or a returnof 1.36 percent on an average liquidity of UA 8.97 billion,
compared to an income of UA 132.41 million, or a returnof 1.62 percent, on an average liquidity of UA 8.17 billion in
2014. Overall, the portfolios at fair value outperformed theiraverage benchmarks in the key currencies during the year.

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African Development Bank

Figure 6.1

The reduced return in 2015 compared to 2014 was a resultof a more challenging investment environment.

Outstanding Loan Portfolio by Product Typeat 31 December 2015 (Percentages)

The ADB’s liquid assets are tranched into 3 portfolios, namely,
operational portfolio, prudential portfolio, and equity-backed
portfolio, each with a different benchmark that reflects the cash
flow and risk profile of its assets and funding sources. Thesebenchmarks are 1-month LIBID for the operational portfolio,
and 6-month marked-to-market LIBOR, resetting on 1 Februaryand 1 August for the prudential portfolio. The operational andprudential portfolios are held for trading. The equity-backed
portfolio, which is held at amortized cost, is managed against
a repricing profile benchmark with 10 percent of the Bank’s net
assets repricing uniformly over a period of 10 years.

Multi-Currency
Fixed Rate 4.21%

Single Currency
Variable Rate 0.34%
Single Currency
Floating Rate
16.08%

Multi-Currency
Variable Rate
1.06%

Single Currency
Fixed Rate 78.31%

Loan Portfolio
The Bank makes loans to its regional member countries andpublic sector enterprises guaranteed by the government.
Loans are also extended to private sector enterprises without Disbursements
government guarantee.
Loan disbursements during 2015 amounted to UA 1.62 billion,
compared to UA 1.94 billion in 2014. At 31 December 2015,
Cumulative loans signed, net of cancellations, as at cumulative disbursements (including non-sovereign loans)
31 December 2015 amounted to UA 34.47 billion. This is amounted to UA 29.83 billion. A total of 924 loans were fully
UA 2.23 billion higher than the balance at 31 December 2014 disbursed amounting to UA 26.21 billion, representing 87.86
when the cumulative loans signed stood at UA 32.24 billion. percent of cumulative disbursements. Loan disbursements
Table 6.4 presents the evolution of loans approved, disbursed in 2015 by country are shown in Table 6.5.
and undisbursed balances from 2011 to 2015.

Repayments

Total disbursed and outstanding loans as at 31 December
2015 was UA 13.07 billion, an increase of UA 0.42 billion
over the UA 12.65 billion outstanding as at the end of 2014.
Undisbursed balances of signed loans at 31 December 2015
totaled UA 4.64 billion, an increase of UA 0.89 billion over the
UA 3.75 billion of undisbursed loans at 31 December 2014.

Principal loan repayments amounted to UA 927.93 million
in 2015 compared to UA 795.56 million realized in 2014,
representing an increase of 16.64 percent over the previous
year. Cumulative repayments as of 31 December 2015 were
UA 16.81 billion compared to UA 15.69 billion at 31 December
2014. Figure 6.2 shows the evolution of loan disbursements
and repayments for the period, 2011-2015.

As at 31 December 2015, the number of active loans was
346 while 709 loans amounting to UA 13.15 billion had been Outlook for 2016
fully repaid. A breakdown of the outstanding loan portfolio by The Bank is expected to be impacted by the continuing
product type is presented in Figure 6.1.
turbulence in the global financial markets given the sensitivity

Table 6.4

Lending Status, 2011-2015(UA millions)
Loans Approved*
Disbursements
Undisbursed Balances*2011
2,446.72
1,868.79
5,301.02

Excludes approvals of special funds and equity participations but includes guarantees.

116

2012
1,801.47
2,208.17
4,463.23

2013
1,705.04
1,430.78
4,490.13

2014
3,052.29
1,938.53
3,751.22

2015
4,373.44
1,619.17
4,640.60

Annual Report 2015of its financial results to changes in these domains. The diligent
monitoring of their impacts on the volume of the Bank’s
lending and the timing of repayment of its loans in 2016 andbeyond, is critical if it is to ensure that it continues to effectively
deliver on its development mandate. The Bank’s Ten-Year
Strategy, approved in 2013, continues to shape the Bank’s
interventions and operations over the planning horizon to2022. The strategic focus on the five key operational priorities,
including infrastructure development, regional integration,
private sector development, governance and accountability,
and skills and technology provides the Bank with a unifying
framework under the High 5s for the effective delivery of its
operational activities in the coming year and beyond.
As at end 2015, the Bank’s move back to its statutory
headquarters in Abidjan, Côte d’Ivoire was virtually complete,restoring the much-needed stability and the resultant efficiency
in the Bank’s operational environment in the short term. In thelong term, the completion of the move is expected to result inthe stabilization of the level of administrative expenses which
spiked somewhat at the peak of the move, particularly, in2014 and 2015. A positive consequence of this is that theachievement of the target cost/income ratio of 30 percent
will be possible in the medium term.

Managing Investment Performancein a Challenging Financial Markets Context
The Bank’s borrowing and investment activities in 2015
were undertaken in a challenging environment of significant
volatility in the global financial markets. The first half of 2015
was dominated by events in Greece as the newly elected
government sought to renegotiate the country’s bailout termswith its creditors. After months of protracted negotiation,
following the near-collapse of the Greek financial system, andtheir exit from the Eurozone becoming a distinct possibility,
the government accepted a further bailout under stringent
terms. Market fears of a Greek default and concerns overthe future of the Eurozone created substantial stress acrossfinancial markets. This led to the widening of credit spreadsof European sovereigns and supranational institutions, thelatter representing the largest creditors to Greece following
its debt restructuring in 2012.

Chapter 6

Table 6.5

Loan Disbursements by Country in 2015
(UA millions)
Country
Botswana
Burkina Faso
Cabo Verde
Cameroon
Côte d'Ivoire
Democratic Republic of Congo
Egypt
Equatorial Guinea
Gabon
Ghana
Kenya
Mali
Mauritius
MoroccoMozambique
Namibia
Nigeria
RwandaSenegalSouth Africa
Swaziland
Togo
Tunisia
UgandaZambiaMultinational
TOTAL

Amount disbursed
4.06
2.00
14.46
8.58
64.32
33.91
128.82
4.81
0.03
1.08
83.26
5.55
28.72
329.915.20
44.31
219.033.39
29.85
155.970.50
3.06
289.82
0.12
39.26
119.14
1,619.17

Figure 6.2

Loan Disbursements and Repayments,
2011-2015 (UA millions)Disbursements

Loan Repayments

2,000

1,500

1,000

500

0

In the second half of the year, as concerns over Greece abated,volatility was triggered by weak economic data in China that
was amplified by expected monetary tightening in the UnitedStates, rapidly declining oil prices, and the high private sector
indebtedness in a number of emerging market economies. In

2011

2012

2013

2014

2015

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African Development Bank

particular, the perceived fragility of China’s economy had major The lower interest-rate environment reduced the returns on theimplications for the global financial markets, triggering falls in Bank’s treasury investment portfolios. However, in the case
global equity and commodity markets as well as emerging of ADB’s liquidity portfolios, the lower investment income wasmarket currencies. In response, and in light of persistently low subsequently offset by reductions in borrowing costs. Given
inflation, global central banks continued to employ extremely the volatile global market, the Bank maintained a conservative
accommodative monetary policies, cutting interest rates investment strategy, prioritizing capital preservation and liquidity.
to historically low (and in some cases negative) levels. A Accordingly, the Bank targeted high quality liquid assets with shorter
notable exception was the US Federal Reserve, which began maturities, with a focus on secured investments where possible.
tightening monetary policy, increasing rates in December for As a result, the credit quality and liquidity profile of the Bank’s
the first time since 2008.
investment remains very strong, whilst volatility of returns is limited.

118

African Development Bank
Financial Statements andReport of the Independent Auditor
Year ended 31 December 2015

Balance Sheet
Income Statement
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Report of the Independent Auditor

122
124
125
126
127
128
211

Chapter 6

African Development Bank

Balance sheet
as at 31 December 2015
(UA thousands – Note B)
ASSETS

2015

2014

1,214,608

406,709

3,801

3,801

-

34,511

TREASURY INVESTMENTS (Note F)

8,392,261

7,341,624

DERIVATIVE ASSETS (Note G)

1,454,625

1,143,678

271

739

489,537

190,662
449,497
640,159

13,698,075

12,496,518
112,704
596,818
94,111
13,300,151

93,55978,834626
79,46025,346,737

22,950,832

CASH
DEMAND OBLIGATIONSSECURITIES PURCHASED UNDER RESALE AGREEMENTS

NON-NEGOTIABLE INSTRUMENTS ON ACCOUNT OF CAPITAL (Note H)
ACCOUNTS RECEIVABLE
Accrued income and charges receivable on loans (Note I)
Other accounts receivable

DEVELOPMENT FINANCING ACTIVITIESLoans, net (Notes D & I)
Hedged loans – Fair value adjustment (Note G)
Equity participations (Note J)
Other securities (Note K)
OTHER ASSETS
Property, equipment and intangible assets (Note L)
Miscellaneous

TOTAL ASSETS
The accompanying notes to the financial statements form part of this statement.

122

196,979
292,558

12,868,547
79,837703,268
46,42392,828731

Annual Report 2015

Chapter 6

LIABILITIES & EQUITYACCOUNTS PAYABLE
Accrued financial charges
Other accounts payable

DERIVATIVE LIABILITIES (Note G)

EQUITY (Note N)
CapitalSubscriptions paid
Cumulative Exchange Adjustment on Subscriptions (CEAS)
Subscriptions paid (net of CEAS)
Reserves
Total equity

TOTAL LIABILITIES & EQUITY

2014

1,332,383

261,564
950,249
1,211,813-

429,317

1,084,992

853,735

16,449,265

13,481,627
894,326
14,375,953

177,155
1,155,228

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

BORROWINGS (Note M)
Borrowings at fair value
Borrowings at amortized cost2015

15,851,251
598,0143,727,691(168,842)
3,558,849

3,438,232(173,538)
3,264,694

2,921,248
6,480,097

2,815,320
6,080,014

25,346,737

22,950,832

The accompanying notes to the financial statements form part of this statement.

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African Development Bank

Income statement
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

OPERATIONAL INCOME & EXPENSES
Income from:
Loans (Note O)
Investments and related derivatives (Note O)
Equity investments (Dividends)
Other securities
Total income from loans and investments

350,207122,213
15,0503,734
491,204

342,128
132,4146,335
3,851
484,728

Borrowing expenses (Note P)
Interest and amortized issuance costs
Net interest on borrowing-related derivatives
Unrealized losses on borrowings, related derivatives and others(346,134)
180,219(49,516)(375,961)
221,207(29,830)

Net impairment charge (Note I)
Loan principal
Loan charges
Provision for impairment on equity investments (Note J)
Translation gains/(losses)
Other income
Net operational income(51,577)(13,848)433
14,605
4,266
229,652(1,566)(16,451)
748(4,071)
3,391
282,195

OTHER EXPENSES
Administrative expenses (Note Q)
Depreciation – Property, equipment and intangible assets (Note L)
Sundry (expenses)/income
Total other expenses(121,999)(9,052)(5,441)(136,492)(123,157)(7,608)262(130,503)

Income before distributions approved by the Board of Governors

93,160151,692

Distributions of income approved by the Board of Governors (Note N)(124,000)(120,000)NET (LOSS)/INCOME FOR THE YEAR

(30,840)

31,692

The accompanying notes to the financial statements form part of this statement.

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Annual Report 2015

Chapter 6

Statement of comprehensive income
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

NET (LOSS)/INCOME FOR THE YEAR

(30,840)

31,692OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to profit or loss
Net gains on financial assets at fair value through “other comprehensive income”
Unrealized gain/(loss) on fair-valued borrowings arising from “own credit”
Remeasurements of defined benefit liability
Total items that will not be reclassified to profit or loss
Total other comprehensive income

38,21473,05825,496
136,768
136,768

20,596(32,136)(61,713)(73,253)(73,253)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

105,928(41,561)

The accompanying notes to the financial statements form part of this statement.

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African Development Bank

Statement of changes in equity
for the year ended 31 December 2015
(UA thousands – Note B)

BALANCE AT 1 JANUARY 2014
Net income for the year
Other comprehensive income
Net gains on financial assets at fair value
through “other comprehensive income”
Unrealized losses on fair-valued
borrowings arising from "own credit"
Remeasurement of defined benefit liability
Total other comprehensive income
Net increase in paid-up capital
Net conversion losses on new subscriptions
BALANCE AT 31 DECEMBER 2014 AND
1 JANUARY 2015
Net loss for the year
Other comprehensive income
Net gains on financial assets at fair value
through “other comprehensive income”
Unrealized gains on fair-valued
borrowings arising from "own credit"
Remeasurement of defined benefit liability
Total other comprehensive income
Net increase in paid-up capital
Net conversion gains on new subscriptions
BALANCE AT 31 DECEMBER 2015

CapitalSubscriptions
Paid

Cumulative
Exchange
Adjustment on
Subscriptions

3,147,084(172,654)

2,964,743(213,145)

42,72562,558

5,831,311--

31,692---

31,692----

20,596-

20,596291,148
-

(884)

-

(61,713)(61,713)-

20,596-(32,136)(32,136)-(32,136)(61,713)(73,253)
291,148(884)

3,438,232(173,538)

2,996,435(274,858)

63,32130,422

6,080,014--(30,840)---(30,840)

-

-

-

-

38,214-

38,214289,459
3,727,691

4,696(168,842)

2,965,595

25,49625,496(249,362)

38,214
101,535

73,05873,058103,480

73,05825,496
136,768
289,459
4,696
6,480,097

The accompanying notes to the financial statements form part of this statement.

126

Reserves
Net Gains on
Unrealized
Financial Assets Gains/ (Losses)
Remeasure­at Fair Value on Fair-Valued
ments of through Other
Borrowings
Retained Defined Benefit Compre­hen­sive
Arising from
Earnings
Liability
Income“Own Credit”

Total
EquityAnnual Report 2015

Chapter 6

Statement of cash flows
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

OPERATING ACTIVITIES:Net (loss)/income(30,840)

31,692Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
Provision for impairment on loan principal and charges
Unrealized losses on investments and related derivatives
Amortization of discount or premium on treasury investments at amortized cost
Provision for impairment on equity investments
Amortization of borrowing issuance costs
Unrealized losses on borrowings, related derivatives and others
Translation (gains)/losses
Share of profits in associate
Net movements in derivatives
Changes in accrued income on loans
Changes in accrued financial charges
Net change in reverse repurchase agreements and cash collateral on securities borrowed
Changes in other receivables and payables
Net cash provided by operating activities

9,052
65,42532,2903,902(433)(14,129)
65,443(14,605)394
27,618(9,247)(84,407)(394,806)
414,026
69,683

7,608
18,01735,333(2,767)(748)
2,971
27,195
4,071
633
146,574(21,612)(170,779)
394,806
289,538
762,532(1,619,171)
927,930(1,938,532)
795,557(208,427)
234,559(23,740)
695(76,238)
17,400(746,992)(420,879)(826,847)(45,837)
67(68,515)
32,664(2,472,322)

FINANCING ACTIVITIES:New borrowings
Repayments on borrowings
Cash from capital subscriptions
Net cash provided by financing activities

5,484,651(3,312,314)
294,155
2,466,492

4,515,243(3,688,517)
290,264
1,116,990

Effect of exchange rate changes on cash and cash equivalents
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

(35,989)
1,753,194
650,6812,403,875(24,039)(616,839)
1,267,520
650,681COMPOSED OF:
Investments maturing within 3 months of acquisition:
Investments at fair value through profit and loss
Cash
Cash and cash equivalents at the end of the year

1,189,267
1,214,608
2,403,875

243,972
406,709650,681(250,322)
488,793
15,050(325,533)
477,4396,165

281,278(64,417)(151,274)

92,075
209,017(220,261)

CASH FLOWS FROM:INVESTING, LENDING AND DEVELOPMENT ACTIVITIES:
Disbursements on loans
Repayments of loans
Investments maturing after 3 months of acquisition:
Investments at amortized cost
Investments at fair value through profit and loss
Acquisition of fixed assets
Disposal of fixed assets
Disbursements on equity participations
Repayments on equity participations
Net cash used in investing, lending and development activities

SUPPLEMENTARY DISCLOSURE:
1. Operational cash flows from interest and dividends:
		 Interest paid
		 Interest received
		 Dividend received
2. Movement resulting from exchange rate fluctuations:		Loans
		Borrowings
		 Currency swaps
The accompanying notes to the financial statements form part of this statement.

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African Development Bank

Notes to the financial statements
Year ended 31 December 2015

Note A — Operations and affiliated organizations
The African Development Bank (ADB or the Bank) is a multilateral development finance institution dedicated to the economic
and social progress of its regional member states. The Bank’s headquarters is located in Abidjan, Côte d’Ivoire. The Bankfinances development projects and programs in its regional member states, typically in cooperation with other national orinternational development institutions. In furtherance of this objective, the Bank participates in the selection, study andpreparation of projects contributing to such development and, where necessary, provides technical assistance. The Bank
also promotes investments of public and private capital in projects and programs designed to contribute to the economic
and social progress of the regional member states. The activities of the Bank are complemented by those of the African
Development Fund (ADF or the Fund), which was established by the Bank and certain countries; and the Nigeria Trust Fund(NTF), which is a special fund administered by the Bank. The ADB, ADF, and NTF each have separate and distinct assets
and liabilities. There is no recourse to the ADB for obligations in respect of any of the ADF or NTF liabilities. The ADF wasestablished to assist the Bank in contributing to the economic and social development of the Bank’s regional members, topromote cooperation and increased international trade particularly among the Bank’s members, and to provide financing
on concessional terms for such purposes.
In accordance with Article 57 of the Agreement Establishing the Bank, the Bank, its property, other assets, income andits operations and transactions shall be exempt from all taxation and customs duties. The Bank is also exempt from any
obligation to pay, withhold or collect any tax or duty.

Note B — Summary of significant accounting policies
The Bank’s individual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS)
promulgated by the International Accounting Standards Board. The financial statements have been prepared under thehistorical cost convention except for certain financial assets and financial liabilities that are carried at fair value.
The significant accounting policies applied by the Bank in the preparation of the financial statements are summarized below.

Revenue Recognition
Interest income is accrued and recognized based on the effective interest rate for the time such instrument is outstanding andheld by the Bank. The effective interest rate is the rate that discounts the estimated future cash flows through the expected
life of the financial asset to the asset’s net carrying amount.
Income from investments includes realized and unrealized gains and losses on financial instruments measured at fair value
through profit or loss.
Dividends are recognized in income statement when the Bank’s right to receive the dividends is established in accordancewith IAS 18 – Revenue.

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Annual Report 2015

Chapter 6

Functional and Presentation Currencies
The Bank conducts its operations in the currencies of its member countries. As a result of the application of IAS 21 revised,“The Effects of Changes in Foreign Exchange Rates”, the Bank prospectively changed its functional currency from the currencies
of all its member countries to the Unit of Account (UA) effective 1 January 2005, as it was concluded that the UA mostfaithfully represented the aggregation of economic effects of events, conditions and the underlying transactions of the Bank
conducted in different currencies. The UA is also the currency in which the financial statements are presented. The value ofthe Unit of Account is defined in Article 5.1 (b) of the Agreement establishing the Bank (the Agreement) as equivalent to one
Special Drawing Right (SDR) of the International Monetary Fund (IMF) or any unit adopted for the same purpose by the IMF.

Currency Translation
Income and expenses are translated to UA at the rates prevailing on the date of the transaction. Monetary assets andliabilities are translated into UA at rates prevailing at the balance sheet date. The rates used for translating currencies into
UA at 31 December 2015 and 2014 are reported in Note V-1. Non-monetary assets and liabilities are translated into UA at
historical rates. Translation differences are included in the determination of net income. Capital subscriptions are recorded
in UA at the rates prevailing at the time of receipt. The translation difference relating to payments of capital subscriptions isreported in the financial statements as the Cumulative Exchange Adjustment on Subscriptions (CEAS). This is composed of thedifference between the UA amount at the predetermined rate and the UA amount using the rate at the time of receipt. Whencurrencies are converted into other currencies, the resulting gains or losses are included in the determination of net income.

Member Countries’ Subscriptions
Although the Agreement establishing the ADB allows for a member country to withdraw from the Bank, no member has
ever withdrawn its membership voluntarily, nor has any indicated to the Bank that it intends to do so. The stability in themembership reflects the fact that the members are African and non-African countries, committed to the purpose of the Bank
to contribute to the sustainable economic development and social progress of its Regional Member Countries individuallyand jointly. Accordingly, as of 31 December 2015, the Bank did not expect to distribute any portion of its net assets due tomember country withdrawals.
In the unlikely event of a withdrawal by a member, the Bank shall arrange for the repurchase of the former member’s shares.
The repurchase price of the shares is the value shown by the books of the Bank on the date the country ceases to bea member, hereafter referred to as “the termination date”. The Bank may partially or fully offset amounts due for sharespurchased against the member’s liabilities on loans and guarantees due to the Bank. The former member would remain liablefor direct obligations and contingent liabilities to the Bank for so long as any parts of the loans or guarantees contracted
before the termination date are outstanding. If at a date subsequent to the termination date, it becomes evident that losses
may not have been sufficiently taken into account when the repurchase price was determined, the former member may berequired to pay, on demand, the amount by which the repurchase price of the shares would have been reduced had thelosses been taken into account when the repurchase price was determined. In addition, the former member remains liable
on any call, subsequent to the termination date, for unpaid subscriptions, to the extent that it would have been required torespond if the impairment of capital had occurred and the call had been made at the time the repurchase price of its shares
was determined.
Were a member to withdraw, the Bank may set the dates in respect of payments for shares repurchased. If, for example,
paying a former member would have adverse consequences for the Bank’s financial position, the Bank could defer payment
until the risk had passed, and indefinitely if appropriate. Furthermore, shares that become unsubscribed for any reason may
be offered by the Bank for purchase by eligible member countries, based on the share transfer rules approved by the Boardof Governors. In any event, no payments shall be made until six months after the termination date.

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African Development Bank

If the Bank were to terminate its operations, all liabilities of the Bank would first be settled out of the assets of the Bank andthen, if necessary, out of members’ callable capital, before any distribution could be made to any member country. Such
distribution is subject to the prior decision of the Board of Governors of the Bank and would be based on the pro-rata shareof each member country.

Employee Benefits
1) Pension Obligations
The Bank operates a contributory defined benefit pension plan for its employees. The Staff Retirement Plan (SRP) provides
benefit payments to participants upon retirement. A defined benefit plan is a pension plan that defines an amount of pension
benefit that an employee will receive on retirement, usually dependent on one or more factors such as accrual rate, age,contribution years of service and average remuneration. An actuarial valuation of the cost of providing benefits for the SRP isdetermined using the Projected Unit Credit Method. Upon reaching retirement age, pension is calculated based on the average
remuneration for the final three years of pensionable service and the pension is subject to annual inflationary adjustments.
Actuarial gains and losses as well as the differences between expected and real returns on assets are recognized immediately
in other comprehensive income in the year they occur. When benefits of a plan are changed or when a plan is curtailed, theresulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit
or loss. The pension liability is recognized as part of other accounts payable in the balance sheet. The liability represents
the present value of the Bank’s defined benefit obligations, net of the fair value of plan assets.

2) Post-Employment Medical Benefits
The Bank operates a contributory defined Medical Benefit Plan (MBP), which provides post-employment healthcare benefits
to eligible former staff, including retirees. Membership of the MBP includes both staff and retirees of the Bank. The entitlement
to the post-retirement healthcare benefit is usually conditional on the employee contributing to the Plan up to retirement
age and the completion of a minimum service period. The expected costs of these benefits derive from contributions fromplan members as well as the Bank and are accrued over the period of employment and during retirement. Contributions
by the Bank to the MBP are charged to expenses and included in the income statement. The MBP Board, an independent
body created by the Bank, determines the adequacy of the contributions and is authorized to recommend changes to thecontribution rates of both the Bank and plan members. Actuarial gains and losses as well as the difference between expected
and real return on assets are recognized immediately in other comprehensive income in the year they occur. The medical
plan liability is recognized as part of other accounts payable in the balance sheet. The liability represents the present valueof the Bank’s post-employment medical benefit obligations, net of the fair value of plan assets.
Further details and analysis of the Bank’s employee benefits are included in Note R – Employee Benefits.

Financial Instruments
Financial assets and financial liabilities are recognized on the Bank’s balance sheet when the Bank assumes related contractual
rights or obligations.

1) Financial Assets
In accordance with IFRS 9, the Bank manages its financial assets in line with the applicable business model and, accordingly,classifies its financial assets into the following categories: financial assets at amortized cost; financial assets at fair value
through profit or loss (FVTPL); and financial assets at fair value through other comprehensive income (FVTOCI). In line with
the Bank’s business model, financial assets are held either for the stabilization of income through the management of net
interest margin or for liquidity management. The Bank’s investments in the equity of enterprises, whether in the private or
public sector is for the promotion of economic development of its member countries and not for trading to realize fair valuechanges. Management determines the classification of its financial assets at initial recognition.

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Annual Report 2015

i)

Chapter 6

Financial Assets at Amortized Cost
A financial asset is classified as at ‘amortized cost’ only if the asset meets two criteria: the objective of the Bank’sbusiness model is to hold the asset to collect the contractual cash flows; and the contractual terms give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal outstanding. The nature of any
derivatives embedded in debt investment are considered in determining whether the cash flows of the investment aresolely payment of principal and interest on the principal outstanding and are not accounted for separately.
If either of the two criteria above is not met, the financial asset is classified as at fair value through profit or loss.
Financial assets at amortized cost include some loans and receivables on amounts advanced to borrowers and certain
debt investments that meet the criteria of financial assets at amortized cost. Receivables comprise demand obligations,accrued income and receivables from loans and investments and other amounts receivable. Loans and receivables
meeting the two criteria above are carried at amortized cost using the effective interest method.
Loan origination fees are deferred and recognized over the life of the related loan as an adjustment of yield. The
amortization of loan origination fee is included in income from loans.
Loans that have a conversion option that could potentially change the future cash flows to no longer represent solely
payments of principal and interest are measured at FVTPL as required by IFRS 9. The fair value is determined using
the expected cash flows model with inputs including interest rates and the borrower’s credit spread estimated basedon the Bank’s internal rating methodology for non-sovereign loans.
Investments classified as financial assets at amortized cost include investments that are non-derivative financial assets
with fixed or determinable payments and fixed maturities. These investments are carried and subsequently measured
at amortized cost using the effective interest method.

ii) Financial Assets at Fair Value through Profit or Loss (FVTPL)
Debt instruments that do not meet the amortized cost criteria as described above are measured at FVTPL. This
category includes all treasury assets held for resale to realize short-term fair value changes as well as certain loans forwhich either of the criteria for recognition at amortized cost is not met. Gains and losses on these financial assets arereported in the income statement in the period in which they arise. Derivatives are also categorized as financial assets
at fair value through profit or loss.
In addition, debt instruments that meet amortized cost criteria can be designated and measured at FVTPL. A debt
instrument may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces
a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognizing thegains and losses on them on different bases.

iii) Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
On initial recognition, the Bank can make an irrevocable election (on an instrument-by-instrument basis) to designate
investments in equity instruments not held for trading as financial assets measured at FVTOCI.
Equity investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fairvalue with gains and losses arising from changes in fair value recognized in other comprehensive income. The cumulative
gains or losses are not reclassified to profit or loss on disposal of the investments and no impairments are recognizedin the profit or loss. Dividends earned from such investments are recognized in profit and loss unless the dividends
clearly represent a repayment of part of the cost of the investment.

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African Development Bankiv) Financial Guarantee Contracts
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder
for an incurred loss because a specified debtor fails to make payments when due in accordance with the terms of a
specified debt instrument. The Bank issues such financial guarantees - which are not managed on a fair value basis- to its clients including banks, financial institutions and other parties. IFRS 9 require written financial guarantees thatare managed on a fair value basis to be designated at fair value through profit or loss. However, financial guarantees
that are not managed on a fair value basis are initially recognized in the financial statements at fair value. Subsequent
to initial recognition, these financial guarantees are measured at the higher of the amount initially recognized lesscumulative amortization, and to the extent a payment under the guarantee has become probable, the present value ofthe expected payment. Any change in the liability relating to probable expected payments resulting from guarantees
is recorded in the income statement as an expense or a recovery, in line with IAS 37.

Recognition and Derecognition of Financial Assets
Purchases and sales of financial assets are recognized or derecognized on a trade-date basis, which is the date on which
the Bank commits to purchase or sell the asset. Loans are recognized when cash is advanced to the borrowers. Financial
assets not carried at fair value through profit or loss are initially recognized at fair value plus transaction costs. Financial
assets are derecognized when the rights to receive cash flows from the financial assets have expired or where the Bank
has transferred substantially all risks and rewards of ownership.

Securities Purchased Under Resale Agreements, Securities Lent Under Securities Lending Agreements
and Securities Sold Under Repurchase Agreements and Payable for Cash Collateral Received
Securities purchased under resale agreements, securities lent under securities lending agreements, and securities sold under
repurchase agreements are recorded at market rates. The Bank receives securities purchased under resale agreements,
monitors the fair value of the securities and, if necessary, closes out transactions and enters into new repriced transactions.
The securities transferred to counterparties under the repurchase and security lending arrangements and the securities
transferred to the Bank under the resale agreements do not meet the accounting criteria for treatment as a sale. Therefore,
securities transferred under repurchase agreements and security lending arrangements are retained as assets on the Bank
balance sheet, and securities received under resale agreements are not recorded on the Bank’s balance sheet. In cases
where the Bank enters into a “reverse repo” – that is, purchases an asset and simultaneously enters into an agreement
to resell the same at a fixed price on a future date – a receivable from reverse repurchase agreement is recognized in thestatement of financial position and the underlying asset is not recognized in the financial statements.

Cash and Cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and other short-term, highly liquid investments thatare readily convertible to a known amount of cash, are subject to insignificant risk of changes in value and have a time tomaturity upon acquisition of three months or less.

2) Financial Liabilitiesi)

Borrowings
In the ordinary course of its business, the Bank borrows funds in the major capital markets for lending and liquidity
management purposes. The Bank issues debt instruments denominated in various currencies, with differing maturities
at fixed or variable interest rates. The Bank’s borrowing strategy is driven by three major factors, namely: timeliness inmeeting cash flow requirements, optimizing asset and liability management with the objective of mitigating exposure
to financial risks, and providing cost-effective funding.

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In addition to long and medium-term borrowings, the Bank also undertakes short-term borrowing for cash and liquidity
management purposes only. Borrowings not designated at fair value through profit or loss are carried on the balance
sheet at amortized cost with interest expense determined using the effective interest method. Borrowing expenses
are recognized in profit or loss and include the amortization of issuance costs, discounts and premiums, which isdetermined using the effective interest method. Borrowing activities may create exposure to market risk, most notablyinterest rate and currency risks.
The Bank uses derivatives and other risk management approaches to mitigate such risks. Details of the Bank’s risk
management policies and practices are contained in Note D to these financial statements. Certain of the Bank’sborrowings obtained prior to 1990, from the governments of certain member countries of the Bank, are interest-freeloans. In accordance with the exemption provided in the provisions of IAS 20 – Accounting for Government Grants
and Disclosure of Government Assistance, such borrowings are carried at the amounts at which they are repayable
on their due dates.

ii) Financial Liabilities at Fair Value through Profit or Loss
This category has two sub-categories: financial liabilities held for trading, and those designated at fair value through profit
or loss at inception. Derivatives are categorized as held-for-trading. The Bank applies fair value designation primarily toborrowings that have been swapped into floating-rate debt using derivative contracts. In these cases, the designationof the borrowing at fair value through profit or loss is made in order to significantly reduce accounting mismatches that
otherwise would have arisen if the borrowings were carried on the balance sheet at amortized cost while the related
swaps are carried on the balance sheet at fair value.
In accordance with IFRS 9, fair value changes for financial liabilities that are designated as at fair value through profit or loss,
that is attributable to changes in the Bank’s “own credit” risk is recognized in other comprehensive income. Changes in fairvalue attributable to the Bank’s credit risk are not subsequently reclassified to profit or loss.

iii) Other Liabilities
All financial liabilities that are not derivatives or designated at fair value through profit or loss are recorded at amortizedcost. The amounts include certain borrowings, accrued finance charges on borrowings and other accounts payable.
Financial liabilities are derecognized when they are discharged or canceled or when they expire.

Derivatives
The Bank uses derivative instruments in its portfolios for asset/liability management, cost reduction, risk management andhedging purposes. These instruments are mainly cross-currency swaps and interest rate swaps. The derivatives on borrowings
are used to modify the interest rate or currency characteristics of the debt the Bank issues. This economic relationship isestablished on the date the debt is issued and maintained throughout the terms of the contracts. The interest componentof these derivatives is reported as part of borrowing expenses.
The Bank classifies all derivatives at fair value, with all changes in fair value recognized in the income statement. When thecriteria for the application of the fair value option are met, then the related debt is also carried at fair value with changes infair value recognized in the income statement.
The Bank assesses its hybrid financial assets (i.e. the combined financial asset host and embedded derivative) in its entirety
to determine their classification. A hybrid financial asset is measured at amortized cost if the combined cash flows represent
solely principal and interest on the outstanding principal; otherwise it is measured at fair value. As at 31 December 2015,
the Bank had hybrid financial assets that were measured at fair value in accordance with IFRS 9.

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Derivatives embedded in financial liabilities or other non-financial host contracts are treated as separate derivatives when
their risks and characteristics were not closely related to those of the host contract and the host contract was not carriedat fair value with unrealized gains or losses reported in profit or loss. Such derivatives are stripped from the host contract
and measured at fair value with unrealized gains and losses reported in profit or loss.

Derivative Credit Valuation and Debit Valuation Adjustment (CVA/DVA)
Valuation adjustment for counterparty risk (CVA/DVA) is recognized on derivative financial instruments to reflect the impact
on fair value of counterparty credit risk and the Bank’s own credit quality. This adjustment takes into account the existing
compensating agreements for each of the counterparties. The CVA is determined on the basis of the expected positive
exposure of the Bank vis-à-vis the counterparty, the probability of default of the counterparty, recovery rates, and the amountof loss in case of a default, on a counterparty basis. The DVA is calculated in a symmetric way on the basis of the expected
negative exposure. These calculations are recognized on the life of the potential exposure, and concentrates on the use ofobservable and relevant market data.

Hedge Accounting
The Bank applies fair value hedge accounting to interest rate swaps contracted to hedge the interest rate risk exposure
associated with its fixed rate loans. Under fair value hedge accounting, the change in the fair value of the hedging instrument
and the change in the fair value of the hedged item attributable to the hedged risk are recognized in the income statement.
At inception of the hedge, the Bank documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking the hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the Bank documents whether the hedging instrument is highly effective inoffsetting changes in fair values of the hedged item attributable to the hedged risk. Hedge accounting is discontinued whenthe Bank’s risk management objective for the hedging relationship has changed, when the hedging instrument expires or issold, terminated, or exercised, or when it no longer qualifies for hedge accounting. The cumulative fair value adjustment tothe carrying amount of the hedged item arising from the hedged risk is amortized to profit or loss from that date.

Impairment of Financial Assets
Assets Carried at Amortized Cost
The Bank first assesses whether objective evidence of impairment exists individually for financial assets. If the Bank determinesthat no objective evidence of impairment exists for an individually assessed financial asset, that asset is included in a groupof financial assets with similar credit characteristics and collectively assessed for impairment. Assets that are individuallyassessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective
assessment of impairment. A financial asset or a group of financial assets is impaired and impairment losses are incurred if,
and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognitionof the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated.
If the Bank determines that there is objective evidence that an impairment loss on loans and receivables or investments
carried at amortized cost has been incurred, the amount of the impairment loss is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that havenot been incurred) discounted at the financial asset’s original effective interest rate. For sovereign-guaranteed loans, theestimated impairment representing present value losses arises from delays that may be experienced in receiving amounts
due. For non-sovereign-guaranteed loans, the impairment reflects management’s best estimate of the non-collectability, inwhole or in part, of amounts due as well as delays in the receipt of such amounts.

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The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognizedin the income statement. If a loan or investment carried at amortized cost has a variable interest rate, the discount rate formeasuring any impairment loss is the current effective interest rate determined under the contract. Interest and charges are
accrued on all loans including those in arrears. When a subsequent event causes the amount of impairment loss to decrease,the decrease in impairment loss is reversed through profit or loss.

Offsetting of Financial Instruments
Financial assets and liabilities are offset and reported on a net basis when there is a current legally enforceable right tooff-set the recognized amount. A current legally enforceable right exists if the right is not contingent on a future event andis enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity andall counterparties and there is an intention on the part of the Bank to settle on a net basis, or realize the asset and settle
the liability simultaneously. The Bank discloses all recognized financial instruments that are set off and those subject to an
enforceable master netting arrangement or similar agreement, irrespective of whether they are offset. Information relating
to financial assets and liabilities that are subject to offsetting, enforceable master netting arrangement is provided in Note D.

Fair Value Disclosure
In liquid or active markets, the most reliable indicators of fair value are quoted market prices. A financial instrument isregarded as quoted in an active market if quoted prices are regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions
on an arm’s length basis. If the above criteria are not met, the market is regarded as being inactive. Indications that a market
might be inactive include when there is a wide bid-offer spread or significant increase in the bid-offer spread or there are
few or no recent transactions observed in the market. When markets become illiquid or less active, market quotations may
not represent the prices at which orderly transactions would take place between willing buyers and sellers and therefore
may require adjustment in the valuation process. Consequently, in an inactive market, price quotations are not necessarily
determinative of fair values. Considerable judgment is required to distinguish between active and inactive markets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair values of financial assets and financial liabilities that are traded in
active markets are based on quoted market prices or dealer price quotations. For all other financial instruments the Bank
measures fair values using other valuation techniques that incorporate the maximum use of market data inputs.
The objective of the valuation techniques applied by the Bank is to arrive at a reliable fair value measurement.
Other valuation techniques include net present value, discounted cash flow analysis, option pricing models, comparison
to similar instruments for which market observable prices exists and other valuation models commonly used by market
participants. Assumptions and inputs used in valuation techniques include risk free and benchmark interest rates, credit
spreads and other premiums used in estimating discount rates, bond and equity prices, foreign currency exchange rates
and expected price volatilities and correlations.
The Bank uses widely recognized valuation models for measuring the fair value of common and more simple financial
instruments, like interest rate and currency swaps that use only observable market data and require little management judgment
and estimation. Availability of observable market prices and model inputs reduces the need for management judgment andestimation and also reduces the uncertainty associated with the measurement of fair value. Observable market prices andinputs available vary depending on the products and markets and are subject to changes based on specific events andgeneral conditions in the financial markets.

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Where the Bank measures portfolios of financial assets and financial liabilities on the basis of net exposures, it applies
judgment in determining appropriate portfolio level adjustments such as bid-ask spread. Such judgments are derived fromobservable bid-ask spreads for similar instruments and adjusted for factors specific to the portfolio.
The following three hierarchical levels are used for the measurement of fair value:
Level 1:

Quoted prices in active markets for the same instrument (i.e. without modification or repackaging).

Level 2: Quoted prices in active markets for similar assets or liabilities or other valuation techniques for which all significant
inputs are based on observable market data. Included in this category are instruments valued using: quoted market prices in
active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered lessthan active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
Level 3: Valuation techniques for which significant input is not based on observable market data and the unobservable
inputs have a significant effect on the instrument’s valuation. Instruments that are valued based on quoted market prices for
similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between
the instruments are included in this category.
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on thebasis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significanceof an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs
that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. A valuation
input is considered observable if it can be directly observed from transactions in an active market, or if there is compellingexternal evidence demonstrating an executable exit price.
The methods and assumptions used by the Bank in measuring the fair values of financial instruments are as follows:
Cash: The carrying amount is the fair value.
Investments: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices
are not available, fair values are based on quoted market prices of comparable instruments.
Borrowings: The fair values of the Bank’s borrowings are based on market quotations when possible or valuation techniques
based on discounted cash flow models using LIBOR market-determined discount curves adjusted by the Bank’s credit
spread. Credit spreads are obtained from market data as well as indicative quotations received from certain counterparties
for the Bank’s new public bond issues. The Bank also uses systems based on industry standard pricing models andvaluation techniques to value borrowings and their associated derivatives. The models use market-sourced inputs suchas interest rates, yield curves, exchange rates and option volatilities. Valuation models are subject to internal and periodic
external reviews. When a determination is made that the market for an existing borrowing is inactive or illiquid, appropriate
adjustments are made to the relevant observable market data to arrive at the Bank’s best measure of the price at which the
Bank could have sold the borrowing at the balance sheet date.
For borrowings on which the Bank has elected fair value option, the portion of fair value changes on the valuation of borrowings
relating to the credit risk of the Bank is reported in Other Comprehensive Income in accordance with IFRS 9.
Equity Investments: The Bank holds direct equity in various enterprises and private funds which may be listed or unlisted.
All equity investments held by the Bank are measured at fair value in line with IFRS 9. Where, as in the case of private funds,
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Management has concluded that these valuations are representative of fair value. Where such valuations are unavailable,
the percentage of the Bank’s ownership of the net asset value of such funds is deemed to approximate the fair value of theBank’s equity participation. The fair value of investments in listed enterprises is based on the latest available quoted bid
prices. For equity investments in unlisted entities the fair value is assessed using appropriate methods, which maximize theuse of relevant observable inputs for example, discounted cash flows.
Derivative Financial Instruments: The fair values of derivative financial instruments are based on market quotations whenpossible or valuation techniques that use market estimates of cash flows and discount rates. The Bank also uses valuation
tools based on industry standard pricing models and valuation techniques to value derivative financial instruments. The
models use market-sourced inputs such as interest rates, yield curves, exchange rates and option volatilities. All financial
models used for valuing the Bank’s financial instruments are subject to both internal and periodic external reviews.
Loans: The Bank does not sell its sovereign loans, nor does it believe there is a comparable market for these loans. The
Bank’s loan assets, except for those at fair value, are carried on the balance sheet at amortized cost. The fair value of loans
carried at amortized cost are reported in these financial statements for disclosure purposes only and represents Management’s
best measures of the present value of the expected cash flows of these loans. The fair valuation of loans has been measured
using a discounted cash flow model based on year-end market lending rates in the relevant currency including impairment,
when applicable, and credit spreads for non-sovereign loans. In arriving at its best estimate Management makes certain
assumptions about the unobservable inputs to the model, the significant ones of which are the expected cash flows andthe discount rate. These are regularly assessed for reasonableness and impact on the fair value of loans. An increase in thelevel of forecast cash flows in subsequent periods would lead to an increase in the fair value and an increase in the discountrate used to discount the forecast cash flows would lead to a decrease in the fair value of loans. Changes in fair value ofloans carried at fair value through profit and loss are reported in the income statement. The estimated fair value of loans isdisclosed in Note I.

Valuation Processes Applied by the Bank
The fair value measurements of all qualifying treasury investments, borrowings, loans and equity investments are reported toand reviewed by the Assets & Liabilities Management Committee (ALCO) in line with the Bank’s financial reporting policies.
Where third-party information from brokers or pricing experts are used to measure fair value, documents are independently
assessed and the evidence obtained from the third parties to support the conclusions.
The assessment and documentation involves ensuring that (i) the broker or pricing service provider is duly approved for use inpricing the relevant type of financial instrument, (ii) the fair value arrived at reasonably represents actual market transactions,(iii) where prices for similar instruments have been adopted, that the same have been, where necessary, adjusted to reflect
the characteristics of the instrument subject to measurement and where a number of quotes for the same financial instrument
have been obtained, fair value has been properly determined using those quotes.

Day One Profit and Loss
The fair value of a financial instrument at initial recognition is based on fair value as defined under IFRS 13. A gain or loss may
only be recognized on initial recognition of a financial instrument if the fair value of that instrument is evidenced by comparison
with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or basedon a valuation technique whose variables include only data from observable markets. On initial recognition, a gain or loss
may not be recognized when using a fair value which is not defined under IFRS 13. The Bank only recognizes gains orlosses after initial recognition to the extent that they arise from a change in a factor (including time) that market participants
would consider in setting a price.

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The Bank holds financial instruments, some maturing after more than ten years, where fair value is not based on quoted
prices in an active market at the measurement date. Such financial instruments are initially recognized at the transaction
price, although the value obtained from the relevant market participants may differ. The difference between the transaction
price and the fair value measurement that is not evidenced by a quoted price in an active market or by a valuation techniquethat uses only observable market data, commonly referred to as “day one profit and loss”, is either: (a) amortized over thelife of the transaction; or (b) deferred until the instrument’s fair value can be measured using market observable inputs or isrealized through settlement. The financial instrument is subsequently measured at fair value, adjusted for the deferred day
one profit and loss. Subsequent changes in fair value are recognized immediately in the income statement without immediate
reversal of deferred day one profits and losses.

Investment in Associate
Under IAS 28, “Investments in Associates and Joint Ventures”, the ADF and any other entity in which the Bank has significant
influence are considered associates of the Bank. An associate is an entity over which the Bank has significant influence,but not control, over the entity’s financial and operating policy decisions. The relationship between the Bank and the ADF is
described in more detail in Note J. IAS 28 requires that the equity method be used to account for investments in associates.
Under the equity method, an investment in an associate is initially recognized at cost and the carrying amount is increased
or decreased to recognize the investor’s share of the profit or loss of the investee after the date of acquisition. The investor’sshare of the profit or loss of the investee is recognized in the investor’s income statement. The subscriptions by the Bank tothe capital of the ADF occurred between 1974 and 1990. At 31 December 2015, such subscriptions cumulatively represented
less than 1 percent of the economic interest in the capital of the ADF.
Although ADF is a not-for-profit entity and has never distributed any dividend to its subscribers since its creation in 1972,
IAS 28 require that the equity method be used to account for the Bank’s investment in the ADF. Furthermore, in accordancewith IAS 36, the net investment in the ADF is assessed for impairment. Cumulative losses as measured under the equity
method are limited to the investment’s original cost as the ADB has not guaranteed any potential losses of the ADF.

Property and Equipment
Property and equipment is measured at historical cost less depreciation. Historical cost includes expenditure directly
attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or are recognized
as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item willflow to the Bank and the cost of the item can be measured reliably. Repairs and maintenance are charged to the income
statement when they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to amortize the difference
between cost and estimated residual values over estimated useful lives. The estimated useful lives are as follows:
Buildings: 15-20 years
Fixtures and fittings: 6-10 years●● Furniture and equipment: 3-7 years●● Motor vehicles: 5 years●●●●

The residual values and useful lives of assets are reviewed periodically and adjusted if appropriate. Assets that are subject toamortization are reviewed annually for impairment. An asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated recoverable amount. The recoverable amount is thehigher of the asset’s fair value less costs to disposal and its value in use. Gains and losses on disposal are determined as
the difference between proceeds and the asset’s carrying amount and are included in the income statement in the period
of disposal.

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Intangible Assets
Intangible assets include computer systems software and are stated at historical cost less amortization. An intangible asset
is recognized only when its cost can be measured reliably and it is probable that the expected future economic benefits
attributable to it will flow to the Bank. Amortization of intangible assets is calculated using the straight-line method to write
down the cost of intangible assets to their residual values over their estimated useful lives of 3-5 years.

LeasesThe Bank has entered into several operating lease agreements, including those for its offices in certain member countries.
Under such agreements, all the risks and benefits of ownership are effectively retained by the lessor. Payments made underoperating leases are charged to the income statement on a straight-line basis over the period of the lease. Benefits received
and receivable as an incentive to enter into an operating lease are also recognized on a straight-line basis over the lease
term. When an operating lease is terminated before the lease period has expired, any payment required to be made to thelessor by way of penalty is recognized as an expense in the period in which the termination takes place.

Allocations and Distributions of Income Approved by the Board of Governors
In accordance with the Agreement establishing the Bank, the Board of Governors is the sole authority for approving
allocations from income to surplus account or distributions to other entities for development purposes. Surplus consists ofearnings from prior years which are retained by the Bank until further decision is made on their disposition or the conditionsof distribution for specified uses have been met. Distributions of income for development purposes are reported as expenses
on the Income Statement in the year of approval. Distributions of income for development purposes may be funded fromamounts previously transferred to surplus account or from the current year’s income.

Retained Earnings
Retained earnings of the Bank consist of amounts allocated to reserves from prior years’ income, balance of amounts
allocated to surplus after deducting distributions approved by the Board of Governors, unallocated current year’s net income,and expenses recognized directly in equity as required by IFRS.

Critical Accounting Judgments and Key Sources of Estimation Uncertainty
In the preparation of financial statements in conformity with IFRS, Management makes certain estimates, assumptions andjudgments that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent
liabilities. Actual results could differ from such estimates. Estimates and judgments are continually evaluated and are basedon historical experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances.
The most significant judgments and estimates are summarized below:

1) Significant Judgments
The Bank’s accounting policies require that assets and liabilities be designated at inception into different accounting categories.
Such decisions require significant judgment and relate to the following circumstances:
Fair Value through Profit and Loss – In designating financial assets or liabilities at fair value through profit or loss, the Bank
has determined that such assets or liabilities meet the criteria for this classification.
Amortized Cost and Embedded Derivatives – The Bank follows the guidance of IFRS 9 on classifying financial assets andthose with embedded derivatives in their entirety as at amortized cost or fair value through profit or loss. In making thisjudgment, the Bank considers whether the cash flows of the financial asset are solely payment of principal and interest on
the principal outstanding and classifies the qualifying asset accordingly without separating the derivative.

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Consolidation – The Bank follows the guidance of IFRS 10 in ascertaining if there are any entities that it controls, and that
may require consolidation.

2) Significant Estimates
The Bank also uses estimates for its financial statements in the following circumstances:
Impairment Losses on Financial Assets Measured at Amortized Cost – At each financial statements reporting date, theBank reviews its financial assets measured at amortized cost for impairment. The Bank first assesses whether objective
evidence of impairment exists for individual assets. If such objective evidence exists, impairment is determined by discounting
expected future cash flows using the asset’s original effective interest rate and comparing this amount to the asset’s net
carrying amount. Determining the amount and timing of future cash flows on impaired assets requires significant judgment.
If the Bank determines that no objective evidence of impairment exists for an individually assessed asset, that asset isincluded in a group of assets with similar credit characteristics and collectively assessed for impairment. Objective evidenceof impairment for a group of assets may include observable data indicating that there has been an adverse change in thepayment status of borrowers in a group, or national or local economic conditions that correlate with defaults on assets in
the group. Management uses estimates based on historical loss experience for assets with credit risk characteristics andobjective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology
and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any
differences between loss estimates and actual loss experience.
Fair Value of Financial Instruments – The fair value of financial instruments that are not quoted in active markets is measured
by using valuation techniques. Where valuation techniques (for example, models) are used to measure fair values, they arevalidated and periodically reviewed by qualified personnel independent of the area that created them. All valuation models
are calibrated to ensure that outputs reflect actual data and comparative market prices. To the extent practical, valuation
models use only observable data; however, areas such as credit risk (both own and counterparty), volatilities and correlations
require management to make estimates. Changes in assumptions about these factors could affect the reported fair valueof financial instruments. Assessing the significance of a particular input to the fair value measurement in its entirety requires
judgment, considering factors specific to the asset or liability. The determination of what constitutes ‘observable’ requires
significant judgment by the Bank.
Post-employment Benefits – The present value of retirement benefit obligations is sensitive to the actuarial and financial
assumptions used, including the discount rate. At the end of each year, the Bank determines the appropriate discount rate
and other variables to be used to determine the present value of estimated future pension obligations. The discount rate isbased on market yields at the end of the year of high-quality corporate bonds in the currencies comprising the Bank’s UA,
and the estimates for the other variables are based on the bank best judgment.

Events After the Reporting Period
The financial statements are adjusted to reflect events that occurred between the balance sheet date and the date when thefinancial statements are authorized for issue, provided they give evidence of conditions that existed at the balance sheet date.
Events that are indicative of conditions that arose after the balance sheet date, but do not result in an adjustment of thefinancial statements themselves, are disclosed.

Reclassification and Restatement
Certain reclassifications of prior year’s amounts have been made to conform to the presentation in the current year. These
reclassifications did not affect prior year’s reported result.

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Note C — The effect of new and revised international financial
reporting standards
Standards, Amendments and Interpretations Issued but not yet effective
At the date of issue of these financial statements, various International Financial Reporting Standards issued by the IASB
were not yet effective for application and had not been applied in preparing these financial statements. The new standards
which are expected to be relevant to the Bank are discussed briefly below:

IFRS 15: Revenues from Contracts with Customers
IFRS 15 was issued in May 2014 and applies to annual reporting periods beginning on or after 1 January 2017. It specifies
how and when entities should recognize revenue from contracts with customers as well as the required disclosures in thefinancial statements. The standard provides a single, principles-based five-step model to be applied to all contracts withcustomers.
The Bank has determined that the standard is not applicable to its operations as its contracts with customers are accounted
for under IFRS 9.

IFRS 9: Financial Instruments
The Bank has already adopted phase 1 of the IFRS 9 with effect from 1 January 2011. Phase 2, which is the final version of
IFRS 9 was issued on 24 July 2014 and is effective for annual periods beginning on or after 1 January 2018. The revisions
in the final phase of this standard introduce a third classification and measurement category for financial assets, namely,
fair value through OCI, some revisions to hedge accounting and replacement of the incurred loss model in IAS 39 with the
expected credit loss impairment model. The final standard also includes the guidance for financial liabilities, as previously
issued to the effect that there is no subsequent recycling of realized gains or losses on “own credit” from OCI to profit and loss.
Although preliminary indications are that the Bank will be affected by the new standard, the Bank is still assessing the full
impact of this new pronouncement on its financial position and performance.

Annual Improvements to IFRS 2012 - 2014 Cycle
In September 2014, the IASB issued Annual Improvements to IFRS 2012-2014 Cycle. This comprises amendments that
result in accounting changes for presentation, recognition or measurement purposes as well as terminology or editorial
amendments related to a variety of individual IFRS standards. These changes are effective for reporting periods beginningon or after 1 January 2016, with early adoption permitted.
The Bank is currently assessing the impact of the amendments on its financial statements.

Amendments to IAS 1: Presentation of Financial Statements
In December 2014, the IASB issued amendments to IAS 1, as part of an initiative to improve presentation and disclosurein financial reports, to further encourage reporting entities to apply professional judgement in determining what information
to disclose in their financial statements and in determining where and in what order information is presented in the financial
disclosures. The Amendments have a mandatory effective date of 1 January 2016, with earlier adoption permitted.
The Bank expects that the adoption of these amendments will not have material impact on its Financial Statements.

IFRS 16: Leases
On 1 January 2016, the IASB published IFRS 16, “Leases”, which replaces the current guidance on lease accounting
in IAS 17. IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019, with earlier application
permitted. The new standard requires far-reaching changes in accounting by lessees in particular. Under IAS 17, lessees

141Chapter 6

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were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet).
IFRS 16 now requires lessees to recognize a lease liability reflecting future lease payments and a ‘right-of-use asset’ forvirtually all lease contracts. The IASB has included an optional exemption for certain short-term leases and leases of lowvalue assets; however, this exemption can only be applied by lessees.
Preliminary indications are that the new standard will affect the Bank. However, the full impact on the financial position andperformance is still being assessed.

IAS 7: Statement of Cash Flows (Amendments)
On 29 January 2016, the IASB published some revisions to IAS 7, “Statement of Cash Flows”, aimed at improving theeffectiveness of disclosures in financial reports. These amendments, which are effective from 1 January 2017, require entities
to provide information about changes in their financing liabilities. The amendments are a response to users’ demand for
information that helps them better understand and evaluate changes in liabilities arising from an entity’s financing activities,
including changes from cash flows and non-cash changes (such as foreign exchange gains or losses).
Although the Bank is yet to assess the potential impact of adopting this standard, its application is not expected to havean impact on the financial position of the Bank as the new requirements merely involve additional disclosures rather than achange in measurement basis.
Based on the foregoing no new or revised financial reporting standard, applicable to the Bank, became effective in 2015.

Note D — Risk management policies and procedures
In carrying out its development mandate, the Bank seeks to maximize its capacity to assume core business risks resulting fromits lending and investing operations while at the same time minimizing its non-core business risks (market risk, counterparty
risk, and operational risk) that are incidental but nevertheless critical to the execution of its mandate.

Risk Governance and Risk Appetite
The highest level of risk management oversight in the Bank is assured by the Board of Executive Directors, which is chaired by
the President. The Board of Directors is committed to the highest standards of corporate governance. In addition to approving
all risk management policies, the Board of Directors regularly reviews trends in the Bank’s risk profiles and performance toensure compliance with the underlying policies.
Three management level committees perform monitoring and oversight roles: the Asset and Liability Management Committee(ALCO), the Credit Risk Committee (CRC) and the Operations Committee (OPSCOM). The ALCO is the oversight and control
organ of the Bank’s finance and treasury risk management activities. It is the Bank’s most senior management forum on
finance and treasury risk management issues and is chaired by the Vice President for Finance. The Credit Risk Committee(CRC) ensures effective implementation of the Bank’s credit policies and oversees all credit risk issues related to sovereignand non-sovereign operations, prior to their submission to OPSCOM. OPSCOM is chaired by the First Vice President andChief Operating Officer and reviews all operational activities before they are submitted to the Board of Directors for approval.
The ALCO, CRC and OPSCOM meet on a regular basis to perform their respective oversight roles. Among other functions,
the ALCO reviews regular and ad-hoc finance and treasury risk management reports and financial projections and approves
proposed strategies to manage the Bank’s balance sheet. The Credit Risk Committee is responsible for end-to-end credit risk
governance, credit assessments, portfolio monitoring and rating change approval amongst other responsibilities. ALCO and
CRC are supported by several standing working groups that report on specific issues including country risk, non-­sovereign
credit risk, interest rate risk, currency risk, operational risk, financial projections, and financial products and services.

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In late 2013, a Group Chief Risk Officer position was created reporting directly to the President of the Bank. Day-to-day
operational responsibility for implementing the Bank’s financial and risk management policies and guidelines are delegatedto the appropriate business units. The Financial Management Department and the office of the Group Chief Risk Officer are
responsible for monitoring the day to-day compliance with those policies and guidelines.
The degree of risk the Bank is willing to assume to achieve its development mandate is limited by its risk-bearing capacity.
This institutional risk appetite is embodied in the Bank’s capital adequacy policy and its commitment to maintain a prudent
risk profile consistent with the highest credit rating. The Bank allocates its risk capital between non-core risks (10 percent),
with sovereign and non-sovereign operations sharing equally the remaining balance (45 percent each).

Policy Framework
The policies, processes and procedures by which the Bank manages its risk profile continually evolve in response to market,
credit, product, and other developments. The guiding principles by which the Bank manages its risks are governed by the
Bank’s Capital Adequacy Policy, the General Authority on Asset Liability Management (the ALM Authority), the General Authority
on the Bank’s Financial Products and Services (the FPS Authority) and the Bank’s Credit Risk Management Guidelines.
The ALM Authority is the overarching framework through which Management has been vested with the authority to manage
the Bank’s financial assets and liabilities within defined parameters. The ALM Authority sets out the guiding principles for
managing the Bank’s interest rate risk, currency exchange rate risk, liquidity risk, counterparty credit risk and operationalrisk. The ALM Authority covers the Bank’s entire array of ALM activities such as debt-funding operations and investmentof liquid resources, including the interest rate and currency risk management aspects of the Bank’s lending and equity
investment operations.
The FPS Authority provides the framework under which the Bank develops and implements financial products and services
for its borrowers and separate guidelines prescribe the rules governing the management of credit and operational risk for
the Bank’s sovereign and non-sovereign loan, guarantee and equity investment portfolios.
Under the umbrella of the FPS Authority and the ALM Authority, the President is authorized to approve and amend moredetailed operational guidelines as necessary, upon the recommendations of the Asset and Liability Management Committee(ALCO), the Credit Risk Committee (CRC) and the Operations Committee (OPSCOM).
The following sections describe in detail the manner in which the different sources of risk are managed by the Bank.

Credit Risk
Credit risk arises from the inability or unwillingness of counterparties to discharge their financial obligations. It is the potential
for financial loss due to default of one or more debtors/obligors. Credit risk is the largest source of risk for the Bank arisingessentially from its lending and treasury operations.
The Bank manages three principal sources of credit risk: (i) sovereign credit risk in its public sector portfolio; (ii) non-sovereign
credit risk in its portfolio of non-sovereign and enclave projects; and (iii) counterparty credit risk in its portfolio of treasury
investments and derivative transactions used for asset and liability management purposes. These risks are managed within
an integrated framework of credit policies, guidelines and processes, which are described in more detail in the sections
that follow.

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The Bank’s maximum exposure to credit risk before collateral received or other credit enhancements for 2015 and 2014 is
as follows:(UA thousands)
AssetsCash
Demand obligations
Securities purchased under resale agreement
Treasury investments at amortized cost
Treasury investments at fair value
Derivative assets
Non-negotiable instruments on account of capital
Accrued income and charges receivable on loans
Other accounts receivable
Loans
Equity participations
Other debt securities

2015
1,214,608
3,801
3,957,896
4,434,365
1,454,625
271
425,559
320,213
13,070,393
751,306
46,423

2014
406,709
3,801
34,511
3,617,995
3,723,629
1,143,678
739
416,311477,066
12,647,806
645,288
94,111

1) Sovereign Credit Risk
When the Bank lends to public sector borrowers, it generally requires a full sovereign guarantee or the equivalent fromthe borrowing member state. In extending credit to sovereign entities, the Bank is exposed to country risk which includes
potential losses arising from a country’s inability or unwillingness to service its obligations to the Bank. The Bank manages
country credit risk through its policies related to the quality at entry of project proposals, exposure management, including
individual country exposures and overall creditworthiness of the concerned country. These include the assessment of thecountry’s risk profile as determined by its macroeconomic performance, debt sustainability, socio-political conditions andthe conduciveness of its business environment.

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Chapter 6

Country Exposure in Borrowing Member Countries
The Bank’s exposures as at 31 December 2015 to borrowing member countries as well as the private sector and enclave
projects from its lending activities are summarized below:(UA thousands)

Country
AngolaBotswana
Cabo Verde
Cameroon
Congo
Democratic Republic of Congo
Egypt
Equatorial Guinea
Gabon
Kenya
Mauritius
MoroccoNamibia
Nigeria
RwandaSenegal
Seychelles
Somalia**South Africa
Sudan** (1)Swaziland
Tanzania
Tunisia
UgandaZambiaZimbabwe**
Multinational
Total Public Sector
Total Private Sector
Total
*
**

N° of
Loans
4
3
8
3
1
10
15
3
7
1
9
54
6
5
1
1
5
3
8
4
7
3
36
2
6
12
5
222
125
347

Total Unsigned Loan
Loans*
Amounts
893,841
64,9481,002,388
126,492
145,952
14,93814,938436,004
1,965,182
56,756285,487
28,53828,538
460,5103,300,987
88,668362,711
208,902752,569
53,74147,89347,89347,5674,251
1,689,749
52,304
68,793
369,493
195,529
2,208,072
132,926
256,895
229,482
198,313
197,125
184,230
15,159,477
1,063,128
4,282,003
667,356
19,441,480
1,730,484

Undisbursed
Balance
395,908
16,722
44,741
130,516
818,962
45,78968,37584,216730,287
71,260469,067
53,741
22,082455,724
49,230173,964
357,827
132,80327,125
4,148,339
492,264
4,640,603

Outstanding
Balance
432,985
985,666
81,751
15,436
436,004
1,146,220
10,967217,112376,2942,482,032
82,549283,50225,485
4,251
1,234,025
52,304
19,5631,850,245
123
288
198,313
12,895
9,948,010
3,122,383
13,070,393% of Total
Outstanding
Loans
3.31
7.54
0.63
0.12
3.34
8.77
0.08
1.66
2.88
18.99
0.63
2.17
0.19
0.03
9.44
0.40
0.15
14.16
0.00
0.00
1.52
0.10
76.11
23.89
100.00Excludes fully repaid loans and canceled loans. Trade finance and repayment guarantee related exposures are also excluded.
Countries in non-accrual status as at 31 December 2015.

(1) The outcome of the referendum conducted in South Sudan in January 2011 supported the creation of an independent state of South Sudan. After the split of the state of Sudan
into two separate nations became effective in July 2011, the number and amounts of loans shown against Sudan in this statement would be split between the emerging states, on abasis agreed upon following the ongoing negotiations between Sudan and South Sudan. At the end of December 2015, no decision has been taken by the states of Sudan and South
Sudan regarding the terms and conditions of such exchange.
Slight differences may occur in totals due to rounding.

The Bank is also exposed to some of its borrowers on account of trade finance and repayment guarantees for an amountof UA 444.43 million of which UA 167.32 million related to trade finance as at 31 December 2015.

Exposure Exchange Agreement
As part of ongoing efforts to reduce sovereign concentration risk and increase lending headroom, the African Development
Bank in 2015 entered into Exposure Exchange Agreements (EEAs) with the Inter-American Development Bank (IADB) andthe World Bank, both AAA-rated entities.

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African Development BankAn EEA involves a simultaneous exchange of equivalent credit risk on defined reference portfolios of sovereign exposures,subject to each participating Multilateral Development Bank (MDB) retaining a minimum of 50 percent of the total exposure
to each country that is part of the EEA.
Under the EEA, the MDB that originates the sovereign loans and buys protection continues to be the lender of record. An
exposure exchange in no way affects the application of the normal sovereign sanctions policies by the buyer of protection.
Purchased or sold credit protection pays out only upon the occurrence of certain credit events with respect to any sovereign
borrower in the reference portfolio. Following a default, the seller pays compensation to the buyer for part of the unpaid
interest, based on the EEA amount for the country in default at the interest rate stipulated in the agreement, currently set at
USD six-month LIBOR plus 0.75 percent. The seller is only required to make principal payments to the buyer when the EEA
buyer writes off or restructures part, or all, of the loans in the reference portfolio. Any principal payment made reduces the
EEA amount and the coverage of the EEA for the country for which the write-off/restructuring occurs. Experience shows that
MDBs hardly ever write off arrears as the said arrears always ultimately get settled. Interest payments and principal, whereapplicable, are made on a semi-annual basis and cannot exceed contractual payments related to the loans that are in default.
When the default event is resolved, payments made under an exposure exchange are returned to the seller of protection.
The EEAs have final maturities in 2030 with linear annual reduction of the notional amounts starting from 2025. As at
31 December 2015, the total notional amount of credit protection purchased or sold on the relevant underlying single
reference entities is USD 4.47 billion (UA 3.22 billion). The participating MDBs have paid no credit protection fee (i.e. guarantee
premium) as the amount of exposure exchanged - purchased and sold - are notionally the same at inception. The tablebelow presents the countries and notional amounts of credit protection contracted under the EEA.
(USD millions)Protection Purchased
World
Bank
AngolaBotswana
Gabon
Namibia
NigeriaSouth Africa

Total

213.71225.00150.0049.00
100.00850.001,587.71

Protection Sold

Inter-American
Development Bank
Angola85.00
Egypt
720.00Morocco990.00
Nigeria
95.00
Tunisia
990.00Total

2,880.00

World
Bank
Albania
China
India
Indonesia
JordanPakistan
Romania
TurkeyTotal

126.00128.18450.00475.3213.00
10.21
185.00200.001,587.71

Inter-American
Development Bank
Argentina
750.00Brazil820.00Ecuador303.20
Mexico800.00Panama206.80Total

2,880.00

The Bank accounts for exposures arising from EEAs and similar transactions as financial guarantee contracts, in accordancewith IFRS 9 and IAS 37, as described in Note B.
As of 31 December 2015, no default events have occurred on any exposures covered under these Exposure Exchanges
and the Bank continues to expect full recovery of its sovereign and sovereign-guaranteed exposures.
The counterparty credit exposure that can arise from the purchase or sale of protection, under the exposure exchange, ismanaged and mitigated by the Bank through its robust risk management mechanisms and frameworks.

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Chapter 6

The Private Sector Credit Enhancement Facility (PSFs)
The Bank enters into credit enhancement facilities for the primary purpose of promoting private sector operations (PSOs) in
certain countries by inviting other entities to participate in the risks of such PSOs.

Systematic Credit Risk Assessment
The foundation of the Bank’s credit risk management is a systematic credit risk assessment framework, through underlying
models and their associated risk factors that have been optimized to ensure more predictive power of the rating parameters
and to better align with widely-used rating scales and ensure consistency with best practices. The credit risk assessment ismeasured using a uniform internal 22-grade master scale, optimized to provide: (i) increased granularity; (ii) better differentiation
between obligors; (iii) smoother grade distribution to alleviate the current grade concentration; and finally (iv) to create acommon framework when communicating credit risks to risks takers. The level of granularity helps in measuring probabilitiesof default in order to better differentiate between obligors.
The credit ratings at the sovereign level are derived from a risk assessment of five risk indices that include macroeconomic
performance, debt sustainability, socio-political factors, business environment and the Bank’s portfolio performance. These
five risk indices are combined to derive a composite country risk index for both sovereign and non-sovereign portfolios. The
country risk ratings are validated against the average country risk ratings from different international rating agencies andother specialized international organizations. The CRC reviews the country ratings on a quarterly basis to ensure that theyreflect the expected risk profiles of the countries. The CRC also assesses whether the countries are in compliance with theircountry exposure limits and approves changes in loss provisioning, if required.
The following table presents the Bank’s internal measurement scales compared with the international rating scales:

Risk Class

Very Low Risk

Low Risk

Moderate Risk

High Risk

Very High Risk

Revised Rating Scale
1+
1
12+
2
23+
3
34+
4
45+
5
56+
6
67
8
9
10

International Ratings
S&P – Fitch
Moody’s
A+ and above
A1 and above
A
A2
AA3
BBB+
Baa1
BBB
Baa2
BBBBaa3
BB+
Ba1
BB
Ba2
BBBa3
B+
B1

Assessment
Excellent

StrongGood

Satisfactory

B

B2

B-

B3

Acceptable

CCC+

Caa1

Marginal

CCC

Caa2

Special Attention

CCC-

Caa3

Substandard

CC
C

Ca
C

Doubtful
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Portfolio Risk Monitoring
The weighted average risk rating of the Bank’s sovereign and sovereign-guaranteed portfolio was 2.63 at the end of
December 2015, compared to 2.60 as of 31 December 2014. The distribution of the sovereign portfolio across the Bank’s
five risk classes is shown in the table below:

2015
2014
2013
2012
2011
2010

Very Low Risk
61%
54%
54%
73%
70%
76%

Risk Profile of the Outstanding Sovereign-Guaranteed Loan Portfolio
Low Risk
Moderate Risk
High Risk
15%
19%
5%
27%
12%
7%
24%
12%
9%
15%
1%
10%
15%
1%
13%
2%
5%
13%

Very High Risk
1%
1%
1%
4%

It is the Bank’s policy that if the payment of principal, interest or other charges with respect to any Bank Group credit
becomes 30 days overdue, no new loans to that member country, or to any public sector borrower in that country, will bepresented to the Board of Directors for approval, nor will any previously approved loan be signed, until all arrears are cleared.
Furthermore, for such countries, disbursements on all loans to or guaranteed by that member country are suspended until
all overdue amounts have been paid. These countries also become ineligible in the subsequent billing period for a waiver of
0.5 percent on the commitment fees charged on qualifying undisbursed loans.
Although the Bank benefits from the advantages of its preferred creditor status and rigorously monitors the exposure on
non-performing sovereign borrowers, some countries have experienced difficulties in servicing their debts to the Bank on atimely basis. As previously described, the Bank makes provisions for impairment on its sovereign loan portfolio commensuratewith the assessment of the incurred loss in such portfolio.
To cover potential Expected Losses (EL) and Unexpected Losses (UL) related to credit, the Bank maintains a prudent risk
capital cushion for credit risks. The Bank’s capital adequacy policy articulates differentiated risk capital requirements for
public sector and private sector credit-sensitive assets (loans and equity investments), as well as for contingent liabilities(guarantees and client risk management products) in each risk class. Risk capital requirements are generally higher for private
sector operations which have a higher probability of default and loss-given default than public sector operations. At theend of December 2015, the Bank’s public sector loan portfolio used up to 31 percent of the Bank’s total risk capital basedon the Bank’s capital adequacy framework. The Bank defines risk capital as the sum of paid-in capital net of exchange
adjustments, plus accumulated reserves adjusted by gain on financial assets at fair value through Other Comprehensive
Income and unrealized loss/gain on fair-valued borrowings arising from "own credit". Callable capital is not included in thecomputation of risk capital.

2) Non-Sovereign Credit Risk
When the Bank lends to private sector borrowers and to enclave projects, it does not benefit from full sovereign guarantees.
The Bank may also provide financing to creditworthy commercially oriented entities that are publicly owned, without asovereign guarantee.
To assess the credit risk of non-sovereign projects or facilities, the Bank uses several models to assess the risk of every
project at entry. The models are tailored to the specific characteristics and nature of the transactions. The result of the credit
risk assessment is measured using a uniform internal 22-grade master scale as described above.
Non-sovereign transactions are grouped into the following three main categories: a) project finance; b) financial institutions;and c) private equity funds. Internal credit ratings are derived on the basis of pre-determined critical factors.

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Chapter 6a) Project Finance
The first factor involves the overall evaluation and assessment of the borrower’s financial strength. This assesses:
Primarily, i) the capacity of the project to generate sufficient cash flow to service its debt; ii) the company’s operating
performance and profitability; and iii) the project company’s capital structure, financial flexibility and liquidity positions.
Secondly, the following, four main non-financial parameters are analyzed: i) the outlook of the industry in which the projectcompany operates; ii) the competitive position of the project company within the industry; iii) the strength of the projectcompany’s management with particular emphasis on its ability to deal with adverse conditions; and iv) the quality of theinformation on which the analysis is based.
Finally, the project company’s risk rating is adjusted to reflect the overall host country risk rating.

b) Financial Institutions
The assessment of financial institutions follows the uniform rating system commonly referred to as the CAMELS model: i) Capital
adequacy – analyses of the composition, adequacy and quality of the institution’s capital; ii) Asset quality, operating policies
and procedures and risk management framework; iii) Management quality and decision-making framework; iv) Earnings andmarket position – an evaluation of the quality and level of profitability; v) Liquidity and funding adequacy – an assessment
focusing on the entity’s ability to access debt market; and vi) Sensitivity to market risk – an assessment of the impact ofinterest rate changes and exchange rate fluctuations.

c) Private Equity Funds
The assessment of Private Equity Funds takes into consideration the analysis of the following qualitative and quantitative factors:
Financial strength and historic fund performance;
Investment strategy and risk management;●● Industry structure;●● Management and corporate governance; and●● Information quality.
●●●●

All new non-sovereign projects require an initial credit rating and undergo a rigorous project approval process. The NonSovereign Working Group of the CRC reviews the non-sovereign credit rating of each project on a quarterly basis and may
recommend changes for approval by CRC if justified by evolving country and project conditions.
Since 2009, the Bank has been increasing its non-sovereign loan and equity exposures. The weighted-average risk rating
was 4.0 at the end of 2015 compared to 3.73 at the end of 2014. The distribution of the non-sovereign portfolio across the
Bank’s five credit risk classes is shown in the table below.

2015
2014
2013
2012
2011
2010

Very Low Risk
21%
31%
36%
33%
36%
24%

Risk Profile of Outstanding Non-Sovereign Loan and Equity Portfolio
Low Risk
Moderate Risk
High Risk
24%
33%
16%
21%
31%
14%
17%
31%
14%
19%
36%
9%
20%
35%
5%
20%
30%
24%

Very High Risk
6%
3%
2%
3%
4%
2%

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In compliance with IFRS, the Bank does not make general provisions to cover the expected losses in the performing nonsovereign portfolio. For the non-performing portfolio, the Bank makes a specific provision based on an assessment of thecredit impairment, or incurred loss, on each loan. At the end of 2015, the cumulative impairment provision to cover the incurred
loss on impaired loan principal in the non-sovereign portfolio was UA 118.36 million compared to UA 55.39 million in 2014.
In addition to private sector lending, the Bank makes equity investments in private sector entities, either directly or throughinvestment funds.
To cover potential unexpected credit-related losses due to extreme and unpredictable events, the Bank maintains a risk
capital cushion for non-sovereign credit risks derived from the Bank’s Economic Capital Approach (IRB). At the end of
December 2015, the Bank’s non-sovereign portfolio required as risk capital approximately 24 percent of the Bank’s total
on-balance sheet risk capital sources. This level is still below the limit of 45 percent determined by the Bank for total nonsovereign operations. Out of the Bank’s non-sovereign portfolio, equity participations required as risk capital approximately
10 percent of the Bank’s total on-balance sheet risk capital sources. This is still below the statutory limit of 15 percent
established by the Board of Governors for equity participations.

Credit Exposure Limits
The Bank operates a system of exposure limits to ensure the maintenance of an adequately diversified portfolio at any given
point in time. The Bank manages credit risk at the global country exposure limit (combined sovereign-guaranteed and nonsovereign portfolios) by ensuring that in aggregate, the total exposure to any country does not exceed 15 percent of theBank’s total risk capital. This threshold and other determinants of country limit allocation are clearly spelt out in the Bank’s
capital adequacy framework.
In the revised capital adequacy and exposure management approved by the Board in May 2011, the 15 percent (of theBank’s total risk capital) global country concentration limit is meant to allow for adequate portfolio diversification.
The credit exposure on the non-sovereign portfolio is further managed by regularly monitoring the exposure limit with regard
to the specific industry/sectors, equity investments and single obligor. In addition, the Bank generally requires a range ofcollateral (security and/or guarantees) from project sponsors to partially mitigate the credit risk for direct private sector loans.

3) Counterparty Credit Risk
In the normal course of business, and beyond its development related exposures, the Bank utilizes various financial
instruments to meet the needs of its borrowers, manage its exposure to fluctuations in market interest and currency rates,
and to temporarily invest its liquid resources prior to disbursement. All of these financial instruments involve, to varying
degrees, the risk that the counterparty to the transaction may be unable to meet its obligation to the Bank. Given the natureof the Bank’s business, it is not possible to completely eliminate counterparty credit risk; however, the Bank minimizes thisrisk by executing transactions within a prudential framework of approved counterparties, minimum credit rating standards,
counterparty exposure limits, and counterparty credit risk mitigation measures.
Counterparties must meet the Bank’s minimum credit rating requirements and are approved by the Bank’s Vice President for
Finance. For local currency operations, less stringent minimum credit rating limits are permitted in order to provide adequate
availability of investment opportunities and derivative counterparties for implementing appropriate risk management strategies.
The ALCO approves counterparties that are rated below the minimum rating requirements.
Counterparties are classified as investment counterparties, derivative counterparties, and trading counterparties. Their ratings
are closely monitored for compliance with established criteria.

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For trading counterparties, the Bank requires a minimum short-term credit rating of A-2/P-2/F-2 for trades settled underdelivery vs. payment (DVP) terms and a minimum long-term credit rating of A/A2 for non DVP-based transactions.
The following table details the minimum credit ratings for authorized investment counterparties:

6 months
Government
Government agencies and supranationals
Banks
Corporations including non-bank financial institutions

A/A2
A/A2

1 yearA/A2
A/A2

Maturity
5 years
10 years

AA-/Aa3
AA-/Aa3

15 years
AA-/Aa3
AA-/Aa3

30 years
AAA/Aaa
AAA/Aaa

AAA/Aaa
AAA/AaaAAA
Maximum legal maturity of 50 years for ABS/MBS with the underlying collateraloriginated in the UK and 40‑year maximum legal maturity for all other eligible ABS/MBS.
Also, the maximum weighted average life for all ABS/MBS at the time of acquisition
shall not exceed 5 years.

MBS/ABS

The Bank may also invest in money market mutual funds with a minimum rating of AA-/Aa3 and enters into collateralized
securities repurchase agreements.
The Bank uses derivatives in the management of its borrowing portfolio and for asset and liability management purposes.
As a rule, the Bank executes an ISDA master agreement and netting agreement with its derivative counterparties prior toundertaking any transactions. Derivative counterparties are required to be rated AA-/Aa3 by at least two approved rating
agencies or A-/A3 for counterparties with whom the Bank has entered into a collateral exchange agreement. Lower rated
counterparties may be used exceptionally for local currency transactions. These counterparties require the approval of ALCO.
Approved transactions with derivative counterparties include swaps, forwards, options and other over-the-counter derivatives.
Daily collateral exchanges enable the Bank to maintain net exposures to acceptable levels. The Bank’s derivative exposuresand their credit rating profiles are shown in the tables below:(Amounts in UA millions)

2015
2014
2013
2012
2011
2010
*
**

Notional Amount
12,40816,882
15,89815,20915,393
14,504

Derivatives
Fair Value*
663
565
544
1,047
1,192
1,090

Net Exposure**
68
132
134
109
146
96

AAA
0%
0%
0%
0%
0%
0%

Credit Risk Profile of Net Exposure
AA+ to AAA+ and lower
70%
30%
90%
10%
90%
10%
54%
46%
68%
32%
80%
20%

Fair value net of collateral.
After collateral received in cash or securities.

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The financial assets and liabilities that are subject to offsetting, enforceable master netting arrangement are summarized below:

Financial Assets Subject to Offsetting, Enforceable Master Netting Arrangements andSimilar Agreements(UA millions)

2015
2014
2013

Gross Amountsof Recognized
Financial Liabilities
Gross Amounts
Set Off in theof RecognizedStatement of
Financial Assets Financial Position
1,362
(699)
902
(337)
654
(110)

Net Amounts ofFinancial Assets
Presented in theStatement of
Financial Position
663
565
544

Related Amounts not Set Off in theStatement of Financial Position
Financial
Collateral
Instruments
Received
(627)
(455)
(408)

Net Amount
36
110
136

Financial Liabilities Subject to Offsetting, Enforceable Master Netting Arrangements andSimilar Agreements(UA millions)

2015
2014
2013

Gross Amountsof Recognized
Financial Liabilities
526
704
880

Gross Amountsof Recognized
Net Amounts ofFinancial Assets Financial Liabilities
Set Off in the
Presented in theStatement ofStatement of
Financial Position Financial Position
(228)
298
(419)
285
(290)
590

Related Amounts not Set Off in theStatement of Financial Position
Financial
Collateral
Instruments
Received
3

Net Amount
298
285
593

In addition to the minimum rating requirements for derivative counterparties, the Bank operates within a framework of
exposure limits to different counterparties based on their credit rating and size, subject to a maximum of 12 percent of
the Bank’s total risk capital (equity and reserves) for any single counterparty. Individual counterparty credit exposures areaggregated across all instruments using the Bank for International Settlements (BIS) potential future exposure methodology
and monitored regularly against the Bank’s credit limits after considering the benefits of any collateral.
The credit exposure of the investment and related derivative portfolio continues to be dominated by highly rated counterparties
as shown in the table below. The proportion of exposure to AAA-rated entities decreased from the previous year as a resultof the downgrade of some agencies.

2015
2014
2013
2012
2011
2010

152

AAA
44%
48%
51%
62%
58%
69%

Credit Risk Profile of the Investment Portfolio
AA+ to AA45%
50%
44%
31%
33%
24%

A+ and lower
11%
2%
5%
7%
9%
7%

Annual Report 2015

Chapter 6

The Bank’s exposure to the stressed Eurozone economies remains very limited at approximately UA 0.36 million or less than
0.1 percent of the portfolio.
To cover potential unexpected credit losses due to extreme and unpredictable events, the Bank maintains a conservativerisk capital cushion for counterparty credit risks in line with the current BIS standards. At the end of December 2015, theBank’s counterparty credit portfolio including all investments and derivative instruments required as risk capital 2 percent of
the Bank’s total on-balance sheet risk capital sources.

Liquidity Risk
Liquidity risk is the potential for loss resulting from insufficient liquidity to meet cash flow needs in a timely manner. Liquidity
risk arises when there is a maturity mismatch between assets and liabilities. The Bank’s principal liquidity risk management
objective is to hold sufficient liquid resources to enable it to meet all probable cash flow needs for a rolling 1-year horizon
without additional financing from the capital markets for an extended period. In order to minimize this risk, the Bank
maintains a prudential minimum level of liquidity (PML) based on the projected net cash requirement for a rolling one-year
period. The PML is updated quarterly and computed as the sum of four components: 1) 1-year debt service payments; 2)1-year projected net loan disbursements (loans disbursed less repayments) if greater than zero; 3) loan equivalent value ofcommitted guarantees; and 4) undisbursed equity investments.
To strike a balance between generating adequate investment returns and holding securities that can be easily sold for cash if
required, the Bank divides its investment portfolio into tranches with different liquidity objectives and benchmarks. The Bank’s
core liquidity portfolio (operational portfolio) is invested in highly liquid securities that can be readily liquidated if required tomeet the Bank’s short-term liquidity needs. Probable redemptions of swaps and borrowings with embedded options areincluded in the computation of the size of the operational tranche of liquidity. In addition to the core liquidity portfolio, theBank maintains a second tranche of liquidity (the prudential portfolio) that is also invested in relatively liquid securities to coverits expected medium-term operational cash flow needs. A third tranche of liquidity, which is funded by the Bank’s equity
resources, is held in a portfolio of fixed income securities intended to collect contractual cash flows with the objective of
stabilizing the Bank’s net income. In determining its level of liquidity for compliance with the PML, the Bank includes cash,
deposits and securities in all the treasury investments, with appropriate hair-cuts based on asset class and credit rating.

153

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African Development Bank

The contractual maturities of financial liabilities and future interest payments at 31 December 2015 and 2014 were as follows:

Contractual Maturities of Financial Liabilities and Future Interest Payments at 31 December 2015
(UA thousands)

Carrying
AmountContract­ual
Cash Flow

1 yearor lessMore than
1 year but
less than
2 years

355,533
15,851,251
16,206,784

1,208,547
17,045,076
18,253,623

204,407
4,011,338
4,215,745

273,183
3,369,892
3,643,075

288,556
3,237,750
3,526,306

54,2091,223,042
1,277,251

7,223
1,339,325
1,346,548

380,969
3,863,729
4,244,698

1,332,383
598,0141,930,397

1,332,383
943,594
2,275,977

1,332,383
58,795
1,391,178

59,79359,79371,85471,854

213,010
213,010

41,603
41,603

498,539498,539

Total financial liabilities

18,137,181

20,529,600

5,606,923

3,702,868

3,598,160

1,490,261

1,388,151

4,743,237

Represented by:
Derivative liabilities
Accounts payable
Borrowings

355,533
1,332,383
16,449,265

1,208,547
1,332,383
17,988,670

204,407
1,332,383
4,070,133

273,183
3,429,685

288,556
3,309,604

54,2091,436,052

7,223
1,380,928

380,969
4,362,268

Financial liabilities
with derivatives
Derivative liabilities
Borrowings at fair value

Financial liabilities
without derivatives
Accounts payable
Borrowings at amortized cost

154

More than
2 years but
less than
3 years

More than
3 years but
less than
4 years

More than
4 years but
less than
5 years

More than
5 years

Annual Report 2015

Chapter 6

Contractual Maturities of Financial Liabilities and Future Interest Payments at 31 December 2014
(UA thousands)

Carrying
AmountContract­ual
Cash Flow

1 yearor lessMore than
1 year but
less than
2 years

268,332
13,481,627
13,749,959

1,061,998
15,029,513
16,091,511

273,2091,289,865
1,563,074

166,6453,453,437
3,620,082

155,601
2,455,470
2,611,071

116,162
2,711,271
2,827,433

55,425835,093
890,518

294,956
4,284,377
4,579,333

1,211,813
894,326
2,106,139

1,211,813
1,331,174
2,542,987

1,211,813
390,423
1,602,236

63,072
63,072

63,95063,95082,971
82,971

208,791
208,791

521,967
521,967

Total financial liabilities

15,856,098

18,634,498

3,165,310

3,683,154

2,675,021

2,910,404

1,099,309

5,101,300

Represented by:
Derivative liabilities
Accounts payable
Borrowings

268,332
1,211,813
14,375,953

1,061,998
1,211,813
16,360,687

273,209
1,211,813
1,680,288

166,645
3,516,509

155,601
2,519,420

116,1622,794,242

55,425
1,043,884

294,956
4,806,344

Financial liabilities
with derivatives
Derivative liabilities
Borrowings at fair value

Financial liabilities
without derivatives
Accounts payable
Borrowings at amortized costMore than
2 years but
less than
3 years

More than
3 years but
less than
4 years

More than
4 years but
less than
5 years

More than
5 years

Currency Exchange Risk
Currency risk is the potential loss due to adverse movements in market foreign exchange rates. To promote stable growth inits risk-bearing capacity, the Bank’s principal currency risk management objective is to protect its risk capital from translation
risk due to fluctuations in foreign currency exchange rates by matching the currency composition of its net assets to thecurrency composition of the SDR (UA). The agreement establishing the Bank explicitly prohibits it from taking direct currency
exchange exposures by requiring liabilities in any one currency to be matched with assets in the same currency. This isachieved primarily by holding or lending the proceeds of its borrowings (after swap activities) in the same currencies in which
they were borrowed (after swap activities). To avoid creating new currency mismatches, the Bank requires its borrowers toservice their loans in the currencies disbursed.
Because a large part of its balance sheet is funded by equity resources, which are reported in Units of Account (equivalent
to the SDR), the Bank has a net asset position that is potentially exposed to translation risk when currency exchange rates
fluctuate. The Bank’s policy is to minimize the potential fluctuation of the value of its net worth measured in Units of Accountby matching, to the extent possible, the currency composition of its net assets with the currency basket of the SDR (theUnit of Account). In keeping with the Bank’s currency risk management policy, spot currency transactions are carried out torealign the net assets to the SDR basket each time there is a misalignment or when there is a revision to the SDR currencycomposition.
The Bank also hedges its exposure to adverse movements on currency exchange rates on its administrative expenses. The
distribution of the currencies of the Bank’s recurring administrative expenditures shows a high concentration of expenses
in Euros, US Dollars and CFA Franc.

155

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African Development Bank

Net currency position at 31 December 2015 and 2014 was as follows:

Net Currency Position at 31 December 2015
(Amounts in UA thousands)
UnitedEuro States Dollar
AssetsCash
Demand obligations
Investments – measured atfair value (a)Investments at amortized cost
Non-negotiable instruments on
account of capital
Accounts receivable
Loans
Equity participations
Other securities
Other assets
Liabilities
Accounts payable
Borrowings
Currency swaps on borrowings andrelated derivatives (b)Currency position of equity as at
31 December 2015

Pound
Sterling

Other

Subtotal

Units of
Account

Total(15,991)-

25,320-129,584-

64,217-

1,023,536
3,801

1,226,666
3,801(12,058)-

1,214,608
3,801

1,480,065
1,292,019

2,827,398
1,644,454

610
290,275109
731,148

140,283-

4,448,465
3,957,896-

4,448,465
3,957,896

271
574,445
313,087
5,282,346 6,595,194
57,394546,916
8,670,278 11,952,640

35,694
223,612
679,775

44,2972,437
842,208271(467,135)
500,388844,795 12,948,384
36,707641,017
46,423
46,423
1,628,410 23,773,311

271(10,851)489,537- 12,948,384
62,251
703,268
46,42393,55993,559132,901 23,906,212(320,978)649,442(118,753) (10,667,526)(116,153)(1,246,405)(382)(375,256)(1,541,760) (1,329,831)(4,041,325) (16,449,265)(2,552) (1,332,383)- (16,449,265)
355,533(2,552) (17,426,115)(5,878,141)(6,317,872)

1,504,874(8,513,210)

1,540,166
177,608

375,782144

2,812,852
355,533(2,770,233) (17,423,563)

2,352,406

3,439,430

857,383

842,352(1,141,823)

6,349,748

130,349

6,480,097

37.05

54.16

13.50

13.27

(17.98)100.00-100.00

33.24

47.64

7.24

11.87

-

100.00-100.00% of subtotal
SDR composition as at
31 December 2015(a) Investments measured at fair value comprise:
		 Investments measured at fair value
		 Derivative assets
		 Derivative liabilities
Amount per statement of net currency position(b) Currency swaps on borrowings comprise:		 Derivative assets
		 Derivative liabilities	Net swaps on borrowings per statement of
net currency position

156

Japanese
Yen

4,434,365
17,750(3,650)4,448,465

1,436,875(1,081,342)
355,533

Annual Report 2015

Chapter 6

Net Currency Position at 31 December 2014
(Amounts in UA thousands)
UnitedEuro States Dollar
AssetsCash
Demand obligations
Securities purchased underresale agreements
Investments – measured atfair value (a)Investments at amortized cost
Non-negotiable instruments on
account of capital
Accounts receivable
Loans
Equity participations
Other securities
Other assets
Liabilities
Accounts payable
Securities sold under agreements
to repurchase
Borrowings
Currency swaps on borrowings andrelated derivatives (b)Currency position of equity as at
31 December 2014

Japanese
Yen

Pound
Sterling

Other

Subtotal

Units of
Account

Total

95,976-38,021-45,360-8,176-

219,460
3,801

406,993
3,801

(284)
-

406,709
3,801-

34,511---

34,511-

34,511

1,085,704
1,170,763

2,446,380
1,551,128

542
174,462

18,860721,642

193,754-

3,745,240
3,617,995-

3,745,240
3,617,995

739
623,262319,3455,416,541 5,912,478
59,637437,833
34,511
8,451,883 10,774,946

36,864
230,835
488,063

42,763
2,412
793,853(140,962)(74,846)(117,180)(479)(126,805)(429,317)(8,166,440)(1,054,062)(379,395)(429,317)(4,649,251) (14,375,953)(429,317)- (14,375,953)(5,726,967)(5,994,734)

1,087,130(7,583,473)

1,118,265(52,977)

379,169(705)

3,410,735
268,332(1,715,920) (15,347,809)

268,332(400,942) (15,748,751)

2,457,149

3,191,473

435,086

793,148(568,756)

6,308,100(228,086)

6,080,014

38.95

50.60

6.90

12.57

(9.02)

100.00-100.00

35.49

45.61

6.93

11.97

-

100.00-100.00% of subtotal
SDR composition as at
31 December 2014(a) Investments measured at fair value comprise:
		 Investments measured at fair value
		 Derivative assets
		 Derivative liabilities
Amount per statement of net currency position(b) Currency swaps on borrowings comprise:		 Derivative assets
		 Derivative liabilities	Net swaps on borrowings per statement of
net currency position

739(413,543)
608,691
1,046,956 12,609,222
37,136534,606
59,60094,111
1,147,164 21,655,909

739
31,468640,159- 12,609,222
62,212596,818
94,111
79,46079,460172,856 21,828,765(477,404)(400,942)(810,871)(1,211,813)

3,723,629
24,924(3,313)
3,745,240

1,118,754(850,422)
268,332

157

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African Development Bank

Currency Risk Sensitivity Analysis
As described in the previous section, the Bank manages its currency risk exposure by matching, to the extent possible,
the currency composition of its net assets with the currency basket of the SDR. The SDR is composed of a basket of four
currencies, namely the US dollar, Euro, Japanese yen and Pound sterling. The weight of each currency in the basket isdetermined and reviewed by the International Monetary Fund (IMF) every five years and the last revision became effective on
1 January 2011 based on the value of exports of goods and services and international reserves. The SDR rate represents
the sum of specific amounts of the four basket currencies valued in US dollars, on the basis of the exchange rates quoted
at noon each day in the London market.
Currency risks arise with the uncertainty about the potential future movement of the exchange rates between these currencies
on the one hand, and between the exchange rates of the SDR currencies and the other non-SDR currencies (mainly African
currencies) used by the Bank on the other hand. In this regard, the Bank carries out an annual sensitivity analysis of thetranslation results of its net assets with regard to the movement of the different exchange rates. The analysis consists of aset of scenarios where the exchange rates between the US dollar and the other SDR and African currencies are stretchedout by large margins (10 percent appreciation/depreciation).
The following tables illustrate the sensitivity of the Bank’s net assets to currency fluctuations due to movements in theexchange rate of the currencies in the SDR basket as of 31 December 2015 and 2014, respectively. The sensitivity analysis
shown assumes a separate 10 percent appreciation/depreciation for each currency in the basket against the US dollar.
Due to a moderate change in the African currency holdings, the table also includes the effect of a 10 percent appreciation/
depreciation of each African currency against the SDR. Under the different scenarios, the currency risk management strategyof the Bank shows a minimal change in net assets as a result of currency mismatches.

Sensitivity of the Bank’s Net Assets to Currency Fluctuations at 31 December 2015
(Amounts in UA millions)

Net assets resulting from a 10%
appreciation against the USD
EUR
GBP
JPY
Net assets resulting from a 10%
appreciation of each African currency
against the SDR
Net assets resulting from a 10%
depreciation against the USD
EUR
GBP
JPY
Net assets resulting from a 10%
depreciation of each African currency
against the SDR
Assumptions:Base net assets
Currency weight
Base exchange rate

158

Basis Point
Change ofTotal Net
AssetsUnitedStates Dollar

Euro

Japanese
Yen

Pound
Sterling

Other
Currencies

Net
AssetsChange in
Net Assets
Gain/(Loss)

3,025.41
3,089.29
3,103.28

2,281.88
2,118.24
2,127.82

504.80515.46569.58749.60841.97768.89

14.13
14.13
14.13

6,575.82
6,579.09
6,583.70(3.48)(0.22)
4.39

5bps
0bp
7bps

3,125.84

2,143.30

521.56774.4815.54

6,580.72

1.41

2bps

3,223.10
3,159.82
3,146.64

2,009.08
2,166.60
2,157.56

537.79527.23477.30798.58711.73779.63

14.13
14.13
14.13

6,582.68
6,579.51
6,575.26

3.37
0.20(4.04)

5bps
0bp
6bps

3,125.84

2,143.30

521.56774.4812.84

6,578.02(1.28)

2bps

3,125.84
0.66
1.38

2,143.30
0.42
1.27

521.56
12.10
166.41774.48
0.11
0.94

14.13

6,579.31

Annual Report 2015

Chapter 6

Sensitivity of the Bank’s Net Assets to Currency Fluctuations at 31 December 2014
(Amounts in UA millions)

Net assets resulting from a 10%
appreciation against the USD
EUR
GBP
JPY
Net assets resulting from a 10%
appreciation of each African currency
against the SDR
Net assets resulting from a 10%
depreciation against the USD
EUR
GBP
JPY
Net assets resulting from a 10%
depreciation of each African currency
against the SDR
Assumptions:Base net assets
Currency weight
Base exchange rate

Basis Point
Change ofTotal Net
AssetsUnitedStates Dollar

Euro

Japanese
Yen

Pound
Sterling

Other
Currencies

Net
AssetsChange in
Net Assets
Gain/(Loss)

2,750.04
2,814.03
2,827.87

2,280.66
2,121.58
2,132.01

424.79434.68480.50711.24800.57731.37

4.96
4.96
4.96

6,171.69
6,175.82
6,176.70(4.19)(0.06)
0.82

7bps
0bp
1bp

2,847.65

2,146.92

439.87736.485.46

6,176.38

0.50

1bp

2,942.60
2,878.91
2,865.87

2,016.83
2,170.49
2,160.66

454.54444.70402.44761.04676.88741.20

4.96
4.96
4.96

6,179.96
6,175.94
6,175.13

4.08
0.06(0.75)

7bps
0bp
1bp

2,847.65

2,146.92

439.87736.484.51

6,175.43(0.45)

1bp

2,975.26
0.66
1.45

1,948.58
0.42
1.19

403.7812.10
172.99737.04
0.11
0.93

15.36

6,080.02

Interest Rate Risk
The Bank’s interest rate risk sensitivity is comprised of the following two elements:
1.	the sensitivity of the interest margin between the rate the Bank earns on its assets and the cost of the borrowings
funding such assets; and2.	the sensitivity of the income on assets funded by equity resources to changes in interest rates.
The Bank’s principal interest rate risk management objective is to generate a stable overall net interest margin that is notoverly sensitive to sharp changes in market interest rates, but yet adequately responsive to general market trends.

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Chapter 6

African Development BankInterest rate risk position as at 31 December 2015 and 2014 was as follows:

Interest Rate Risk Position as at 31 December 2015
(UA thousands)

AssetsCash
Demand obligations
Treasury investments (a)Non-negotiable instruments on
account of capital
Accounts receivable
Loans – disbursed and outstanding
Hedged loans – fair value adjustment
Accumulated impairment forloan losses
Equity participations
Other securities
Other assets
Liabilities
Accounts payable
Borrowings (b)Macro-hedge swaps

1 yearor lessMore than
1 year but
less than
2 years

More than
2 years but
less than
3 years

More than
3 years but
less than
4 years

More than
4 years but
less than
5 years

1,214,608
3,801
4,766,881

328,160

485,050

358,020102
718,117
10,106,076-

76
342,051-54
313,425-

46,423
16,856,008

670,287(1,332,383)(15,978,687)(221,279)(17,532,349)(676,341)

Interest rate risk position as
at 31 December 2015**

More than
5 yearsNoninterest
bearing
funds

Total

354,0902,086,200

27,9601,214,608
3,801
8,406,361

39
345,122-

307,063-

1,658,181-

271(228,580)
489,537(1,525) 13,070,393
79,837
79,837

798,529

703,181661,153

3,744,381(201,846)(201,846)
703,268
703,268
46,42393,55993,559472,673 23,906,212(203)
100,977
100,774(203)
101,752
101,549(36,840)(36,840)

(219)
(219)

(100,145)
18,550(81,595)- (1,332,383)
22,565 (16,093,732)
22,565 (17,426,115)

771,061

900,078

666,341

660,934

3,662,786

495,238

Interest rate risk position represents equity.

(a) Treasury investments comprise:		 Treasury investments
		 Derivative assets - investments
		 Derivative liabilities - investments
Amount per statement of interest rate risk

8,392,261
17,750(3,650)8,406,361(b) Borrowings comprise:		Borrowings
		 Derivative assets - borrowings
		 Derivative liabilities - borrowings
Net borrowings per statement of interest rate risk

16,449,265(1,436,875)
1,081,342
16,093,732

160

6,480,097

Annual Report 2015

Chapter 6

Interest Rate Risk Position as at 31 December 2014
(UA thousands)

AssetsCash
Demand obligations
Securities purchased underresale agreements
Treasury investments (a)Non-negotiable instruments on
account of capital
Accounts receivable
Loans – disbursed and outstanding
Hedged loans – fair value adjustment
Accumulated impairment forloan losses
Equity participations
Other securities
Other assets
Liabilities
Accounts payable
Securities sold under agreements
to repurchase
Borrowings (b)Macro-hedge swaps

1 yearor lessMore than
1 year but
less than
2 years

More than
2 years but
less than
3 years

More than
3 years but
less than
4 years

More than
4 years but
less than
5 years

More than
5 yearsNoninterest
bearing
funds

Total

406,709
3,801

-

-

-

-

-

-

406,709
3,801

34,511
4,214,783

300,730

347,400

479,600

347,430

1,681,430(8,138)34,511
7,363,235

480
865,8099,689,894-

112
300,870-72
336,253-

52
293,916-23
318,536-

1,709,279-

739(225,650)
640,159(942) 12,647,806
112,704
112,704

94,111
15,310,098

601,712683,725

773,568

665,989

3,390,709(151,288)(151,288)
596,818
596,818
94,111
79,46079,460402,964 21,828,765(1,211,813)

-

-

-

-

-

(429,317)(13,735,089)(214,500)(15,590,719)(248,695)
99,437(149,258)(215)
97,321
97,106

(215)
(215)

(36,656)(36,656)(98,666)
17,742(80,924)(280,621)

452,454780,831

773,353

629,333

3,309,785

Interest rate risk position as
at 31 December 2014**-(1,211,813)(429,317)
11,915 (14,107,621)
11,915 (15,748,751)
414,879

6,080,014

Interest rate risk position represents equity.

(a) Treasury investments comprise:		 Treasury investments
		 Derivative assets - investments
		 Derivative liabilities - investments
Amount per statement of interest rate risk

7,341,624
24,924(3,313)
7,363,235(b) Borrowings comprise:		Borrowings
		 Derivative assets - borrowings
		 Derivative liabilities - borrowings
Net borrowings per statement of interest rate risk

14,375,953(1,118,754)
850,422
14,107,621

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African Development BankInterest Rate Risk on Assets Funded by Debt
Two thirds of the Bank’s interest-rate-sensitive assets are funded by debt. The Bank seeks to generate a stable net interest
margin on assets funded by debt by matching the interest rate characteristics of each class of assets with those of thecorresponding liabilities.
In 1990, the Bank began offering “variable rate” loans. The interest rate on these loans resets semi-annually based on the average
cost of a dedicated pool of the Bank’s borrowings. These pools are funded with a mix of fixed rate and floating rate borrowings
to provide borrowers with broadly stable interest rates that gradually track changes in market interest rates. The cost of funds
pass-through formulation incorporated in the lending rates charged on the Bank’s pool-based loans has traditionally helped tominimize the interest rate sensitivity of the net interest margin on this part of its loan portfolio. In view of declining demand for thisproduct in favor of market-based loans, the Bank is carefully managing the gradual winding down of the designated funding pools.
Since 1997, the Bank offers fixed and floating rate loans whose interest rate is directly linked to market interest rates (marketbased loans). For the market-based loan products, the Bank’s net interest margin is preserved by using swaps to align theinterest rate sensitivity of the loans with that of the Bank’s underlying funding reference (six-month Libor floating rate). The Bank
may also provide borrowers with risk management products such as swaps to modify the currency and interest rate terms of
its market-based loan products. Although it retains the credit risks of the borrower, the Bank eliminates the associated market
risk on these risk management products by simultaneously laying off market risks with an approved derivative counterparty.
For the portfolio of liquid assets funded by borrowings, the Bank protects its net interest margin by managing its investments
within limits around benchmarks that replicate the interest rate characteristics of the underlying funding for each portfolio
tranche. The portfolio of liquid assets funded by borrowings is currently divided into two tranches to reflect the different
business purposes and underlying funding. The core part of the investment portfolio is held to comply with the Bank’s liquidity
policy and uses a six-month Libor floating rate benchmark. The operational liquidity portfolio is managed to meet projected
operational cash flow needs and uses a one-month Libor floating rate benchmark.
The Bank diversifies the sources of its funding by issuing debt in a variety of markets and instruments. Unless fixed rate funding
is required for one of its pool-based loan products, the Bank protects its net interest margin by simultaneously swapping all
new borrowings into floating rate in one of the Bank’s active currencies on a standard six-month Libor rate reference. Where
the Bank issues structured debt, the Bank simultaneously enters into a swap with matching terms to synthetically create thedesired six-month Libor-based floating rate funding. For risk management purposes, callable funding is considered as one
alternative to issuing short-term debt such as Euro Commercial Paper. The Bank manages refinancing risk by: (i) limiting theamount of debt that will mature or is potentially callable within one year to 25 percent of the outstanding debt portfolio, and(ii) trying to match the average maturity of loans priced with a fixed spread with borrowing with similar lifetime.

Interest Rate Risk on Assets Funded by Equity
The second principal source of interest rate risk is the interest rate sensitivity of the income earned from funding a significant
portion of the Bank’s assets with equity resources. These assets are mostly made up of fixed rate loans and investmentswith a lifetime of 10 years. Changes in market interest rates in the currencies of the Bank’s equity resources (the SDR) affectthe net interest margin earned on assets funded by equity. In general, lower nominal market interest rates result in lower
lending and investment rates, which in the long term reduce the nominal earnings on the Bank’s equity resources.
The Bank manages the interest rate profile of the assets funded by equity resources with the objective of reducing thesensitivity of the net interest margin to fluctuations in market interest rates. This is achieved by continuously adjusting therepricing profile of the assets funded by the Bank’s equity resources (fixed rate loans and investments) to match a repricing
profile benchmark. The Bank’s repricing profile benchmark is a 10-year ladder whereby a uniform 10 percent of the Bank’s
assets is funded by equity and repriced in each year. Using this benchmark, the Bank’s net interest margin on assets fundedby equity tends to track a 10-year moving average of 10-year maturity SDR interest rates.

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Chapter 6

At the end of 2014 and 2015, the Bank’s overall repricing profile was closely aligned to the benchmark in almost all annual
buckets.

Net Interest Margin Sensitivity
A parallel upward shift in the SDR curve of 100 bps would have generated a maximum gain in income statement of UA 5.81
million and UA 5.96 million as of 31 December 2015 and 2014, respectively.

Fair Value Sensitivity
Movements in interest rates also have an impact on the values of assets and liabilities that are reported in the financial
statements at fair value through profit or loss. The table below shows the effect of a parallel yield curve movement of +/- 100
bps of each of the currencies in the investment portfolio and the borrowings and derivative portfolios as of 31 December 2015
and 2014, respectively. However, due to the low level of interest rates across the Japanese Yen yield curve, the sensitivity
analysis in 2015 and 2014 for assets and liabilities denominated in Japanese Yen reflect a parallel movement in the yield
curve of +/- 10 bps.
(UA thousands)

Investments at fair value through profit or loss
Fair-valued borrowings and derivative portfolios

Upward Parallel Shift
2014
2015
Gain/(Loss)
Gain/(Loss)(7,776)(7,403)(176,630)(149,845)

Downward Parallel Shift
2015
2014
Gain/(Loss)
Gain/(Loss)
8,808
8,765
172,944
122,221

Prepayment Risk
In addition to the two principal sources of interest rate risk described above, the Bank is exposed to prepayment risk on loans
committed before 1997 on which the Bank is unable to charge a prepayment penalty. In practice the level of prepayments
on such loans has generally been within acceptable levels. For all market-based loans issued since 1997, the Bank protects
itself from prepayment risk by linking the prepayment penalty to the cost of redeploying the funds at current market rates.
Since 2006, total annual prepayments on loans particularly those committed prior to 1997 have been declining over theyears. Prepayments in 2015 amounted to UA 24.94 million compared to prepayments of UA 50.59 million realized in 2014,none of which related to loans committed prior to 1997.

Operational Risk
Like all financial institutions, the Bank is exposed to operational risks arising from its systems and processes.
Operational risks include the risks of losses resulting from inadequate or failed internal processes, people, and/or systems,
and from external events which could have a negative financial or adverse reputational impact. Operational risk is present
in virtually all the Bank’s transactions and includes losses attributable to failures of internal processes in credit and market
operations.
The office of the Group Chief Risk Officer (GCRO) of the Bank is responsible for implementing the Integrated Internal Control
Framework (IICF) which consists of two phases. Phase one relates to the implementation of Internal Control over Financial
Reporting (ICFR) based on the COSO Framework as a means of regularly evaluating the effectiveness and efficiency of
the Bank’s internal controls in all significant business processes with financial statement impact. As part of this process,Management’s attestation on the adequacy of internal controls over financial reporting is published in the Bank’s Annual Report.
Phase two of the IICF entails the implementation of Operational Risk Management Framework which is intended to addressrisks inherent in other business processes not covered by ICFR. The Operational Risk Management Framework (ORM) wasapproved by the Board of Directors in March 2012 as the first step in addressing risks related to business processes and163

Chapter 6

African Development Bank

the implementation process is ongoing. Full implementation of ORM will ensure a structured and well-coordinated approach
to risk identification and assessment, risk mitigation and control as well as risk reporting across the Bank. It will also provide
the basis for applying advanced measurement approach in measuring operational risk capital. Currently, the Bank’s Capital
Adequacy and Exposure Management Framework provides for an operational risk capital charge of 15 percent of the average
operating income for the preceding 3 years, in line with Basel II recommendations for operational risk.
It is the primary responsibility of the management of each business unit to implement adequate controls in their respective
business processes based on the prevailing institutional standards. Management is required to sign attestation of complianceannually.
Compliance with institutional standards is verified through periodic reviews undertaken by the Office of the Auditor Generalof the Bank. The results of internal audit reviews are discussed with the Management of the relevant business unit(s), withsummaries submitted to Senior Management of the Bank and the Audit and Finance Committee of the Board of Directors.
The Bank also has a contingency and business continuity plan which aims to ensure the continuity of its operations andprotect the interests of all the key stakeholders of the Bank Group, namely, the member countries (borrowing and nonborrowing), bondholders and other creditors as well as employees and their families, in the event of any disturbance inits office locations. Three key organs in the Bank ensure the oversight and implementation of the plan: (i) the Executive
Crisis Committee, chaired by the President of the Bank, which makes the key decisions based on recommendations fromthe Operations Crisis Committee (OCC); (ii) the OCC, chaired by the Corporate Vice President, that closely monitors all
developments affecting the Bank and advises on measures necessary to mitigate the relevant risks; and (iii) the business
continuity Unit (BCPU) that follows up on the implementation of decisions made and is also responsible for periodic testsof the overall business continuity preparedness of the Bank and staff.
Other elements of the Bank’s operational risk management practices include compliance with the Code of conduct and staff
rules, the work of the Integrity and Anti-Corruption Department (IACD) and the existence of a Whistleblower Protection Policy.

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Note E — Financial assets and liabilities
The tables below set out the classification of each class of financial assets and liabilities, and their respective fair values as
at 31 December 2015 and 2014:

Analysis of Financial Assets and Liabilities by Measurement Basis(UA thousands)

31 December 2015
Cash
Demand obligations
Treasury investments
Derivative assets
Non-negotiable instruments on
account of capital
Accounts receivable
Loans
Equity participations
Other securities
Total financial assets
Accounts payable
Derivative liabilities
Borrowings
Total financial liabilities

Financial Assets and Liabilities
through Profit or Loss
Mandatorily
Designatedat Fair Valueat Fair Value
4,434,365
1,454,625-

Fair Value
through Other Financial Assets
Comprehensive and Liabilities at
Total
Income Amortized Cost Carrying Amount
1,214,608
1,214,608
3,801
3,801
3,957,896
8,392,261
1,454,625

Fair Value
1,214,608
3,801
8,538,778
1,454,625

20,2655,909,255-

703,268
703,268271
489,537
12,848,282
46,423
18,560,818

271
489,537
12,868,547
703,268
46,42325,173,341

271
489,537
12,977,286
703,268
46,42325,428,597

1,084,992
1,084,992

15,851,251
15,851,251-

1,332,383
598,0141,930,397

1,332,383
1,084,992
16,449,265
18,866,640

1,332,383
1,084,992
16,553,691
18,971,066

Fair Value
through Other Financial Assets
Comprehensive and Liabilities at
Total
Income Amortized Cost Carrying Amount
406,709406,709
3,801
3,801

Fair Value
406,709
3,801(UA thousands)

31 December 2014
Cash
Demand obligations
Securities purchased underresale agreements
Treasury investments
Derivative assets
Non-negotiable instruments on
account of capital
Accounts receivable
Loans
Equity participations
Other securities
Total financial assets
Accounts payable
Securities sold under agreements torepurchase
Derivative liabilities
Borrowings
Total financial liabilities

Financial Assets and Liabilities
through Profit or Loss
Mandatorily
Designatedat Fair Valueat Fair Value
3,723,629
1,143,678--

34,511
3,617,995-

34,511
7,341,624
1,143,678

34,511
7,507,638
1,143,678

18,807
4,886,114-

596,818
596,818739
640,159
12,477,711
94,111
17,275,736

739
640,159
12,496,518
596,818
94,111
22,758,668

739
640,159
12,555,923
596,818
94,111
22,984,087

-

-

-

1,211,813

1,211,813

1,211,813

853,735
853,735

13,481,627
13,481,627-

429,317894,326
2,535,456

429,317853,735
14,375,953
16,870,818

429,317853,735
14,503,792
16,998,657

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The table below classifies the Bank’s financial instruments that were carried at fair value at 31 December 2015 and 2014
into three levels reflecting the relative reliability of the measurement bases, with level 1 as the most reliable.
(UA thousands)

Treasury investments
Derivative assets
Loans
Equity participations
Total financial assets

Valuation techniques for
Valuation techniques for
Quoted prices in active
which all significant inputs which any significant input
markets for the same
are based on observable is not based on observable
instrument
market data
market data
(Level 1)(Level 2)(Level 3)
2015
2014
2015
2014
2015
2014
3,141,911
2,030,960
1,230,333
1,477,165
62,121
215,504
6,997
4,437
1,444,462
1,106,050
3,166
33,191
20,26518,807
6,488
9,216
696,780
587,6023,155,396
2,044,613
2,695,060
2,602,022
762,067
836,2972015
4,434,365
1,454,625
20,265703,268
6,612,523

2014
3,723,629
1,143,678
18,807596,818
5,482,932

Derivative liabilities
Borrowings
Total financial liabilities

8,904,524
8,904,524

1,084,992
15,851,251
16,936,243

853,735
13,481,627
14,335,362

6,952,951
6,952,951

1,050,456
6,787,675
7,838,131

800,895
6,250,150
7,051,045

34,536
159,052
193,588

52,840278,526
331,366

Total

The Bank’s policy is to recognize transfers out of level 3 as of the date of the event or change in circumstances that caused
the transfer.
Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1,
include active listed equities, exchange-traded derivatives, US government treasury bills and certain non-US sovereign
obligations. The Bank does not adjust the quoted price for these instruments.
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices,dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2.These include
investment-grade corporate bonds and certain non-US sovereign obligations, listed equities, over-the-counter derivatives
and a convertible loan. As Level 2 investments include positions that are not traded in active markets and/or are subject totransfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on
available market information.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or do not trade at all.
Instruments in Level 3 include loans to regional member countries, private equity and corporate debt securities including
some structured asset and mortgage-backed instruments. As observable prices are not available for these securities, theBank has used valuation techniques to derive the fair value. However as noted earlier, the fair values for loans and somesecurities are derived merely for disclosure purposes rather than for reporting on the balance sheet.
The primary products classified at Level 3 are as follows:

Debt Securities - Asset and Mortgage-Backed Securities
Due to the lack of liquidity in the market and the prolonged period of time under which many securities have not traded, obtaining
external prices is not a strong enough measure to determine whether an asset has an observable price or not. Therefore, once
external pricing has been verified, an assessment is made whether each security is traded with significant liquidity based on its
credit rating and sector. If a security is of low credit rating and/or is traded in a less liquid sector, it will be classified as Level 3.
Where third party pricing is not available, the valuation of the security will be estimated from market standard cash flow models
with input parameter assumptions which include prepayment speeds, default rates, discount margins derived from comparable
securities with similar vintage, collateral type, and credit ratings. These securities are also classified as Level 3.

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Chapter 6

Equity Shares - Private Equity
The fair value of investments in unlisted entities is assessed using appropriate methods, for example, discounted cash flows
or net asset value (NAV). The fair value of the Bank’s equity participations is estimated as the Bank’s percentage ownershipof the net asset value of the investments.

Derivatives
Trading derivatives are classified at Level 3 if there are parameters which are unobservable in the market, such as products
where the performance is linked to more than one underlying. Examples are derivative transactions and derivatives attachedto local currency transactions. These unobservable correlation parameters could only be implied from the market, throughmethods such as historical analysis and comparison to historical levels or benchmark data.

Reconciliation of Level 3 Fair Value Balances
Reconciliation of fair value balances measured using valuation techniques with no significant input from observable market
data (level 3 hierarchy) at 31 December 2015 and 2014 is as follows:(UA thousands)

2014
Balance at 1 January 2014
Unrealized (losses)/gains recognized in income statement
Gains recognized in the statement ofcomprehensive income
Purchases, issues and settlements (net)
Reclassification
Translation effects
Transfer between assets and liabilities
Balance at 31 December 20142015
Balance at 1 January 2015
Unrealized (losses)/gains recognized in income statement
Gains recognized in the statement ofcomprehensive income
Purchases, issues and settlements (net)
Reclassification
Translation effects
Transfer between assets and liabilities
Balance at 31 December 2015

Investments
at Fair Value
through Profit
and Loss

Investments
at Fair Value
through Other
Compre­hen­sive
IncomeDerivative
AssetsDerivative
Liabilities

Borrowings

178,855(10,931)512,416-

5,847
44,498(54,040)
16,681(243,406)(41,254)

47,369211
215,504

20,59635,851
18,739587,602(4,199)(2,021)(10,934)
33,191(3,418)(22,997)
10,934(52,840)

10,465(4,331)(278,526)

215,504(3,195)

587,602-33,191
6,577(52,840)
3,677(278,526)
934(115,075)(35,113)
62,121

38,214
58,83812,126
696,780(30,322)912(575)(6,617)
3,166

16,770(8,760)6,617(34,536)

124,180(5,640)(159,052)

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Fair Value of Financial Assets and Liabilities at Amortized Cost Based on Three-Level Hierarchy
The table below classifies the fair value of the Bank’s financial instruments that were carried at amortized cost at 31 December
2015 and 2014 into three levels reflecting the relative reliability of the measurement bases, with level 1 as the most reliable.
(UA thousands)

Treasury investments
Loans
Total financial assets

Valuation techniques for
Valuation techniques for
Quoted prices in active
which all significant inputs which any significant input
markets for the same
are based on observable is not based on observable
instrument
market data
market data
(Level 1)(Level 2)(Level 3)
2015
2014
2015
2014
2015
2014
3,946,031
3,567,756
62,065
63,15096,317
153,103- 12,957,021 12,537,116
3,946,031
3,567,756
62,065
63,150 13,053,338 12,690,219

Borrowings
Total financial liabilities--

601,711
601,711884,322884,322

100,729
100,729

137,843
137,843

Total
2015
4,104,413
12,957,021
17,061,434

2014
3,784,009
12,537,116
16,321,125

702,440
702,440

1,022,165
1,022,165

Quantitative Information about Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
The table below shows the valuation techniques used in the determination of fair values for financial assets within level 3 ofthe measurement hierarchy as well as the key unobservable inputs used in the valuation models. The Bank has determinedthat market participants would use the same inputs in pricing the financial instruments. Management considers that changing
the unobservable inputs described below to reflect other reasonably possible alternative assumptions would not result in asignificant change in the estimated fair value.

Type of Financial Instrument
Treasury investments
Time deposits
Asset-backed securities
Government and agency obligations
Corporate bonds
Financial institutions
Supranational
Loans
Fixed rate
Floating rate

168

Valuation Approach

Key Unobservable Input

Discounted cash flow
Comparable pricing

Credit spread
Conditional prepayment rate
Constant default rate
Expected payments profile following
default
Loss given default yield

Discounted cash flow

Derivative assets

Options model

Equity participations

Net asset value

Derivative liabilities

Discounted cash flow

Borrowings

Consensus pricing

Average cost of capital
Probability of default, loss-given
default
Volatility of credit
Counterparty credit risk
Own credit risk
N/A
Volatility of credit
Credit spreads
Offered quotes
Own credit

Inter-Relationship between
Key Unobservable Inputs andFair Value Measurement

Increase in rate reduces fair value

A high probability of default results inlower fair value

N/AAnnual Report 2015

Chapter 6

Significant Unobservable Inputs
Although the Bank believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions
could lead to different fair value results.
The valuation techniques applied with significant unobservable inputs are described briefly below:

Comparable Pricing
Comparable pricing refers to the method where valuation is done by calculating an implied yield from the price of a similar
comparable observable instrument. The comparable instrument for a private equity investment is a comparable listed company.
The comparable instrument in case of bonds is a similar comparable but observable bond. This may involve adjusting theyield to derive a value for the unobservable instrument.

Yield
Yield is the interest rate that is used to discount the future cash-flows in a discounted cash-flow model.

Correlation
Correlation is the measure of how movement in one variable influences the movement in another variable. Credit correlation
generally refers to the factor that describes the relationship between the probability of individual entities to default on
obligations and the joint probability of multiple entities to default on obligations. Similarly, equity correlation is the correlation
between two equity instruments. An interest rate correlation refers to the correlation between two swap rates. FX correlation
represents the correlation between two different exchange rates.

Liquidity DiscountA liquidity discount is primarily applied to unlisted firms to reflect the fact that these stocks are not actively traded. An increasein liquidity discount in isolation will result in unfavourable movement in the fair value of the unlisted firm.

Volatility
Volatility represents an estimate of how much a particular instrument, parameter or Index will change in value over time.
Volatilities are generally implied from the observed option prices. For certain instruments, volatility may change with strikeand maturity profile of the option.

Credit Spreads
Credit spreads represent the additional yield that a market participant would demand for accepting an exposure to the credit
risk of an instrument. A change in the assumptions could lead to different fair value results.

Sensitivity Analysis of Valuations of Level 3 Assets and Liabilities Using Unobservable Inputs
For fair value measurements in level 3, changing one or more of the assumptions used would have the following effects:

Investments
The fair value of level 3 investments is sensitive to sources of pricing used. The fair value variance arising from using othersources of prices amounted to UA 0.01 million or 0.01 percent. (2014: UA 0.01 million or 0.002 percent)Borrowings and Derivatives
The table below shows the effect of a parallel yield curve movement of +/- 100 bps of each of the currencies in the level3 borrowings and derivative portfolios as of 31 December 2015 and 2014. However, due to the low level of interest rates
across the Japanese Yen yield curve, the sensitivity analysis in 2015 and 2014 for liabilities denominated in Japanese Yen
reflect a parallel movement in the yield curve of +/- 10 bps:

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(UA thousands)

Fair-valued level 3 borrowings and derivative portfolios

UpwardParallel Shift
Gain/(Loss)
2015
2014
(3,868)(42,873)

Downward
Parallel Shift
Gain/(Loss)
2015
2014
3,023
24,859Day One Profit and Loss - Unrecognized Gains/Losses as a Result of the Use of
Valuation Models Using Unobservable Inputs
The unamortized balances of day one profit and loss at 31 December 2015 and 2014 were made up as follows:(UA thousands)
Balance at 1 January
New transactions
Amounts recognized in income statement during the year
Translation effects
Balance at 31 December

2015
139,044
32,208(37,054)2,545
136,7432014
146,542
38,848(40,559)(5,787)139,044

Note F — Treasury investments
As part of its overall portfolio management strategy, the Bank invests in government, agency, supranational, bank andcorporate obligations, time deposits, mortgage and asset-backed securities, funded risk participation program, secured
lending transactions, resale agreements and related derivative instruments including futures, forward contracts, cross-currency
swaps, interest rate swaps, options and short sales.
For government, agency and supranational obligations with final maturity longer than 1 year and less than 15 years, theBank may only invest in obligations with counterparties having a minimum credit rating of AA- or unconditionally guaranteed
by governments of member countries or other official entities with the same rating criteria. For maturities beyond 15 years
and up to 30 years, a AAA rating is required. For mortgage and asset-backed securities, the Bank may only invest in
securities with a AAA credit rating. For bank and corporate obligations with final maturity longer than 6 months and lessthan 5 years, the Bank may only invest with counterparties having a minimum credit rating of AA-. AAA rating is requiredfor debt obligations beyond 5 years and up to 10 years. The purchases of currency or interest rate options are permitted
only if the life of the option contract does not exceed 1 year. Such transactions are only executed with counterparties withcredit ratings of AA- or above. All derivative transactions, including options, cross-currency and interest rate swaps including
asset swap transactions, are only permitted with approved counterparties or guaranteed by entities with which the Bank
has entered into Master Derivative Agreements and a Collateral Support Agreement with minimum credit ratings of A-/A3
at the time of the transaction.
As at 31 December 2015, the Bank had received collateral with fair value of UA 633 million in connection with swap
agreements. Of this amount, a total of UA 543 million was in the form of cash and has been recorded on the balance sheetwith a corresponding liability included in “Other accounts payable”. The balance of UA 90 million was in the form of liquid
financial assets and is kept in custody by the Bank.

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The composition of treasury investments as at 31 December 2015 and 2014 was as follows:(UA thousands)
2015
4,434,365
3,957,896
8,392,261

Treasury investments mandatorily measured at fair value through profit or loss
Treasury investments at amortized cost
Total

2014
3,723,629
3,617,995
7,341,624

Treasury Investments Mandatorily Measured at Fair Value through Profit or Loss (FVTPL)
A summary of the Bank’s treasury investments mandatorily measured at FVTPL as at 31 December 2015 and 2014 was
as follows:(UA millions)Time deposits
Asset-backed securities
Government and agency obligations
Corporate bonds
Financial institutions
Supranational
Total

US Dollar
Euro
2015
2014
2015
2014
588.0656.53 600.16
92.71
27.35
81.82
34.73 133.60
1,262.17 1,146.57 420.98 412.10
196.37 338.04
55.68
83.13
689.63 701.10 265.26 352.83
51.04 101.63
99.16
8.38
2,814.62 2,425.69 1,475.97 1,082.75

GBP
2015
2014
18.86
18.86

Other Currencies
All Currencies
2015
2014
2015
2014
1.04
75.87 1,189.26 243.97
62.08 215.42
74.91
83.13 1,758.06 1,641.80- 252.05 421.17
23.40
2.04 978.29 1,055.97
44.43
35.29 194.63 145.30
143.78 196.33 4,434.37 3,723.63

The nominal value of treasury investments mandatorily measured at FVTPL as at 31 December 2015 was UA 4,425.60
million (2014: UA 3,708.41 million). The average yield of treasury investments mandatorily measured at FVTPL for the year
ended 31 December 2015 was 0.58 % (2014: 0.81 %).
The contractual maturity structure of treasury investments mandatorily measured at FVTPL as at 31 December 2015 and2014 was as follows:(UA millions)
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

2015
2,635.22
769.96594.66387.1747.36
4,434.37

2014
1,334.54
998.77728.33112.13377.53172.33
3,723.63

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Treasury Investments at Amortized Cost
A summary of the Bank’s treasury investments at amortized cost at 31 December 2015 and 2014 was as follows:(UA millions)

Asset-backed securities
Government and agency obligations
Corporate bonds
Financial institutions
Supranational
Total

US Dollar
Euro
2015
2014
2015
2014
94.30 146.02
933.17 842.99 735.75 699.39
5.49
11.75
20.96
617.00 545.00 556.26 450.41
1,644.47 1,551.25 1,292.01 1,170.76

GBP
2015
2014
437.48 438.42
12.93
61.92
10.70
231.75 259.59
731.15 721.64

Other Currencies
All Currencies
2015
2014
2015
2014
94.30 146.02
290.27 174.34 2,396.67 2,155.14
18.42
61.92
43.41
- 1,405.01 1,255.00
290.27 174.34 3,957.90 3,617.99

The nominal value of treasury investments at amortized cost as at 31 December 2015 was UA 3,929.94 million (2014:
UA 3,626.13 million). The average yield of treasury investments at amortized cost for the year ended 31 December 2015
was 2.81 % (2014: 3.16 %).
The contractual maturity structure of treasury investments at amortized cost as at 31 December 2015 and 2014 was as follows:(UA millions)2015
318.66329.50480.23355.28352.912,121.32
3,957.90

One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

2014
468.79301.38349.47473.87344.87
1,679.61
3,617.99

The fair value of treasury investments at amortized cost as at 31 December 2015 was UA 4,104.41 million (2014: UA 3,784.01
million).

Note G — Derivative assets and liabilities
The fair values of derivative financial assets and financial liabilities at 31 December 2015 and 2014 were as follows:(UA thousands)
2015
AssetsBorrowings-related:
Cross-currency swaps
Interest rate swaps
Loan swaps
Investments-related:
Asset swaps
Macro-hedge swaps and others
Total

172

Liabilities

2014
AssetsLiabilities

1,360,605
68,566
7,704
1,436,875

924,967
43,307113,068
1,081,342

1,000,960
108,869
8,925
1,118,754

678,461
17,701
154,260
850,422

2,629
15,121
17,7501,454,625

3,650
3,650
1,084,992

3,607
21,31724,924
1,143,678

3,313
3,313
853,735

Annual Report 2015

Chapter 6

The notional amounts of derivative financial assets and financial liabilities at 31 December 2015 and 2014 were as follows:(UA thousands)
Borrowings-related:
Cross-currency swaps
Interest rate swaps
Loan swaps
Investments-related:
Asset swaps
Macro-hedge swaps
Total

2015

2014

10,691,305
6,498,407
1,480,199
18,669,911

10,504,252
4,613,585
1,623,896
16,741,733

194,920
329,728
524,648
19,194,559

134,445
430,088564,533
17,306,266

Loan Swaps
The Bank has entered into interest rate swaps to effectively convert fixed rate income on loans in certain currencies into
variable rate income.

Futures Contracts
The Bank has entered into futures contracts to hedge fixed interest rate bonds against interest rate variations. As at
31 December 2015, the Bank had futures with a notional value of Euro 4,956 million and USD 5,992 million. The carrying
value of Euro futures and US dollars futures were UA 3.2 million and UA 9.2 million respectively.

Forward Exchange Transactions to Hedge
To insulate the Bank from possible significant increases in administrative expenses that could arise from an appreciation of theprincipal currencies of administrative expenditure i.e. EUR, GBP, CFA Franc and USD vis-à-vis the UA, the Bank executedforward exchange transactions to economically hedge its administrative expenses. As at 31 December 2015, there were no
open positions with respect to forward exchange transactions.

Hedge Accounting
The Bank applies fair value hedge accounting to interest rate swaps contracted to hedge its interest rate risk exposure
associated to fixed rate loans. Changes in the fair value of the derivative hedging instruments are recognized in profit orloss. The hedged item is adjusted to reflect changes in its fair value in respect of the risk being hedged with the gain or loss
attributable to the hedged risk being recognized in profit or loss.
The fair value of the loan swaps designated and effective as hedging instruments as at 31 December 2015 was a liability of
UA 111.80 million. The fair value gain on these loan swaps for the year ended 31 December 2015 was UA 31.13 million. The
fair value loss on the hedged loans attributable to the hedged risk was UA 31.67 million. Therefore, the hedge ineffectivenessrecognized in profit or loss was a loss of UA 0.54 million.
Hedge accounting treatment for swaps at the designation date requires the amortization of the difference between the
net carrying amount of loans and their fair value from inception. For 2015, the amortization of fair value adjustment on thehedged risk amounted to UA 4.87 million.

173

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African Development Bank

Note H — Non-negotiable instruments on account of capital
Prior to May 1981, all payments in respect of paid-up capital had been made in convertible currencies. However, for thecapital increases authorized in May 1979 (but effective December 1982) and May 1981, regional members had the following
two options for making their payments:
1.	Five (5) equal annual installments, of which at least 50 percent is payable in convertible currency and the remainder inlocal currency; or
2.	Five (5) equal annual installments, of which 20 percent is payable in convertible currency and 80 percent in non-negotiable,
non-interest-bearing notes. Such notes are redeemable by the Bank solely in convertible currency in installmentscommencing on the fifth anniversary of the first subscription payment date.
Non-regional members were required to make their payments solely in convertible currencies.
The paid-up portion of subscriptions, authorized in accordance with Board of Governors’ Resolution B/BG/87/11 relating
to the Fourth General Capital Increase (GCI-IV), is to be paid as follows:1) egional Members – 50 percent in five (5) equal annual installments in cash in freely convertible currency or freely
R
convertible currencies selected by the member state, and 50 percent by the deposit of five non-negotiable, noninterest-bearing notes of equal value denominated in Units of Account. Such notes are redeemable by the Bank solely
in convertible currency in five (5) equal annual installments commencing on the fifth anniversary of the first subscription
payment date.

2)

Non-Regional Members – five (5) equal annual installments in their national currencies, where such currencies arefreely convertible or in notes denominated in freely convertible currencies encashable on demand.

Under the Fifth General Capital Increase (GCI-V), there is no distinction in the payment arrangements between regional andnon-regional members. Each member is required to pay for the paid-up portion of its subscribed shares in eight (8) equaland consecutive annual installments. The first installments shall be paid in cash and in a freely convertible currency. The
second to the eighth installments shall be paid in cash or notes encashable on demand in a freely convertible currency.
Under the Sixth General Capital Increase (GCI-VI), approved in accordance with the Board of Governors’ Resolution
B/­BG/2010/08 of 27 May 2010 each member eligible to receive financing exclusively from the African Development Fund
only shall pay for the paid-up portion of its subscribed shares in twelve (12) equal and consecutive annual installments; while
Middle Income Countries, Blend countries and Non-Regional Member Countries shall pay for the paid-up portion of theirrespective subscribed shares in eight (8) equal and consecutive annual installments.
Payments for shares under GCI-VI are to be made in freely convertible currencies in cash or promissory notes’ encashable
on or before the due date for payment.
At 31 December 2015 and 2014, the non-negotiable notes’ balances were as follows:(UA thousands)
Balance at 1 January
Net movement for the year
Balance at 31 December

174

2015
739
(468)
271

2014
1,204
(465)
739

Annual Report 2015

Chapter 6

Note I — Loans and guarantees
Loans
The Bank’s loan portfolio comprises loans granted to, or guaranteed by borrowing member countries as well as certain
other non-sovereign-guaranteed loans. Amounts disbursed on loans are repayable in the currency or currencies disbursedby the Bank or in other freely convertible currency or currencies approved by the Bank. The amount repayable in each ofthese currencies shall be equal to the amount disbursed in the original currency. Loans are granted for a maximum periodof twenty years, including a grace period, which is typically the period of project implementation. Loans are for the purposeof financing development projects and programs, and are not intended for sale. Furthermore, Management does not believe
there is a comparable secondary market for the type of loans made by the Bank.
The types of loans currently held by the Bank and the terms applicable are described below:
Loan Portfolio: The Bank’s loan portfolio is currently made up of three primary types of loans based on the financial
terms: fixed rate, floating rate and variable rate loans. Fixed rate and variable rate loans have both multicurrency andsingle currency terms – that is, offered in multicurrency or in a single currency. While floating rate loans only bear single
currency terms.
Other Loans: The Bank also offers parallel co-financing and A/B loan syndications. Through syndications the Bank
is able to mobilize co-financing by transferring some or all of the risks associated with its loans and guarantees toother financing partners. Thus, syndications decrease and diversify the risk profile of the Bank’s financing portfolio.
Syndications may be on a funded or unfunded basis and may be arranged on an individual, portfolio, or any otherbasis consistent with industry practices.
The Bank also offers its RMCs local currency loans if the Bank is able to fund efficiently in the local currency market. The
local currency loans are offered under the fixed spread loan pricing framework with a “cost-pass-through” principle to ensurethat the overall cost of funds is compensated.
At 31 December 2015 and 2014, outstanding loans were as follows:(UA thousands)
Outstanding balance of loans - amortized cost
Outstanding balance of loans - fair value
Less: accumulated provision for impairment
Balance at 31 December

2015
13,050,128
20,265
13,070,393(201,846)
12,868,547

2014
12,628,999
18,807
12,647,806(151,288)
12,496,518

175

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African Development Bank

Fair Value of Loans
At 31 December 2015 and 2014, the carrying and estimated fair values of outstanding loans were as follows:(UA thousands)
2015
Carrying
Value
Loans at amortized cost
Fixed rate loans
Floating rate loans
Variable rate loans
Subtotal
Loans at fair value
Total
Accumulated provision for impairment on loans at amortizedcost
Net loans

Estimated
Fair Value

2014
Carrying
Value

Estimated
Fair Value

10,785,155
2,082,283
182,690
13,050,128
20,265
13,070,393

10,679,302
2,088,446
189,273
12,957,021
20,265
12,977,286

10,186,538
2,254,402
188,059
12,628,999
18,807
12,647,806

10,121,368
2,234,853
180,895
12,537,116
18,807
12,555,923(201,846)
12,868,547

12,977,286(151,288)
12,496,518

12,555,923

The Bank is exposed to a loan that is measured at FVTPL due to the existence of a conversion option in the loan that could
potentially change the future cash flows to no longer represent solely payments of principal and interest as required by
IFRS 9. Accordingly, the fair value of this loan, and similar loans, is determined using the expected cash flows model with
inputs including interest rates and the borrower’s credit spread estimated based on the Bank’s internal rating methodology
for non-sovereign loans.

Maturity and Currency Composition of Outstanding Loans
The contractual maturity structure of outstanding loans as at 31 December 2015 and 2014 was as follows:(UA millions)
Periods
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

Fixed Rate
748.18844.81
879.53925.68958.11
6,428.85
10,785.16

2015
Floating Rate
Variable Rate
339.13178.79250.482.87
482.031.03
180.83150.33699.74
2,102.54
182.69Total
1,266.10
1,098.16
1,362.59
1,106.51
1,108.44
7,128.59
13,070.39

2014
Total
1,316.04
933.54
1,034.23
1,122.79
1,007.95
7,233.26
12,647.81

Borrowers may repay loans before their contractual maturity, subject to the terms specified in the loan agreements.

176

Annual Report 2015

Chapter 6

The currency composition and types of outstanding loans as at 31 December 2015 and 2014 were as follows:(Amounts in UA millions)Fixed Rate:

Multi-Currency

Euro
Japanese Yen
Pound Sterling
Swiss Franc
US Dollar
OthersSingle Currency

Euro
Japanese Yen
South African Rand
US Dollar
OthersFloating Rate:

Single Currency

Euro
Japanese Yen
South African Rand
US Dollar

Variable Rate:

Multi-Currency

Euro
Japanese Yen
US Dollar

Single Currency

Euro
Japanese Yen
Swiss Franc
US Dollar

Total

2015
Amount136.04211.01
2.60
3.84
196.230.02
549.74
4,639.67
2.16
702.304,838.92
52.37
10,235.42428.85
9.03
89.35
1,575.31
2,102.54
29.60
0.73
108.17138.50
11.03
14.44
0.98
17.74
44.19
13,070.39

%

4.21

78.31

16.08

1.06

0.34
100.002014
Amount154.17212.702.62
3.68
170.690.02
543.884,721.70
3.44
861.03
3,997.27
59.22
9,642.66
412.9310.20
125.55
1,724.53
2,273.21
31.57
0.71
107.08139.36
13.75
13.90
0.94
20.11
48.70
12,647.81

%

4.30

76.24

17.97

1.10

0.39
100.00The weighted average yield on outstanding loans for the year ended 31 December 2015 was 2.75 % (2014: 2.86 %).
A comparative summary of the currency composition of outstanding loans at 31 December 2015 and 2014 was as follows:(Amounts in UA millions)

Euro
Japanese Yen
Pound SterlingSouth African Rand
Swiss Franc
US Dollar
OthersTotal

2015
Amount5,245.19
237.372.60
791.65
4.82
6,736.37
52.39
13,070.39

%
40.13
1.81
0.02
6.06
0.04
51.54
0.40
100.002014
Amount5,334.12
240.952.62
986.584.62
6,019.68
59.24
12,647.81

%
42.17
1.91
0.02
7.80
0.04
47.59
0.47
100.00177Chapter 6

African Development Bank

Accrued Income and Charges Receivable on Loans
The accrued income and charges receivable on loans as at 31 December 2015 and 2014 were as follows:(UA thousands)
Accrued income and charges receivable on loans
Less: accumulated provision for impairment
Balance at 31 December

2015
425,559(228,580)
196,9792014
416,311(225,649)
190,662

Provision for Impairment on Loan Principal and Charges Receivable
At 31 December 2015, outstanding loans with an aggregate principal balance of UA 541.73 million (2014: UA 396.79 million),of which UA 270.22 million (2014: UA 265.34 million) was overdue, were considered to be impaired.
The gross amounts of loans and charges receivable that were impaired and their cumulative impairment at 31 December
2015 and 2014 were as follows:(UA thousands)
Outstanding balance on impaired loans
Less: accumulated provision for impairment
Net balance on impaired loans

2015541,726(201,846)
339,8802014
396,789(151,288)
245,501

Charges receivable and accrued income on impaired loans
Less: accumulated provision for impairment
Net charges receivable and accrued income on impaired loans

324,857(228,580)
96,277

311,362(225,649)
85,713The movements in the accumulated provision for impairment on outstanding loan principal for the years ended 31 December
2015 and 2014 were as follows:(UA thousands)
Balance at 1 January
Provision for impairment on loan principal for the year (net)Provision reversal for loan written off
Translation effects
Balance at 31 December

2015
151,288
51,577(4,967)
3,948
201,8462014
145,145
1,566
4,577
151,288

Accumulated provisions for impairment on outstanding loan principal included the provisions relating to public and private
sector loans. During the year, net provision for public sector loans was a recovery of UA 14.41 million, after a review of timein default. During the year ended 31 December 2015, a net provision for impairment made on private sector loans amounted
to UA 65.99 million (2014: reversal of provision for UA 0.37 million). The accumulated provisions on private sector loans at
31 December 2015 amounted to UA 118.36 million (2014: UA 55.39 million).

178

Annual Report 2015

Chapter 6

The movements in the accumulated provision for impairment on loan interest and charges receivable for the years ended
31 December 2015 and 2014 were as follows:(UA thousands)
Balance at 1 January
Provision for impairment on loan charges for the year (net)Provision reversal for loan written off
Translation effects
Balance at 31 December

2015
225,649
13,848(16,384)
5,467
228,580

2014
206,325
16,451
2,873
225,649

Accumulated provisions for impairment on loan interest and charges receivable included the provisions relating to public
and private sector loans. During the year ended 31 December 2015, a provision for impairment was made on interest
and charges receivable on private sector loans in the amount of UA 4.89 million (2014: UA 2.55 million). The accumulated
provision on interest and charges receivable on private sector loans at 31 December 2015 amounted to UA 7.58 million(2014: UA 18.22 million).

Guarantees
The Bank may enter into special irrevocable commitments to pay amounts to borrowers or other parties for goods andservices to be financed under loan agreements. At 31 December 2015, outstanding irrevocable reimbursement guarantees
issued by the Bank to commercial banks on undisbursed loans amounted to UA 0.59 million (2014: UA 0.63 million).
Also, the Bank provides trade finance and repayment guarantees to entities within its regional member countries for development
loans granted to such entities by third parties. Guarantees represent potential risk to the Bank if the payments guaranteed
for an entity are not made. Trade finance and repayment guarantees provided by the Bank outstanding at 31 December
2015 amounted to UA 444.43 million (2014: UA 164.11 million).
Other than the guarantees above given to other entities, the Bank in 2015 entered into guarantee contracts covering certainof its loans whereby it gives as well as receives compensation in case there is a default in any of the specified loans. Basedon the structure, such guarantees are referred to as Exposure Exchange Agreements and are primarily risk management
tools. The details are in Note in D. As at 31 December 2015, the nominal amounts of these contracts was USD 4.47 billion(UA 3.22 billion).
Similarly, the Bank has credit enhancement facilities that it benefits from for some of its loans. As at 31 December 2015, loans
amounting to UA 56.50 million had been approved. The credit enhancement cover for such loans becomes effective in 2016.

Note J — Equity participations
Investment in ADF
The ADF was established in 1972 as an international institution to assist the Bank in contributing to the economic and social
development of African countries, to promote cooperation and increased international trade particularly among the Africancountries, and to provide financing on highly concessional terms for such purposes. The Fund’s original subscriptions were
provided by the Bank and the original State Participants to the ADF Agreement, and State Participants acceding to theAgreement since the original signing date. Thereafter, further subscriptions were received from participants in the form ofSpecial General Increases and General Replenishments.

179

Chapter 6

African Development Bank

The ADF has a 14-member Board of Directors, made up of 7 members selected by the African Development Bank and7 members selected by State Participants. The Fund’s Board of Directors reports to the Board of Governors made up ofrepresentatives of the State Participants and the ADB. The President of the Bank is the ex-officio President of the Fund.
To carry out its functions, the Fund utilizes the offices, staff, organization, services and facilities of the Bank, for which it pays
a share of the administrative expenses. The share of administrative expenses paid by the Fund to the Bank is calculated
annually on the basis of a cost-sharing formula, approved by the Board of Directors, which is driven in large part by the
number of programs and projects executed during the period. Based on the cost-sharing formula, the share of administrative
expenses incurred by ADF for the year ended 31 December 2015 amounted to UA 200.93 million (2014: UA 248.57 million),
representing 63.14 percent (2014: 67.32 percent) of the shareable administrative expenses incurred by the Bank. The
accounts of the ADF are kept separate and distinct from those of the Bank.
Although the ADB by agreement exercises 50 percent of the voting powers in the ADF, the Agreement establishing the ADF
also provides that in the event of termination of the ADF’s operations, the assets of the Fund shall be distributed pro-rata
to its participants in proportion to the amounts paid-in by them on account of their subscriptions, after settlement of any
outstanding claims against the participants. At 31 December 2015, the Bank’s pro-rata or economic share in ADF was
0.48 percent (2014: 0.51 percent).
Notwithstanding the exercise of 50 percent voting power in the Fund by the Bank, the conditions for control under IFRS
10 Consolidated Financial Statements are not met since the Bank does not have absolute voting interest to control ADF,
no rights to variable returns from its relationship with ADF and has an economic interest of less than 1 percent in the Fund.
Consequently, the Fund cannot be consolidated in the Bank’s Financial Statements.
As a result of the implementation in 2006 of the Multilateral Debt Relief Initiative described in Note V-2, the net asset value of
ADF which is the basis for determining the value of the Bank’s investment in the Fund declined, resulting in impairment loss
on the Bank’s investment. The net assets of ADF is made up of its net development resources less outstanding demandobligations plus disbursed and outstanding loans excluding balances due from countries that have reached their HIPC
completion points and, are therefore due for MDRI loan cancelation at the balance sheet date.

Other Equity Participations
The Bank may take equity positions in privately owned productive enterprises and financial intermediaries, public sector
companies that are in the process of being privatized or regional and sub-regional institutions. The Bank’s objective insuch equity investments is to promote the economic development of its Regional Member Countries and, in particular, thedevelopment of their private sectors. The Bank’s equity participation is also intended to promote efficient use of resources,
promoting African participation, playing a catalytic role in attracting other investors and lenders and mobilizing the flow ofdomestic and external resources to financially viable projects, which also have significant economic merit.
Unless otherwise approved by the Board of Directors, the Bank’s equity participation shall not exceed 25 percent of the equity
capital of the entity in which it invests. The Bank does not seek a controlling interest in the companies in which it invests, butclosely monitors its equity investments through Board representation. In accordance with the Board of Governors’ Resolution
B/BG/2009/10 of 13 May 2009, total equity investment by the Bank shall not at any time exceed 15 percent of the aggregate
amount of the Bank’s paid-in capital and reserves and surplus (risk capital) included in its ordinary capital resources.
Under IFRS 9 equity investments must be measured at fair value through profit or loss. However, where the equity investment
is not held for trading, an entity has the option to take fair value changes into other comprehensive income (OCI), with norecycling of the change in fair value to profit or loss if the investment is subsequently derecognized. As the Bank’s equity
investments are currently held for strategic purposes of enhancing development in Regional Member Countries rather thanfor trading, the Bank has opted to designate all its equity investments as at fair value through other comprehensive income.

180

Annual Report 2015

Chapter 6

The Bank’s equity interests at the end of 2015 and 2014 are summarized below:(Amounts in UA thousands)
Institutions
African Development Fund
Accumulated share of profit/(loss) & impairment on 1 January
Share of loss for the year
Reversal of provision for the year

Year Established
1972

Callable Capital--

Carrying Value
2015
111,741(49,528)(395)
433
62,251

2014
111,741(49,643)(633)
748
62,213

DIRECT INVESTMENTS
Development Finance Institutions
Africa50
Africa Prudential plc
African Export and Import Bank
African Guarantee Fund
Afriland Properties plc
Central African Development Bank (BDEAC)
East African Development Bank
Eastern and Southern African Trade and Development BankGreat Lakes Development Bank (BDEGL)*
Shelter Afrique
TCX Investment Company Mauritius Limited
United Capital plc
West African Development Bank (BOAD)

2015
2015
1993
2011
2015
1975
1967
1985
1980
1982
2007
2015
1973

Commercial Banks
United Bank for Africa

54,123
19,577
2,156
10,10339,257160
1,831
127,207

18,041
145
55,283
6,908
134
1,326
15,31152,521
13,583
15,300307
5,157
184,016

29,723
6,641
718
12,60937,432
12,83820,327
3,272
123,560

1961

Microfinance Institutions
AB Microfinance Bank Nigeria Limited
Access Bank Liberia Limited
Access Bank Tanzania Limited
Advans Banque Congo
MicroCred Côte d'Ivoire S.A.

-

6,488
6,488

9,216
9,216

2007
2008
2007
2008
2013

Insurance
Africa Trade Insurance Agency
Africa-Re
Eastern and Southern African Reinsurance Company (ZEP-RE)

-

1,297
915
650
1,199
826
4,887

1,191
971
844
1,016
727
4,749

2013
1977
2011

127,207

10,83142,544
15,543
68,918264,309

10,35338,122
13,55462,029199,554

2010
2009
2010
2014
2010
2009
2008
2008
2010
2015
2008
2007
2014
2012
2010
2012
1998
2005
2008
2012
2014
2010
2011
2008
2011
2012
2010
2014
2008
2012
2010
2013
2007
2014
2008
1996
2011

5,859
4,718
659
11,823
3,869
2,481
702
1,146
6,521
11,442
4,513
1,425
3,542
16,623
2,425
1,147
8,346
6,464
4,164
9,176
637
613
2,329
3,954
2,620
1,208
7,910
3
2,116
13,953
3,567
4,136
6,584
754
545
2,781
160,775
287,962
287,962

19,754
9,538
13,785
5,380
22,291
19,745
8,567
9,865
3,874
2,991
16,975
15,161
1,184
6,583
6,753
1,889
25,23041,224
8,248
1,081
1,941
11,721
4,044
25,788
2,769
5,458
788
17,431
14,078981
28,835935
57
19,346
2,418
376,708
641,017703,268

23,151
8,088
8,709
1,301
14,884
16,966
11,2948,560
4,048
10,496
17,858
953
8,389
4,158
2,190
5
26,81539,512
5,952
1,192
1,877
12,7594,652
16,307
1,383
4,086
51
19,618
10,258360
359
21,622821
327
24,467
1,583
335,051534,605
596,818

TOTAL DIRECT INVESTMENTS
FUNDS
Africa Capitalization Fund
Africa Health Fund LLC
Africa Joint Investment Fund
Africa Renewable Energy Fund L.P
African Agriculture Fund LLC
African Infrastructure Investment Fund 2
AfricInvest Fund II LLC
Agri-Vie Fund PCC
Argan Infrastructure Fund
ARM-Harith Infrastructure Fund
Atlantic Coast Regional Fund LLC
Aureos Africa Fund LLC
Business Partners International Southern Africa SME Fund
Carlyle Sub-Saharan Africa Fund (CSSAF)
Catalyst Fund I LLC
Cauris Croissance II FundECP Africa Fund I LLC
ECP Africa Fund II PCC
ECP Africa Fund III PCC
Eight Miles LLP
Enko Africa Private Equity Fund
Evolution One FundGEF Africa Sustainable Forestry Fund
GroFin Africa Fund
Helios Investors II (Mauritius) Limited
I & P Afrique Entrepreneurs
Investment Fund for Health in Africa
KIBO Fund II
Maghreb Private Equity Fund II (Mauritius) PCC
Maghreb Private Equity Fund III (Mauritius) PCC
New Africa Mining Fund II
Pan African Housing Fund (PAHF)
Pan African Infrastructure Development FundPan African Infrastructure Development Fund II
Pan-African Investment Partners II Limited
South Africa Infrastructure FundWest Africa Emerging Market FundTOTAL FUNDSTOTAL DIRECT INVESTMENTS AND FUNDSGRAND TOTAL***

Amounts fully disbursed, but the value is less than UA 100, at the current exchange rate.
The cost of equity investments (excluding ADF) carried at fair value at 31 December 2015 amounted to UA 524.63 million (2014: UA 455.47 million).

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Note K — Other securities
The Bank may invest in certain debt instruments issued by entities in its Regional Member Countries (RMCs) for the purposeof financing development projects and programs. The Bank may also invest in other securities including trade financing thatmeet the development objectives of its borrower member countries.
These investments are classified as financial assets at amortized cost.
The carrying amount of “Other securities” at 31 December 2015 was UA 46.42 million (2014: UA 94.11 million).

Note L — Property, equipment and intangible assets(UA thousands)
Intangible
AssetsProperty and Equipment

2015
Cost:
Balance at 1 January
Additions during the year
Disposals during the year
Balance at 31 December
Accumulated Depreciation:
Balance at 1 January
Depreciation during the year
Disposals during the year
Balance at 31 December
Net Book Values:
31 December 2015

Land

Capital Building andWork in
Improve­
Progressments

Furniture,
Fixtures &Fittings

Equipment& Motor
VehiclesTotal
Property &Equipment

Grand
Total
Property,
Equipment
Computer & Intangible
SoftwareAssets480
480

56,345
13,533(75)
69,80323,314819
24,133

18,843
3,346(5,814)
16,37566,042
4,980(8,808)62,214

165,024
22,678(14,697)
173,005

22,6681,062(8)23,722

187,692
23,740(14,705)
196,727--

22,121
301
22,422

11,7802,173(5,589)8,364

53,5095,511(8,414)50,60687,410
7,985(14,003)
81,392

21,4481,067(8)22,507

108,858
9,052(14,011)
103,899

480

69,803

1,711

8,011

11,60891,613

1,215

92,828(UA thousands)
Intangible
AssetsProperty and Equipment

2014
Cost:
Balance at 1 January
Additions during the year
Disposals during the year
Balance at 31 December
Accumulated Depreciation:
Balance at 1 January
Depreciation during the year
Disposals during the year
Balance at 31 December
Net Book Values:
31 December 2014

182

Land

Capital Building andWork in
Improve­
Progressments

Furniture,
Fixtures &Fittings

Equipment& Motor
VehiclesTotal
Property &Equipment

Grand
Total
Property,
Equipment
Computer & Intangible
SoftwareAssets480
480

23,02833,31756,34522,856458
23,314

14,314
5,664(1,135)
18,843

61,2845,528(770)
66,042

121,962
44,967(1,905)
165,024

21,798870
22,668

143,760
45,837(1,905)
187,692--

21,995
126
22,121

11,196
1,669(1,085)
11,78049,3084,954(753)
53,50982,4996,749(1,838)87,41020,589859
21,448103,088
7,608(1,838)108,858

480

56,345

1,193

7,063

12,53377,614

1,220

78,834

Annual Report 2015

Chapter 6

The land on which the HQ building stands was originally granted for the unlimited use by the Bank, but with ownership
retained by the Government of Côte d'Ivoire. However, in 2013, the Government of Côte d’Ivoire agreed to transfer the title
to the land to the Bank and the relevant processes to perfect the transfer of title to the Bank are underway.

Note M — Borrowings
As at 31 December 2015 and 2014, the Bank’s borrowings were as follows:(UA millions)
Borrowings at fair value
Borrowings at amortized cost
Total

2015
15,851.25
598.01
16,449.26

2014
13,481.63
894.32
14,375.95

The Bank’s borrowings as at 31 December 2015 included subordinated borrowings in the amount of UA 223.09 million(2014: UA 489.33 million).
The capital adequacy framework approved by the Board of Directors adopted the use of a single debt to usable capital ratio
to monitor the Bank’s leverage. The ratio caps the Bank’s total outstanding debt at 100 percent of usable capital. Usable
capital comprises the equity of the Bank and the callable capital of its non-borrowing members rated A- or better. The Bank’s
usable capital at 31 December 2015 was UA 28.13 billion.
The Bank uses derivatives in its borrowing and liability management activities to take advantage of cost-saving opportunities
and to lower its funding costs.
Certain long-term borrowing agreements contain provisions that allow redemption at the option of the holder at specified
dates prior to maturity. Such borrowings are reflected in the tables on the maturity structure of borrowings using the put
dates, rather than the contractual maturities. Management believes, however, that a portion of such borrowings may remain
outstanding beyond their earliest indicated redemption dates.
The Bank has entered into cross-currency swap agreements with major international banks through which proceeds fromborrowings are converted into a different currency and include a forward exchange contract providing for the future exchangeof the two currencies in order to recover the currency converted. The Bank has also entered into interest rate swaps, whichtransform a floating rate payment obligation in a particular currency into a fixed rate payment obligation or vice-versa.

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A summary of the Bank’s borrowings portfolio at 31 December 2015 and 2014 was as follows:

Borrowings and Swaps at 31 December 2015
(Amounts in UA millions)

Currency
Euro

Rate Type
Fixed
Adjustable
Fixed

Japanese
Yen

Adjustable
Fixed

US Dollar

Adjustable
Fixed

Others (d)Adjustable
Fixed

Total

Adjustable

Principal at face value
Net unamortizedpremium/(discount)

Fair valuation adjustment
Total

Carried at
Fair Value
118.74771.80351.94

Direct Borrowings
Wgtd.
Carried at
Avg.
Amortized
Cost (b)
(%)
Cost
0.28
122.670.88
4.30

Currency Swap Agreements (a)Interest Rate Swaps
Wgtd.
Wgtd.
Notional
Wgtd.
AverageAmount
Avg.
AverageAmount
Avg.
AverageMaturity
Payable/Cost (b)Maturity
Payable/Cost (b)Maturity(Years) (Receivable)(%)(Years) (Receivable)(%)(Years)1.3
213.656.63
5.3(117.85)0.28
1.3(271.05)(0.35)
1.5
117.85(0.23)
1.3
5,740.60(0.17)
3.5
33.3(831.75)
0.86
34.2
4.3
15.71
(0.49)
6.6
14.36(0.31)
8.7

10,085.14
178.593,954.45
390.5914,930.13
921.1215,851.25

368.0458.15
49.77
548.8649.77
598.63

1.58
0.85
3.16
5.22
1.94
4.08
2.07

1.6
0.9
4.2
2.0
4.1
2.7
4.0

(371.00)(4,293.77)
3,848.06(759.27)(3,476.88)
614.98(684.60)
213.65(8,602.39)
4,207.70
3,925.73(255.31)

3.34
1.75
0.27
(0.08)
3.17
5.64
3.94
6.63
2.24
1.09
(1.24)
-

9.6
2.2
9.9
4.0
4.0
3.1
2.3
5.3
6.0
9.5
3.1
-

(14.36)(5,357.47)
5,625.48(238.13)(572.08)
503.33(6,047.40)
6,261.02(252.49)(38.87)

2.47
1.65
0.45
1.60
1.77
2.75
1.54
0.83
(0.54)
-

8.7
2.5
2.4
0.7
1.6
1.8
1.9
2.4
(1.0)
-

15,851.25(0.62)
598.012.07

4.0

519.40264.09--34.59(4.28)--

15,851.25

598.01

2.07

4.0

171.55 (c)435.64--29.54 (c)
25.26

-

-

Supplementary disclosure (direct borrowings):
The notional amount of borrowings at 31 December 2015 was UA 16,449.26 million and the estimated fair value was UA 16,553.69 million.
(a)	Currency swap agreements include cross-currency interest rate swaps.
(b)	The average repricing period of the net currency obligations for adjustable rate borrowings was six months. The rates indicated are those prevailing at 31 December 2015.
(c)	These amounts are included in derivative assets and liabilities on the balance sheet.
(d)	These amounts relate mainly to borrowings and derivatives in AUD, CHF, NZD, TRY and ZAR.
Slight differences may occur in totals due to rounding.

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Chapter 6

Borrowings and Swaps at 31 December 2014
(Amounts in UA millions)

Currency
Euro

Rate Type
Fixed
Adjustable
Fixed

Japanese
Yen

Adjustable
Fixed

US Dollar

Adjustable
Fixed

Others (d)Adjustable
Fixed

Total

Adjustable

Principal at face value
Net unamortizedpremium/(discount)

Fair valuation adjustment
Total

Carried at
Fair Value
126.81
574.44362.30

Direct Borrowings
Wgtd.
Carried at
Avg.
Amortized
Cost (b)
(%)
Cost
0.28
117.32
1.36
4.50

Currency Swap Agreements (a)Interest Rate Swaps
Wgtd.
Wgtd.
Notional
Wgtd.
AverageAmount
Avg.
AverageAmount
Avg.
AverageMaturity
Payable/Cost (b)Maturity
Payable/Cost (b)Maturity(Years) (Receivable)(%)(Years) (Receivable)(%)(Years)2.3
244.586.38
5.9(125.70)0.28
2.3
5,555.92
0.09
4.6
125.700.03
2.3(272.35)(0.08)
2.4
29.4(624.90)
1.21
31.7
4.4
-

7,363.16
175.994,721.14
157.7912,785.55
696.0813,481.63

628.10146.52
3.11
891.943.11
895.05

1.82
1.25
3.23
1.96
2.28
3.10
2.32

3.2
1.3
4.4
3.7
4.8
3.5
4.7

(394.89)(3,761.71)
3,732.99(828.11)
5.44(4,254.40)
816.81(367.31)250.02(8,641.01)
10,105.72(1,862.66)(147.93)

3.41
1.79
0.08
(0.18)
3.92
3.43
5.40
1.07
6.33
2.56
0.52
0.84
-

9.4
3.1
8.5
4.4
0.5
4.3
3.9
4.0
5.8
5.8
6.0
5.1
-

(3,594.67)
3,850.91(241.36)(651.86)551.23(4,372.23)
4,527.84(241.36)(85.75)

1.95
0.31
2.00
1.68
3.34
1.86
0.67
2.00
-

3.2
3.1
1.0
4.7
4.4
3.4
3.2
1.0
-

13,481.63(0.73)
894.322.32

4.7

526.33378.40--80.45(5.30)--

13,481.63

894.322.32

4.7(55.90) (c)322.50--96.47 (c)
91.17

-

-

Supplementary disclosure (direct borrowings):
The notional amount of borrowings at 31 December 2014 was UA 14,347.92 million and the estimated fair value was UA 14,503.79 million.
(a)	Currency swap agreements include cross-currency interest rate swaps.
(b)	The average repricing period of the net currency obligations for adjustable rate borrowings was six months. The rates indicated are those prevailing at 31 December 2014.
(c)	These amounts are included in derivative assets and liabilities on the balance sheet.
(d)	These amounts relate mainly to borrowings and derivatives in AUD, CHF, NZD, TRY and ZAR.
Slight differences may occur in totals due to rounding.

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The contractual (except for callable borrowings) maturity structure of outstanding borrowings as at 31 December 2015 was
as follows:i)

Borrowings Carried at Fair Value(UA millions)
Periods
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

Ordinary
3,530.54
3,137.85
3,066.91
1,107.37
1,182.68
3,600.75
15,626.10

Callable
192.29
1.33
2.37
29.16
225.15

Total
3,722.83
3,137.85
3,066.91
1,108.70
1,185.05
3,629.91
15,851.25

Ordinary
4.93
5.93
19.78
162.294.93
340.93538.79(0.62)
538.17

Callable
59.84
59.84
59.84

Total
4.93
5.93
19.78
162.294.93
400.77598.63(0.62)
598.01ii) Borrowings Carried at Amortized Cost
(UA millions)
Periods
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Subtotal
Net unamortized premium and discountTotal

The contractual (except for callable borrowings) maturity structure of outstanding borrowings as at 31 December 2014 was
as follows:i)

Borrowings Carried at Fair Value(UA millions)
Periods
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

186

Ordinary
699.513,238.80
2,288.69
2,563.28
750.793,641.32
13,182.39

Callable
281.33
1.26
16.65
299.24

Total
980.843,238.80
2,288.69
2,563.28
752.05
3,657.97
13,481.63

Annual Report 2015

Chapter 6ii) Borrowings Carried at Amortized Cost
(UA millions)
Periods
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Subtotal
Net unamortized premium and discountTotal

Ordinary309.23
5.54
6.60
22.51
158.13393.04895.05(0.73)
894.32Callable-

Total
309.23
5.54
6.60
22.51
158.13393.04895.05(0.73)
894.32

The fair value of borrowings carried at fair value through profit or loss at 31 December 2015 was UA 15,851.25 million(2014: UA 13,481.63 million). For these borrowings, the amount the Bank will be contractually required to pay at maturity
at 31 December 2015 was UA 15,848.51 million (2014: UA 13,452.87 million). The surrender value of callable borrowings
is equivalent to the notional amount plus accrued finance charges.
As per Note P, there was a loss of UA 38.81 million on fair-valued borrowings and related derivatives for the year ended
31 December 2015 (2014: net loss of UA 36.73 million). The fair value movement attributable to changes in the Bank’s credit
risk included in the other comprehensive income for the year ended 31 December 2015 was a gain of UA 73.06 million(2014: loss of UA 32.14 million).
Fair value movements attributable to changes in the Bank’s credit risk are determined by comparing the discounted cash
flows for the borrowings designated at fair value through profit or loss using the Bank’s credit spread on the relevant liquidmarkets for ADB quoted bonds versus LIBOR both at the beginning and end of the relevant period. The Bank’s credit spread
was not applied for fair value changes on callable borrowings with less than one year call date.
For borrowings designated at fair value through profit or loss at 31 December 2015, the cumulative unrealized fair value
losses to date were UA 770.29 million (2014: losses of UA 828.27 million).

Note N — Equity
Equity is composed of capital and reserves. These are further detailed as follows:

CapitalCapital includes subscriptions paid-in by member countries and cumulative exchange adjustments on subscriptions (CEAS).
The Bank is not exposed to any externally imposed capital requirements.

Subscriptions Paid In
Subscriptions to the capital stock of the Bank are made up of the subscription to the initial capital, a voluntary capital increase
and the Six General Capital Increases (GCI) made so far. The Fifth General Capital Increase (GCI-V) was approved by the
Board of Governors of the Bank on 29 May 1998 and became effective on 30 September 1999 upon ratification by member
states and entry into force of the related amendments to the Agreements establishing the Bank. The GCI-V increased theauthorized capital of the Bank by 35 percent from 1.62 million shares to 2.187 million shares with a par value of UA 10,000
per share. The GCI-V shares, a total of 567,000 shares, are divided into paid-up and callable shares in proportion of six
percent (6%) paid-up and ninety-four percent (94%) callable. The GCI-V shares were allocated to the regional and non-regional

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members such that, when fully subscribed, the regional members shall hold 60 percent of the total stock of the Bank andnon-regional members shall hold the balance of 40 percent.
Prior to the GCI-V, subscribed capital was divided into paid-up capital and callable capital in the proportion of 1 to 7. With the
GCI-V, the authorized capital stock of the Bank consists of 10.81 percent paid-up shares and 89.19 percent callable shares.
Prior to the sixth General Capital Increase (GCI-VI) and by its resolutions B/BG/2008/07 and B/BG/2009/05, the Boardof Governors authorized two capital increases bringing the Authorized Capital of the Bank from UA 21,870 million to
UA 22,120 million to allow the Republic of Turkey and the Grand Duchy of Luxembourg to become members of the Bank.
The membership of these two countries became effective upon completion of the formalities specified in the Agreement
establishing the Bank and in the General Rules Governing Admission of Non-Regional Countries to Membership of the Bank.
Consequently, on 29 October 2013 and 29 May 2014, the Republic Turkey and The Grand Duchy Luxembourg respectively
were formally admitted as the 78th and 79th member countries of the Bank.
In 2009, the Board of Directors endorsed a proposal made by Canada and Republic of Korea offering to subscribe, temporarily,
to additional non-voting callable capital of the Bank in the amounts of UA 1.63 billion and UA 0.19 billion, respectively. This
proposal was adopted by the Board of Governors on 22 February 2010. Accordingly, the authorized capital stock of the
Bank increased from UA 22,120 million to UA 23,947 million by the creation of additional 182,710 non-voting shares. These
non-voting callable shares were to be absorbed by the subscriptions of Canada and the Republic of Korea to GCI-VI when
they become effective.
The GCI-VI was approved by the Board of Governors of the Bank on 27 May 2010. GCI-VI increased the authorized capitalstock of the Bank from UA 23,947 million to UA 67,687 million with the creation of 4,374,000 new shares. The new shares
created are to be allocated to the regional and non-regional groups in such proportions that, when fully subscribed, theregional group shall hold 60 percent of the total capital stock of the Bank, and the non-regional group 40 percent. The
new shares and the previous ones described above shall be divided into paid-up and callable shares in the proportion of
6 percent paid-up shares and 94 percent callable shares.
Upon conclusion of the GCI VI capital increase and following the Board of Governors’ resolutions, the temporary non-voting
callable shares of Canada and Korea described above were effectively retired in 2011 and 2012, respectively thereby reducing
the authorized capital of the Bank for each of these periods by 163,296 and 19,414.
Following its Resolution B/BG/2012/04 of 31 May 2012, the Board of Governors authorized a Special Capital Increase of theauthorized share capital of the Bank to allow for: (i) subscription by a new regional member country (the Republic of South
Sudan) of the minimum number of shares required for it to become a member; and (ii) the resulting subscription by nonregional members of the number of shares necessary to comply with the 60/40 ratio requirement between the shareholdingof regional and non-regional members. Accordingly, the Board of Governors, decided to increase the authorized capital of
the Bank by the creation of 111,469 new shares, out of which 66,881 shall be available for subscription by the Republic ofSouth Sudan, and 44,588, shall be available for subscription by non-regional members. In 2014, by Resolution B/BG/2014/02,
the Board of Governors revised down to 33,895 shares the initial subscription of South Sudan’s, in line with its IMF quota.
The additional shares are subject to the same terms and conditions as the shares authorized in the GCI-VI. On 30 April 2015,
having completed the membership process to join the African Development Bank, South Sudan was admitted as member.

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Chapter 6

The Bank’s capital as at 31 December 2015 and 2014 was as follows:(UA thousands)
Capital Authorized (in shares of UA 10 000 each)Less: Unsubscribed
Subscribed Capital
Less: Callable Capital
Paid-up Capital
Shares to be issued upon payment of future installments
Add: Amounts paid in advance
Less: Amounts in arrears
Capital at 31 December

2015
66,975,050(1,492,542)
65,482,508(60,598,095)
4,884,413(1,157,150)
445
3,727,708(17)
3,727,691

2014
66,975,050(1,841,828)
65,133,222(60,268,705)
4,864,517(1,426,520)
354
3,438,351(119)
3,438,232

Included in the total unsubscribed shares of UA 1,492.54 million at 31 December 2015 was an amount of UA 38.83 million
representing the balance of the shareholding of the former Socialist Federal Republic of Yugoslavia (former Yugoslavia).
Since the former Yugoslavia has ceased to exist as a state under international law, its shares (composed of UA 38.83
million callable, and UA 4.86 million paid-up shares) have been held by the Bank in accordance with Article 6 (6) of the
Bank Agreement. In 2002, the Board of Directors of the Bank approved the proposal to invite each of the successor statesof the former Yugoslavia to apply for membership in the Bank, though such membership would be subject to their fulfillingcertain conditions including the assumption pro-rata of the contingent liabilities of the former Yugoslavia to the Bank, as of
31 December 1992. In the event that a successor state declines or otherwise does not become a member of the Bank, thepro-rata portion of the shares of former Yugoslavia, which could have been reallocated to such successor state, would bereallocated to other interested non-regional members of the Bank in accordance with the terms of the Share Transfer Rules.
The proceeds of such reallocation will however be transferable to such successor state. Furthermore, pending the response
from the successor states, the Bank may, under its Share Transfer Rules, reallocate the shares of former Yugoslavia tointerested non-regional member states and credit the proceeds on a pro-rata basis to the successor states. In 2003, one of
the successor states declined the invitation to apply for membership and instead offered to the Bank, as part of the state’s
Official Development Assistance its pro-rata interest in the proceeds of any reallocation of the shares of former Yugoslavia.
The Bank accepted the offer.

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Subscriptions by member countries and their voting power at 31 December 2015 were as follows:(Amounts in UA thousands)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54

Member States
Algeria
AngolaBenin
Botswana
Burkina Faso
BurundiCabo Verde
Cameroon
Central African Republic
Chad
Comoros
Congo
Côte d’Ivoire
Democratic Republic of Congo
Djibouti
Egypt
Equatorial Guinea
Eritrea
Ethiopia
Gabon
GambiaGhana
GuineaGuinea Bissau
Kenya
LesothoLiberia
Libya
Madagascar
MalawiMali
Mauritania
Mauritius
MoroccoMozambique
Namibia
Niger
Nigeria
RwandaSão Tomé & Príncipe
Senegal
Seychelles
Sierra Leone
SomaliaSouth Africa
South Sudan
Sudan
Swaziland
Tanzania
Togo
Tunisia
UgandaZambiaZimbabwe
Total Regionals

Slight differences may occur in totals due to rounding.

190

Total
Shares271,025
74,242
12,40569,45225,64815,2694,919
69,602
2,843
4,528
542
29,200239,563
82,7891,213
350,410
10,245
2,003
101,633
76,913
9,763
137,130
25,9191,552
92,976
3,723
12,403
214,523
41,27017,84627,864
3,704
42,063
227,618
38,083
22,117
16,148574,044
8,480
4,350
67,337
1,823
18,472
1,941
323,933
32,03021,411
7,385
49,043
10,07090,17530,74480,258133,074
3,833,716% of Total
Shares
4.213
1.154
0.193
1.080
0.399
0.237
0.076
1.082
0.044
0.070
0.008
0.454
3.724
1.287
0.019
5.447
0.159
0.031
1.580
1.196
0.152
2.132
0.403
0.024
1.445
0.058
0.193
3.335
0.642
0.277
0.433
0.058
0.654
3.539
0.592
0.344
0.251
8.924
0.132
0.068
1.047
0.028
0.287
0.030
5.036
0.498
0.333
0.115
0.762
0.157
1.402
0.478
1.248
2.069
59.599AmountPaid
153,734
39,011
6,517
61,681
13,717
9,194
3,095
35,755
1,607
2,548
605
15,670134,738
44,4991,517
200,935
6,395
2,506
53,397
48,3905,237
70,437
14,233870
51,863
4,025
7,404
120,463
21,672
10,043
14,757
4,118
30,427
141,566
21,14914,031
9,121
333,0424,496
2,461
35,142
1,732
9,987
2,427
157,745
1,695
12,758
8,325
25,9485,528
57,503
16,87542,611
72,5872,167,789

Callable
Capital2,556,520
703,412
117,533
632,845
242,775
143,496
46,100660,281
26,822
42,7404,826
276,350
2,260,900
783,395
10,6183,303,170
96,057
17,522962,940
720,758
92,4131,300,871
244,961
14,660877,900
33,210116,637
2,024,777
391,030
168,420
263,881
32,915
390,230
2,134,620
359,697
207,150
152,363
5,407,433
80,30341,053
638,241
16,499174,751
16,986
3,081,600
318,610201,347
65,530464,497
95,171
844,260
290,577
759,945
1,258,158
36,169,756

Numberof Votes
271,650
74,867
13,03070,077
26,273
15,894
5,544
70,227
3,327
5,153
1,167
29,825
240,188
83,414
1,838
351,035
10,8702,628
102,258
77,538
10,388
137,755
26,544
2,177
93,601
4,348
13,028215,118
41,895
18,471
28,4894,329
42,688228,243
38,70822,742
16,773574,669
9,105
4,975
67,962
2,448
19,097
2,566
324,558
32,65522,036
8,010
49,668
10,69590,80031,36980,813
133,699
3,867,225% of Total
Voting Power
4.191
1.155
0.201
1.081
0.405
0.245
0.085
1.083
0.051
0.079
0.018
0.460
3.705
1.287
0.028
5.415
0.168
0.041
1.577
1.196
0.160
2.125
0.409
0.034
1.444
0.067
0.201
3.319
0.646
0.285
0.439
0.067
0.659
3.521
0.597
0.351
0.259
8.865
0.140
0.077
1.048
0.038
0.295
0.040
5.007
0.504
0.340
0.124
0.766
0.165
1.401
0.484
1.247
2.063
59.658Annual Report 2015

Chapter 6(Amounts in UA thousands)

55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80

Member States
Total Regionals
Argentina
Austria
BelgiumBrazilCanadaChina
Denmark
FinlandFranceGermany
India
Italy
Japan
Korea
KuwaitLuxembourg
Netherlands
NorwayPortugal
Saudi Arabia
Spain
SwedenSwitzerland
TurkeyUnited Kingdom
United States of America
Total Non-Regionals
Grand Total

Total
Shares3,833,716
5,847
28,76941,156
26,072
246,004
73,73975,836
31,495
241,981
265,640
16,094
156,363
353,868
30,161
29,20812,65955,83074,754
15,422
12,42069,25399,557
94,488
6,572
112,759
422,8622,598,809
6,432,525% of Total
Shares59.599
0.091
0.447
0.640
0.405
3.824
1.146
1.179
0.489
3.762
4.130
0.250
2.431
5.501
0.469
0.454
0.197
0.868
1.162
0.240
0.193
1.077
1.548
1.469
0.102
1.753
6.574
40.401100.000

AmountPaid
2,167,789
6,107
17,03322,39014,051
178,344
43,17155,036
18,646143,256
157,265
9,058
92,471
209,500
17,463
21,4201,988
32,45344,2138,470
6,760
49,09258,93655,9391,541
65,033
230,266
1,559,902
3,727,691

Callable
Capital36,169,756
52,364
270,660
389,180
246,676
2,281,710
694,230
703,330
296,3102,276,560
2,499,140
151,890
1,471,170
3,329,180
284,150
270,660
124,610525,860
703,330
145,750
117,440
643,440
936,640
888,950
64,1901,062,560
3,998,359
24,428,339
60,598,095

Numberof Votes
3,867,225
6,472
29,394
41,782
26,698
246,629
74,36476,461
32,120242,606
266,265
16,719156,988354,493
30,786
29,833
13,28456,45575,37916,047
13,04569,878100,182
95,113
7,197
113,384
423,487
2,615,061
6,482,286% of Total
Voting Power59.658
0.100
0.453
0.644
0.412
3.805
1.147
1.180
0.495
3.743
4.108
0.258
2.422
5.469
0.475
0.460
0.205
0.871
1.163
0.248
0.201
1.078
1.545
1.467
0.111
1.749
6.533
40.342100.000

The subscription position including the distribution of voting rights at 31 December 2015 reflects the differences in the timing of subscription payments by member countries during
the allowed subscription payment period for GCI-VI. After the shares have been fully subscribed, the regional and non-regional groups are expected to hold 60% and 40% voting
rights, respectively.
Slight differences may occur in totals due to rounding.

Cumulative Exchange Adjustment on Subscriptions (CEAS)
Prior to the fourth General Capital Increase (GCI-IV), payments on the share capital subscribed by the non-regional member
countries were fixed in terms of their national currencies. Under GCI-IV, and subsequent capital increases payments by regionaland non-regional members in US dollars were fixed at an exchange rate of 1 UA = US$ 1.20635. This rate represented thevalue of the US dollar to the SDR immediately before the introduction of the basket method of valuing the SDR on 1 July
1974 (1974 SDR). As a result of these practices, losses or gains could arise from converting these currencies to UA when
received. Such conversion differences are reported in the Cumulative Exchange Adjustment on Subscriptions account.
At 31 December 2015 and 2014, the Cumulative Exchange Adjustment on Subscriptions was as follows:(UA thousands)
Balance at 1 January
Net conversion (gains)/losses on new subscriptions
Balance at 31 December

2015
173,538(4,696)
168,8422014
172,654884
173,538191

Chapter 6

African Development Bank

Reserves
Reserves consist of retained earnings, fair value gains/losses on investments designated at fair value through othercomprehensive income, gains/losses on fair-valued borrowings arising from “own credit” and remeasurements of defined
liability.

Retained Earnings
Retained earnings included the net income for the year, after taking into account transfers approved by the Board of Governors,
and net charges recognized directly in equity. Retained earnings also included the transition adjustments resulting from theadoption of new or revised financial reporting standards, where applicable.
The movements in retained earnings during 2014 and 2015 were as follows:(UA thousands)
Balance at 1 January 2014
Net income for the year
Net gains recognized directly in equity
Balance at 31 December 2014

2,964,743
31,692
2,996,435

Net loss for the current year
Net gains recognized directly in equity
Balance at 31 December 2015

(30,840)
2,965,595

During the year, the Board of Governors approved the distribution of UA 124.00 million (2014: UA 120.00 million) fromincome and the surplus account to certain entities for development purposes.
With effect from 2006, Board of Governors’ approved distributions to entities for development purposes are reported as
expenses in the Income Statement in the year such distributions are approved.
The movement in the surplus account during 2014 and 2015 is as follows:(UA thousands)
Balance at 1 January 2014
Distribution to Special Relief FundDistribution to Africa50
Balance at 31 December 2014

33,442(5,000)(20,000)
8,442

Allocation from 2014 net income
Distribution to Special Relief FundDistribution to MIC Technical Assistance FundDistribution to NEPAD Infrastructure Project Preparation Facility
Balance at 31 December 2015

25,000(10,000)(8,000)(8,000)7,442

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Chapter 6

Distributions to entities for development purposes, including those made from the surplus account, for the years ended
31 December 2015 and 2014 were as follows:(UA thousands)
African Development Fund (ADF)
Post Conflict Assistance - DRC
Special Relief Fund
MIC Technical Assistance FundNEPAD Infrastructure Project Preparation Facility
Africa50
Total

2015
51,00047,00010,0008,000
8,000
124,000

2014
42,00053,0005,000
20,000120,000

Note O — Income from loans and investments and related derivatives
Income from Loans
Income from loans for the years ended 31 December 2015 and 2014 was as follows:(UA thousands)
Interest income on loans not impaired
Interest income on impaired loans
Commitment charges
Statutory commission
Total

2015
305,609
32,898
11,430270
350,2072014
301,71128,502
11,648267
342,128

2015
151,680(4,966)(24,501)
122,2132014
169,869(83)(37,372)
132,414

Income from Investments and Related Derivatives
Income from investments for the years ended 31 December 2015 and 2014 was as follows:(UA thousands)
Interest income
Realized fair value losses on investments
Unrealized fair value losses on investments
Total

Total interest income on investments at amortized cost for the year ended 31 December 2015 was UA 102.64 million (2014:
UA 106.01 million).

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Note P — Borrowing expenses
Interest and Amortized Issuance Costs
Interest and amortized issuance costs on borrowings for the years ended 31 December 2015 and 2014 were as follows:(UA thousands)
Charges to bond issuers
Amortization of issuance costs
Total

2015
344,336
1,798
346,1342014
375,624
337
375,961

Total interest expense for financial liabilities not at fair value through profit or loss for the year ended 31 December 2015 was
UA 98.74 million (2014: UA 66.70 million).

Net Interest on Borrowing-Related Derivatives
Net interest on borrowing-related derivatives for the years ended 31 December 2015 and 2014 was as follows:(UA thousands)
Interest on derivatives payable
Interest on derivatives receivable
Total

2015
157,163(337,382)(180,219)2014
143,678(364,885)(221,207)

Unrealized Losses on Borrowings, Related Derivatives and Others
Unrealized gains/losses on borrowings, related derivatives and others for the years ended 31 December 2015 and 2014
were as follows:(UA thousands)
Unrealized (losses)/gains on fair-valued borrowings and related derivatives
Unrealized (losses)/gains on derivatives on non-fair valued borrowings and others
Total

2015
(38,814)(10,702)(49,516)2014(36,728)
6,898(29,830)

Fair value gain attributable to changes in the Bank’s “own credit” for the year ended 31 December 2015 amounted to
UA 73.06 million (2014: loss of UA 32.14 million) and was included in the other comprehensive income.
The net unrealized loss on derivatives on non-fair valued borrowings and others for the year ended 31 December 2015
amounted to UA 10.70 million (2014: gain of UA 6.90 million). This included the income statement effects of the hedge
accounting, consisting of unrealized loss of UA 0.54 million, representing hedge ineffectiveness and UA 4.87 million ofamortization of fair value adjustments on the hedged risk (See Note G).
Valuation adjustment loss in respect of counterparty risk of derivative financial assets (CVA) for the year ended 31 December
2015 amounted to UA 11.22 million (2014: loss of UA 0.42 million), whilst valuation adjustment loss relating to credit risk inderivative financial liabilities (DVA) for the year ended 31 December 2015 was UA 0.34 million (2014: loss of UA 3.51 million).

194

Annual Report 2015

Chapter 6

Note Q — Administrative expenses
Total administrative expenses relate to expenses incurred for the operations of the Bank and those incurred on behalf of
the ADF and the NTF. The ADF and NTF reimburse the Bank for their share of the total administrative expenses, based on
an agreed-upon cost-sharing formula, which is driven by certain selected indicators of operational activity for operational
expenses and relative balance sheet size for non-operational expenses. However, the expenses allocated to the NTF shallnot exceed 20 percent of the NTF’s gross income.
Administrative expenses comprised the following:(UA thousands)
Manpower expenses*
Other general expenses
Total
Reimbursable by ADF
Reimbursable by NTF
Net
*

2015
250,672
72,623323,295(200,932)(364)
121,9992014
295,50276,594372,096(248,566)(373)
123,157

Share of ADB manpower expenses amount - UA 96.78 million (2014: UA 101.44 million).

Included in general administrative expenses is an amount of UA 7.80 million (2014: UA 11.68 million) incurred under operatinglease agreements for offices in Côte d’Ivoire and in certain member countries, where the Bank has offices.
At the balance sheet date, the Bank had outstanding commitments under operating leases which fall due as follows:(UA thousands)
Within one year
In the second to fifth years inclusive
Total

2015
8,141
9,273
17,414

2014
4,699
3,862
8,561

Leases are generally negotiated for an average term of one (1) to five (5) years and rentals are fixed for an average of one(1) year. Leases may be extended for periods that are not longer than the original term of the leases.

Note R — Employee benefits
Staff Retirement Plan
The Staff Retirement Plan (SRP), a defined benefit plan established under Board of Governors’ Resolution 05-89 of 30 May
1989 became effective on 31 December 1989, following the termination of the Staff Provident Fund. Every person employedby the Bank on a full-time basis, as defined in the Bank’s employment policies, is eligible to participate in the SRP, uponcompletion of 6 months service without interruption of more than 30 days.
The SRP is administered as a separate fund by a committee of trustees appointed by the Bank on behalf of its employees.
In November 2004, the Board of Directors of the Bank approved certain revisions to the SRP, including simplification of thecalculation of the employee contribution rate, more explicit reference to the Bank’s residual responsibility and rights as the
SRP sponsor, changes in survivor child benefits and an increase in the pension accumulation rate from 2 percent to 2.5

195Chapter 6

African Development Bank

percent for each year of service. Also, new members from the Field Offices of the Bank joined the Plan in 2007. Accordingly
the associated past service costs associated with these changes were reported in the financial statements of respective years.
In 2008, the early retirement provisions and the death benefits to spouses were modified, resulting in a net negative priorservice cost of UA 8.12 million, which was immediately recognized. Under the revised SRP, employees contribute at a rateof 9 percent of regular salary. A tax factor included in the basis for the determination of contribution in the previous SRP has
been eliminated. The Bank typically contributes twice the employee contribution, but may vary such contribution based on
the results of annual actuarial valuations.
In 2011, the Board of Directors approved the extension of the mandatory staff retirement age in the Bank from 60 to 62
years effective 1 January 2012. Participants of the Plan as of 11 May 2011 were given up to 31 December 2012 to makethe election on either to retire at 60 years with no penalty for early retirement or accept the extension and retire at age 62.
The option to retire at age 60 is not available to staff joining the Bank from 1 January 2012, the date of effectiveness of thechange. Most of the existing participants opted for the revised retirement age. The impact of the change on the actuarial
valuation of SRP was a curtailment of UA 10.90 million and was reported in the financial statements for the year ended
31 December 2011.
During 2015, the Board of Directors approved changes to enhance financial sustainability of the Plan. These changes primarily
included review of the commutation of pension as well as benefits applicable for death in retirement.
All contributions to the SRP are irrevocable and are held by the Bank separately in a retirement fund to be used in accordancewith the provisions of the SRP. Neither the contributions nor any income thereon shall be used for or diverted to purposes
other than the exclusive benefit of active and retired participants or their beneficiaries or estates, or for the satisfaction of the
SRP’s liabilities. At 31 December 2015, virtually all of the SRP’s investments were under external management and thesewere invested in indexed funds, with the following objectives: a) Equity portfolio – to track as closely as possible, the returnsof the Morgan Stanley Capital International World Index as well as hedging the currency exposure of the SRP’s anticipatedfuture liabilities; b) Bond portfolio – to track as closely as possible, the returns of the Citigroup World Government Bond
Index as well as hedge the currency exposure of the SRP’s anticipated future liabilities.

Post-Employment Medical Benefit Plan
The Medical Benefit Plan (MBP) was created under the Board of Directors’ resolution B/BD/2002/17 and F/BD/2002/18 of
17 July 2002 and became effective on 1 January 2003. Under the MBP, all plan members including existing staff or retirees
contribute a percentage of their salary or pension while the Bank typically contributes twice the employee contribution, but
may vary such contribution based on the results of annual actuarial valuations.
Contribution rates by staff members and retirees are based on marital status and number of eligible children. An MBP board,
composed of selected officers of the Bank and representatives of retirees and the staff association, oversees the management
and activities of the MBP. The contributions from the Bank, staff and retirees are deposited in a trust account. In accordancewith the directive establishing the Plan, all Plan members including staff and retirees are eligible as beneficiaries for making
claims for medical services provided to them and their recognized dependents.
On 1 January 2015, the Board of Directors approved a new set contribution rates to the MBP for the Bank, active staff
and retirees. The new set of rates are with effect from 1 September 2015 and aim at enhancing the long term financial
sustainability of the Plan.

196

Annual Report 2015

Chapter 6

The pension and post-employment medical benefit expenses for 2015 and 2014 for the Bank, the ADF and the NTF combined(the Bank Group) comprised the following:(UA millions)

Current service cost – gross
Past service cost amendments
Less: employee contributions
Net current service cost
Interest cost
Expected return on plan assets
Expense for the year

Staff Retirement Plan
2015
48.45
(9.11)
39.34
21.03(15.90)
44.47

2014
41.63
(9.71)
31.92
22.39(19.04)35.27

Medical Benefit Plan
2015
13.82
(16.22)(2.46)(4.86)
4.44(0.42)

2014
17.83(2.35)
15.48
5.92
21.40

At 31 December 2015, the Bank had a liability to the SRP amounting to UA 128.90 million (2014: UA 180.55 million) while
the Bank’s liability to the post-employment aspect of the MBP amounted to UA 145.64 million (2014: UA 140.81 million).
During 2015, an additional amount of UA 42.13 million was transferred by the Bank to the Staff Retirement Plan.
At 31 December 2015 and 2014 the determination of these liabilities, which are included in “Other accounts payable” on
the Balance Sheet is set out below:(UA millions)Staff Retirement Plan
2015

2014

Medical Benefit Plan
2015

2014

Fair value of plan assets:
Market value of plan assets at beginning of year
Actual return on assets
Employer’s contribution
Plan participants’ contribution during the year
Benefits paid
Market value of plan assets at end of year

508.93(8.95)
60.34
9.11(18.93)550.50454.01
46.27
19.42
9.71
(20.48)508.93

34.55
0.06
5.03
2.46
(2.97)
39.13

30.80
0.30
4.70
2.35
(3.60)
34.55

Present value of defined benefit obligation:
Benefit obligation at beginning of year
Current service cost
Employee contributions
Interest cost
Actual (gain)/loss
Benefits paid
Past service cost amendments
Benefit obligation at end of year

689.48
39.34
9.11
21.03
(60.63)(18.93)679.40550.31
31.92
9.71
22.39
95.63
(20.48)689.48175.36
11.36
2.46
5.55
9.23
(2.97)(16.22)184.77161.60
15.48
2.35
7.30
(7.77)(3.60)
175.36

Funded status:
Liability recognized on the balance sheet at 31 December
representing excess of benefit over plan asset(128.90)(180.55)(145.64)(140.81)197

Chapter 6

African Development Bank

There were no unrecognized past service costs at 31 December 2015 and 2014. At 31 December 2015, the cumulative net
actuarial losses recognized directly in equity through other comprehensive income for the SRP were UA 199.26 million (2014:
losses of UA 235.04 million). The cumulative net actuarial losses recognized directly in equity through other comprehensive
income for MBP were UA 50.10 million (2014: losses of UA 39.82 million).
The following summarizes the funding status of the SRP at the end of the last five fiscal years:(UA millions)
2015

2014

2013

2012

2011

Staff Retirement Plan:
Fair value of Plan assets
Present value of defined benefit obligation
Deficit funding

550.50(679.40)(128.90)508.93(689.48)(180.55)454.01(550.31)(96.30)415.84(523.13)(107.29)364.94(411.01)(46.07)

Experience adjustments on plan assets
Experience adjustments on plan liabilities
Net(23.97)(175.29)(199.26)0.89(235.93)(235.04)(26.37)(140.24)(166.61)(33.05)(163.59)(196.64)(48.95)(90.98)(139.93)

The funding status of the Medical Benefit Plan at the end of the last five fiscal years was as follows:(UA millions)
2015

2014

2013

2012

2011

Medical Benefit Plan:
Fair value of Plan assets
Present value of defined benefit obligation
Deficit funding

39.13(184.77)(145.64)

34.55(175.36)(140.81)30.81(161.60)(130.79)25.85(158.85)(133.00)

22.14(110.15)(88.01)

Experience adjustments on plan assets
Experience adjustments on plan liabilities
Net(5.01)(45.09)(50.10)(3.96)(35.86)(39.82)(2.89)(43.64)(46.53)(2.18)(60.23)(62.41)(1.90)(24.59)(26.49)Assumptions used in the latest available actuarial valuations at 31 December 2015 and 2014 were as follows:(Percentages)

Discount rate
Rate of salary increase
Future pension increase
Health care cost growth rate

Staff Retirement Plan
2015
3.40
3.65
2.15

2014
3.07
3.73
2.23

Medical Benefit Plan
2015
3.40
3.65
5.00

2014
3.07
3.73
5.00

The SRP mortality assumptions are based on the Self-Administered Pension Schemes 2008 (SAPS08) tables, specificallyreferenced from the experience of United Kingdom self-administered pension schemes. Similarly, the MBP mortality
assumptions are also based on the Self-Administered Pension Schemes (SAPS) tables, specifically referenced from theexperience of United Kingdom occupational schemes. These SAPS tables assume normal health participants, and havebeen updated using Continuous Mortality Investigations (CMI) 2009 projections to factor in future longevity improvements.

198

Annual Report 2015

Chapter 6

The discount rate used in determining the benefit obligation is selected by reference to the long-term year-end rates on AA
corporate bonds.
The medical cost inflation assumption is the rate of increase in the cost of providing medical benefits. This is influenced by awide variety of factors, such as economic trends, medical developments, and patient utilization. For the purposes of thesecalculations, the medical cost inflation rate was assumed at 5 percent per annum.
The Bank’s obligation and costs for post-retirement medical benefits are highly sensitive to assumptions regarding medical
cost inflation.
The average duration of SRP and MBP is 15.9 years and 25 years, respectively.
The following table shows projected benefit cash flow outgo:(UA millions)

Cash flow from MBP
Cash flow from SRP

2016
3.1
26.87

2017
3.3
30.13

2018
3.4
31.88

2019
3.6
34.17

2020
3.8
34.64

2021
to 202522.0
191.97

The following table shows the effects of a one-percentage-point change in the assumed health care cost growth rate:(UA thousands)

Effect on total service and interest cost
Effect on post-retirement benefit obligation

1% Increase
2015
6,052
57,701

2014
7,001
52,374

1% Decrease2015(4,346)(43,568)2014(5,172)(39,270)

The following table shows the effect of a one percent point change in the discount rate for the SRP:
(UA thousands)

Effect on total service and interest cost
Effect on post-retirement benefit obligation

1% Increase
2015
6,441
94,693

2014
8,062
99,505

1% Decrease
2015(8,458)(120,986)

2014(10,733)(127,892)

No SRP assets are invested in any of the Bank’s own financial instruments, nor any property occupied by, or other assets
used by the Bank. All investments are held in active markets.

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The following table presents the weighted-average asset allocation at 31 December 2015 and 2014 for the Staff Retirement
Plan:(UA thousands)
Debt securities
Equity securities
Property
OthersTotal

2015257,274
199,555
87,975544,804

2014
235,383
179,284
78,8478,141
501,655

At 31 December 2015 and 2014, the assets of the MBP were invested primarily in short-term deposits and bonds.
The Bank’s estimate of contributions it expects to make to the SRP and the MBP for the year ending 31 December 2016
are UA 37.14 million and UA 15.25 million, respectively.

Note S — Related parties
The following related parties have been identified:
The Bank makes or guarantees loans to some of its members who are also its shareholders, and borrows funds from thecapital markets in the territories of some of its shareholders. As a multilateral development institution with membershipcomprising 54 African states and 26 non-African states (the “regional members” and “non-regional members”, respectively),
subscriptions to the capital of the Bank are made by all its members. All the powers of the Bank are vested in the Boardof Governors, which consists of the Governors appointed by each member of the Bank, who exercise the voting power of
the appointing member country. Member country subscriptions and voting powers are disclosed in Note N. The Board of
Directors, which is composed of twenty (20) Directors elected by the member countries, is responsible for the conduct of
the general operations of the Bank, and for this purpose, exercises all the powers delegated to it by the Board of Governors.
The Bank also makes or guarantees loans to certain of the agencies of its Regional Member Countries and to public andprivate enterprises operating within such countries. Such loans are approved by the Board of Directors.
In addition to its ordinary resources, the Bank administers the resources of other entities under special arrangements. In
this regard, the Bank administers the resources of the ADF. Furthermore, the Bank administers various special funds andtrust funds, which have purposes that are consistent with its objectives of promoting the economic development and social
progress of its Regional Member Countries. In this connection, the Bank administers the NTF as well as certain multilateraland bilateral donor funds created in the form of grants.
The ADF was established pursuant to an agreement between the Bank and certain countries. The general operation of the
ADF is conducted by a 14-member Board of Directors of which 7 members are selected by the Bank. The Bank exercises
50 percent of the voting power in the ADF and the President of the Bank is the ex-officio President of the Fund. To carryout its functions, the ADF utilizes the officers, staff, organization, services and facilities of the Bank, for which it reimburses
the Bank based on an agreed cost-sharing formula, driven in large part by the number of programs and projects executedduring the year.
The Bank’s investment in the ADF is included in Equity Participations and disclosed in Note J. In addition to the amountreported as equity participation, the Bank periodically makes allocations from its income to the Fund, to further its objectives.

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Net income allocations by the Bank to ADF are reported as Other Resources in the Fund’s financial statements. Net income
allocation to the Fund in 2015 amounted to UA 51 million (2014: UA 42 million)
The NTF is a special fund administered by the Bank with resources contributed by Nigeria. The ADB Board of Directors
conducts the general operations of NTF on the basis of the terms of the NTF Agreement and in this regard, the Bank consultswith the Government of Nigeria. The NTF also utilizes the offices, staff, organization, services and facilities of the Bank forwhich it reimburses to the Bank its share of administrative expenses for such utilization. The share of administrative expenses
reimbursed to the Bank by both the ADF and NTF is disclosed in Note Q.
Grant resources administered by the Bank on behalf of other donors, including its member countries, agencies and otherentities are generally restricted for specific uses, which include the co-financing of Bank’s lending projects, debt reduction
operations and technical assistance for borrowers including feasibility studies. Details of the outstanding balance on suchgrant funds at 31 December 2015 and 2014 are disclosed in Note V-5.
The Bank charges fees for managing some of these funds. Management fees received by the Bank for the year ended
31 December 2015 amounted to UA 1.70 million (2014: UA 2.12 million).
The Bank also administers the SRP and MBP. The activities of the SRP and MBP are disclosed in Note R.

Management Personnel Compensation
Compensation paid to the Bank’s management personnel and executive directors during the years ended 31 December
2015, and 2014 was made up as follows:(UA thousands)
Salaries
Termination and other benefits
Contribution to retirement and medical plan
Total

2015
20,351
11,403
4,269
36,0232014
22,095
14,155
4,461
40,711The Bank may also provide personal loans and advances to its staff, including those in management. Such loans andadvances, guaranteed by the terminal benefits payable at the time of departure from the Bank, are granted in accordancewith the Bank’s rules and regulations. At 31 December 2015, outstanding balances on loans and advances to management
staff amounted to UA 5.83 million (2014: UA 6.48 million).

Note T — Segment reporting
The Bank is a multilateral development finance institution dedicated to the economic and social progress of its regional
member states. The Bank’s products and services are similar and are structured and distributed in a fairly uniform manner
across borrowers.
Based on the evaluation of the Bank’s operations, management has determined that ADB has only one reportable segment
since the Bank does not manage its operations by allocating resources based on a determination of the contribution to net
income from individual borrowers.
The products and services from which the Bank derives its revenue are mainly loans, treasury and equity investments.

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External revenue for the years ended 31 December 2015 and 2014 is detailed as follows:(UA thousands)
Interest income from loans
Fixed rate loans
Variable rate loans
Floating rate loans
Commitment charges and commissions
Total income from loans
Income from investments
Income from other debt securities
Other income
Total external revenue

2015

2014

272,224
13,71752,566
338,507
11,700350,207122,213
3,734
19,316495,470

265,278
13,84951,086330,213
11,915342,128
132,4143,851
9,726
488,119

Revenues earned from transactions with a single borrower country of the Bank and exceeding 10 percent of the Bank’s
revenue for one country amounted to UA 75.55 million for the year ended 31 December 2015 (2014: two countries withrevenues exceeding 10 percent of Bank’s revenue amounted to UA 127.53 million).
The Bank’s development activities are divided into five sub-regions of the continent of Africa for internal management purposes,
namely: Central Africa, Eastern Africa, Northern Africa, Southern Africa, and Western Africa. Activities involving more than
one single country from the continent of Africa are described as multinational activities. Treasury investment activities arecarried out mainly outside the continent of Africa, and are therefore not included in the table below. In presenting informationon the basis of the above geographical areas, revenue is based on the location of customers.
Geographical information about income from loans for the years ended 31 December 2015 and 2014 is detailed as follows:(UA thousands)

2015
Income from sovereign loans
Income from non-sovereign loans

2014
Income from sovereign loans
Income from non-sovereign loans

CentralAfricaEastern
AfricaNorthern
AfricaSouthern
AfricaWestern
AfricaMulti­
national

Total

42,435
3,755
46,1904,213
11,53015,74379,55816,922
96,48081,11037,710118,820

2,759
40,361
43,120234
29,62029,854

210,309
139,898
350,20748,786
4,327
53,113

4,183
11,62915,812

94,201
14,925
109,126

70,944
41,638112,582

1,543
28,32329,866283
21,346
21,629219,940
122,188342,128

As of 31 December 2015, land and buildings owned by the Bank were located primarily at the Bank’s headquarters in
Abidjan, Côte d’Ivoire. More than 90 percent of other fixed and intangible assets were located at the regional resource
centers in Nairobi, Pretoria and Tunis.

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Note U — Approval of financial statements
On 30 March 2016, the Board of Directors authorized these financial statements for issue to the Board of Governors. The
financial statements are expected to be approved by the Board of Governors at its annual meeting in May 2016.

Note V — Supplementary disclosures
Note V — 1: Exchange rates
The rates used for translating currencies into Units of Account at 31 December 2015 and 2014 were as follows:

1 UA = SDR =Algerian Dinar
Angolan Kwanza
Australian Dollar
Botswana Pula
Brazilian Real
Canadian Dollar
Chinese Yuan
CFA Franc
Danish Kroner
Egyptian Pound
Ethiopian Birr
Euro
Gambian Dalasi
Ghanaian Cedi
Guinean Franc
Indian Rupee
Japanese Yen
Kenyan Shilling
Korean Won
Kuwaiti Dinar
Libyan Dinar
Mauritian Rupee
Moroccan Dirham
New Zambian Kwacha
New Zealand Dollar
Nigerian Naira
Norwegian Krone
Pound SterlingSão Tomé & Principe Dobra
Saudi Arabian Riyal
South African Rand
Swedish Krona
Swiss Franc
Tanzanian Shilling
Tunisian Dinar
Turkish Lira
Ugandan Shilling
United States Dollar
Vietnamese Dong

2015
148.456000
187.510000
1.896700
15.587500
5.410990
1.917850
8.995480
834.922000
9.472210
10.835092
29.279000
1.272830
55.460000
5.204920
10,663.200000
91.910100
167.116000
140.118000
1,624.080000
0.420570
1.932400
49.778500
13.726600
14.187500
2.023550
269.631000
12.206900
0.935100
31,778.200000
5.196480
21.541200
11.574200
1.374780
2,979.700000
2.808040
4.009690
4,678.710000
1.385730
30,676.600000

2014
127.415000
148.600548
1.766400
13.771900
3.848310
1.679980
8.865250
782.766607
8.86611010.374856
29.426552
1.193320
65.239914
4.638039
10,468.426300
91.754900
174.733000
131.258926
1,592.530000
0.424211
1.932400
45.967900
13.073772
9.231626
1.850560
242.607000
10.769300
0.928247
28,745.095780
5.433010
16.778600
11.317600
1.433010
2,500.143300
2.697480
3.2391194,019.426339
1.448810
30,781.417260

No representation is made that any currency held by the Bank can be or could have been converted into any other currency at the cross rates resulting from the rates indicated above.

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Note V — 2: Other development assistance activitiesi) Democratic Republic of Congo (DRC)
In connection with an internationally coordinated effort between the Bank, the International Monetary Fund (the IMF),
the World Bank and other bilateral and multilateral donors to assist the Democratic Republic of Congo (DRC) in its
reconstruction efforts, the Board of Directors on 26 June 2002 approved an arrears clearance plan for the DRC. Under
the arrears clearance plan, contributions received from the donor community were used immediately for partial clearanceof the arrears owed by the DRC. The residual amount of DRC’s arrears to the Bank and loan amounts not yet due
were consolidated into new contractual receivables, such that the present value of the new loans was equal to thepresent value of the amounts that were owed under the previous contractual terms. The new loans carry the weighted
average interest rate of the old loans. In approving the arrears clearance plan, the Board of Directors considered thefollowing factors: a) the arrears clearance plan is part of an internationally coordinated arrangement for the DRC; b) themagnitude of DRC’s arrears to the Bank ruled out conventional solutions; c) the prolonged armed conflict in the DRC
created extensive destruction of physical assets, such that the DRC had almost no capacity for servicing its debt; andd) the proposed package would result in a significant improvement in its repayment capacity, if appropriate supporting
measures are taken. Furthermore, there was no automatic linkage between the arrears clearance mechanism and thedebt relief that may be subsequently provided on the consolidated facility. In June 2004, the DRC reached its decision
point under the Heavily Indebted Poor Countries (HIPC) initiative. Consequently, the consolidated facility has since thatdate benefited from partial debt service relief under HIPC.
A special account, separate from the assets of the Bank, was established for all contributions towards the DRC arrears
clearance plan. Such contributions may include allocations of the net income of the Bank that the Board of Governors
may from time to time make to the special account, representing the Bank’s contribution to the arrears clearance plan.
The amount of such net income allocation is subject to the approval of the Boards of Governors of the Bank, typicallyoccurring during the annual general meeting of the Bank. Consequently, income recognized on the consolidated DRC
loans in current earnings is transferred out of reserves to the special account only after the formal approval of suchtransfer, in whole or in part, by the Board of Governors of the Bank.

ii) Post-Conflict Countries Assistance/Transition States Facility
The Post Conflict Countries’ Fund was established as a framework to assist countries emerging from conflict in theirefforts towards re-engagement with the donor community in order to reactivate development assistance and help
these countries reach the Heavily Indebted Poor Countries (HIPC) decision point to qualify for debt relief after clearing
their loan arrears to the Bank Group. The framework entails the setting aside of a pool of resources through a separate
facility with allocations from the ADB’s net income, and contributions from the ADF and other private donors.
Resources from the facility are provided on a case-by-case basis to genuine post-conflict countries not yet receiving
debt relief to fill financing gaps after maximum effort by the post-conflict country to clear its arrears to the Bank Group.
In this connection, the Board of Governors by its Resolution B/BG/2004/07 of 25 May 2004 established the PostConflict Countries Facility (PCCF) under the administration of the ADF and approved an allocation of UA 45 million
from the 2003 net income of the Bank. The Board of Governors also, by its resolution B/BG/2005/05 of 18 May 2005,
approved an additional allocation of UA 30 million from the 2004 net income as the second installment of the Bank’s
contribution to the facility and by its resolution B/BG/2006/04 of 17 May 2006, the Board of Governors also approved
the third and final installment of the Bank’s allocation of UA 25 million from the 2005 net income. In March 2008, theBoard of Directors approved the establishment of the Fragile States Facility (FSF) to take over the activities of the PCCF
and in addition provide broader and integrated framework for assistance to eligible states. The purposes of the FSF
are to consolidate peace, stabilize economies and lay the foundation for sustainable poverty-reduction and long-term
economic growth of the eligible countries. By policy, contributions made by ADB to the PCCF/FSF are not used toclear the debt owed to the Bank by beneficiary countries.

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Annual Report 2015

Chapter 6iii) Heavily Indebted Poor Countries (HIPC) Initiative
The Bank participates in a multilateral initiative for addressing the debt problems of countries identified as HIPCs.
Under this initiative, creditors provide debt relief for eligible countries that demonstrate good policy performance overan extended period­to bring their debt burdens to sustainable levels. Under the original HIPC framework, selectedloans to eligible beneficiary countries were paid off by the HIPC Trust Fund at a price equivalent to the lower of the netpresent value of the loans or their nominal values, as calculated using the methodology agreed under the initiatives.
Following the signature of a HIPC debt relief agreement, the relevant loans were paid off at the lower of their net present
value or their carrying value. On average, loans in the ADB’s portfolio carry higher interest rates than the present value
discount rates applied and therefore the net present value of the loans exceeds the book value. Consequently, affected
ADB loans were paid off by the HIPC Trust Fund at book values.
The HIPC initiative was enhanced in 1999 to provide greater, faster and more poverty-focused debt relief. This wasachieved by reducing the eligibility criteria for qualification under the initiative and by commencing debt relief much earlier
than under the original framework. Under the enhanced framework, where 33 African countries are eligible, the debt relief
is delivered through annual debt service reductions, as well as the release of up to 80 percent of annual debt service
obligations as they come due until the total debt relief is provided. In addition, interim financing between the decisionand completion points of up to 40 percent of total debt relief is provided whenever possible within a 15-year horizon.
As at end December 2015, the implementation of the HIPC initiative shows that out of the 33 eligible countries, 30
RMCs have reached their completion points while Chad is still in interim period. Three countries, Somalia, Sudan andEritrea (pre-point decision) are yet to reach the decision point.

iv) Multilateral Debt Relief Initiative (MDRI)
At the Gleneagles Summit on 8 July 2005, the Group of 8 major industrial countries agreed on a proposal for the ADF,
the International Development Association (IDA), and the International Monetary Fund (IMF) to cancel 100 percent of
their claims on countries that have reached, or will reach, the completion point under the enhanced HIPC Initiative.
The main objective of the MDRI is to complete the process of debt relief for HIPCs by providing additional resources tohelp 38 countries worldwide, 33 of which are in Africa, to make progress towards achieving the Millennium Development
Goals (MDGs), while simultaneously safeguarding the long-term financing capacity of the ADF and the IDA. The debt
cancelation would be delivered by relieving post-completion-point HIPCs’ repayment obligations and adjusting theirgross assistance flows downward by the same amount. To maintain the financial integrity of the ADF, donors havecommitted to make additional contributions to the ADF to match “dollar-for-dollar” the foregone principal and service
charge payments.
The MDRI became effective for the ADF on 1 September 2006. As of that date, the ADF wrote down its balance ofdisbursed and outstanding loans net of HIPC relief by an amount of UA 3.84 billion, with a corresponding decrease
as of that date in the ADF’s net assets. Reduction in ADF net assets results in a decrease in the value of the Bank’s
investment in the Fund. Subsequent write-down of loan balances is effected as and when other countries reach their
HIPC completion point and are declared beneficiaries of MDRI loan cancelation. The reduction in the net asset valueof the ADF does not include loans outstanding to MDRI countries that have not reached their HIPC completion points
at the end of the year.

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Note V — 3: Special funds
Under Article 8 of the Agreement establishing the Bank, the Bank may establish or be entrusted with the administration of
special funds.
At 31 December 2015 and 2014, the following funds were held separately from those of the ordinary capital resources of
the Bank:i)
The NTF was established under an agreement signed on 26 February 1976 (the Agreement) between the African
Development Bank and the Federal Republic of Nigeria. The Agreement stipulates that the NTF shall be in effect for aperiod of 30 years from the date the Agreement became effective and that the resources of the NTF shall be transferred to
the Government of Nigeria upon termination. However, the 30-year sunset period may be extended by mutual agreement
between the Bank and the Federal Republic of Nigeria. At the expiry of the initial 30-year period on 25 April 2006, the Bankand the Federal Republic of Nigeria agreed to 2 interim extensions (each for 12 months) to allow for further consultations
and an independent evaluation of the NTF.
Following the positive result of the independent evaluation, the NTF Agreement was renewed for a period of ten years
starting from 26 April 2008. The initial capital of the NTF was Naira 50 million payable in two equal installments of Naira 25
million each, in freely convertible currencies. The first installment, equivalent to US$ 39.90 million, was received by the Bankon 14 July 1976, and payment of the second installment, equivalent to US$ 39.61 million, was made on 1 February 1977.
During May 1981, the Federal Republic of Nigeria announced the replenishment of the NTF with Naira 50 million. The first
installment of Naira 35 million (US$ 52.29 million) was paid on 7 October 1981. The second installment of Naira 8 million(US$ 10.87 million) was received on 4 May 1984. The payment of the third installment of Naira 7 million (US$ 7.38 million)
was made on 13 September 1985.
During the year ended 31 December 2014, the Government of the Federal Republic of Nigeria authorized the withdrawal ofan amount of US$13 million (UA 8.41 million) from reserves to settle its commitment on the arrears clearance of debt owed
by Liberia under the internationally coordinated arrears clearance mechanism for Post Conflict Countries.
During the year ended 31 December 2015, following a request by the Government of Nigeria, on 13 May 2015, a withdrawalof US$ 10 million (UA 7.14 million) was made from the resources of the Fund and paid to the Government of Nigeria.

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Chapter 6

The resources of the NTF at 31 December 2015 and 2014 are summarized below:(UA thousands)
Contribution received
Funds generated (net)
Adjustment for translation of currencies
Represented by:
Due from banks
Investments
Accrued income and charges receivable on loans
Accrued interest on investments
Other amounts receivable
Loans outstanding
Less: Current accounts payable

2015
128,586
140,452(99,162)
169,876

2014
128,586
146,347(106,656)
168,277

5,053
115,224
1,124
59
295
48,765
170,520(644)
169,876

10,286
113,419
1,136
45
252
44,466
169,604(1,327)
168,277ii) The Special Relief Fund (for African countries affected by drought) was established by Board of Governors’
Resolution 20-74 to assist African countries affected by unpredictable disasters. The purpose of this fund was subsequently
expanded in 1991 to include the provision of assistance, on a grant basis, to research institutions whose research objectives
in specified fields are likely to facilitate the Bank’s objective of meeting the needs of Regional Member Countries in those
fields. The resources of this Fund consist of contributions by the Bank, the ADF and various member states.
The summary statement of the resources and assets of the Special Relief Fund (for African countries affected by drought)
as at 31 December 2015 and 2014 follows:(UA thousands)
Fund balance
Funds generated
Funds allocated to Social Dimensions of Structural Adjustment (SDA)
Less: Relief disbursed
Represented by:
Due from bankInvestments

2015
97,464
5,481
1(94,272)
8,674

2014
87,4645,197
1(87,088)
5,574

1,250
7,424
8,674

2,192
3,382
5,574

At 31 December 2015, a total of UA 0.72 million (2014: UA 3.31 million) had been committed but not yet disbursed under
the Special Relief Fund.
iii) Africa Growing Together Fund (AGTF): Pursuant to the Board of Governors resolution B/BG/2014/06 of 22 May
2014, the agreement establishing the Africa Growing Together Fund was signed between the Bank and the Peoples Bankof China on 22 May 2014 to co-finance alongside the ADB-eligible sovereign and non-sovereign operations. Following theentry into force of the AGTF agreement, an initial contribution of USD 50 million towards the Fund was received by the Bankon 28 November 2014.

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The summary statement of the resources and assets of the Africa Growing Together Fund as at 31 December 2015 and2014 follows:(UA thousands)
Contribution received
Funds generated (net)
Represented by:
Due from bankInvestments
Less: Current accounts payable2015
36,082(336)
35,746

2014
34,511(35)
34,476648
35,473(375)
35,746350
34,163(37)
34,476Note V — 4: Trust funds
The Bank has been entrusted, under Resolutions 11-70, 19-74 and 10-85 of the Board of Governors, with the administrationof the Mamoun Beheiry Fund, the Arab Oil Fund, and the Special Emergency Assistance Fund for Drought and Famine in
Africa. These funds, held separately from those of the ordinary capital resources of the Bank, are maintained and accounted
for in specific currencies, which are translated into Units of Account at exchange rates prevailing at the end of the year.
i)
The Mamoun Beheiry Fund was established under Board of Governors’ Resolution 11-70 of 31 October 1970,
whereby Mr. Mamoun Beheiry, former President of the Bank, agreed to set up a fund, which could be used by the Bank to
reward staff members who had demonstrated outstanding performance in fostering the objectives of the Bank.
ii) The Special Emergency Assistance Fund for Drought and Famine in Africa (SEAF) was established by the 20th
Meeting of Heads of State and Governments of member countries of the African Union formerly Organization of African
Unity (OAU) held in Addis Ababa, Ethiopia, from 12 to 15 November 1984, under Resolution AHG/Res. 133 (XX), with theobjective of giving assistance to African member countries affected by drought and famine.

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Chapter 6

The financial highlights of these Trust Funds at 31 December 2015 and 2014 are summarized below:(UA thousands)i) Mamoun Beheiry FundContribution
Income from investments
Less: Prize awarded			Gift
Represented by:
Due from banksii) Special Emergency Assistance Fund for Drought and Famine in Africa
Contributions
Funds generated
Relief granted
Represented by:
Due from banks
Investments
Total Resources & Assets of Trust Funds

2015

2014

151
200
351
(46)
(25)
280

151
202
353
(46)
(25)
282

280
280

282
282

23,8096,171
29,980(26,513)
3,467

22,075
5,902
27,977(25,359)
2,618

3
3,464
3,467
3,747

623
1,995
2,618
2,900

Note V — 5: Grants (Donor Funds)
The Bank administers grants on behalf of donors, including member countries, agencies and other entities. Resources
for Grants are restricted for specific uses, which include the co-financing of the Bank’s lending projects, debt reduction
operations, technical assistance for borrowers including feasibility studies and project preparation, global and regional
programs and research and training programs. These funds are placed in trust and are not included in the assets of theBank. In accordance with Article 11 of the Agreement establishing the Bank, the accounts of these grants are kept separate
from those of the Bank.

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The undisbursed balances of the grant resources at 31 December 2015 and 2014 were as follows:(UA thousands)
Africa Water Facility Fund
African Trade Fund
African Legal Support Facility
African Economic Outlook
Africa Climate Change Fund
African Community of Practice
Africa Growing Together Fund
Agriculture Fast Track Fund
AMINA
Bill and Melinda Gate Foundation TCA
CanadaChinese Government Grant
Clean Technology Fund
Congo Basin
Climate Development
EU Africa Infrastructure Trust Fund
Fertilizer Financing Mechanism
FinlandFrance-BAD (Fonds d’Assistance Technique)Global Agriculture and Food Security Programme (GAFSP)
Global Environment Facility (GEF)
Global Strategy to improve Agriculture and Rural Statistics (GARS)
Governance Trust Fund (GTF)
ICA-Infrastructure Consortium for Africa
International Comparison Programme – Africa (ICP-Africa)
IMDE (Initiative Migration and Development)
Improving Statistics Food Security Trust Fund (ISFS)
India
Investment Climate Facility for Africa
Italy
Japan (FAPA)
Korea Trust Fund
Lake Turkana Wind Power Project
Making Finance Work for Africa
MENA Transition Fund
Microfinance Trust Fund
Multi-donor Water Partnership Program
Nepad Infrastructure
NorwayPortuguese Technical Cooperation Trust Fund
Programme for Infrastructure Development in Africa (PIDA)
Rural Water Supply and Sanitation Initiative
SFRD (Great Lakes)
South South Cooperation Trust Fund
Statistical Capacity Building (SCB)
Strategic Climate Fund
Sustainable Energy Fund for Africa
Swedish Trust Fund for Consultancy Services
Switzerland Technical Assistance Grant
The Nigeria Technical Cooperation Fund
The United Kingdom
The United Nations Development Programme
Trust Fund for Countries Transition
Value for Money Fund
Zimbabwe Multi-donor Trust Fund
Others
Total

210

2015
51,9996,811
14,496
48
4,409
1,112
33,165
14,465
1,620
1,169
712
250
67,07538,528
11,188
382
9,242
3,205
717
4,078
22,882
2,852
1,408
1,355
13
4,855
942
1,882
10,200285
29,76722,422
3,199
731
16,176
3,828
694
37,876842
736
109
71,588
433
2,109
7,735
20,81833,044
171
1,800
9,124
8,708
41
1,699
901
44,10843630,047

2014
63,967
8,205
16,271
53
4,270
2,628
34,513
14,852
1,529
1,271
225
72,55950,462
9,723
8,390
4,261
1,031
19,882
22,281
3,175
1,586
1,436
22
5,529
2,409
21,130824
25,682
19,403
8,379
949
14,0184,296
928
34,021
1,556
892
171
76,312
409
2,923
4,814
21,23134,805182
218
12,389
2,031
38
3,935
837
51,705
40
694,648

KPMG Audit
Tour EQHO
2 Avenue Gambetta
CS 60055
92066 Paris la Défense Cedex
FranceTelephone:Telefax:
Internet:+33 (0)1 55 68 68 68+33 (0)1 55 68 73 00
www.kpmg.fr

African Development Bank
Avenue Joseph Anoma
01 BP 1387 Abidjan 01
Côte d’Ivoire

Independent Auditor’s Report to the Board of Governors of the African Development Bank
Year ended 31 December 2015
We have audited the accompanying financial statements of the African Development Bank (the Bank) which comprisethe balance sheet as at 31 December 2015 and the income statement, the statement of comprehensive income, thestatement of changes in equity and the statement of cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory notes as set out in notes A to V.
The financial statements have been prepared in accordance with International Financial Reporting Standards, for the
purpose of submitting approved and audited financial statements to the Board of Governors as required by Article
32(d) of the Agreement establishing the Bank. This report is made solely to the Bank’s Board of Governors, as a body,in accordance with Article 32(d) of the Agreement establishing the Bank. Our audit work has been undertaken sothat we might state to the Bank’s members those matters we are required to state to them in an auditor’s report andfor no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Bank and the Bank’s members as a body, for our audit work, for this report, or for the opinions wehave formed.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining
internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.

KPMG S.A.
Société française membre du réseau KPMG
constitué de cabinets indépendants adhérents de
KPMG International Coopérative, une entité de droit suisse.

Société anonyme d’expertisecomptable et de commissariat
aux comptes à directoire etconseil de surveillance.
Inscrite au Tableau de l’Ordreà Paris sous le n° 14-30080101
et à la Compagnie Régionale
des Commissaires aux Comptes
de Versailles.

Headquarters:
KPMG S.A.
Tour Eqho
2 avenue Gambetta
92066 Paris la Défense Cedex
Capital : 5 497 100 €.
Code APE 6920Z
775 726 417 R.C.S. Nanterre
TVA Union Européenne
FR 77 775 726 417

211

African Development Bank
Independent Auditor’s Report to the Board of Governorsof the African Development Bank

Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the financial statements arefree of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, weconsider internal control relevant to the entity’s preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriatenessof accounting principles used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Bank as
at 31 December 2015, and its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards.

Paris La Défense, 30 March 2016
KPMG Audit
A division of KPMG S.A.

Valéry Foussé
Partner212

Annual Report 2015

Chapter 6

ADB administrative budget for financial year 2016
(UA thousands)
Description
Personnel Expenses
Salaries
Benefits
Other Employee Expenses
Short-Term and Technical Assistance Staff
Consultants
Staff Training
General Expenses
Official Missions
Accommodation
Equipment Rental, Repairs and MaintenanceCommunication Expenses
Printing, Publishing and Reproduction
Office Supplies and Stationery
Library
Other Institutional Expenses

159,554
71,38010,471
1,353
27,7406,175
276,673
23,46018,4389,109
12,685
1,544
518
615
15,44881,817

Total Administrative Expenses
Depreciation

358,490
12,240Total

370,730

Less: Management Fees*
Net Administrative Budget(221,150)
149,580*	The amount represents the African Development Fund and the Nigeria Trust Fund’s share of the fair value of the Bank’s expenses in respect of officers, staff, organization,
services and facilities based on formula approved by the Boards.

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Chapter 6

African Development FundTHE AFRICAN DEVELOPMENT FUND

percent of the MDRI cost of UA 5.69 billion for the period,
2006-2054.

FINANCIAL MANAGEMENT

Financial Products

The ADF is the concessional financing window of the Bank
Group that provides low-income regional member countries
with concessional loans as well as grants for projects and
ADF Replenishments
programs, risk guarantees and support through technical
The resources of the African Development Fund (the ADF assistance for studies and capacity building.
or the Fund) primarily consist of subscriptions by the Bank,
subscriptions and contributions by State Participants, as well Loansas other resources received by the Fund. The cumulative Prior to the ADF-13 replenishment, the ADF was operating
subscriptions to the ADF amounted to UA 26.71 billion at under differentiated lending terms for ADF-eligible countries
31 December 2015.
classified as blend, gap and graduating versus ADF-only
countries. Accordingly, loans extended to blend, gap andSubsequent to the initial subscriptions, additional resources graduating countries had a maturity period of 30 years,
have been provided to the ADF in the form of periodic including an 8-year grace period with an interest rate of 1
general replenishments, typically done every three years. The percent per annum. For ADF-only countries, their loans had
thirteenth (ADF-13) replenishment was adopted by the Board a maturity period of 50 years, including a grace period of 10
of Governors on 31 January 2014, and became effective on years, with no interest rate. The standard commitment fee of
31 March 2014 with the total resource envelope amounting 0.50 percent per annum on undisbursed amounts and service
to UA 5.35 billion, comprising donor subscriptions of UA charge of 0.75 percent per annum on outstanding balances,3.80 billion, supplementary contributions of UA 0.06 billion, were still applicable for all ADF loans.
Advanced Commitment Capacity or internally generated
resources of UA 0.98 billion, and a technical gap of UA 0.51 With the view to preserving the long-term financial sustainability
billion. The replenishment covers the 2014-2016 operational and capacity of the ADF, the ADF-13 replenishment introduced
period. As of 31 December 2015, State Participants had (i) hardened and differentiated lending terms, and (ii) two subsubscribed a total amount of UA 3.80 billion, representing groups of ADF-only countries: the “regular” or the “advance”
99 percent of the ADF-13 pledged amount.
group. The financing terms for regular and advance ADF-only
countries, as well as for blend, gap and graduating countries,
Commitments under thewere hardened. An accelerated repayment clause and a
Multilateral Debt Relief Initiative
voluntary prepayment framework were also introduced.
Under the Multilateral Debt Relief Initiative (MDRI), donor
countries agree to compensate ADF for the cancellation of Accordingly, new loans extended under ADF-13 to regular ADF
its loans to Heavily Indebted Poor Countries (HIPCs) that countries have a maturity of 40 years, including a grace period
have reached, or will reach the completion point under the of 10 years; and loans extended to advance ADF countries
enhanced HIPC initiative. The MDRI became effective on have a maturity of 40 years, including a grace period of 5 years.
1 September 2006, and covers the period, 2006-2054. To The standard commitment fee of 0.50 percent per annum onpreserve the financial integrity and the financing capacity undisbursed amounts and service charge of 0.75 percent perof the Fund, the terms of the MDRI require donors to annum in outstanding balances remain applicable. Loans tofully compensate the Fund for debts canceled under the blend, gap and graduating countries have a maturity of 30
MDRI. Donors have also agreed that periodic adjustments years including a 5-year grace period, and an interest ratewould be made under the initiative to reflect changes in charge of 1 percent per annum in addition to the standard
the actual and estimated costs to the Fund resulting from commitment and service fees.
debt forgiveness.

Subscriptions

Guarantees

As of 31 December 2015, the Fund had received from donors
aggregate commitments of UA 4.69 billion, representing 82

214

As a means of stimulating additional private sector investments
in Low-Income Countries (LICs), the ADF Partial Risk

Annual Report 2015

Chapter 6

Guarantee (ADF-PRG) instrument was introduced as part of
ADF-12 to leverage resources from the private sector and otherco-financiers for ADF countries, including fragile states. The
ADF-PRG protects private lenders against well-defined politicalrisks related to the failure of a government or a governmentrelated entity to honor certain specified commitments andincentivize governments to undertake policy and fiscal reforms
necessary to mitigate performance-related risks.
Starting with the ADF-13 replenishment, the Partial Credit
Guarantee (PCG) has been added to the suite of ADF
instruments. The ADF-PCG is an instrument designed toaddress the challenges faced by well-performing ADF-only
countries and State Owned Enterprises (SOEs), in theirquest to mobilize both domestic and external commercial
financing for developmental purposes. The product will serve
to partially guarantee debt-service obligations of LICs andwell-performing SOEs in LICs. The ADF PCG is available onlyto; (1) ADF countries with low risk of debt distress (green lightcountries) and adequate debt management capacity; and(2) SOEs in ADF countries with low risk and moderate risk ofdebt distress (green and yellow light countries, respectively),
subject to meeting certain defined eligibility criteria. Similar
to the ADF-PRG, the ADF-PCG will enable well-performing
LICs and SOEs to catalyze larger volumes of development
financing at more attractive terms.

2014 to hedge the discount granted to donors, who choseto accelerate the encashment of their subscription to ADF-13,
and to the smaller size of the higher yielding held-at-amortizedcost portfolios.

Development Activities
Cumulative loans and grants signed, net of cancellations, at
31 December 2015, amounted to UA 28.26 billion, compared
to UA 26.67 billion at the end of 2014. Table 6.6 presents
loans approved, disbursed and undisbursed balances from2011 to 2015.
Total outstanding loans, as at 31 December 2015, wasUA 9.80 billion, UA 0.83 billion higher than the UA 8.97 billion
outstanding as at the end of 2014.
At the end of 2015, there was a total of 1,169 active loans
and grants, and a total of 725 loans amounting to UA 5.76
billion had been fully repaid or canceled through MDRI.

Disbursements

Loans and grants disbursed by the Fund increased by
14.75 percent to stand at UA 1.40 billion in 2015 from UA
1.22 billion in 2014. As at 31 December 2015, cumulative
disbursements on loans and grants amounted to UA 21.51
billion compared to UA 20.11 billion at the end of theprevious year. A total of 2,144 loans and grants were fully
Investments
disbursed for an amount of UA 16.72 billion, representing
ADF cash and treasury investments amounted to UA 3.27 77.73 percent of cumulative disbursements. Figure 6.3 tracks
billion at 31 December 2015, compared to UA 3.38 billion at the evolution of loan disbursements and repayments overthe end of 2014. Investment income for the year amounted the past five years.
to UA 60.97 million, representing a return of 1.64 percent,on an average liquidity level of UA 3.72 billion, compared Repaymentswith an income of UA 76.35 million, representing a return In 2015, principal loan repayments for the Fund amounted to UAof 2.31 percent on an average liquidity of UA 3.31 billion in 66.34 million compared to UA 62.87 million in 2014, representing
2014. The lower income and return in 2015 was due to a an increase of 5.52 percent over the previous year. Cumulativesmall increase in the fair value of derivatives put in place in repayments as of 31 December 2015, stood at UA 7.13 billion.

Table 6.6

Lending Status, 2011-2015(UA millions)
Loans Approved*
Disbursements
Undisbursed Balances*2011
1,475.74
1,296.65
5,415.36

2012
1,659.51
1,169.60
6,921.62

2013
2,054.48
1,702.21
6,327.68

2014
1,338.23
1,215.30
6,558.66

2015
1,259.58
1,398.36
6,762.39

Excludes approvals of Special Funds but includes guarantees and grants.

215

Chapter 6

African Development Fund

Figure 6.3●●

Loan Disbursements and Repayments,
2011-2015 (UA millions)Disbursements

Loan Repayments

1,500

●●

1,000

500

0
2011

2012

2013

2014

2015

Risk Management Policies and Processes
As in the case of the Bank, the Fund employs stringent risk
management procedures in order to prudently reduce its
exposure to risks, such as liquidity, currency and interest raterisks, that are not essential to its core business of providing
development-related assistance to its clients. The details of
the risk management policies and practices employed by theFund to manage these risks are provided in Note C to the
Financial Statements.

FINANCIAL RESULTS
The following are the highlights of the Fund’s financial
performance in 2015:●●●●

The generally low level of interest rates prevailing globally
continued to have the dual effect of lowering the Fund’sinvestment income and increasing the impact of theaccelerated encashment of promissory notes deposited
towards the payment of subscriptions to the Fund.
The Fund’s share of the total shareable administrative
expenses of the ADB Group decreased by UA 47.64
million from UA 248.57 million in 2014 to UA 200.93 million
in 2015, due to the general decrease in the operational
expenses of the Bank Group and the lower expenses
relating to the return of the Bank to its Headquarters in
Abidjan, Côte d’Ivoire. As noted earlier, the Fund’s shareof administrative expenses is based on a predetermined
cost-sharing formula, which is driven by the relative levelsof certain operational volume indicators and relative balance
sheet size. The Fund’s share of these expenses was 63.14
percent for 2015, compared to 67.32 percent for 2014.
Investment income decreased from UA 76.35 million in2014 to UA 60.97 million in 2015. Loan income increased
from UA 80.66 million in 2014 to UA 90.32 million in 2015,
driven primarily by a higher average outstanding loanbalance in 2015. Discount on the accelerated encashmentof promissory notes amounted to UA 27.21 million in 2015
compared to UA 34.33 million in 2014.

According to the Fund’s non-accrual policy, service charges
on loans made to or guaranteed by borrowers are excluded
from loan income, if principal installments or service charges
on any such loans are in arrears for six months or more, until
such time that payment is received. As a result of this policy,
UA 2.05 million of non-accrued loan income was excluded
from 2015 income compared to UA 2.06 million in 2014. The
number of borrowers in non-accrual status at 31 December
2015 remained three; which was the same level as at theend of December 2014.

The Fund reported a reduced deficit of UA 83.25 million
in 2015, compared to a deficit of UA 125.35 million in
2014. The persistent reported losses over recent years isprincipally due to certain structural changes to the Fund, The Fund continued to cancel qualifying debts under MDRI
including the cancellation of loans to certain beneficiaries as the relevant countries reached HIPC completion point.
under the MDRI initiative (described in Note F to the financial No new countries reached completion point during 2015. A
statements) and the increased grant elements in the recent summary of the cumulative loan cancellations under MDRI
ADF resource allocation. Although these changes are not and HIPC is presented in Note F to the Special Purpose
reported as income in the Fund’s financial statements, their Financial Statements.
impact does not adversely affect the commitment capacityor the financial sustainability of the Fund because the Fund Performance Management and Monitoringis expected to be compensated through additional donor As with the African Development Bank (the Bank) management
subscriptions, payable over the life of the canceled loans. monitors performance measures and indicators which reflect

216

Annual Report 2015

Chapter 6

the critical success factors in the ADF’s business. To theextent that the ADF extends grants in addition to lending at
highly concessional rates, the conventional profitability andfinancial ratios are not deemed to be an appropriate meansof determining its effectiveness in delivering development
resources to regional member countries. One proxy that theFund applies for measuring effective delivery of development
resources is the level of disbursements made to the RMCs fromone period to another. As already noted previously, during theyear under review a total of UA 1.40 billion was disbursed forloans and grants as compared to UA 1.22 billion made in 2014.

217

African Development Fund
Special Purpose Financial
Statements andReport of the Independent Auditor
Year ended 31 December 2015
Statement of Net Development ResourcesStatement of Income and Expenses and Other Changes in Development ResourcesStatement of Comprehensive Income
Statement of Cash Flows
Notes to the Special Purpose Financial Statements
Report of the Independent Auditor

220
221
222
223
224
246

Chapter 6

African Development Fund

Statement of net development resources
as at 31 December 2015
(UA thousands – Note B)
2015

2014

376,273

368,7022,891,917

1,452,412
1,557,501
3,009,913

2,669,459

2,801,319

83,183(88,946)
5,931,886

54,92570,888125,813(154,342)
6,151,405

25,714,816
602,961(340,516)(353,093)
25,624,168

26,175,035(31,586)
26,143,449(1,963,439)
24,180,010(7,018)24,172,992
748,051
24,921,043(112,202)
24,808,841(291,641)
24,517,200
551,960(257,267)(332,021)
24,479,872

ALLOCATION OF DEVELOPMENT RESOURCESGRANTS AND TECHNICAL ASSISTANCE ACTIVITIES (Note F)
HIPC GRANTS DISBURSED (Note F)
NET DEBT RELIEF (Note F)
LOANS DISBURSED AND OUTSTANDING (Note F)(4,750,545)(184,000)(4,955,072)(9,802,665)(4,379,817)(184,000)(4,799,441)(8,965,209)

NET DEVELOPMENT RESOURCES

5,931,886

6,151,405

DEVELOPMENT RESOURCESDUE FROM BANKSINVESTMENTS (Note D)
Treasury investments, mandatorily at fair value
Treasury investments at amortized cost
Total investments
DEMAND OBLIGATIONS (Note E)
RECEIVABLES
Accrued income on loans and investments
Other receivables

1,699,887
1,192,030

57,41725,766

LIABILITIESNET DEVELOPMENT RESOURCES
FUNDING OF DEVELOPMENT RESOURCESSUBSCRIPTIONS AND CONTRIBUTIONS (Notes G & M)
Amount subscribed including contributions through accelerated encashment of subscriptions
Less: Portion of accelerated encashment not yet effected
Less: Installments not yet payable
Less: Installments due
Contributions paid on Multilateral Debt Relief Initiative
Less: Unamortized discounts on subscriptions and contributions (Note B)
Cumulative exchange adjustment on subscriptions and contributions (Note B)
Total subscriptions and contributions
OTHER RESOURCES (Note H)
RESERVES (Note I)
CUMULATIVE CURRENCY TRANSLATION ADJUSTMENT (Note B)

The accompanying notes to the special purpose financial statements form part of this statement.

220

26,644,463(15,793)
26,628,670(1,348,588)
25,280,082(7,018)25,273,064
849,249
26,122,313(100,786)
26,021,527(306,711)

Annual Report 2015

Chapter 6

Statement of income and expenses and other changes in development resources
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

66,907
23,41760,967(200,932)(27,209)(1,251)(5,148)(83,249)

61,90518,751
76,35090(248,566)(34,332)(135)
585(125,352)

1,100,072
101,198
51,000(15,070)
11,416(21,072)
1,227,544

1,756,184
80,81242,000(12,340)
15,524(46,062)
1,836,118(370,728)(1,027,633)
66,342
9,317(41,112)(1,363,814)(378,642)(836,659)
62,867(8,773)(1,161,207)

Change in Net Development Resources
Net Development Resources at the beginning of the year

(219,519)
6,151,405

549,559
5,601,846

NET DEVELOPMENT RESOURCES AT THE END OF THE YEAR

5,931,886

6,151,405

INCOME AND EXPENSES
Service charges on loans
Commitment charges on loans
Income on investments
Other income
Administrative expenses (Note K)
Discount on accelerated encashment of participants’ demand obligations
Financial charges(Loss)/Gain on exchange
Deficit
CHANGE IN DEVELOPMENT RESOURCES FUNDING
Increase in paid-up subscriptions
Contributions received on account of Multilateral Debt Relief Initiative
Increase in other resources
Changes in accumulated exchange adjustment on subscriptions and contributions
Changes in unamortized discounts on subscriptions and contributions
Changes in accumulated translation adjustment
CHANGE IN DEVELOPMENT RESOURCES ALLOCATION
Disbursement of grants
Disbursement of loans
Repayment of loans
Recoveries on account of Multilateral Debt Relief Initiative
Translation adjustment on loans

The accompanying notes to the special purpose financial statements form part of this statement.

221

Chapter 6

African Development Fund

Statement of comprehensive income
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

DEFICIT(83,249)(125,352)

OTHER COMPREHENSIVE INCOME
Changes in accumulated translation adjustment(21,072)(46,062)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(104,321)(171,414)

The accompanying notes to the special purpose financial statements form part of this statement.

222

Annual Report 2015

Chapter 6

Statement of cash flows
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

(83,249)(125,352)(8,362)
27,209(1,406)(18,304)(84,112)

4,143
34,332
1,086(2,722)(88,513)

CASH FLOWS FROM:OPERATING ACTIVITIES:Deficit
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized (gain)/loss on investments
Discount on accelerated encashment of participants’ demand obligations
Changes in accrued income on loans and investments
Changes in net current assets
Net cash used in operating activities
INVESTING, LENDING AND DEVELOPMENT ACTIVITIES:
Disbursement of grants
Disbursement of loans
Repayment of loans
Recoveries on account of Multilateral Debt Relief Initiative
Investments maturing after 3 months of acquisition:
Treasury investments, mandatorily at fair value
Treasury investments at amortized cost
Net cash used in investment, lending and development activities(370,728)(1,027,633)
66,342
9,317(378,642)(836,659)
62,867-(404,717)
382,374(1,345,045)(250,828)
529,300(873,962)

FINANCING ACTIVITIES:
Subscriptions and contributions received in cash
Participants’ demand obligations encashed
Increase in other resources
Net cash provided by financing activities

448,760
794,355
51,0001,294,115

258,164
1,057,423
42,0001,357,587

Effect of exchange rate changes on cash and cash equivalents
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

(26,186)(161,228)
636,817475,589(9,047)
386,065
250,752
636,817COMPOSED OF:
Cash
Investments maturing within 3 months of acquisition:
Treasury investments, mandatorily at fair value
Cash and cash equivalents at the end of the year

376,273

368,702

99,316475,589

268,115
636,817

SUPPLEMENTARY DISCLOSURE:
Movements resulting from exchange rate fluctuations on:
Loans
Subscriptions and contributions

41,112(15,070)

8,773(12,340)

The accompanying notes to the financial statements form part of this statement.

223

Chapter 6

African Development Fund

Notes to the special purpose financial statements
Year ended 31 December 2015

Note A — Purpose, organization and resources
Purpose and Organization
The African Development Fund (ADF or the Fund) was established in 1972 as an international institution to assist the African
Development Bank (ADB or the Bank) in contributing to the economic and social development of the Bank’s regional members,
promote cooperation and increased international trade particularly among the Bank’s members, and to provide financing
on concessional terms for such purposes.
By its resolution F/BG/2010/03 of 27 May 2010, the Board of Governors increased the membership of the Board of Directorsof ADF from twelve (12) to fourteen (14), made up of seven (7) members selected by the Bank and seven (7) members selectedby State Participants. The Board of Directors reports to the Board of Governors, which is made up of representatives of theState Participants and the ADB. The ADB exercises fifty percent (50 %) of the voting powers in the ADF and the Presidentof the Bank is the ex-officio President of the Fund.
The ADB, the Nigeria Trust Fund (NTF), which is a special fund administered by the ADB, and the ADF are collectively referred
to as the Bank Group. The principal purpose of the ADB is to promote economic and social development in its Regional
Member Countries. The ADB finances development projects and programs in its regional member states. The ADB also
participates in the selection, study and preparation of projects contributing to the development of its member countries andwhere necessary provides technical assistance. The NTF was established under an agreement between the Bank and theFederal Republic of Nigeria to further support the development efforts of ADB Regional Member Countries, particularly thelesser-developed countries. The assets and liabilities of the ADB and of the NTF are separate and independent of those of
the ADF. Furthermore, the ADF is not liable for their respective obligations. Transactions with these affiliates, where there
are, are disclosed in the notes that follow.

Resources
The resources of the Fund consist of subscriptions by the Bank, subscriptions and contributions by State Participants, otherresources received by the Fund and funds derived from operations or otherwise accruing to the Fund. The initial resources of
the Fund consisted of subscriptions by the Bank and the original State Participants to the Agreement Establishing the Fund(the Agreement). Thereafter, the resources have been replenished through Special and General increases of subscriptions
and contributions.

Note B — Basis of preparation and significant accounting policies
Due to its nature and organization, the Fund presents its financial statements on a special purpose basis. The Special Purpose
Financial Statements are prepared for the specific purpose of reflecting the net development resources of the Fund and are
not intended to be a presentation in accordance with International Financial Reporting Standards. Net development resources
represent resources available to fund loan and grant commitments and comprise primarily cash, marketable investments
and demand obligations of State Participants. These special purpose financial statements have been prepared to comply
with Article 35(1) of the Agreement establishing the Fund, which requires that the Fund circulates, at appropriate intervals,
a summary of its financial position and income and expenditure statement showing the results of its operations.

224

Annual Report 2015

Chapter 6

The significant accounting policies used in the preparation of the Fund’s special purpose financial statements are as follows:

Monetary Basis of the Special Purpose Financial Statements
The special purpose financial statements are expressed in Units of Account (UA). Article 1 of the Agreement defined a Unitof Account as having a value of 0.81851265 grams of fine gold.
On 1 April 1978, when the second amendment to the Articles of the Agreement of the International Monetary Fund (IMF)came into effect, gold was abolished as a common denominator of the international monetary system. Computations relating
to the currencies of IMF members were thereafter made on the basis of the Special Drawing Right (SDR) for purposes ofapplying the provisions of the Articles of the IMF. The Fund’s Unit of Account was therefore based on its relationship to the
SDR at the time of establishment of the Fund. This was 1 Unit of Account equal to SDR 0.921052.
Subsequently, on 16 November 1992, the Board of Governors decided by Resolution F/BG/92/10 to redefine the Fund’s
Unit of Account to be equivalent to the UA of the ADB, which is defined as equivalent to the Special Drawing Right of the
IMF. In compliance with this Resolution, the Board of Directors, on 22 June 1993, adopted 1 January 1993 as the date forthe entry into effect of the Resolution, and the Fund’s UA has since then been defined as equal to the Bank’s UA.
The Fund conducts its operations in the currencies of its State Participants. Income and expenses are converted into UA at
the rate prevailing on the date of the transaction. Assets and liabilities are translated into UA at rates prevailing at the date of
the Statement of Net Development Resources. Translation differences are debited or credited to the Cumulative Currency
Translation Adjustment. Translation gains and losses on subscriptions received are credited or debited to the Cumulative
Exchange Adjustment on Subscriptions and contributions. Where currencies are converted into any other currency, theresulting gains or losses are included in income.
The rates used for translating currencies into UA at 31 December 2015 and 2014 are as follows:

1 Unit of Account equals:
Argentinian Peso
Brazilian Real
Canadian Dollar
Danish Krone
Euro
Indian Rupee
Japanese Yen
Korean Won
Kuwaiti Dinar
Norwegian Krone
Pound SterlingSouth African Rand
Swedish Krona
Swiss Franc
Turkish Lira
United States Dollar

2015

2014

13.234600
5.410990
1.917850
9.472210
1.272830
91.910100
167.116000
1,624.080000
0.420570
12.206900
0.935100
21.541200
11.574200
1.374780
4.009690
1.385730

12.416800
3.848310
1.679980
8.866110
1.193320
91.754900
174.733000
1,592.530000
0.424210
10.769300
0.928250
16.778600
11.317600
1.433010
3.239120
1.448810

No representation is made that any currency held by the Fund can be or could be converted into any other currency at the cross-rates resulting from the rates indicated above.

Participants’ Subscriptions and Contributions
Subscriptions committed by State Participants for each replenishment are recorded in full as subscriptions receivable fromparticipants upon submission of an instrument of subscription by the participants. A replenishment becomes effective when225

Chapter 6

African Development Fundthe ADF receives instruments of subscription from participants for a portion of the intended replenishment level as specified in
the replenishment resolution. The portion of subscribed amounts for which payments are not yet due from State Participants
are recorded as installments on subscriptions not yet payable, and are not included in the net development resources of
the Fund. The subscriptions not yet payable become due throughout the replenishment period (generally three years) inaccordance with an agreed payment schedule. The actual payment of subscriptions when they become due from certain
participants is conditional upon the respective participant’s budgetary appropriation process.
The subscriptions receivable are settled through payment of cash or deposit of non-negotiable, non-interest-bearing demandnotes. The notes are encashed by the Fund as provided in an encashment program agreed to at the time of the replenishment.
Starting with the ADF-9 replenishment, participants were given the option of an early payment of cash in an amount equivalent
to the net present value of their entire subscriptions and contributions. Upon receipt of such cash payments, participants are
credited with the full face value of their entire subscriptions, and in agreement with the Fund, such cash amounts received
are invested and the income generated thereon is retained by the Fund. A discount, calculated as the difference between theface value of the subscriptions and the cash amount received, is initially recorded to represent the interest expected to beearned on the cash received from State Participants who opted for the accelerated encashment program. Such discount isamortized over the projected encashment period, to recognize the effective contributions to equity by the relevant participant
over and above the initial cash advanced.
By its resolutions F/BG/2006/12 and F/BG/2006/13 of 18 May 2006 and 31 August 2006 respectively, the Board ofGovernors of the Fund authorized the Board of Directors to approve the participation of the ADF in the Multilateral Debt
Relief Initiative (MDRI) and in that regard the Board of Governors also authorized an increase in the resources of the ADF
to provide full and timely compensation for the debt cancellation under the MDRI subject to the attainment of the following
effectiveness thresholds:
1)	Receipt of Instruments of Commitment from donors covering an aggregate amount equivalent to at least seventy percent(70%) of the total cost of debt relief for the first group of 14 post-completion point Heavily Indebted Poor Countries(HIPCs); and2)	Receipt of unqualified Instruments of Commitments from donors for an amount not less than the equivalent of at least
seventy five percent (75%) of the total cost of debt relief incurred during the remainder of ADF-10 period.
Upon satisfaction of the above two thresholds, the Board of Directors of the Fund approved the effectiveness of the
MDRI with effect from 1 September 2006. To ensure full compensation for foregone reflows as a result of the upfront debt
cancellation, the ADF governing bodies endorsed Management’s proposal for a compensation scheme over the 50-year
period of the Initiative. Donors will contribute additional resources to ADF, equivalent to the foregone debt service (service
charges and principal) for each replenishment period, by submitting pledges over the life of the initiative. The compensatory
financing arrangements will take the form of a general increase in the contribution of State Participants pursuant to Article
7 of the Agreement Establishing ADF. The contributions received from State Participants under the compensatory financing
arrangements shall not be counted as part of the burden share for the replenishment period in which such resources arereceived, but shall carry voting rights in the same manner as normal subscriptions. Such contributions are separately disclosed
within the total of subscriptions and contributions in the Statement of Net Development Resources.

Maintenance of Value of Currency Holdings
Prior to the second general replenishment, subscriptions were denominated in UA and were subject to Article 13 of theAgreement which provided that, whenever the par value in the IMF of the currency of a State Participant is reduced interms of the UA or its foreign exchange value has, in the opinion of the Fund, depreciated to a significant extent within thatparticipant’s territory, that participant shall pay to the Fund within a reasonable time an amount of its currency required to226Annual Report 2015

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maintain the value, as of the time of subscription, of the amount of such currency paid into the Fund by that participant andwhich has not been disbursed or exchanged for another currency.
Conversely, if the currency of a State Participant has increased in par value or appreciated in its foreign exchange value
within that participant’s territory, the Fund shall return to that participant an amount of such currency equal to the increasein the value of the Fund’s holding of that currency which was received by it in payment of subscriptions, to the extent thatthese amounts have not been disbursed or exchanged for another currency.
In accordance with Board of Governors’ successive Resolutions governing the second through to the thirteenth general
replenishments of the Fund, which stipulated that Article 13 shall not apply to these general replenishments, subscribers
to these replenishments fixed the amount of their subscriptions payable in national currencies in terms of agreed parities
ruling at the date these replenishments came into force. Gains or losses arising on translating these subscriptions, when
received, into UA are applied against subscriptions, with the offsetting debits or credits recorded as Cumulative Exchange
Adjustment on Subscriptions (CEAS).

Financial Assets
The Fund’s financial assets are classified into the following categories: financial assets at amortized cost and financial assets
at fair value through profit or loss (FVTPL). These classifications are determined based on the Fund’s business model. In
accordance with the Fund’s business model, financial assets are held either for the stabilization of income through the
management of net interest margin or for liquidity management. Management determines the classification of its financial
assets at initial recognition.

i)

Financial Assets at Amortized cost

A financial asset is classified at ’amortized cost’ only if the asset meets the objective of the Fund’s business model to holdthe asset to collect the contractual cash flows; and the contractual terms give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal outstanding. The nature of any derivatives embedded in financial
assets are considered in determining whether the cash flows of the investment are solely payment of principal and intereston the principal outstanding and are not accounted for separately.
If either of the two criteria above is not met, the financial asset is classified at ’fair value through profit or loss’.
Financial assets at amortized cost include mainly demand obligations and accrued income on loans and receivables andcertain investments that meet the criteria of financial assets at amortized cost. Demand obligations are non-negotiable,
non-interest-bearing notes payable on demand deposited for subscription payment.
The Fund also classifies at amortized cost, investments of the proceeds of accelerated encashment of notes. This is consistent
with the business model of the Fund of collecting contractual cash flows. The primary objective of such financial assets is
to recoup the discount granted to State Participants on the accelerated encashment program.

ii) Financial Assets at Fair Value through Profit or Loss (FVTPL)
Financial assets that do not meet the amortized cost criteria as described above are measured at FVTPL. This category
includes all treasury assets held for resale to realize short-term fair value changes. Gains and losses on these financial assets
are reported in the income statement in the period in which they arise. Derivatives are also categorized as financial assets
at fair value through profit or loss.
Cash and cash equivalents include amounts due from banks, demand deposits and other short-term highly liquid investmentsthat are readily convertible to a known amount of cash, are subject to an insignificant risk of changes in value and have atime to maturity upon acquisition of three months or less.

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African Development Fund

Purchases and sales of financial assets are recognized on a trade-date basis, which is the date the Fund commits to purchaseor sell the asset. Loans are recognized when cash is advanced to the borrowers. Income on investments includes interest
earned and unrealized gains and losses on financial assets at FVTPL.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or where theFund has transferred substantially all risks and rewards of ownership.

Investments
The Fund’s investment securities are classified either as financial assets at amortized cost or as at fair value. Investments classified
as financial assets at amortized cost include non-derivative financial assets with fixed or determinable payments and fixedmaturities. These investments are carried and subsequently measured at amortized cost using the effective interest method.
All other investment securities are classified as investments at fair value through profit or loss and measured at market value.
Income on investments includes interest earned and unrealized gains and losses on the portfolio held at fair value throughprofit or loss. Purchases and sales of investments are recognized on a trade-date basis, which is the date on which theFund commits to purchase or sell the investments.

Loans
The Fund provides concessional funding for development purposes to the least developed countries in Africa. Country eligibility
is determined by assessing gross national income per capita, creditworthiness and performance. Annual Debt Sustainability
Analysis is used to determine the risk of debt distress of each beneficiary country and set appropriate financing terms.
The following categories of countries are eligible to ADF loans: ategory A countries that are not deemed creditworthy for non-concessional financing and whose income levels areCbelow the operational cut-off.
●● Category A countries that are not deemed creditworthy for non-concessional financing but whose income levels areabove the operational cut-off (blend countries) have access to ADF funds with modified financing terms at par with thoseof blend countries.
●● Category B countries are those deemed creditworthy for non-concessional financing but whose income levels are below
the operational cut-off with access to a blend of ADB and ADF resources.
●●

Graduating countries are those that are graduating from the category of ADF borrowing countries to the category of ADB
borrowing countries and the graduating policies are determined for each new ADF replenishment.
Disbursed and outstanding loans are reported at amortized cost and not included in Net Development Resources in thespecial purpose financial statements as they represent an allocation of development resources. Accordingly, no provision
for possible loan losses is required.
Loan income arising from interest, service and commitment charges is recognized on an accrual basis. The Fund places allloans to a borrower country in non-accrual status if the principal installments, interest or service charges on any of the loans
to such member country are overdue by 6 months or more, unless the Fund’s management determines that the overdue
amount will be collected in the immediate future. Further, management may place a loan in non-accrual status even if it is not
yet overdue by 6 months, if the specific facts and circumstances, including consideration of events occurring subsequent
to the balance sheet date, warrant such action. On the date a borrower’s loans are placed in non-accrual status, unpaid
interests and charges that had previously been accrued on loans to the borrower are deducted from income on loans forthat period. Interests and charges on loans in non-accrual status are included in income only to the extent that payment ofsuch charges has been received by the Fund.

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Partial Risk Guarantee
The Fund provides guarantees, through the Partial Risk Guarantees (PRGs) program, for credits issued in support of projects
located within a member county that are undertaken by private entities. Under the PRGs program, the Fund provides
financial guarantees for private lenders to a member country in the event that a member country fails to honor its contractual
obligations with respect to private lenders to a project. The PRGs insure private lenders against well-defined political risks
related to the failure of a government or government related entity to honor certain specified commitments such as politicalforce majeure, currency inconvertibility, regulatory risks and various forms of breach of contract.
Under the PRGs framework the Fund executes the payment obligations if the borrower defaults and the lender consequently
demands payment from the Fund. In the event that a guarantee is called, the Fund has the contractual right to require
payment from the member country that has provided the counter guarantee to the Fund.
Guarantee fee income received is deferred and amortized over the life of the guarantee.

Partial Credit Guarantee
The Fund also provides further credit instrument in the form of Partial Credit Guarantee (PCGs) – a risk mitigation instrument
designed to better leverage resources by crowding in private capital.
The PCGs product serves to partially guarantee debt service obligations and will help to: (i) extend debt maturities; (ii) improveaccess to capital markets for public sector investment projects, especially in infrastructure; (iii) reduce effective borrowing
costs; (iv) support mobilization of long-term resources from international and domestic capital markets; and (v) support
sovereign mobilization of commercial financing for policy or sectoral reforms.
Guarantee fee income received under the PCGs is deferred and amortized over the life of the guarantee.

GrantsIn addition to loans, the Fund is authorized to provide development financing in the form of grants. Prior to the ninth
replenishment of the resources of the Fund, grant funds were granted for technical assistance activities only. With effectfrom the ninth replenishment, grants may be used for technical assistance as well as project financing. Grants, like loans,represent allocations of development resources and are accordingly treated as such in the Statement of Net Development
Resources of the Fund.

HIPC Debt Initiative
The Fund participates in a multilateral debt relief initiative for addressing the debt problems of countries identified as heavily
indebted poor countries (HIPCs) to help ensure that their reform efforts are not compromised by unsustainable external debt
burdens. Under this initiative, creditors provide debt relief for those countries that demonstrate good policy performance overan extended period to bring their debt burdens to sustainable levels. As a part of this process, the HIPC Debt Initiative TrustFund, (the Trust Fund) constituted by funds from donors, including the Bank Group, was established to help beneficiaries
reduce their overall debt, including those debts owing to the Fund.
Under the original framework of the debt relief initiative, upon signature of a HIPC Debt Relief Agreement by the Fund, thebeneficiary country and the Trust Fund, loans or repayment installments identified for sale to the Trust Fund are written
down to their estimated net present value. On the settlement date, the estimated write-down is adjusted to reflect the actual
difference between the cash received and the carrying value of the loans sold.
Under the enhanced HIPC framework, the implementation mechanism comprises a partial payment of ADF debt service as
it falls due with funds received from the Trust Fund.

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African Development Fund

Multilateral Debt Relief Initiative (MDRI)
Under the MDRI, loans due from eligible HIPCs are canceled when the countries attain the completion point under the HIPC
framework. The Fund is expected to be fully compensated for loans canceled under MDRI by additional contributions to bemade by donors over the previously scheduled repayment periods of the canceled loans. When MDRI becomes effective
for a country, certain amounts previously disbursed to that country as loans are no longer repayable by the country andeffectively take on the character of grants made by the Fund. Accordingly, loans canceled under the MDRI are included in“Net Debt Relief” and reported in the Statement of Net Development Resources as allocation of development resources,
with a corresponding offset to loans outstanding.

Financial Liabilities
Financial liabilities include accounts payable and are subsequently measured at amortized cost. Financial liabilities are
derecognized upon discharge, cancellation or expiration.

Impairment of Financial Assets
The Fund assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial
assets included in its Net Development Resources is impaired. A financial asset or a group of financial assets is impaired
and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset (a ’loss event’) and that loss event (or events) has an impact on theestimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
If the Fund determines that there is objective evidence that an impairment loss has been incurred on its receivable ortreasury investments held at amortized cost (described in prior years as held to maturity investment), the amount of the loss
is measured as the difference between the asset’s carrying amount and the present value of its estimated future cash flows(excluding future credit losses that have not been incurred), discounted at the financial asset’s original effective interest rate.
The estimated impairment loss may arise from delays that may be experienced in receiving amounts due, and the impairment
calculations reflect management’s best estimate of the effect of such delays.
The impairment loss is reported as a reduction to the carrying amount of the asset through the use of an allowance accountand recognized in the income statement. If a treasury investment at amortized cost has a variable interest rate, the discountrate for measuring any impairment loss is the current effective interest rate determined under the contract.
Loans are not included in Net Development Resources and are therefore not subject to impairment.

Fair Value Disclosure
The fair values of quoted financial assets in active markets are based on current bid prices, while those of liabilities are
based on current asking prices. For financial instruments with inactive markets, the Fund establishes fair value by using
valuation techniques that incorporate the maximum use of market data inputs. These include the use of recent arm’s
length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly usedby market participants. Financial instruments for which market quotations are not readily available have been valued using
methodologies and assumptions that necessarily require the use of subjective judgments. Accordingly, the actual value atwhich such financial instruments could be exchanged in a current transaction or whether they are actually exchangeable is
not readily determinable. Management believes that these methodologies and assumptions are reasonable; however, thevalues actually realizable in a sale might be different from the fair values disclosed.
The following three hierarchical levels are used for the determination of fair value:
Level 1:	Quoted prices in active markets for the same instrument (i.e. without modification or repackaging).

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Chapter 6

Level 2:

 uoted prices in active markets for similar assets or liabilities or other valuation techniques for which all significant
Q
inputs are based on observable market data.

Level 3:

Valuation techniques for which any significant input is not based on observable market data.

The methods and assumptions used by the Fund in estimating the fair values of financial instruments are as follows:
Investments: Fair values for investment securities are based on quoted market prices, where available, using the bid prices. If
quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Government
and agency obligations include marketable bonds or notes and other government obligations issued or unconditionally
guaranteed by governments of member countries or other official entities with a minimum credit rating of AA-. For assetbacked securities, the Fund may only invest in securities with an AAA credit rating. Money market instruments include time
deposits, certificates of deposit and other obligations with a maturity period of less than 1 year, issued or unconditionally
guaranteed by banks and other financial institutions with a minimum rating of A.
Derivative Financial Instruments: The fair values of derivative financial instruments are based on market quotations whenpossible or valuation techniques that use market estimates of cash flows and discount rates. The Fund also uses valuation
tools based on industry standard pricing models and valuation techniques to value derivative financial instruments. The
models use market-sourced inputs such as interest rates, yield curves, exchange rates and option volatilities. All financial
models used for valuing the Fund’s financial instruments are subject to both internal and periodic external reviews.

Events After the Reporting Period
The financial statements are adjusted to reflect events that occurred between the date of the Statement of Net Development
Resources and the date when the financial statements are authorized for issue, provided they give evidence of conditions
that existed at the date of the Statement of Net Development Resources.
Events that are indicative of conditions that arose after the date of the Statement of Net Development resources are disclosed,
but do not result in an adjustment of the financial statements themselves.

Reclassification
Certain reclassifications of prior year’s amounts have been made to conform to the presentation in the current year. These
reclassifications did not affect the prior year’s reported result.

Note C — Risk management policies and procedures
In carrying out its development mandate, the Fund seeks to maximize its capacity to assume core business risks resulting fromits lending and investing operations while at the same time minimizing its non-core business risks (market risk, counterparty
risk, and operational risk) that are incidental but nevertheless critical to the execution of its mandate.
The degree of risk the Fund is willing to assume to achieve its development mandate is limited by its commitment capacity.
The Fund’s overall risk management strategy is to minimize the exposure of its replenishment resources (the Commitment
Capacity) to the risk of over-commitment and also to protect its Net Development Resources from currency translation
losses that could negatively affect the Fund’s long-term capacity to meet its development needs.
The policies, processes and procedures which the Fund uses to manage its risk profile continually evolve in response tomarket, credit, product, and other developments. The highest level of risk management oversight is assured by the Fund’s
Board of Executive Directors, which is chaired by the President. The Board of Directors is committed to the highest standards

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African Development Fundof corporate governance. In addition to approving all risk management policies, the Board of Directors regularly reviews
trends in the Fund’s risk profiles and performance to ensure compliance with the underlying policies.
The guiding principles by which the Fund manages its core and non-core risks are governed by the General Authority on
Asset Liability Management (the ALM Authority) approved by the Board of Directors of the Fund.
The ALM Authority is the overarching framework through which Management has been vested with the authority to manage
the Fund’s liquid assets and liabilities within defined parameters. The ALM Authority sets out the guiding principles for
managing the Fund’s interest rate risk, currency exchange rate risk, liquidity risk, counterparty credit risk and operationalrisk. The ALM Authority covers the Fund’s entire array of ALM activities.
Under the umbrella of the ALM Authority, the President is authorized to approve and amend more detailed operationalguidelines as necessary, upon the recommendations of the Asset and Liability Management Committee (ALCO). The
ALCO, chaired by the Vice President for Finance, is the oversight and control organ of the Fund’s finance and treasury risk
management activities.
The ALCO meets on a regular basis to perform its oversight role. The ALCO is supported by several standing working groups
that report on specific issues including interest rate risk, currency risk, operational risk, financial projections, and financial
products and services. In June 2012 the Bank Group also created the Credit Risk Committee (CRC), to ensure effective
implementation of the Fund’s credit policies and oversee all credit risk issues related to loan operations.
Day-to-day operational responsibility for implementing the Fund’s financial and risk management policies and guidelines
are delegated to the appropriate business units. The Financial Management Department is responsible for monitoring the
day-to-day compliance with those policies and guidelines.
The following sections describe in detail the manner in which the individual sources of risk are managed by the Fund.

Credit Risk
Credit risk arises from the inability or unwillingness of counterparties to discharge their financial obligations. It is the potential
financial loss due to default of one or more debtors/obligors. Credit risk is the largest source of risk for the Fund arisingessentially from its lending and treasury operations.
The Fund’s credit risk arises from two principal sources: (i) sovereign credit risk arising from lending to its qualifying RMCsand (ii) counterparty credit risk on its portfolio of treasury investments and derivative transactions.

Sovereign Credit Risk
The Fund provides concessional loans in order to fund economic and social development of its member countries which
generally have a lower credit quality than ADB borrowers. Although loans are included in the financial statements as resources
already allocated for development and therefore not included in the Net Development Resources, the Fund still manages
sovereign credit risks to ensure equitable allocation of resources to eligible beneficiaries and ensure that expected reflows
from loan repayments are properly monitored and managed. Country eligibility for loans is determined by assessing among
other things, gross national income per capita, credit worthiness and performance. The Fund uses the International Monetary
Fund/World Bank Debt Sustainability Framework (DSF) for Low-Income Countries, to make performance-based allocation(PBA) of ADF resources among the many competing needs in the continent and to ensure the funds are directed to areas
they will be used most effectively. The PBA process, which is reviewed regularly, is also used to determine the proportionof ADF resources that is allocated in the form of grants to each qualifying borrower. On the basis of the debt sustainability
analysis, certain countries are allocated grants-only resources, while others may receive a combination of loan and grant
resources or loan resources only.

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Chapter 6

Country Exposure in Borrowing Member Countries
The Fund’s exposures as at 31 December 2015 from its lending activities are summarized below:(Amounts in UA thousands)

Country
AngolaBenin
Botswana
Burkina Faso
BurundiCabo Verde
Cameroon
Central African Republic
Chad
Congo
Côte d’Ivoire
Democratic Republic of Congo
Djibouti
Egypt
Equatorial Guinea
Eritrea
Ethiopia
Gabon
GambiaGhana
GuineaGuinea-Bissau
Kenya
LesothoLiberia
Madagascar
MalawiMali
Mauritania
Mauritius
MoroccoMozambique
Namibia
Niger
Nigeria
RwandaSão Tomé & Principe
Senegal
Seychelles
Sierra Leone
Somalia**
Sudan**/+
Swaziland
Tanzania
Togo
UgandaZambiaZimbabwe**
Multinational
Total

N° of
Loans*
14
33
12
34
6
29
33
1
16
4
4
7
18
17
11
8
29
1
10
40
14
9
59
35
6
25
26
45
15
2
5
37
2
24
27
22
5
39
3
15
17
15
8
48
3
34
23
10
21
921

Total
Loans*
77,147355,891
44,280415,989
23,676
93,894573,362
1,030
104,543
54,36477,531
90,412
82,132
123,940
22,93479,4901,613,377
1,089
29,209817,355
115,340
27,674
1,874,705
130,889
113,161
339,225
271,156
549,145
60,2501,753
27,322735,981
10,745284,573
803,997292,714
15,266478,390
4,570
112,418
64,404
174,863
29,3101,666,374
21,6981,031,872
421,562
34,513292,869
14,668,384

Unsigned
Loan Amounts
180,000
54,000201,746435,746

Undisbursed
Balance
38,617
135,447
80,185
4,152
260,530516
34,74747,587
43,6382,159
7,725
13,330439,103
146,757
48,142
9,371
746,614
9,817
74,566
97,381
108,096
147,1445,380
201,335
120,000
310,380
101,459
11,500114,886
26,021
453,798
8,099
340,372
161,619
79,5004,429,973

Outstanding
Balance
38,530220,444
44,280335,804
23,67689,742
312,832514
69,796
6,777
33,89388,25374,407
123,940
22,934
66,160994,274
1,089
29,209670,598
67,19818,303
1,128,091
121,072
38,595
241,844
163,060
402,001
54,8701,753
27,322534,646
10,745
164,573493,617
191,255
3,766
363,504
4,570
86,39764,404
174,863
29,3101,158,576
13,599691,500
259,943
34,513
11,6239,802,665% of Total
Outstanding
Loans
0.39
2.25
0.45
3.43
0.24
0.92
3.19
0.01
0.71
0.07
0.35
0.90
0.76
1.26
0.23
0.67
10.14
0.01
0.30
6.84
0.68
0.19
11.51
1.24
0.39
2.47
1.66
4.10
0.56
0.02
0.28
5.45
0.11
1.68
5.04
1.95
0.04
3.71
0.05
0.88
0.66
1.78
0.30
11.82
0.14
7.05
2.65
0.35
0.12
100.00+	The outcome of the referendum conducted in South Sudan in January 2011 supported the creation of an independent state of South Sudan. After the split of the current state of
Sudan into two separate nations became effective in July 2011, the number and amounts of loans shown against Sudan in this statement would be split between the emerging
states, on a basis agreed upon following the ongoing negotiations between the North and South Sudan. At end of December 2015, no decision has been taken by the states of
the North and South Sudan regarding the terms and conditions of such exchange.
*	Excludes fully repaid loans and canceled loans.
**	Countries in non-accrual status as at 31 December 2015.
Slight differences may occur in totals due to rounding.

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African Development FundCounterparty Credit Risk
In the normal course of business, the Fund utilizes various financial instruments to meet the needs of its borrowers, manage
its exposure to fluctuations in market interest and currency rates, and to temporarily invest its liquid resources prior to
disbursement. All of these financial instruments involve, to varying degrees, the risk that the counterparty to the transaction
may be unable to meet its obligation to the Fund. Given the nature of the Fund’s business, it is not possible to completely
eliminate counterparty credit risk, however, the Fund minimizes this risk by executing transactions within a prudential
framework of approved counterparties, minimum credit rating standards, counterparty exposure limits, and counterparty
credit risk mitigation measures.
Counterparties must meet the Fund’s minimum credit rating requirements and are approved by the Bank Group’s Vice
President for Finance. The ALCO approves counterparties that are rated below the minimum rating requirements.
Counterparties are classified as investment counterparties, derivative counterparties, and trading counterparties. Their ratings
are closely monitored by the Financial Management Department.
For trading counterparties, the Fund requires a minimum short-term credit rating of A-2/P-2/F-2 for trades settled underdelivery vs. payment (DVP) terms and a minimum long-term credit rating of A/A2 for non-DVP-based transactions.
The following table details the minimum credit ratings for authorized investment counterparties:

6 months
Government
Government agencies and supranationals
Banks
Corporations including non-bank financial institutions

A/A2
A/A2

1 yearA/A2
A/A2

Maturity
5 years
10 years

AA-/Aa3
AA-/Aa3

15 years
AA-/Aa3
AA-/Aa3

30 years
AAA/Aaa
AAA/Aaa

AAA/Aaa
AAA/AaaAAA
Maximum legal maturity of 50 years for ABS/MBS with the underlying collateraloriginated in the UK and 40‑year maximum legal maturity for all other eligible ABS/MBS.
Also, the maximum weighted average life for all ABS/MBS at the time of acquisition
shall not exceed 5 years.

MBS/ABSThe Fund uses derivatives in the management of its assets and liabilities. As a rule, the Fund executes an ISDA masteragreement and collateral exchange agreement with its derivative counterparties prior to undertaking any transactions. Derivative
counterparties are required to be rated AA-/Aa3 by at least two approved rating agencies or A-/A3 for counterparties withwhom the Fund has entered into a collateral exchange agreement. These counterparties require the approval of the ALCO.
Approved transactions with derivative counterparties include swaps, forwards, options and other over-the-counter derivatives.
In addition to these minimum rating requirements, the Fund operates within a framework of exposure limits based on the
counterparty credit rating and size, subject to a stipulated maximum for any single counterparty. Individual counterparty
credit exposures are aggregated across all instruments using the Bank for International Settlements (BIS) potential future
exposure methodology and monitored regularly against the Fund’s credit limits after considering the benefits of any collateral.

2015
2014
2013

234

AAA
38%
40%
48%

Credit Risk Profile of the Investment and Derivative Portfolios
AA+ to AAA+ and lower
54%
8%
49%
11%
48%
4%

Annual Report 2015

Chapter 6

Liquidity Risk
Liquidity risk is the potential for loss resulting from insufficient liquidity to meet cash flow needs in a timely manner. The Fund’s
principal liquidity risk management objective is to hold sufficient liquid resources to enable it to meet all probable cash flowneeds for between 50 and 75 percent of the three years’ moving average of expected disbursements.
To strike a balance between generating adequate investment returns and holding securities that can be easily sold for cash if
the need arises, the Fund divides its investment portfolio into two tranches with different liquidity objectives and benchmarks.
The Fund’s core liquidity portfolio, which is fair valued, is invested in highly liquid securities that can be readily liquidated
if the need arises to meet the Fund’s short-term liquidity needs. In addition to the trading portfolio, the Fund maintains asecond tranche of liquidity under the broad category of amortized cost portfolio, which is held in a portfolio of fixed income
securities intended to earn contractual cash flows.

Currency Exchange Risk
Currency risk is the potential loss due to adverse movements in market foreign exchange rates. To promote stable growth in
the Fund’s Net Assets, including its Net Development Resources (NDR) and outstanding loans, the Fund’s principal currency
risk management objective is to ensure that it is able to provide the disbursement currencies requested by borrowers while
minimizing the exposure of its net development resources to adverse exchange rate movements. To the extent possible, theFund shall maintain the alignment of the currency composition of its Net Assets with the UA as the primary benchmark of
its currency composition. The Fund may conduct currency exchange transactions for the following two reasons: (1) to alignthe currency composition of its Net Assets (loan and investment portfolios) with the UA, (2) for the purpose of providing ADF
borrowers with the disbursement currencies requested.

Interest Rate Risk
Interest rate risk is the potential for loss due to adverse movements in market interest rates. In seeking to earn a stable andreasonable return on invested liquidity, the Fund’s principal interest rate risk management is to reduce the sensitivity of theFund’s investment returns to changes in market interest rates. To achieve this objective, the Fund’s investments are managed
in two portfolios: (1) an actively managed portfolio (the “Operational” Portfolio); and (2) a passively managed portfolio (the“Investment” Portfolio).
The Operational Portfolio provides a readily available source of liquidity to cover both expected and unexpected disbursements
as well as any other probable cash outflows. The Operational Portfolio is managed against a 3-month LIBOR reference
benchmark in each currency. Generally, investments in the Operational Portfolio are held for trading and are regularly marked
to market.
The Investment Portfolio consists of funds that are not immediately required for loan disbursements and therefore may beinvested for a longer horizon. Generally, investments in the Investment Portfolio are purchased with the intention to holdthem until their maturity and are not marked to market. The Investment Portfolio comprises two sub-portfolios, (1) an
investment portfolio for income stabilization for the purpose of generating a stable income for the Fund and reducing theFund’s investment income sensitivity to interest rates. This portfolio is managed against a ten-year uniform repricing profile foreach invested currency, and (2) an investment portfolio for accelerated encashments for the purpose of investing proceedsfrom accelerated encashments to recoup the discount granted to State Participants, minimizing or eliminating interest raterisk on accelerated encashments. This portfolio is managed against a target rate, which is the discount rate agreed with
State Participants.

235

Chapter 6

African Development FundInterest Rate Risk Position as at 31 December 2015
(UA thousands)

AssetsCash
Investments
Demand obligations
Accounts receivable
Liabilities
Accounts payable

Net Development Resources
at 31 December 2015

1 yearor lessMore than
1 year but
less than
2 years

More than
2 years but
less than
3 years

More than
3 years but
less than
4 years

More than
4 years but
less than
5 years

More than
5 years

Total

376,273864,160
774,962
83,183
2,098,578

797,860
610,949
1,408,809

753,220
437,887
1,191,107

309,890360,694
670,584

138,811
148,608
287,419

27,976336,359364,335

376,273
2,891,917
2,669,459
83,1836,020,832(88,946)(88,946)

-

-

-

-

-

(88,946)(88,946)

2,009,632

1,408,809

1,191,107

670,584

287,419364,335

5,931,886

1 yearor lessMore than
1 year but
less than
2 years

More than
2 years but
less than
3 years

More than
3 years but
less than
4 years

More than
4 years but
less than
5 years

More than
5 years

Total

368,702
1,177,061
743,822
125,8132,415,398

493,420
703,154
1,196,574

578,111446,676
1,024,787

283,790
282,171565,961

258,650
252,957
511,607

218,881372,539
591,420

368,7023,009,913
2,801,319
125,8136,305,747(154,342)(154,342)

-

-

-

-

-

(154,342)(154,342)

2,261,056

1,196,574

1,024,787

565,961

511,607591,420

6,151,405

Interest Rate Risk Position as at 31 December 2014
(UA thousands)

AssetsCash
Investments
Demand obligations
Accounts receivable
Liabilities
Accounts payable

Net Development Resources
at 31 December 2014236

Annual Report 2015

Chapter 6

Note D — Financial assets and liabilities
The tables below set out the classification of each class of financial assets and liabilities, and their respective fair values:

Analysis of Financial Assets and Liabilities by Measurement Basis(UA thousands)

31 December 2015
Cash
Treasury investments
Demand obligations
Accounts receivable
Total financial assets
Liabilities
Total financial liabilities

Financial Assets and Liabilities
through Profit or Loss
Mandatorily
Designatedat Fair Valueat Fair Value
1,699,887
1,699,887--

Fair Value
through Other Financial Assets
Comprehensive and Liabilities at
Total
Income Amortized Cost Carrying Amount376,273376,273
1,192,030
2,891,917
2,669,459
2,669,459
83,183
83,183
4,320,945
6,020,832-

88,946
88,946

Fair Value
376,273
2,946,459
2,669,459
83,183
6,075,374

88,946
88,946

88,946
88,946

Fair Value
through Other Financial Assets
Comprehensive and Liabilities at
Total
Income Amortized Cost Carrying Amount
368,702368,702
1,557,501
3,009,913
2,801,319
2,801,319
125,813
125,813
4,853,335
6,305,747

Fair Value
368,7023,086,614
2,801,319
125,813
6,382,448(UA thousands)

31 December 2014
Cash
Treasury investments
Demand obligations
Accounts receivable
Total financial assets
Liabilities
Total financial liabilities

Financial Assets and Liabilities
through Profit or Loss
Mandatorily
Designatedat Fair Valueat Fair Value
1,452,412
1,452,412---

154,342
154,342

154,342
154,342

154,342
154,342

The composition of investments as at 31 December 2015 and 2014 was as follows:(UA thousands)
Treasury investments mandatorily measured at fair value through profit or loss
Treasury investments at amortized cost
Total

2015
1,699,887
1,192,030
2,891,917

2014
1,452,412
1,557,501
3,009,913

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Treasury Investments Mandatorily Measured at Fair Value through Profit or Loss (FVTPL)
A summary of the Fund’s treasury investments measured at FVTPL at 31 December 2015 and 2014 follows:(UA millions)Time deposits
Asset-backed securities
Government and agency obligations
Corporate bonds
Supranational
Total

US Dollar
2015
2014
25.04
0.11
13.53
457.20 267.08
268.40 225.88
24.89
34.80
775.64 541.29

Euro
2015
2014
22.23 108.94
1.67
29.59
190.12 158.97
53.40
29.60
59.58
14.52
327.00 341.62

GBP
2015
2014
49.84 159.18
8.25
35.86
198.87 163.33
196.67 126.95
36.49
23.23
490.12 508.55

Other Currencies
All Currencies
2015
2014
2015
2014
2.21
99.32 268.12
10.03
78.98
104.9260.95 951.11 650.33- 518.47 382.43- 120.96
72.55
107.1360.95 1,699.89 1,452.41

The contractual maturity structure of investments measured at FVTPL at 31 December 2015 and 2014 was as follows:(UA millions)2015
631.85504.18518.3643.72
1.78
1,699.89

One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

2014
805.05261.75281.61
47.75
4.13
52.12
1,452.41

Treasury Investments at Amortized Cost
A summary of the Fund’s treasury investments at amortized cost at 31 December 2015 and 2014 follows:(UA millions)

Asset-backed securities
Government and agency obligations
Corporate bonds
Supranational
Total

US Dollar
2015
2014
14.42
13.71
492.62 572.04
6.00
33.51
202.84 256.62
715.88 875.88

Euro
2015
2014
224.68 325.63
25.26
59.23
116.33 141.98
366.27 526.84

GBP
2015
2014
66.18 110.30
10.65
10.67
33.05
33.81
109.88 154.78

Other Currencies
All Currencies
2015
2014
2015
2014
14.42
13.71
- 783.48 1,007.97
41.91 103.41- 352.22 432.41- 1,192.03 1,557.50

The contractual maturity structure of investments at amortized cost at 31 December 2015 and 2014 was as follows:(UA millions)
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

238

2015
232.31
293.68234.86266.17138.8126.20
1,192.03

2014
372.01231.67296.50236.04254.52166.76
1,557.50

Annual Report 2015

Chapter 6

Futures Contracts
The Fund has also entered into futures contracts to hedge fixed interest rate bonds against interest rate variations. As at
31 December 2015, the Fund had 2,505 contracts in Euro, 2,941 contracts in Pound sterling and 3,056 contracts in US
dollars. The nominal value of each contract is one million of each currency unit, except for 2,941 GBP contracts with anominal value of 500,000 for each contract.

Note E — Demand obligations
Demand obligations represent subscription payments made by participants, in accordance with Article 9 of the Agreement,in the form of non-negotiable, non-interest-bearing notes payable at their par value on demand. The Board of Governors
has agreed that the encashment of these notes will be governed by the Fund’s disbursement requirements.

Note F — Development activities
According to the Fund’s loan regulations, loans are expressed in UA and repaid in the currency disbursed.

Project Loans and Lines of Credit
Loans are generally granted under conditions that allow for repayment over 40 years after a 10-year grace period commencing
from the date of the loan agreement. Loan principal is generally repayable from years 11 through 20 at a rate of 1 percent
per annum and from years 21 through 50 at a rate of 3 percent per annum. A service charge at a rate of 0.75 percent per
annum on the principal amount disbursed and outstanding is payable by the borrower semi-annually. Loans and lines ofcredit approved after June 1996 carry a 0.5 percent per annum commitment charge on the undisbursed portion. Suchcommitment charge commences to accrue after 90 days from the date of signature of the loan agreement. With effectfrom the ADF-12 replenishment, loans to blend, gap and graduating countries carry differentiated financing terms of thirty(30) years’ maturity, grace period of 8 years and interest rate of 1 percent, in addition to the existing standard 0.50 percent
commitment fee and 0.75 percent service charge. Under ADF-13, further differentiated lending terms were adopted withthe view of preserving the long-term financial sustainability and capacity of the Fund. The new lending terms require theacceleration of loan repayment by regular and advanced ADF-only countries, and also to blend, gap and graduating countries;
and the granting of financial incentives for voluntary loan repayment.
Prior to the establishment of the Technical Assistance Account, loans for pre-investment studies were normally granted for aperiod of 10 years, including a grace period of 3 years, with repayments in seven equal installments from years 4 through 10.
Of the undisbursed balances of loans signed, the Fund may enter into special irrevocable commitments to pay amounts toborrowers or others in respect of the cost of goods and services to be financed under loan agreements. As at 31 December
2015, outstanding irrevocable reimbursement guarantees to commercial banks amounted to UA 12.91 million (2014: UA
6.44 million).
The Fund also provides innovative financial instruments in the form of Partial Reimbursement Guarantees (PRGs) and, Partial
Credit Guarantee (PCG) for the purpose of better leveraging resources by crowding in ADB and commercial sources offinancing.
The PRGs’ product provides guarantees to private entities for development exposures on projects located in Regional Member
Countries. Such guarantees represent potential risk to the Fund if amounts guaranteed for an entity are not reimbursed. As
at 31 December 2015, guarantees provided by the Fund to private entities on account of its borrowers amounted to UA
145.75 million (2014: UA 145.75 million).

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African Development Fund

The PCGs’ product serves to partially guarantee the debt service obligations of Regional Member Countries, which include
extension of debt maturities, the improvement of access to domestic and foreign capital markets, and the reduction ofborrowing costs. As at 31 December 2015, no PCGs have been provided.

Private Sector Credit Enhancement Facility
In 2014,the Fund allocated a grant of UA 165 million for the establishment of the Private Sector Enhancement Facility (the PSF)
to encourage increased development financing in the ADF countries. The PSF provides credit enhancement guarantees to
the ADB on certain eligible loans to the private sector in ADF countries. The PSF is operationally and financially autonomousfrom the Fund and its statutory framework explicitly precludes it from having recourse to the Fund for any losses that it
may incur. As at 31 December 2015, credit enhancement approvals of UA 56.50 million had been made.
As at 31 December 2015, loans made to or guaranteed by certain borrowers with an aggregate principal balance outstandingof UA 273.79 million (2014: UA 272.59 million), of which UA 118.64 million (2014: UA 110.05 million) was overdue, were in
non-accrual status. If these loans had not been in non-accrual status, income from loans for the year ended 31 December
2015, would have been higher by UA 2.05 million (2014: UA 2.06 million). At 31 December 2015, the cumulative charges notrecognized on the non-accrual loans amounted to UA 42.64 million, compared to UA 40.42 million at 31 December 2014.
Lines of credit to national development banks and similar national finance institutions are generally granted for a maximumof 20 years, including a 5-year grace period.
At 31 December 2015, outstanding loans amounted to UA 9,802.67 million (2014: UA 8,965.21 million).

Maturity and Currency Composition of Outstanding Loans
The maturity distribution of outstanding loans as at 31 December 2015 and 2014 was as follows:(Amounts in UA millions)

One year or less*More than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total*

Include the arrears on loans.

240

2015
Amount196.1884.11
93.17
107.02118.739,203.45
9,802.66

%
2.00
0.86
0.95
1.09
1.21
93.89
100.002014
Amount187.18
81.87
89.42
98.69
111.788,396.27
8,965.21

%
2.09
0.91
1.00
1.10
1.25
93.65
100.00Annual Report 2015

Chapter 6

The currency composition of outstanding loans as at 31 December 2015 and 2014 was as follows:(Amounts in UA millions)
Currency
Canadian Dollar
Danish Kroner
Euro
Japanese Yen
Norwegian Krone
Pound Sterling
Swedish Krona
Swiss Franc
United States Dollar
OthersTotal

2015
Amount9.22
9.15
3,052.29
594.92
14.66
662.6010.70
49.28
5,399.52
0.32
9,802.66

%
0.10
0.09
31.14
6.07
0.15
6.76
0.11
0.50
55.08
0.00
100.002014
Amount11.20
10.33
3,080.75
609.6117.31
569.0912.16
52.57
4,601.86
0.33
8,965.21

%
0.12
0.12
34.36
6.80
0.19
6.35
0.14
0.59
51.33
0.00
100.00Slight differences may occur in total due to rounding.

Grants and Technical Assistance Activities
Under the Fund’s lending policy, 5 percent of the resources available under the third and fourth general replenishments, 10
percent under the fifth and sixth general replenishments, and 7.5 percent under the seventh and eighth general replenishments
were allocated as grants and grant-based technical assistance for the identification and preparation of development projects
or programs in specified member countries. In addition, amounts in the range of 18 to 21 percent of the total resources under
the ninth replenishment were set aside in the form of grants for permitted uses, including technical assistance and project
financing. Grants do not bear charges. The share of grants under the tenth, eleventh and twelfth general replenishments isbased on a country-by-country analysis of debt sustainability. Under the seventh, eighth and ninth general replenishments,
technical assistance may also be provided on a reimbursable basis.
Technical assistance loans are granted under conditions that allow for repayment in 50 years, including a 10-year grace­period, from the date of the loan agreement. However, the following categories of loans have different terms:i)	where the loan is granted for the preparation of a pre-investment study and the study proves that the project is not
feasible, the grace period is extended to 45 years with a repayment period of 5 years thereafter.
(ii)	where the loan is granted for strengthening Regional Member Countries’ cooperation or for the improvement of theoperations of existing institutions and is not related to specific projects or programs, the grace period is 45 years witha repayment period of 5 years thereafter.
Technical assistance loans do not carry charges.

HIPC Debt Relief Initiative
Under the original framework of HIPC, selected loans to beneficiary countries were paid off by the HIPC Trust Fund at a priceequivalent to the net present value of the loans as calculated using the methodology agreed under the initiative. Following
the signature of a HIPC debt relief agreement, loans identified for payment were written down to their estimated net present
value. The amount of the write-down, representing the difference between the book value and net present value of the loans,
was shown as an allocation of development resources. The amount of UA 71.08 million, which was the write-down in respectof the debt relief granted to Mozambique in 1999 under the original HIPC framework, is included in the amount stated as
net debt relief in the Statement of Net Development Resources. The outstanding balance and net present value of the loans
owed by Mozambique and sold to the HIPC Trust Fund in 1999 were UA 132.04 million and UA 60.96 million, respectively.

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In 1999, the HIPC initiative was enhanced to provide greater, faster and more poverty-focused debt relief. This was achievedby reducing the eligibility criteria for qualification under the initiative and by commencing debt relief much earlier than under theoriginal framework. Under the enhanced framework, where 33 African countries are currently eligible, debt relief is delivered
through annual debt service reductions which allow the release of up to 80 percent of annual debt service obligations as
they come due until the total net present value (NPV) of debt relief, determined by the debt sustainability analysis (DSA), is
provided. Interim financing of up to 40 percent of total debt relief is granted between the decision and completion points.
Total contributions by the Fund to the HIPC initiative at 31 December 2015 amounted to UA 184 million and are shown as
allocation of development resources in the Statement of Net Development Resources.

Multilateral Debt Relief Initiative
At the Gleneagles Summit on 8 July 2005, the Group of 8 major industrial countries agreed on a proposal for the ADF,
the International Development Association (IDA), and the International Monetary Fund (IMF) to cancel 100 percent of theirclaims on countries that have reached, or will reach, the completion point under the enhanced HIPC initiative. Through theDevelopment Committee Communiqué of 25 September 2005, the donor community expressed its support for the MDRI,
and urged the institutions referred to above to proceed with the necessary steps to ensure implementation.
The main objective of the MDRI is to complete the process of debt relief for HIPCs by providing additional resources to help
38 countries worldwide, 33 of which are in Africa, to make progress towards achieving the Millennium Development Goals(MDGs), while simultaneously safeguarding the long-term financing capacity of the ADF and the IDA. The debt cancellation
is delivered by relieving post-completion-point HIPCs’ repayment obligations and adjusting their gross assistance flows
downward by the same amount. To maintain the financial integrity of the ADF, donors are expected to make additional
contributions to the ADF to match “dollar-for-dollar” the foregone principal and service charge payments.
The MDRI became effective for the ADF on 1 September 2006. Since disbursed and outstanding loans are already excluded
from net development resources, the debt cancellation did not have an impact on the Fund’s balance of net development
resources. Cancellation of ADF debts are effected when other eligible countries reach the HIPC completion point.
At 31 December 2015, a gross amount of UA 5.68 billion (2014: UA 5.53 billion) of outstanding loans had been canceledunder MDRI for 30 (2014: 29) HIPC completion-point countries. Of this amount, UA 1,225.99 million (2014: UA 1,225.99
million) in nominal terms were converted by the HIPC Trust Fund. The present value of the converted loans was UA 942.71
million (2014: UA 942.71 million). As of 31 December 2015, the present value amounts have been transferred from the
HIPC Trust Fund to ADF.
A summary of debt relief granted under HIPC and MDRI as at 31 December 2015 and 2014 follows:(UA thousands)

Balance at 1 January
Loans canceled*
Cash received*
Balance at 31 December*

HIPC
235,096
235,096

2015
MDRI
4,564,345
164,947(9,316)
4,719,976

Total
4,799,441
164,947(9,316)
4,955,072

HIPC
235,096
235,096

2014
MDRI
4,564,345
4,564,345

Total
4,799,441
4,799,441

Upon implementation of MDRI.

Special Arrears Clearance Mechanism
Arrears Clearance Mechanism for DRC – In connection with an internationally coordinated effort including the ADB Group,
the IMF, the World Bank and other bilateral and multilateral donors to assist the Democratic Republic of Congo (DRC) in
its reconstruction efforts, the Board of Directors on 26 June 2002, approved an arrears clearance mechanism for the DRC.

242

Annual Report 2015

Chapter 6

Under the arrears clearance mechanism, representatives of ADF State Participants (the Deputies) authorized an allocationof approximately UA 36.50 million of grant resources from the ninth replenishment of the ADF (ADF-9) to clear the entire
stock of the DRC’s arrears to the Fund. The Deputies also authorized the use of approximately UA 11.77 million of theresidual Supplementary Financing Mechanism (SFM) resources from ADF-8 as a partial payment against the DRC’s arrears
on charges to the ADB.
Fragile States Facility Framework – The Fragile States Facility (FSF) was established in March 2008 to provide a broader andintegrated framework for assistance to eligible states, typically Regional Member Countries of ADB emerging from conflictor crisis. The purposes of FSF are to consolidate peace, stabilize economies and lay the foundation for sustainable poverty
reduction and long-term economic growth. The FSF assumes the arrears clearance activities of the now defunct Post Conflict
Countries Facility (PCCF), which was established as a framework to assist countries emerging from conflicts in clearing theirarrears and prepare them for re-engagement with the donor communities, in order to reactivate development assistanceand help these countries reach the HIPC decision point to qualify for debt relief after clearing their loan arrears to the Bank
Group. The framework entails the setting aside of a pool of resources through a separate facility with contributions from theADF, the ADB and private donors. Resources from the facility are provided on a case-by-case basis to genuine eligible fragile
states not yet receiving debt relief to fill financing gaps after maximum effort by the country to clear its arrears to the Bank
Group. Contributions made by the Fund to the facility cannot be used to clear the debt owed to the Fund by beneficiaryfragile states. Contributions by the Fund to the Facility are included in “Grants and Technical Assistance Activities” in theStatement of Net Development Resources.

Note G — Subscriptions and contributions
The Fund’s initial subscriptions were provided by the Bank and the original State Participants to the Agreement, and states
acceding to the Agreement since the original signing date. Thereafter, further subscriptions were received from participantsin the form of a special general increase and twelve general replenishments. Details of these movements are shown in theStatement of Subscriptions and Voting Power in Note M.
The Board of Governors, by its resolution F/BG/2014/01 of 31 January 2014, approved the thirteenth general replenishmentof the Fund (ADF-13), following the Deputies agreement for a replenishment level of UA 5.35 billion, of which UA 0.98 billion
represents internally generated resources, for the three-year operational period, 2014 to 2016. ADF-13 came into effect inMarch 2014 after the State Participants had deposited with the Fund, enough instruments of subscriptions and the approvalby the Board of Directors for the use of the internally generated resources for operational commitments. At 31 December
2015, subscriptions to ADF-13 amounted to UA 3.82 billion.
The Grand Duchy of Luxembourg was admitted to the ADF on 29 May 2014, becoming the Fund’s 27th State Participant.
As per the Board of Governors’ Resolution F/BG/2009/04, Luxembourg’s initial subscription amount was set to UA 14.51
million. This subscription amount was paid in full on 16 May 2014, and included in the Fund’s resources.
At 31 December 2015, cumulative contributions pledged on account of the MDRI amounted to UA 5.68 billion of which
UA 849.25 million had been paid and included in total subscriptions. Consistent with the resolution approving MDRI, thecontributions paid entitle the State Participants to voting rights, as reflected in Note M.
Gains or losses arising from translation of subscriptions and contributions received into UA are recorded in the Cumulative
Exchange Adjustment on Subscriptions account in the Statement of Net Development Resources.

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Note H — Other resources
In conformity with the findings of the UN General Assembly, the Board of Directors accepted that the former Socialist Federal
Republic of Yugoslavia no longer exists as a state under international law and hence is no longer a State Participant in theFund or a member of the Bank. Pursuant to a decision of the Board of Directors of the Fund in 1993, the subscriptions of
the former Socialist Federal Republic of Yugoslavia in the Fund less the unpaid portion, are deemed to have become part ofthe permanent patrimony of the Fund and are not returnable to any entity. Accordingly, the amounts of the paid subscriptions
are reported as part of other resources in the Statement of Net Development Resources.
Also included in other resources is a total of UA 589.99 million, representing contributions by the Bank of UA 587.99 million, andby the Government of Botswana of UA 2 million towards the Fund’s activities, in accordance with Article 8 of the Agreement.

Note I — Reserves
Reserves as at 31 December 2015 and 2014 were as follows:(UA thousands)
Reserves at 1 January
Deficit for the year
Balance at 31 December

2015(257,267)(83,249)(340,516)

2014(131,915)(125,352)(257,267)

Note J — Trust funds
The Fund has available resources entrusted to it under Article 8 of the Agreement, which empowers the Fund to receive otherresources including grants from State Participants, non-participating countries, and from any public or private body or bodies.
At 31 December 2015, the undisbursed balance of trust fund resources was UA 5.10 million (2014: UA 4.11 million)
representing the balance of a grant received from Japan for the development of human resources in Africa.
Resources of the trust funds are kept separate from those of the ADF.

Note K — Administrative expenses
Pursuant to Article 31 of the Agreement, the Fund reimburses the ADB for the estimated fair value of its use of the latter’s
offices, staff, organization, services and facilities. The amount of such administrative expenses reimbursed is based on apredetermined cost-sharing formula, which is driven, in large part, by the Fund’s relative share of the number of programs
and projects executed during the year by the Bank Group. The administrative expenses incurred by the Fund for the year
amounted to UA 200.93 million (2014: UA 248.57 million).

Note L — Related parties
The general operation of the Fund is conducted by a 14-member Board of Directors, of which 7 members are selected by
the Bank. The Bank exercises 50 percent of the ADF’s voting power and the President of the Bank is the ex-officio President

244

Annual Report 2015

Chapter 6of the Fund. In accordance with the Agreement, the Fund utilizes the offices, staff, organization, services and facilities of the
ADB (the Bank) to carry out its functions, for which it reimburses the Bank as disclosed in Note K. In this regard, the Bank
administers the resources of the Fund. The Fund also administers trust funds entrusted to it by one of its State Participants.

Note M — Statement of subscriptions, contributions and voting power as at
31 December 2015
(Amounts in UA thousands)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

SpecialParticipants
Initial Increase
ADB
4,605
1,382
Angola9,691
Argentina
1,842
Austria
13,816
Belgium
2,763
Brazil
1,842
921
Canada13,816
6,908
China
13,816
Denmark
4,605
1,842
Egypt
Finland
1,842
France8,809
Germany
6,860
6,956
India
5,526
Italy
9,211
Japan
13,816
Korea
9,211
Kuwait4,974
Luxembourg
14,514
Netherlands
3,684
1,842
Norway4,605
2,303
Portugal
7,368
Saudi Arabia
8,290South Africa
1,794
Spain
1,842
921
Sweden4,605
3,684
Switzerland
2,763
2,938
Turkey40,693
United Arab Emirates
4,145
United Kingdom
4,800
3,073
United States ofAmerica
12,4348,290
Supplementary/
voluntary contributions
Total
238,582 41,060
Supplementary
information:
Supplementary
contributions
through accelerated
encashment to
reduce the gap-

Subscriptions
ADF-1 toADF-12
ADF-13
Install­ments Install­ment
105,754
1,057
16,789379,318
93,099442,33190,003140,866
1,557,485
214,485
421,923
84,280581,148
75,172
1,303
1,326
451,107
109,382
2,271,239
364,167
2,277,291
402,680
73,96912,364
1,478,382
202,337
2,457,987
293,377
199,661
57,541
166,846
7,864
936,792
166,606
983,880
201,519
166,191
252,207
23,20229,493
16,195557,923
43,713
1,105,956
207,302
131,073789,377
4,145
1,992,671
611,550

GrantsCompen­Totalsation Sub­scrip­tions
111,741
10,74818,631
203
486,436278
535,375
143,629773
1,793,467
282
520,301
418
663,1852,629
259
562,590
1,354
2,645,570
1,347
2,695,13430
91,889724
1,690,654
1,406
2,766,586
109
266,52229
179,713
14,514643
1,109,567
608
1,192,915
1
173,560
81
283,78020
47,502389
604,788687
1,322,234
493
926,644
40,6938,290
1,047
2,613,141

Payment Positions
Install­ments
not yetTotal Install­ Install­ments
Payablements PaidDue
111,741
10,748
1,842
7,018
9,771
455,262
31,174
504,564
28,904
143,629
1,721,204
67,505
520,301
662,4192,187
442
562,246
2,523,387
114,1652,559,857
135,277
87,594
4,295
1,690,654
2,667,947
98,639247,306
19,216
179,713
14,514
1,109,158
409
1,125,355
67,560143,995
29,565
283,780
47,502
524,360
80,4281,252,905
69,329926,644
40,6938,290
2,408,593
204,548

MDRI

Voting PowerPay­ments
Re­ceived
12,393
16,17895,664
17,138
11,354
15,65696,021
68,988
1,817
43,57281,427
7,572
13,12534,442
36,947
5,899
5,508
9,562
48,167
41,74957,75880,367

Numberof Votes
1,000.000
0.073
18.46620.4145.672
71.37321.21324.69619.899102.808
103.803
3.531
54.947108.552
10.0647.614
0.573
44.67945.622
5.919
11.42122.60951.11738.8551.607
0.327
98.277%50.000
0.004
0.923
1.021
0.284
3.569
1.061
1.235
0.995
5.140
5.190
0.176
2.747
5.428
0.503
0.381
0.029
2.234
2.281
0.296
0.571
1.130
2.556
1.943
0.080
0.016
4.914

105.869

5.293

2,603,776

385,980

1,845

3,012,325

2,632,911-

379,41447,94594,70922,540,519

15,0003,811,274

13,028109,709
26,644,463

101,763
25,273,064

7,018

7,946
1,348,588

849,249

60,001

5,320-

65,32160,001

5,320

6,195

-

2,000.000 100.000--

Note N — Approval of special purpose financial statements
On 30 March 2016, the Board of Directors authorized these financial statements for issue to the Board of Governors. The
financial statements are expected to be approved by the Board of Governors at its annual meeting in May 2016.

245

KPMG Audit
Tour EQHO
2 Avenue Gambetta
CS 60055
92066 Paris la Défense Cedex
FranceTelephone:Telefax:
Internet:+33 (0)1 55 68 68 68+33 (0)1 55 68 73 00
www.kpmg.fr

African Development Fund
Avenue Joseph Anoma
01 BP 1387 Abidjan 01
Côte d’Ivoire

Independent Auditor’s Report on the special purpose financial statements of theAfrican Development Fund to the Board of Governors of the African Development FundYear ended 31 December 2015
We have audited the accompanying special purpose financial statements of the African Development Fund (theFund) prepared in compliance with the accounting and financial reporting matters as set out in the accounting
policies in note B to the Special Purpose Financial Statements for the year ended 31 December 2015.
These special purpose financial statements have been prepared for the purposes of submitting approved andaudited special purpose financial statements to the Board of Governors as required by Article 26(v), 35(l) and 35(3)of the Agreement establishing the Fund, and are not intended to be a presentation in conformity with a recognised
accounting framework, such as, International Financial Reporting Standards.
This report is made solely to the Fund’s Board of Governors, as a body, in accordance with Article 26(v), 35(l) and35(3) of the Agreement establishing the Fund. Our audit work has been undertaken so that we might state to theFund’s Board of Governors those matters we are required to state to them in an auditor’s report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than theFund and its Board of Governors as a body, for our audit work, for this report, or for the opinions we have formed.
Management’s Responsibility for the Annual Financial Statements
Management is responsible for the preparation and presentation of these financial statements in accordance witharticles 26(v), 35(l) and 35(3) of the Agreement Establishing the Fund and the accounting policies set out in note B
to the special purpose financial statements. This responsibility includes: designing, implementing and maintaining
internal control relevant to the preparation and presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.

KPMG S.A.
Société française membre du réseau KPMG
constitué de cabinets indépendants adhérents de
KPMG International Coopérative, une entité de droit suisse.

246

Société anonyme d’expertisecomptable et de commissariat
aux comptes à directoire etconseil de surveillance.
Inscrite au Tableau de l’Ordreà Paris sous le n° 14-30080101
et à la Compagnie Régionale
des Commissaires aux Comptes
de Versailles.

Headquarters:
KPMG S.A.
Tour Eqho
2 avenue Gambetta
92066 Paris la Défense Cedex
Capital : 5 497 100 €.
Code APE 6920Z
775 726 417 R.C.S. Nanterre
TVA Union Européenne
FR 77 775 726 417

African Development Fund
Independent Auditor’s Report on the special purpose
financial statements of the African Development Fund to
the Board of Governors of the African Development Fund

Auditor’s Responsibility
Our responsibility is to express an opinion on these special purpose financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance that the special purpose
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the special
purpose financial statements. The procedures selected depend on the auditor’s judgement, including the assessmentof the risks of material misstatement of the special purpose financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation andpresentation of the special purpose financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonablenessof accounting estimates made by management, as well as evaluating the overall special purpose financial statement
presentation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the special purpose financial statements of the Fund have been prepared, in all material respects, inaccordance with the accounting and financial reporting matters as set out in the accounting policies in note B to thespecial purpose financial statements for the year ended 31 December 2015.

Paris La Défense, 30 March 2016
KPMG Audit
A division of KPMG S.A.

Valéry Foussé
Partner247

Chapter 6

African Development FundADF administrative budget for financial year 2016
(UA thousands)
Management fees*
Direct expenses
Total

220,650150
220,800*	The amount represents the African Development Fund’s share of the fair value of the Bank’s expenses in respect of officers, staff, organization, services, and facilities based ona formula approved by the Boards.

248

Chapter 6

Nigeria Trust FundTHE NIGERIA TRUST FUND

Loan Portfolio

FINANCIAL MANAGEMENTNTF Replenishment
The Nigeria Trust Fund (NTF) is a special fund administeredby the Bank. The Fund’s resources primarily consist of
subscriptions by the Federal Republic of Nigeria. The NTF
was established in 1976, for an initial period of thirty (30)years, when an agreement establishing the NTF was executed
between the Bank and the Federal Republic of Nigeria, witha provision for extension by mutual agreement. After two
annual extensions in 2006 and 2007, the operation of the NTF
was extended for ten years with effect from 26 April 2008,
following a positive evaluation of its performance during theinitial 30 years of operation.

Loan Products

Cumulative loans signed, net of cancellations, as at 31 December
2015, increased by UA 12.03 million to UA 320.46 million
compared to UA 308.43 million at the end of 2014. During 2015,
the new loan approvals amounted to UA 12.50 million comparedwith UA 11.49 million in 2014. Table 6.7, below, presents theevolution of loans approved, loans disbursed and the undisbursedbalances from 2011 to 2015. From the table, the level of loan
approvals continues to show an upward trend since 2011.
As at 31 December 2015, there were 34 active loans with an
outstanding amount of UA 48.90 million and 49 fully repaidloans amounting to UA 160.23 million.

Disbursements
Disbursements increased from UA 3.13 million in 2014 toUA 7.47 million in 2015. As at 31 December 2015, cumulative
disbursements amounted to UA 248.67 million (2014:
UA 241.20). A total of 70 loans amounting to UA 238.89 million
was fully disbursed as at 31 December 2015, representing
96.07 percent of cumulative disbursements on that date.
Figure 6.4 shows the evolution of loan disbursements andrepayments over the past five years.

NTF provides financing in the form of loans to the least
developed and low-income regional member countries atconcessionary rates in order to enhance economic development
and social progress in Africa. In the past the NTF has provided
concessional financing exclusively to public sector operations.
However, for the extension period to 2018, the Fund’s mandate Repayments
has been expanded to cover financial support to private sector Principal loan repayments amounted to UA 5.09 million in
operations as well, including the microfinance subsector.
2015 compared to UA 6.81 million in 2014, representing adecrease of 25.26 percent over the previous year. Cumulative
Investments
repayments as of December 2015 stood at UA 190.66 million
The cash and treasury investments of the NTF, all denominated compared to UA 177.34 million at the end of 2014.
in US Dollars, amounted to UA 120.27 million at 31 December
2015, compared to UA 123.71 million at the end of 2014. Risk Management Policies and Processes
Investment income for 2015 was UA 0.37 million, representing a The NTF, like the Bank, seeks to reduce its exposure to
return of 0.29 percent, on an average liquidity level of UA 126.93 risks that are not essential to its core business of providing
million, compared to an income of UA 0.42 million, representing development-related assistance, such as liquidity, currency
a return of 0.35 percent on an average liquidity of UA 121.38 and interest rate risks. The Fund follows stringent risk
million in 2014. The portfolio marginally underperformed its management procedures in managing these risks. Note D
benchmark in 2015 as the volatility in the global financial to the Financial Statements of the Fund provides the details ofmarkets created a challenging investment context.
the risk management policies and practices employed by NTF.

Table 6.7

Lending Status, 2011-2015(UA millions)
Loans Approved
Disbursements
Undisbursed Balances

250

2011
10.00
8.67
9.73

2012
12.90
1.76
22.86

2013
31.17
0.96
40.70

2014
11.49
3.13
67.23

2015
12.50
7.47
71.79

Annual Report 2015

FINANCIAL RESULTS
The highlights of the Nigeria Trust Fund’s financial performancein 2015 include the following:●●

NTF’s income before distributions approved by the Boardof Governors decreased by UA 0.10 million from UA 1.49
million in 2014 to UA 1.39 million in 2015, mainly due to adecrease in investment income owing to low interest rates.

Chapter 6

Figure 6.4

Loan Disbursements and Repayments,
2011-2015 (UA millions)Disbursements

Loan Repayments

8
7
6
5
4

●●

●●

Administrative expenses representing the NTF’s share of
the total shareable expenses of the ADB Group, decreased
by UA 0.01 million from UA 0.37 million in 2015 to UA 0.36
million in 2014. As noted earlier, the NTF’s share of thetotal shareable expenses of the ADB Group is based ona predetermined cost-sharing formula, which is driven by
the relative levels of certain operational volume indicatorsand relative balance sheet-size. However, the NTF’s shareof the total administrative expenses is capped at no morethan 20 percent of its gross income in any year.

3
2
1
0
2011

2012

2013

2014

2015

The NTF’s reserves net of cumulative currency translation
adjustments increased from UA 39.69 million at the end of2014 to UA 41.29 million on 31 December 2015, a 4.03
percent increase.

251

Nigeria Trust Fund
Financial Statements andReport of the Independent Auditor
Year ended 31 December 2015

Balance Sheet
Income Statement
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Report of the Independent Auditor

254
256
257
258
259
260
279

Chapter 6

Nigeria Trust Fund

Balance sheet
as at 31 December 2015
(UA thousands – Note B)
ASSETS

2015

2014

DUE FROM BANKS

5,053

10,286115,224

113,419

1,124
59
295
1,478

1,136
45
252
1,433

48,903(138)
48,76544,621(155)
44,466

170,520

169,604

INVESTMENTS (Note F)
ACCOUNTS RECEIVABLE
Accrued income and receivables on loans
Accrued income on investments
Other receivables

LOANS (Notes D & G)
Disbursed and outstanding
Less: Accumulated provision for impairment

TOTAL ASSETS
The accompanying notes to the financial statements form part of this statement.

254

Annual Report 2015

Chapter 6

LIABILITIES & EQUITY

2015

2014

ACCOUNTS PAYABLE

644

1,327

Capital128,586

128,586

Reserves
Retained earnings
Cumulative Currency Translation Adjustment (Note B)
Total reserves

140,452(99,162)
41,290146,347(106,656)
39,691

Total Equity

169,876

168,277

TOTAL LIABILITIES & EQUITY

170,520

169,604

EQUITY (Note H)

The accompanying notes to the special purpose financial statements form part of this statement.

255

Chapter 6

Nigeria Trust Fund

Income statement
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

1,457
365
1,822

1,447
417
1,864

EXPENSES
Administrative expenses (Note J)
Bank charges and sundry losses/(gains)
Total expenses

364
86
450

373
(12)
361

Provision for impairment on loan principal and charges (Note G)
Total expenses and provision for impairment

(17)
433

12
373

Income before distributions approved by the Board of Governors
Distributions of income approved by the Board of Governors (Note H)

1,389
(149)

1,491
(158)

NET INCOME FOR THE YEAR

1,240

1,333

INCOME (Note I)
Interest and charges on loans
Income from investments
Total income

The accompanying notes to the financial statements form part of this statement.

256

Annual Report 2015

Chapter 6

Statement of comprehensive income
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

NET INCOME FOR THE YEAR
Other comprehensive income

1,240
-

1,333
-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,240

1,333

The accompanying notes to the financial statements form part of this statement.

257

Chapter 6

Nigeria Trust Fund

Statement of changes in equity
for the year ended 31 December 2015
(UA thousands – Note B)

CapitalRetained
Earnings

Cumulative
Currency
Translation
Adjustment

128,586

153,423(116,237)

165,772

Withdrawal of funds by the Government of Nigeria-(8,409)-(8,409)Net income for the year

-

1,333

-

1,333

128,586

146,347

9,581(106,656)

9,581
168,277

Withdrawal of funds by the Government of Nigeria-(7,135)-(7,135)

Net income for the year

-

1,240

-

1,240

Currency translation adjustment

-

-

7,494

7,494

128,586

140,452(99,162)

169,876

BALANCE AT 1 JANUARY 2014

Currency translation adjustment
BALANCE AT 31 DECEMBER 2014 AND 1 JANUARY 2015

BALANCE AS AT 31 DECEMBER 2015
The accompanying notes to the financial statements form part of this statement.

258

Total Equity

Annual Report 2015

Chapter 6

Statement of cash flows
for the year ended 31 December 2015
(UA thousands – Note B)
2015

2014

1,240

1,333

(17)
(104)
356
(806)
669

12
(22)
(132)
238
1,429

CASH FLOWS FROM:OPERATING ACTIVITIES:Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for impairment on loan principal and charges
Unrealized (gains)/losses on investments
Changes in accrued income and receivables on loans
Changes in net current assets
Net cash provided by operating activities
INVESTING, LENDING AND DEVELOPMENT ACTIVITIES:
Disbursements on loans
Repayment of loans
Investments maturing after 3 months of acquisition:
Held at fair value through profit or loss
Net cash provided by/(used in) investing, lending and development activities(7,468)
5,093(3,126)
6,813

12,274
9,899(7,662)(3,975)FINANCING ACTIVITIES:
Withdrawal of funds by the Government of Nigeria
Net cash used in financing activities(7,135)(7,135)(8,409)(8,409)Effect of exchange rate changes on cash and cash equivalents

5,481

(345)

Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

8,914
13,62922,543(11,300)
24,92913,629COMPOSED OF:
Investments maturing within 3 months of acquisition
Cash
Cash and cash equivalents at the end of the year

17,4905,053
22,543

3,343
10,286
13,629SUPPLEMENTARY DISCLOSURE
1. Operational cash flows from interest
		 Interest received
2. Movement resulting from exchange rate fluctuations on loans

1,500
1,893

1,900
2,456

The accompanying notes to the financial statements form part of this statement.

259

Chapter 6

Nigeria Trust Fund

Notes to the financial statements
Year ended 31 December 2015

Note A — Nature of operations
The Nigeria Trust Fund (the Fund or NTF) was established under an agreement signed on 26 February 1976 (the Agreement)
between the African Development Bank (ADB or the Bank) and the Federal Republic of Nigeria. The African Development
Bank, headquartered in Abidjan, Côte d’Ivoire, manages the resources of the Fund on behalf of the Government of Nigeria.
The purpose of the Fund is to assist in the development efforts of the poorer ADB Regional Member Countries. The Agreement
stipulates that the Fund shall be in effect for a period of 30 years from the date the Agreement became effective and that suchsunset date may be extended by mutual agreement between the Bank and the Federal Republic of Nigeria. The Agreement
expired on 26 April 2006 and was extended twice for one-year periods, to allow for the completion of an independent
review of the operation of the Fund. Following the successful completion of the independent review, the Agreement has
been extended for a period of ten years starting from 26 April 2008.

Note B — Summary of significant accounting policies
The financial statements of the Fund are prepared in accordance with International Financial Reporting Standards (IFRS)
promulgated by the International Accounting Standards Board (IASB). The financial statements have been prepared under
the historical cost convention except for certain financial assets that are carried at fair value.
The significant accounting policies employed by the Fund are summarized below:

Revenue Recognition
Interest income is accrued and recognized based on the effective interest rate for the time such instrument is outstanding andheld by the Fund. The effective interest rate is the rate that discounts the estimated future cash flows through the expected
life of the financial asset to the asset’s net carrying amount. Commitment fees are accrued for unutilized loan facilities.
Income from investments includes realized and unrealized gains and losses on financial instruments measured at fair value
through profit or loss.

Functional and Presentation Currencies
The Fund conducts its operations in United States Dollars, and has determined that its functional currency is the United States
Dollars (USD). In accordance with Article VII, section 7.3, of the Agreement establishing the Fund, the financial statements
are presented in Units of Account (UA).
The value of the Unit of Account is defined in Article 5.1 (b) of the Agreement Establishing the Bank as equivalent to one
Special Drawing Right (SDR) of the International Monetary Fund (IMF) or any unit adopted for the same purpose by the IMF.
At 31 December 2015, 1 UA was equivalent to 1.38573 United States dollars (2014: 1.44881 USD).

Currency Translation
Income and expenses are translated to UA at the rates prevailing on the date of the transaction. Monetary assets and liabilities
are translated from USD to UA at rates prevailing at the balance sheet date. Translation differences are included in reserves
under cumulative currency translation adjustment (CCTA). Changes in CCTA are reported in the statement of changes in260

Annual Report 2015

Chapter 6

equity. Capital replenishments are recorded in UA at the exchange rates prevailing at the time of receipt. Translation gains
and losses on conversion of currencies into UA are included in the determination of net income.

Financial Instruments
Financial assets and financial liabilities are recognized when the Fund assumes related contractual rights or obligations.

1) Financial Assets
In accordance with IFRS 9, the Fund classifies its financial assets into the following categories: financial assets at amortized
cost; and financial assets at fair value through profit or loss (FVTPL). These classifications are determined based on the Fund’sbusiness model. In accordance with the Fund’s business model, financial assets are held either for the stabilization of income
through the management of net interest margin or for liquidity management. Management determines the classification of
its financial assets at initial recognition.

i)	Financial Assets at Amortized Cost
A financial asset is classified as ‘amortized cost’ only if the asset meets the objective of the Fund’s business model to holdthe asset to collect the contractual cash flows; and the contractual terms give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal outstanding. The nature of any derivatives embedded in financial
assets are considered in determining whether the cash flows of the investment are solely payment of principal and intereston the principal outstanding and are not accounted for separately.
If either of the two criteria above is not met, the financial asset is classified as at fair value through profit or loss.
Financial assets at amortized cost include loans and receivables on amounts advanced to borrowers and certain investmentsthat meet the criteria of financial assets at amortized cost. Loans and receivables comprise demand obligations, accrued
income and receivables from loans and investments and other sundry amounts receivable. Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when theFund provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables
are carried at amortized cost using the effective interest method.
Loan origination fees are deferred and recognized over the life of the related loan as an adjustment of yield. Incremental direct
costs associated with originating loans are expensed as incurred as such amounts are considered insignificant.
Investments classified as financial assets at amortized cost include investments that are non-derivative financial assets with
fixed or determinable payments and fixed maturities. These investments are carried and subsequently measured at amortizedcost using the effective interest method.

ii)	Financial Assets at Fair Value through Profit or Loss (FVTPL)
Financial assets that do not meet the amortized cost criteria as described above are measured at FVTPL. This category
includes all treasury assets held for resale to realize short-term fair value changes. Gains and losses on these financial assets
are reported in the income statement in the period in which they arise. Derivatives are also categorized as financial assets
at fair value through profit or loss.
Cash and cash equivalents include amounts due from banks, demand deposits and other short-term, highly liquid investmentsthat are readily convertible to a known amount of cash, are subject to an insignificant risk of changes in value and have atime to maturity upon acquisition of three months or less.
Purchases and sales of financial assets are recognized on a trade-date basis, which is the date the Fund commits to purchaseor sell the asset. Loans are recognized when cash is advanced to the borrowers.

261

Chapter 6

Nigeria Trust Fund

Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or where theFund has transferred substantially all risks and rewards of ownership.

2) Financial Liabilities
Financial liabilities include accounts payable and are subsequently measured at amortized cost. Financial liabilities are
derecognized upon discharge, cancellation or expiration.

Impairment of Financial Assets
The Fund assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial
assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only
if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of theasset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset
or group of financial assets that can be reliably estimated.
If the Fund determines that there is objective evidence that an impairment loss has been incurred on a loan, receivable orheld-to-maturity investment carried at amortized cost, the amount of the loss is measured as the difference between theasset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have notbeen incurred), discounted at the financial asset’s original effective interest rate. The estimated impairment loss may arise
from delays that may be experienced in receiving amounts due, and the impairment calculations reflect management’s best
estimate of the effect of such delays.
The impairment loss is reported as a reduction to the carrying amount of the asset through the use of an allowance accountand recognized in the income statement. If a loan or other investment held at amortized cost has a variable interest rate,
the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
Interest and charges are accrued on all loans, including those in arrears.

Offsetting of Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle theliability simultaneously.

Fair Value Disclosure
In liquid or active markets, the most reliable indicators of fair value are quoted market prices. A financial instrument isregarded as quoted in an active market if quoted prices are regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions
on an arm’s length basis. If the above criteria are not met, the market is regarded as being inactive. Indications that amarket might be inactive include when there is a wide bid-offer spread or significant increase in the bid-offer spread or
there are few or no recent transactions observed in the market. When markets become illiquid or less active, market
quotations may not represent the prices at which orderly transactions would take place between willing buyers and sellers
and therefore may require adjustment in the valuation process. Consequently, in an inactive market, price quotations are
not necessarily determinative of fair values. Considerable judgment is required to distinguish between active and inactive
markets.
The fair values of quoted investments in active markets are based on current bid prices, while those of liabilities are based on
current asking prices. For financial instruments with inactive markets or unlisted securities, the Fund establishes fair value by
using valuation techniques that incorporate the maximum use of market data inputs. These include the use of recent arm’s
length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used262

Annual Report 2015

Chapter 6

by market participants. Financial instruments for which market quotations are not readily available have been valued using
methodologies and assumptions that necessarily require the use of subjective judgments. Accordingly, the actual value atwhich such financial instruments could be exchanged in a current transaction or whether they are actually exchangeable is
not readily determinable. Management believes that these methodologies and assumptions are reasonable; however, thevalues actually realized in a sale might be different from the fair values disclosed.
The following three hierarchical levels are used for the determination of fair value:
Level 1:

Quoted prices in active markets for the same instrument (i.e. without modification or repackaging).

Level 2:

 uoted prices in active markets for similar assets or liabilities or other valuation techniques for which all significant
Q
inputs are based on observable market data.

Level 3:

Valuation techniques for which any significant input is not based on observable market data.

The methods and assumptions used by the Fund in measuring the fair values of financial instruments are as follows:
Cash and cash equivalents: The carrying amount is the fair value.
Investments: Fair values for investment securities are based on quoted market prices, where available. If quoted market
prices are not available, fair values are based on quoted market prices of comparable instruments.
Loans: The Fund does not sell its loans, nor does it believe there is a comparable market for its loans. The fair value of loans
reported in these financial statements represents management’s best estimates of the expected cash flows of its loans. The
fair valuation of loans has been determined using a discounted cash flow model based on year-end market lending rates in
USD, including impairment percentages when applicable.

Retained Earnings
Retained earnings of the Fund consist of amounts allocated to reserves from prior years’ income and unallocated current
year net income.

Critical Accounting Judgments and Key Sources of Estimation Uncertainty
In the preparation of financial statements in conformity with IFRS, management makes certain estimates, assumptions andjudgments that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent
liabilities. Actual results could differ from such estimates. Estimates and judgments are continually evaluated and are basedon historical experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances.
The most significant judgments and estimates are summarized below:i)	Impairment Losses on Assets Carried at Amortized Cost
The Fund first assesses whether objective evidence of impairment exists individually for financial assets. If the Fund determinesthat no objective evidence of impairment exists for an individually assessed financial asset, that asset is included in a groupof financial assets with similar credit characteristics and collectively assessed for impairment.
Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are notincluded in a collective assessment of impairment. A financial asset or a group of financial assets is impaired and impairment
losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred263

Chapter 6

Nigeria Trust Fundafter the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future
cash flows of the financial asset or group of financial assets and can be reliably estimated.
If the Fund determines that there is objective evidence that an impairment loss on loans and receivables or investments
carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognizedin the income statement.

ii)	Fair Values of Financial Instruments
The fair value of financial instruments that are not quoted in active markets is measured by using valuation techniques. Wherevaluation techniques (for example, models) are used to measure fair values, they are validated and periodically reviewed byqualified personnel independent of the area that created them. All models are periodically calibrated to ensure that outputs
reflect actual data and comparative market prices. To the extent practical, valuation models use only observable data; however,areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates.
Changes in assumptions about these factors could affect the reported fair value of financial instruments.

Reclassifications
Certain reclassifications of prior year’s amounts have been made to conform to the presentation in the current year. These
reclassifications did not affect prior year’s reported result.

Note C — The effect of new and revised international financial
reporting standards
Standards, Amendments and Interpretations Issued but not yet effective
At the date of issue of these financial statements, various International Financial Reporting Standards issued by the IASB
were not yet effective for application and had not been applied in preparing these financial statements. The new standards
which are expected to be relevant to the Fund are discussed briefly below:

IFRS 15: Revenues from Contracts with Customers
IFRS 15 was issued in May 2014, and applies to annual reporting periods beginning on or after 1 January 2017. It specifies how
and when entities should recognize revenue from contracts with customers as well as the required disclosures in the financial
statements. The standard provides a single, principles-based five-step model to be applied to all contracts with customers.
The Fund has determined that the standard is not applicable to its operations as its contracts with customers are accounted
for under IFRS 9.

IFRS 9: Financial Instruments
The Fund has already adopted phase 1 of the IFRS 9 with effect from 1 January 2011. Phase 2, which is the final version of
IFRS 9 was issued on 24 July 2014, and is effective for annual periods beginning on or after 1 January 2018. The revisions
in the final phase of this standard introduce a third classification and measurement category for financial assets, namely,
fair value through OCI, some revisions to hedge accounting and replacement of the incurred loss model in IAS 39 with the
expected credit loss impairment model. The final standard also includes the guidance for financial liabilities, as previously
issued to the effect that there is no subsequent recycling of realized gains or losses on “own credit” from OCI to profit and loss.

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Although preliminary indications are that the Fund will be affected by the new standard, the Fund is still assessing the full
impact of this new pronouncement on its financial position and performance.

Annual Improvements to IFRS 2012 - 2014 Cycle
In September 2014, the IASB issued Annual Improvements to IFRS 2012-2014 Cycle. This comprises amendments that
result in accounting changes for presentation, recognition or measurement purposes as well as terminology or editorial
amendments related to a variety of individual IFRS standards. These changes are effective for reporting periods beginningon or after 1 January 2016, with early adoption permitted.
The Fund is currently assessing the impact of the amendments on its financial statements.

Amendments to IAS 1: Presentation of Financial Statements
In December 2014, the IASB issued amendments to IAS 1, as part of an initiative to improve presentation and disclosurein financial reports, to further encourage reporting entities to apply professional judgement in determining what information
to disclose in their financial statements and in determining where and in what order information is presented in the financial
disclosures. The Amendments have a mandatory effective date of 1 January 2016, with earlier adoption permitted.
The Fund expects that the adoption of these amendments will not have material impact on its Financial Statements.

IFRS 16: Leases
On 13 January 2016, the IASB published IFRS 16, “Leases”, which replaces the current guidance on lease accounting
in IAS 17. IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019, with earlier application
permitted. The new standard requires far-reaching changes in accounting by lessees in particular. Under IAS 17, lessees
were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet).
IFRS 16 now requires lessees to recognize a lease liability reflecting future lease payments and a ‘right-of-use asset’ forvirtually all lease contracts. The IASB has included an optional exemption for certain short-term leases and leases of lowvalue assets; however, this exemption can only be applied by lessees.
Preliminary indications are that the new standard will affect the Fund. However, the full impact on the financial position andperformance is still being assessed.

IAS 7: Statement of Cash Flows (Amendments)
On 29 January 2016, the IASB published some revisions to IAS 7, “Statement of Cash Flows”, aimed at improving theeffectiveness of disclosures in financial reports. These amendments, which are effective from 1 January 2017, require entities
to provide information about changes in their financing liabilities. The amendments are a response to users’ demand for
information that helps them better understand and evaluate changes in liabilities arising from an entity’s financing activities,
including changes from cash flows and non-cash changes (such as foreign exchange gains or losses).
Although the Fund is yet to assess the potential impact of adopting this standard, its application is not expected to havean impact on the financial position of the Fund as the new requirements merely involve additional disclosures rather than achange in measurement basis.
Based on the foregoing no new or revised financial reporting standard, applicable to the Fund, became effective in 2015.

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Note D — Risk management policies and procedures
As described in Note A, the Bank manages the resources of the Fund on behalf of the Government of Nigeria. In the courseof exercising its fiduciary duties, the Bank applies specific risk management policies designed to protect the resources of theFund through the Bank’s General Authority on Asset and Liability Management (“the ALM Authority”). The ALM Authority sets
out the guiding principles for managing the Fund’s risks, including interest rate risk, currency risk, liquidity risk, counterparty
credit risk and operational risk.
Under the ALM Authority, the President of the Bank is authorized to approve and amend more detailed operational guidelines
as necessary, upon the recommendations of the Asset and Liability Management Committee (ALCO). ALCO is the Bank’s
most senior management forum on finance and financial risk management issues and is chaired by the Vice President for
Finance of the Bank.
The ALCO meet on regular basis to perform its oversight roles. Among its functions, the ALCO reviews regular and ad-hoc
finance and treasury risk management reports and projections and approves strategies to adjust the balance sheet. ALCO
is supported by several standing working groups that report on specific issues including interest rate risk, currency risk andfinancial projections.
In late 2013, a Group Chief Risk Officer position was created reporting directly to the President of the Bank.
Day-to-day operational responsibilities for implementing the Bank’s risk management policies and guidelines are delegatedto the relevant business units, and the Financial Management Department is responsible for monitoring the day-to-day
compliance with those policies and guidelines.
The following sections describe in detail the manner in which the individual sources of risk are managed by the Fund.

Credit Risk
Credit risk is the potential financial loss due to default of one or more debtors/obligors. Credit risk is the largest source ofrisk for the Fund arising from its lending and treasury operations essentially and it includes sovereign credit risk from lending
operations, and counterparty credit risk.

1)	Sovereign Credit Risk
When the Fund lends to public sector borrowers, it generally requires a full sovereign guarantee or the equivalent from theborrowing member state. Also, in extending credit to sovereign entities, it is exposed to country risk which includes potential
losses arising from a country’s inability or unwillingness to service its obligations to the Fund. Country credit risk is managed
through financial policies and lending strategies, including individual country exposure limits and overall creditworthinessassessment. These include the assessment of each country’s macroeconomic performance as well as its socio-politicalconditions and future growth prospects.

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Country Exposure in Borrowing Member Countries
The Fund’s outstanding loans at 31 December 2015 were to the following countries:(Amounts in UA thousands)

Country
Benin
Cabo Verde
Cameroon
Djibouti
GambiaGhana
GuineaGuinea-Bissau
LesothoLiberia
Madagascar
MalawiMali
Mauritania
Namibia
RwandaSenegal
Seychelles
Sierra Leone
Somalia**
Swaziland
Tanzania
Togo
UgandaZambiaTotal

N° of
Loans*
3
1
1
1
3
1
1
1
1
1
1
2
1
2
1
2
1
1
2
1
1
1
1
2
1
34

Total
Loans*
10,270
412
4,999
632
10,471
1,257
2,682
3,483
4
6,506
6,514
11,549
6,493
7,069
688
10,874
308
585
7,464
840
3,966
522
6,500
10,232
6,376
120,696

Unsigned
Loan Amounts-

Undisbursed
Balance
6,000
4,861
3,177
5,697
5,339
9,701
6,322
6,500
6,670
6,500
6,713
4,313
71,793

Outstanding
Balance
4,270
412
138
632
10,471
1,257
2,682
306
4
809
1,175
1,848
171
7,069
688
4,374
308
585
794
840
3,966
522
3,519
2,063
48,903% of Total
Outstanding
Loans
8.73
0.84
0.28
1.29
21.41
2.57
5.49
0.63
0.01
1.65
2.40
3.78
0.35
14.45
1.41
8.94
0.63
1.20
1.62
1.72
8.11
1.07
7.20
4.22
100.00*	Excludes fully repaid loans and canceled loans.
**	Country with overdue amounts as at 31 December 2015.
Slight differences may occur in totals due to rounding.

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Nigeria Trust Fund

Systematic Credit Risk Assessment
As at 31 December 2015, all the Fund’s loans were made only to public sector borrowers, and such loans generally carryfull sovereign guarantee or the equivalent from the borrowing member state.
The Fund’s credit risk management framework is based on a systematic credit risk assessment using a uniform internal credit
risk rating scale that is calibrated to reflect the Fund’s statistical loss expectations as shown in the table below.

Risk Class

Very Low Risk

Low Risk

Moderate Risk

High Risk

Very High Risk

Revised Rating Scale
1+
1
12+
2
23+
3
34+
4
45+
5
56+
6
67
8
9
10

International Ratings
S&P – Fitch
Moody’s
A+ and above
A1 and above
A
A2
AA3
BBB+
Baa1
BBB
Baa2
BBBBaa3
BB+
Ba1
BB
Ba2
BBBa3
B+
B1

Assessment
Excellent

StrongGood

Satisfactory

B

B2

B-

B3

Acceptable

CCC+

Caa1

Marginal

CCC

Caa2

Special Attention

CCC-

Caa3

Substandard

CC
C

Ca
C

Doubtful
Loss

These sovereign risk credit ratings are derived from a risk assessment on five risk indices that include macro-economic
performance, debt sustainability, socio-political factors, business environment, and portfolio performance. These five risk indices
are combined to derive a composite sovereign country risk index and then converted into separate country risk ratings. These
country risk ratings are validated against the average country risk ratings from accredited rating agencies and other specializedinternational bodies. The Credit Risk Committee reviews the country ratings on a quarterly basis to ensure compliance withcountry exposure limits, changes in country credit risk conditions, and to approve changes in loss provisioning, if any.

Portfolio Risk Monitoring
It is the Fund’s policy that if the payment of principal, interest or other charges becomes 30 days overdue, no new loans tothat country, or to any public sector borrower in that country, will be presented to the Board of Directors for approval, norwill any previously approved loan be signed, until all arrears are cleared. Furthermore, for such countries, disbursements on
all loans to or guaranteed by that borrower country are suspended until all overdue amounts have been paid.

2)	Counterparty Credit Risk
Counterparty credit risk is the potential for loss due to failure of a counterparty to honor its obligation. Various financial
instruments are used to manage the Fund’s exposure to fluctuations in market interest and currency rates, and to invest
its liquid resources prior to disbursement. All of these financial instruments involve, to varying degrees, the risk that thecounterparty to the transaction may be unable to meet its obligation to the Fund.

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Given the nature of the Fund’s business, it is not possible to completely eliminate counterparty credit risk, however, this risk
is minimized by executing transactions within a prudential framework of approved counterparties, minimum credit rating
standards, counterparty exposure limits, and counterparty credit risk mitigation measures. Counterparties for treasury assets
must meet the Fund’s minimum credit rating requirements and are approved by the Bank’s Vice President for Finance. For
counterparties that are rated below the minimum rating requirements, approval by the ALCO is required.
The following table details the minimum credit ratings for authorized investment counterparties:

6 months
Government
Government agencies and supranationals
Banks
Corporations including non-bank financial institutions

A/A2
A/A2

1 yearA/A2
A/A2

Maturity
5 years
10 years

AA-/Aa3
AA-/Aa3

15 years
AA-/Aa3
AA-/Aa3

30 years
AAA/Aaa
AAA/Aaa

AAA/Aaa
AAA/AaaAAA
Maximum legal maturity of 50 years for ABS/MBS with the underlying collateraloriginated in the UK and 40‑year maximum legal maturity for all other eligible ABS/MBS.
Also, the maximum weighted average life for all ABS/MBS at the time of acquisition
shall not exceed 5 years.

MBS/ABSThe Fund invests in money market mutual funds with a minimum rating of AA-/Aa3.
In addition to these minimum rating requirements, the Fund operates within a framework of exposure limits based on the
counterparty credit rating and size, subject to a maximum of 10 percent of the Fund’s total liquidity for any single counterparty.
Individual counterparty credit exposures are aggregated across all instruments using the Bank for International Settlements(BIS) potential future exposure methodology and monitored regularly against the Fund’s credit limits after considering thebenefits of any collateral.
As shown in the following table, the estimated potential counterparty credit exposure of the investment portfolio continues
to be predominantly in the AA- or higher-rated class:

2015
2014
2013
2012
2011
2010

AAA
19%
19%
50%
63%
50%
48%

Credit Risk Profile of the Investment Portfolio
AA+ to AA68%
78%
44%
19%
23%
40%

A+ and lower
13%
3%
6%
18%
27%
12%

Liquidity Risk
Liquidity risk is the potential for loss resulting from insufficient liquidity to meet cash flow needs in a timely manner. In
order to mitigate liquidity risk, the Fund’s investment management policy ensures it has sufficient liquid assets to meet its
disbursement obligations.

Currency Risk
Currency risk is the potential loss due to adverse movements in market foreign exchange rates. The Fund manages its currency
risk by holding all of its investments and loans in US dollars, the currency in which the Fund’s resources are denominated.

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Chapter 6

Nigeria Trust FundInterest Rate Risk
The Fund is exposed to fair value interest rate risk on its portfolio of loans and investments. All of the Fund’s loans have
fixed interest rates. Investments are managed against the monthly average of 3-month LIBOR in order to manage prudently
the available resources. Repricing risk is not considered significant in comparison to the Fund’s equity resources, and isaccordingly not hedged.
At December 2015, the Fund had UA 71.79 million of loans which were committed but not yet disbursed (2014: UA 67.23
million). The interest rate on these undisbursed loans has been fixed at between 2 to 4 percent per annum.
Interest rate risk positions as at 31 December 2015 and 2014 were as follows:

Interest Rate Risk Position as at 31 December 2015
(UA thousands)

AssetsCash
Investments
Accounts receivable
Loans
Liabilities
Accounts payable
Interest rate risk position as
at 31 December 2015*

1 yearor lessMore than
1 year but
less than
2 years

More than
2 years but
less than
3 years

More than
3 years but
less than
4 years

More than
4 years but
less than
5 years

More than
5 yearsNoninterest
bearing
funds

Total

5,053
87,675
1,478
4,981
99,187

21,7603,680
25,440

4,292
3,190
7,482

1,436
3,310
4,746

3,260
3,260

61
30,48230,543

(138)
(138)

5,053
115,224
1,478
48,765
170,520

(644)

-

-

-

-

-

-

(644)

98,54325,440

7,482

4,746

3,260

30,543(138)

169,876

Total*	Interest rate risk position represents equity.

Interest Rate Risk Position as at 31 December 2014
(UA thousands)

1 yearor lessMore than
1 year but
less than
2 years

More than
2 years but
less than
3 years

More than
3 years but
less than
4 years

More than
4 years but
less than
5 years

More than
5 yearsNoninterest
bearing
funds

10,286
19,9101,433
5,815
37,444

61,323
3,958
65,281

26,596
3,509
30,105

4,124
3,045
7,169

3,029
3,029

1,466
25,265
26,731

(155)
(155)

10,286
113,419
1,433
44,466
169,604

Liabilities
Accounts payable(1,327)

-

-

-

-

-

-

(1,327)

Interest rate risk position as
at 31 December 2014*36,11765,281

30,105

7,169

3,029

26,731(155)

168,277

AssetsCash
Investments
Accounts receivable
Loans*	Interest rate risk position represents equity.

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Chapter 6

Currency and Interest Rate Sensitivity Analysis
The Fund holds all of its investments and loans in U.S. dollars and therefore is exposed only to translation adjustment as theFund’s assets are reported in UA for financial statements purposes. Any change in the UA/USD exchange rate would havean impact of approximately 40 percent on these reported values.
Movements in interest rates have an impact on the reported fair value of the trading portfolio. The table below shows theeffect of a parallel yield curve movement +/- 100bps as at 31 December 2015 and 2014, respectively.
(UA thousands)+100 Basis Points
2015
(261)

(Loss)/Gain on investments measured at fair value

2014
(215)

-100 Basis Points
2015
262

2014
204

Note E — Financial assets and liabilities
The tables below set out the classification of each class of financial assets and liabilities, and their respective fair values:

Analysis of Financial Assets and Liabilities by Measurement Basis(UA thousands)

31 December 2015
Due from banks
Treasury investments
Accounts receivable
Loans
Total financial assets
Liabilities
Total financial liabilities

Financial Assets and Liabilities
through Profit or Loss
Financial Assets
Mandatorily
Designated and Liabilities at
Total
at Fair Valueat Fair Value Amortized Cost Carrying Amount
5,053
5,053
115,224
115,224
1,478
1,478
48,765
48,765
115,224
55,296
170,520
-

-

644
644

Fair Value
5,053
115,224
1,478
48,505170,260

644
644

644
644

Financial Assets and Liabilities
through Profit or Loss
Financial Assets
Mandatorily
Designated and Liabilities at
Total
at Fair Valueat Fair Value Amortized Cost Carrying Amount
10,286
10,286
113,419
113,419
1,420
1,420
44,46644,466
113,419
56,172
169,591

Fair Value
10,286
113,419
1,420
44,237
169,362(UA thousands)

31 December 2014
Due from banks
Treasury investments
Accounts receivable
Loans
Total financial assets
Liabilities
Total financial liabilities

-

-

1,327
1,327

1,327
1,327

1,327
1,327

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Note F — Investments
As part of its portfolio management strategy, the Fund invests in government and agency obligations, time deposits, andasset-backed securities.
For government and agency obligations with final maturities longer than 1 year, the Fund may only invest in obligations withcounterparties having a minimum credit rating of AA- issued or unconditionally guaranteed by governments of member
countries of the Bank or other official entities. For asset-backed securities, the Fund may only invest in securities with an
AAA credit rating. Investments in money market instruments are restricted to instruments having maturities of not more than
1 year and a minimum rating of A.
As at 31 December 2015, all investments are held at fair value through profit and loss.
The Fund’s investments at 31 December 2015 and 2014 (at FVTPL) are summarized below:(UA thousands)
2015
17,49061
85,465
12,208115,224

Time deposits
Asset-backed securities
Government and agency obligations
Corporate bonds
Total

2014
3,343
323
88,422
21,331
113,419

The table below classifies the Fund’s investments at 31 December 2015 and 2014 into three levels reflecting the relative
reliability of the measurement bases, with level 1 as the most reliable.
(UA thousands)

Time deposits
Asset-backed securities
Government andagency obligations
Corporate bonds
Total

Valuation techniques for
Valuation techniques for
Quoted prices in active
which all significant inputs which any significant input
markets for the same
are based on observable is not based on observable
instrument
market data
market data
(Level 1)(Level 2)(Level 3)
2015
2014
2015
2014
2015
2014
17,4903,343
61
323
85,465102,955

88,422
91,765

12,208
12,20821,331
21,331

61

323

Total
2015
17,490
61

2014
3,343
323

85,465
12,208115,224

88,422
21,331
113,419

Fair value measurement of financial instruments using valuation technique with no significant input from observable market
data (level 3 hierarchy) at 31 December 2015 and 2014 are made up as follows:(UA thousands)
Balance at 1 January
Losses recognized in income statement
Purchases, issues and settlements (net)Currency translation adjustments
Balance at 31 December

272

2015
323
(30)
(236)
4
61

2014
502
(210)
31
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Chapter 6

The contractual maturity structure of the Fund’s investments as at 31 December 2015 and 2014 were as follows:(UA thousands)
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

2015
87,675
21,760
4,292
1,436
61
115,2242014
19,91061,323
26,596
4,124
1,466
113,419

The notional balance of investments as at 31 December 2015 was UA 115.22 million (2014: UA 113.42 million), while theaverage yield was 0.32 % (2014: 0.35%).

Note G — Loans
Loans originated prior to 22 September 2003, carry an interest rate of 4 percent on the outstanding balance. With effectfrom 22 September 2003, pursuant to the Board of Governors’ resolution B/BG/2003/11 of 3 June 2003 and the protocol
agreement between the Government of Nigeria and the Bank, dated 22 September 2003, the interest rate on loans waschanged from a flat 4 percent per annum to a range of 2 percent to 4 percent (inclusive) per annum on the outstandingbalance and future undisbursed loans. Furthermore, a 0.75 percent commission is payable on undisbursed balances
commencing 120 days after the signature of the loan. Loans approved prior to the extension of the Agreement are granted
for a maximum period of twenty-five years including grace periods of up to five years.
Following the extension of the Agreement in April 2008, the terms of the NTF loans were further modified in line with theterms of financing in the operational guidelines of the Fund, approved pursuant to the Board of Directors’ resolution ADB/
BD/ WP/2008/196 of 2 December 2008 which stipulates that the resources of the Fund will henceforth be deployed inaccordance with the following three options:
Financial terms for the first option include: (i) no interest charges on NTF loans; (ii) a service charge of 0.75 percent per
annum on outstanding balances; (iii) a commitment fee of 0.5 percent per annum on undisbursed commitments; and (iv) a
20-year repayment period with a 7-year grace period.
Financial terms for the second option include: (i) no interest charges on NTF loans; (ii) a service charge of 0.75 percent per
annum on outstanding balances; (iii) a commitment fee of 0.5 percent per annum on undisbursed commitments; and (iv) a
15-year repayment period with a 5-year grace period.
Financial terms for the third option would be the same terms as for the ADB private sector financing, taking into consideration
the risk analysis of the project.
For all the above-mentioned options, the grace period starts from the date of signing of the financing agreement or at a dateagreed amongst co-financiers, in the case of co-financed projects.
For private sector operations, a commitment fee of 0.75 percent per annum on undisbursed balances will be charged from
120 days after the signing of the loan agreement.
The NTF shall provide financing to suit the needs of its borrowers.

273

Chapter 6

Nigeria Trust Fund

Loan Ceilings
In order to promote broader coverage of the NTF resources, utilization will be subject to a ceiling for each operation. For
both public and private sector operations, a ceiling of USD 10 million per project will apply. Project proposals of more than
USD 10 million may be considered if there is strong justification. This will be subject to review as appropriate depending on
the recommendations of the mid-term reviews of the NTF.
The Fund’s loan regulations require that loans be expressed in UA and repaid in the currency disbursed. At 31 December
2015, all loans disbursed were repayable in United States dollars.
The contractual maturity structure of outstanding loans as at 31 December 2015 and 2014 was as follows:(Amounts in UA millions)
Periods
One year or lessMore than one year but less than two years
More than two years but less than three years
More than three years but less than four years
More than four years but less than five years
More than five years
Total

2015
Amount
4.98
3.68
3.19
3.31
3.26
30.48
48.90

%
10.18
7.53
6.52
6.77
6.67
62.33
100.002014
Amount
5.81
3.96
3.51
3.05
3.03
25.26
44.62

%
13.02
8.87
7.87
6.84
6.79
56.61
100.00The weighted-average interest yield on outstanding loans for the year ended 31 December 2015 was 3.21% (2014: 3.31%).
Borrowers may prepay loans, subject to the terms specified in the loan agreement.

Provision for Impairment on Loan Principal and Charges Receivable
As at 31 December 2015, loans made to or guaranteed by certain borrowing countries with an aggregate principal balanceof UA 0.84 million, of which UA 0.84 million was overdue, were considered to be impaired.
The gross amounts of impaired loans and charges receivable and their corresponding impairment provisions at 31 December
2015 and 2014 were as follows:(UA thousands)
Outstanding balance on impaired loans
Less: accumulated provision for impairment
Net balance on impaired loans

2015
840
(138)
702

2014
803
(155)
648

Charges receivable and accrued income on impaired loans
Less: accumulated provision for impairment
Net charges receivable and accrued income on impaired loans

1,122
(599)
523

1,036
(573)
463

274

Annual Report 2015

Chapter 6

Movements in the accumulated provision for impairment on loan principal for the year ended 31 December 2015 and 2014
were as follows:(UA thousands)
2015
155
(24)
7
138

Balance at 1 January
Provision for impairment on loan principal for the year
Translation effects
Balance at 31 December

2014
146
9
155

Movements in the accumulated provision for impairment on interest and charges receivable on loans for the year ended
31 December 2015 and 2014 were as follows:(UA thousands)
2015
573
7
19
599

Balance at 1 January
Provision for impairment on loan charges for the year
Translation effects
Balance at 31 December

2014
536
12
25
573

Fair Value of Loans
At 31 December 2015 and 2014, the carrying and estimated fair values of outstanding loans were as follows:(UA thousands)

Loan balance at 31 December
Accumulated provision for impairment on loans
Net balance

2015
Carrying
Value Estimated Fair Value
48,90348,505(138)
48,76548,5052014
Carrying
Value Estimated Fair Value
44,621
44,237(155)
44,46644,237Note H — Equity
Equity is composed of Fund capital and reserves (retained earnings and cumulative currency translation adjustments). These
are further detailed as follows:

Fund Capital
The initial capital of the Fund was Naira 50 million which was payable in two equal installments of Naira 25 million each, infreely convertible currencies. The first installment, equivalent to USD 39.90 million, was received by the Bank on 14 July
1976, and the second installment, equivalent to USD 39.61 million, was received on 1 February 1977.
During May 1981, the Federal Republic of Nigeria announced the replenishment of the Fund with Naira 50 million. The first
installment of Naira 35 million, equivalent to USD 52.29 million, was received on 7 October 1981. The second installment
of Naira 8 million, equivalent to USD 10.87 million, was received on 4 May 1984. The third installment of Naira 7 million,
equivalent to USD 7.38 million, was received on 13 September 1985.

275

Chapter 6

Nigeria Trust Fund

Following a request by the Government of Nigeria on 14 June 2006, a withdrawal of USD 200 million (UA 135.71 million)
was made by the Government of Nigeria from the resources of the Fund.
A second request for a withdrawal of USD 200 million (UA 129.04 million) was paid to the Government of Nigeria in July 2009.
During the year ended 31 December 2014, the Government of the Federal Republic of Nigeria authorized the withdrawal ofan amount of USD 13 million (UA 8.41 million) from reserves to settle its commitment on the arrears clearance of debt owed
by Liberia under the internationally coordinated arrears clearance mechanism for Post Conflict Countries.
During the year ended 31 December 2015, following a request by the Government of Nigeria on 13 May 2015, a withdrawalof USD 10 million (UA 7.14 million) was made from the resources of the Fund and paid to the Government of Nigeria.

Reserves including Retained Earnings

Retained Earnings
Retained earnings as at 31 December 2015 and 2014 were as follows:(UA thousands)
Balance at 1 January 2014
Liberia arrears clearance
Net income for the year
Balance at 31 December 2014 and 1 January 2015

153,423(8,409)1,333
146,347

Withdrawal of funds by the Government of Nigeria
Net income for current year
Balance at 31 December 2015

(7,135)1,240
140,452

The Board of Governors of the Bank approves the transfers of part of the Fund’s annual income for the year to HIPC. Transfers
approved by the Board of Governors of the Bank are reported within the income statement as expenses in the year thetransfer is approved. Prior to 2006, Board of Governors’ approved transfer was reported as a reduction in retained earnings.
Approvals during the years ended 31 December 2015 and 2014 were UA 0.15 million and UA 0.16 million, respectively.

Cumulative Currency Translation Adjustments
Cumulative currency translation adjustments as at December 2015 and 2014 were as follows:(UA thousands)
Balance at 1 January
Movements during the year
Balance at 31 December

276

2015
106,656(7,494)
99,162

2014
116,237(9,581)
106,656

Annual Report 2015

Chapter 6

Note I — Income
Interest and Charges on Loans
Interest and charges on loans for the year ended 31 December 2015 and 2014 were as follows:(UA thousands)
Interest income on loans not impaired
Interest income on impaired loans
Commitment charges
Total

2015
1,072
33
352
1,457

2014
1,179
31
237
1,447

2015
507
(142)
365

2014
448
(31)
417

Income from Investments
Income from investments for the year ended 31 December 2015 and 2014 were as follows:(UA thousands)
Interest income
Realized and unrealized fair value losses
Total

Note J — Administrative expenses
According to the Agreement establishing NTF, the Fund shall pay to the Bank the expenses incurred in the management of
the Fund as follows:a)	Separately identifiable costs incurred by the Bank for the Fund; andb)	Indirect costs incurred by the Bank in the management of the Fund.
However, the annual payment for the aforementioned expenses incurred by the Bank shall not exceed 20 percent of theFund’s gross income during the course of each period. The administrative cost-sharing formula may be reviewed fromtime-to-time by mutual agreement.
The amount of UA 0.36 million charged for the year ended 31 December 2015 (2014: UA 0.37 million) represents the Fund’s
share of the Bank Group expenses.

Note K — Related parties
The Nigeria Trust Fund is administered by the African Development Bank. The ADB conducts the general operations of the
NTF on the basis of the terms of the Agreement and in consultation with the Government of Nigeria. The NTF utilizes theoffices, staff, organization, services and facilities of the Bank and reimburses the Bank for its share of the costs of such
facilities, based on an agreed-upon cost-sharing formula (see Note J). The amount outstanding at 31 December 2015
in respect of the Fund’s share of administrative expenses was UA 0.05 million (2014: UA 0.05 million) and is included in
Accounts Payable on the balance sheet.

277

Chapter 6

Nigeria Trust Fund

Note L — Segment reporting
The objective of the Fund is to provide loan funds to the poorer ADB regional member countries for development purposes.
The Fund’s products and services are similar and are structured and distributed in a fairly uniform manner across borrowers.
Management has concluded that the Fund has only one reportable segment in accordance with IFRS 8.
The main products and services from which the Fund derives its revenue are mainly loans to ADB regional member countries
and treasury investments.
External revenue for the years ended 31 December 2015 and 2014 is detailed as follows:(UA thousands)
2015
1,457
365
1,822

Interest income and charges on loans with sovereign guarantee
Treasury investment income
Total external revenue

2014
1,447
417
1,864

The Fund’s development activities are divided into five sub-regions of the continent of Africa for internal management purposes,
namely: Central Africa, Eastern Africa, Northern Africa, Southern Africa, and Western Africa. Treasury investment activities
are carried out mainly outside of the continent of Africa, and are therefore not included in the table below. In presenting
information on the basis of the above geographical areas, revenue is based on the location of customers. The Fund uses
ADB’s offices, staff, organization, services and facilities and therefore has no fixed assets of its own.
Geographical information about income from loans for the year ended 31 December 2015 and 2014 is detailed as follows:(UA thousands)
CentralAfricaEastern
AfricaNorthern
AfricaSouthern
AfricaWestern
AfricaMulti­
national

Total

2015
Income from Loans

25

271

149

313

608

91

1,457

2014
Income from Loans

-

311

143

332

661

-

1,447

There were no revenues deriving from transactions with a single external customer that amounted to 10 percent or more of
the Fund’s revenues for the year ended 31 December 2015.

Note M — Approval of financial statements
On 30 March 2016, the Board of Directors of the Bank authorized these financial statements for issue to the Board ofGovernors. The financial statements are expected to be approved by the Board of Governors of the African Development
Bank at its annual meeting in May 2016.

278

KPMG Audit
Tour EQHO
2 Avenue Gambetta
CS 60055
92066 Paris la Défense Cedex
FranceTelephone:Telefax:
Internet:+33 (0)1 55 68 68 68+33 (0)1 55 68 73 00
www.kpmg.fr

Nigeria Trust Fund
Avenue Joseph Anoma
01 BP 1387 Abidjan 01
Côte d’Ivoire

Independent Auditor’s Report to the Board of Governors of the African Development Bankin respect of the Nigeria Trust FundYear ended 31 December 2015
We have audited the accompanying financial statements of the Nigeria Trust Fund (the Fund) which comprise thebalance sheet as at 31 December 2015 and the income statement, the statement of comprehensive income, thestatement of changes in equity and the statement of cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory notes as set out in notes A to M.
The financial statements have been prepared in accordance with International Financial Reporting Standards, forthe purpose of submitting approved and audited financial statements to the Board of Governors of the African
Development Bank, as required by Section 8.2 of the Agreement establishing the Fund. This report is made solely
to the Board of Governors of the Bank, as a body, in accordance with Section 8.2 of the Agreement establishing theFund. Our audit work has been undertaken so that we might state to the Board of Governors those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Fund and the Board of Governors of the Bank as abody, for our audit work, for this report, or for the opinions we have formed.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining
internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.

KPMG S.A.
Société française membre du réseau KPMG
constitué de cabinets indépendants adhérents de
KPMG International Coopérative, une entité de droit suisse.

Société anonyme d’expertisecomptable et de commissariat
aux comptes à directoire etconseil de surveillance.
Inscrite au Tableau de l’Ordreà Paris sous le n° 14-30080101
et à la Compagnie Régionale
des Commissaires aux Comptes
de Versailles.

Headquarters:
KPMG S.A.
Tour Eqho
2 avenue Gambetta
92066 Paris la Défense Cedex
Capital : 5 497 100 €.
Code APE 6920Z
775 726 417 R.C.S. Nanterre
TVA Union Européenne
FR 77 775 726 417

279

Nigeria Trust Fund
Independent Auditor’s Report to the Board of Governorsof the African Development Bank in respect of the Nigeria Trust Fund

Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the financial statements arefree of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, weconsider internal control relevant to the entity’s preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriatenessof accounting principles used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as
at 31 December 2015, and its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards.

Paris La Défense, 30 March 2016
KPMG Audit
A division of KPMG S.A.

Valéry Foussé
Partner

280

Annexes

Annexes

Annex IBank Group Loan and Grant Approvals by Region, 2011-2015,
and Cumulative 1967-2015*(UA million)
Region/Country

2011

2012

2013

2014

2015

1967-2015

Central Africa
Cameroon
Central African Republic
Chad
Congo
Congo, Democratic Republic
Equatorial Guinea
GabonSão Tomé & Príncipe
Central Africa Approvals

85.6
4.6
21.1
0.1
70.2
272.3
453.8

47.3
34.0
21.5
10.6
63.6
145.4
0.5
323.0

42.8
6.4
2.2
185.5
7.0
243.9

143.8
15.6
14.9
7.5
185.0
0.8
1.6
369.2

48.9
21.9
13.4
15.1
39.3
11.5
150.0

1,384.1
254.4
517.9
356.2
2,161.2
131.5
1,448.7
128.6
6,382.7

Eastern Africa
BurundiComoros
Djibouti
Eritrea
Ethiopia
Kenya
RwandaSeychelles
SomaliaSouth Sudan
Sudan
Tanzania
UgandaEastern Africa Approvals

49.0
0.4
1.4
12.0
67.1
104.9
61.0
8.2
1.1
155.0
151.1
611.2

17.8
2.6
5.9
166.0
28.0
4.8
1.1
154.0
67.0
447.2

15.5
13.6
3.9
85.7
239.5
53.8
14.3
3.3
27.4
25.6
41.7
72.9
597.3

41.8
4.0
60.0
190.1
99.4
0.6
0.3
0.7
98.7
127.5
623.1

8.0
8.2
13.5
181.2
184.9
19.6
23.8
1.9
2.0
58.3
487.7
71.2
1,060.3

515.3
111.4
198.6
119.2
2,622.3
1,996.5
813.0
151.2
158.1
34.8
446.5
2,563.6
1,985.3
11,715.8

Northern Africa
Algeria
Egypt
Libya
Mauritania
MoroccoTunisia
Northern Africa Approvals

0.5
0.6
355.3
545.7
902.2

0.8
6.2
754.0
354.6
1,115.5

1.7
204.6
22.6
228.8

0.8
0.4
4.5
232.3
66.2
304.2

2.9
474.0
267.4
299.3
1,043.5

1,895.2
4,235.9
0.6
513.2
7,451.1
5,748.7
19,844.6284

Annual Report 2015

Annexes

Annex I — Continued
Bank Group Loan and Grant Approvals by Region, 2011-2015,
and Cumulative 1967-2015*(UA million)
Region/Country

2011

2012

2013

2014

2015

1967-2015

Southern Africa
AngolaBotswana
LesothoMadagascar
Malawi
Mauritius
Mozambique
NamibiaSouth Africa
SwazilandZambiaZimbabwe
Southern Africa Approvals

4.9
0.6
0.6
10.0
60.0
5.0
301.0
0.5
15.0
6.1
403.7

2.3
52.5
57.5
0.5
273.1
0.5
61.6
16.1
464.0

22.9
17.3
76.9
31.1
99.0
26.5
199.4
133.3
8.8
615.2

662.1
65.9
20.0
76.8
25.2
235.7
45.8
25.6
1,157.0

385.7
33.0
24.5
1.2
18.1
263.1
274.5
228.9
26.7
1,255.6

1,444.9
1,514.5
351.0
981.0
892.7
928.2
1,368.1
637.0
4,268.6
347.1
1,278.0
786.6
14,797.7

Western Africa
Benin
Burkina Faso
Cabo Verde
Côte d’Ivoire
Gambia, The
Ghana
GuineaGuinea-Bissau
Liberia
Mali
Niger
Nigeria
SenegalSierra Leone
Togo
Western Africa Approvals
Multinational

50.0
30.0
101.1
2.0
70.0
50.6
36.2
52.0
25.3
453.6
35.4
37.8
77.7
1,021.8
735.2

30.0
104.3
3.5
168.8
0.7
7.1
0.7
31.6
63.9
4.7
23.3
2.7
441.2
812.0

40.5
79.5
67.1
62.3
0.6
13.3
22.4
43.4
136.0
11.2
410.6
82.1
21.0
1.3
991.0
884.9

25.2
32.2
12.7
30.0
6.3
51.7
12.7
0.6
13.7
38.7
957.9
47.4
7.0
8.6
1,244.5
802.0

17.5
41.0
12.5
169.8
2.0
172.1
23.3
15.0
20.0
4.1
145.8
22.2
14.5
659.9
1,068.3

708.0
979.1
360.1
1,979.2
257.5
1,973.8
804.0
231.7
329.6
1,087.8545.6
4,880.0
1,255.1
468.1
352.1
16,211.7
8,009.2

Total Approvals

4,127.9

3,602.8

3,561.1

4,500.1

5,237.8

76,961.6

Source: AfDB Statistics Department.
Notes:- Magnitude zero.
* Bank Group Loan and Grant Approvals exclude Equity Participation, Guarantees, HIPC debt relief, and Special Funds.

285

Annexes

Annex II
Overview of Key Decisions by the Boards of Directors in 2015

Staff Medical Benefits Plan (MBP)—Proposals to Maintain the Financial Sustainability of the Medical Plan—Revised
GUINEA-BISSAU—Country Strategy Paper 2015-2019
The Bill and Melinda Gates Foundation Trust Fund
Staff Retirement Plan Reform for continued Long-term Financial Sustainability
BOTSWANA—Country Strategy Paper 2015-2019
Roadmap for the Return of the African Development Bank Group to its Headquarters in Côte d’Ivoire
Strategic Framework and Operational Guidelines for the Private Sector Credit Enhancement Facility
Bank Group Knowledge Management Strategy 2015-2020—Revised Version
CHAD—Bank Group Contribution to Debt Relief at Completion Point under the Enhanced Heavily Indebted Poor Countries Initiative andMultilateral Debt Relief Initiative
A Proposal to Update the Decentralization Action Plan 2015-2017
CAMEROON—Joint 2015-2020 Country Strategy Paper and Portfolio Performance Review Report
African Natural Resources Center Strategy (2015-2020)
CHAD—Country Strategy Paper 2015-2020
Procurement Policy and Methodology for Bank Group Funded Operations
Private Sector Operations to be covered under the Private Sector Credit Enhancement Facility
MALI—Country Strategy Paper 2015-2019
2016-2018 Work Program and Budget Document
The 2016 Borrowing Program
EGYPT—Country Strategy Paper 2015-2019
Programs in support of implementation of the Governance Strategic Framework and Action Plan (GAP II), 2014-2018
Programs to support implementation of the Financial Sector Development Policy and Strategy, 2014-2019
Source: Office of the Secretary General, AfDB.

286

Annual Report 2015

Annexes

Annex IIIA — List of Tables, Maps, Figures, and Boxes

Tables0.1
Summary of Bank Group Operations, Resources and Finance, 2006-2015
0.2
Summary of Bank Group Approvals, 2015
1.1
Real GDP Growth (percentage per annum)
1.2
Real GDP Growth Outturn and Projections (percentage per annum)
1.3
Regional Macroeconomic Indicators
3.1
Bank Group Total Approvals by Window, 2014-2015
3.2
Bank Group Total Approvals by Financing Instruments in 2015
3.3
Bank Group Disbursements in 2015: Actual vs. Targets
3.4
Total Bank Group Approvals by Region, 2014-2015
4.1
Summary Performance Scorecard 2015
4.2
How the AfDB Contributes to Africa’s Development (Level 2)
4.3	Staffing and Employment Data by Country (Management, Professional,
and General Services Staff) as at 31 December 2015
6.1
Bank Authorized and Subscribed Capital, 2011-2015
6.2	Overview of Themed Bond Activity in Each Sector
6.3	Key Financial Performance Indicators: 2015 and 20146.4	Lending Status, 2011-2015 (ADB)
6.5	Loan Disbursements by Country in 20156.6	Lending Status, 2011-2015 (ADF)
6.7	Lending Status, 2011-2015 (NTF)

xvii
xviii
5
8
11
39
39
41
57
74
75
87
107
109
114
116
117
215
250

Maps
2.1
Access to Electricity in Africa
2.2	Energy Generation and Transmission Projects of the Programme forInfrastructure Development in Africa
3.1	Major National and Regional (Multinational) Energy Sector Projects Approved by
the Boards in 2015

20
31
45

Figures
1.1
1.2
2.1
3.1

Evolution of Global Commodity Price Indices
Growth in Real GDP and Change in Commodity Price Index
Total Electricity Generation in Africa, by Fuel Type, 2015-2025
Bank Group Total Approvals by Window, 2013-2015

6
7
21
38

287

Annexes

Annex III – Continued
A — List of Tables, Maps, Figures, and Boxes

3.2
Sectoral Distribution of Total Bank Group Approvals, 201540
3.3
Bank Group Loan & Grant Disbursement Targets vs. Actual Achievements, 2011-2015 41
3.4
ADB Loan and Grant Approvals by Country, 201542
3.5
ADF Loan and Grant Approvals by Country, 201542
3.6
Total Bank Group Approvals for Infrastructure, 201543
3.7
Sectoral Composition of Regional Operations Financed in 201548
3.8
Private Sector Operations by Sector, 201549
3.9
Total Bank Group Approvals by Region, 201556
3.10
Sectoral Distribution of Thematic Trust Fund Approvals in 201560
3.11
Sectoral Distribution of Bilateral Trust Fund Approvals in 201560
3.12
Alignment of the High 5s with the TYS and the SDGs
62
6.1
Outstanding Loan Portfolio by Product Type at 31 December 2015116
6.2
Loan Disbursements and Repayments, 2011-2015 (ADB)117
6.3	Loan Disbursements and Repayments, 2011-2015 (ADF)216
6.4	Loan Disbursements and Repayments, 2011-2015 (NTF)
251

Boxes
1.1
Commodity Classifications
1.2
Highlights of Progress Towards the Achievement of Selected MDG Targets
2.1
Ghana’s Toyola Energy Promotes Efficient Cooking Stoves
2.2
AfDB to Support the African Renewable Energy Initiative
2.3
What Underpins the New Deal on Energy?
2.4	South Africa’s Renewable Energy Independent Power Producer
Procurement Programme
3.1
Renewable Energy Project for OMVG States
3.2
Selected Transport Operations Approved in 2015
3.3
The Three Water Initiatives
3.4
Selected Approved Projects in 2015 for Skills Development
3.5
Feeding Africa: An 18-point Action Plan for African Agricultural Transformation
3.6
Testimonies from Stakeholders at the Dakar Conference on Feeding Africa
3.7
Green Morocco Plan Support Programme, Phase 2
3.8
The Special Programs in the Horn of Africa and the ECOWAS Region
3.9
Arusha Sustainable Urban Water and Sanitation Delivery Project
3.10
Natural Gas Transmission and Distribution Network Development Project in Tunisia
3.11
Senegal Digital Technology Park
5.1
Provisions for Further Simplification of the Board Approval Process

288

6
13
22
27
28
30
44
44
46
50
52
53
53
56
58
59
60
95

Annual Report 2015

Annexes

Annex IIIB — Abbreviations and Acronyms

ACBF
ACCF
ACPU
ADB
ADER
ADF
ADOA
AEC
AELG
AERC
AFAWA
AFCOP
AfDB
Afrik4R
AGTF
AICD
AIH
ALCO
ALM
ALSF
AMBD
AMCEN
AMCOW
ANRC
ANRE
AREI
ATRS
AU
AUC
AUFI
AUWSA
AWF
BC
BCEAO

 frican Capacity Building FoundationA
Africa Climate Change Fund
Staff Appeals Committee
African Development Bank
Annual Development Effectiveness Review
African Development Fund
Additionality and Development Outcomes
Assessment
African Economic ConferenceAfrican Energy Leaders GroupAfrican Economic Research ConsortiumAffirmative Finance Action for Womenin Africa
African Community of PracticeAfrican Development Bank GroupAfrica for Results InitiativeAfrica Growing Together Fund
Africa Infrastructure Country Diagnostic
African Information Highway
Asset and Liability Management Committee
Asset and Liability Management
African Legal Support Facility
Committee on Administrative Matters
Affecting the Boards of Directors
African Ministerial Conference on
EnvironmentAfrican Ministers’ Council on Water
African Natural Resources Center
Committee for the Preparation of theAnnual ReportAfrican Renewable Energy Initiative
Activity Time Record System
African Union
African Union Commission
Audit and Finance Committee
Arusha Urban Water Supply andSanitation Authority
African Water Facility
Business Continuity
Banque Centrale des États del’Afrique de l’Ouest (Central Bank of West
African States)

BEAC
BG
BIA
BPC
BTF
CAD
CAHR
CAR
CAS
CBFF
CCAP
CCTA
CEAS
CEC
CEC
CFP
CGP
CIF
CO2
COBD
CODE
COMESA
CONNEX
COP21
COPM
CPPR
CRC
CRMU
CSO
CSP
CSS
CTF
CVA

 anque des États de l’Afrique Centrale
B(The Bank of Central African States)
Bank Group
Business Impact Analysis
Banco de Poupança e Crédito
(Savings and Credit Bank)
Bilateral Trust Fund
China–Africa Development
Committee on Administrative Affairs andHuman Resource Policy Issues
Central African Republic
Cost Accounting System
Congo Basin Forest Fund
Climate Change Action PlanCumulative Currency Translation
Cumulative Exchange Adjustment
Subscriptions
Copperbelt Energy Corporation
Africa Copperbelt Energy Corporation
Complex Framework Papers
Country Gender Profile
Climate Investment Funds
Carbon Dioxide
Business Development Department
Committee on Operations andDevelopment EffectivenessCommon Market for Eastern andSouthern Africa
Strengthening Assistance for Complex
Contract Negotiations
21st session of the Conference of theParties of the UNFCCC
Delivery and Performance
Management OfficeCountry Portfolio Performance Review
Credit Risk CommitteeCompliance Review and Mediation Unit
Civil Society Organizations
Country Strategy Paper
Climate Safeguards System
Clean Technology Fund
Credit Valuation Adjustment289

Annexes

Annex III – Continued
B — Abbreviations and Acronyms

CWHOLE
DFI
DfID
DRC
DRSLP
DSA
DVA
EAAACA
EADI
EAPP
ECA
ECAM

ECOWASEEA
E-GGDS
EGERSP
EL
EPSA
ESAP
ESMS
ESTA
EU
EU-AITFEUR
EURIBOR
EVD
EVSL
FAO
FAPA
FDI
FFL

290

 ommittee of the WholeCDevelopment Finance Institution
United Kingdom Department forInternational Development
Democratic Republic of CongoDrought Resilience and Sustainable
Livelihoods Program in the Horn of Africa
Debt Sustainability Assessment
Debit Valuation Adjustment
East African Association of Anti-Corruption
Authorities
Bank’s African Development InstituteEastern Africa Power Pool
Economic Commission for Africa
Committee for External Communications
and the Preparation of the Bank Group
Annual Meetings
Economic Community of West
African States
Exposure Exchange Agreements
Enhanced General Data Dissemination
SystemEmergency Governance and Economic
Recovery Support ProgramExecutive Level
Enhanced Private Sector AssistanceEnvironment and Social Assessment
Procedures
Environmental and Social Management
Systems
Statistics Department
European Union
European Union–Africa Infrastructure
Trust FundEuro currency
Euro Interbank Offered Rate
Ebola Virus Disease
Enhanced Variable Spread LoanUN Food and Agriculture Organization
Fund for African Private Sector AssistanceForeign Direct Investment
Fully Flexible Loan

FI
FO
FPS
FRMB
FSF
FSL
FVTOCI
FVTPL
GACL
GAFSP
GAP IIGCI
GCI-VI
GCRO
GDP
GEF
GHC
GHG
GW
HIPC
HQ
HR
HRAP
IACD
IABD
IATI
IAS
IASB
IBRD
ICFR
ICP
ICT
IDA
IDEV
IE

Financial Institutions
Field Office
Financial Products and Services
Resource Mobilization and External
Finance Department
Fragile States Facility
Fixed Spread Loan
Fair Value Through Other Comprehensive
IncomeFinancial Assets at fair value through profit
and lossGhana Airports Company Limited
Global Agriculture and Food
Security ProgramGovernance Strategic Framework andAction Plan 2014-2018
General Capital IncreaseSixth General Capital IncreaseGroup Chief Risk Officer
Gross Domestic ProductGlobal Environment Facility
Ghanaian Cedi
Greenhouse Gas
GigawattHeavily Indebted Poor Countries
African Development Bank Headquarters
AfDB Human ResourcesHuman Resources Action PlanIntegrity and Anti-Corruption Department
Inter-American Development Bank
International Aid Transparency Initiative
International Accountings Standards
International Accounting Standards Board
International Bank for Reconstruction
and Development
Internal Controls for Financing ReportingInternational Comparison Program
Information and Communication
Technology
International Development Association
Independent Development Evaluation
Impact Evaluation

Annual Report 2015

Annexes

Annex III – Continued
B — Abbreviations and Acronyms

IFAC
IFC
IFRS
IICF
IMF
INDCs
IPCC
IPPs
IPPF
IRENA
IRM
ISPPP
ISS
IT
ITS
IWRM
JIBAR
JPA
KLMS
KMS
KPIs
kWh
L2C
LHS
LIBOR
LICs
LOC
LOTB
MBP
MDBs
MDGs
MDRI
MDWPP
MENA
MSMEs
Mtoe
MW

International Federation of Accountants
International Finance Corporation
International Financial Reporting Standards
Integrated Internal Control Framework
International Monetary Fund
Intended Nationally Determined
Contributions
Intergovernmental Panel on
Climate Change
Independent Power Producers
Infrastructure Project Preparation Facility
International Renewable Energy Agency
Independent Review Mechanism
Institutional Strengthening for Public Private
Partnerships ProjectIntegrated Safeguards System
Information Technology
Information Technology Strategy
Integrated Water Resources Management
Johannesburg Interbank Agreed RateJoint Partnership for Africa
Knowledge and Learning Management
ServicesKnowledge Management Strategy
Key Performance Indicators
Kilowatt-hour
Learning to Compete
Left-Hand Side
London Interbank Offered Rate
Low-Income Countries
Line of CreditLapse-of-time-basis
Medical Benefit Plan
Multilateral Development BanksMillennium Development Goals
Multilateral Debt Relief Initiative
Multi-Donor Water Partnership ProgramMiddle East and North Africa
Micro-, Small-, and Medium-sizedEnterprises
Million Tonnes (metric tons) of Oil EquivalentMegawatt

NEPAD
NIM
NPV
NSC
NTF
OAGL
ODS
OECD
OFSD
OMVG
OPEC
OPM
OPSCOM
OPSD
ORM
ORPF
ORQR
ORTS
PCGs
PACIGOFPADRCE
PAPMV
PAR
PARCB
PRGS
PAREFSA

PBA
PBD
PBO
PCCF
PCG
PCR

 ew Partnership for Africa’s DevelopmentN
Net Interest Margin
Net Present Value
North–South Corridor
Nigeria Trust Fund
Office of the Auditor GeneralOzone-Depleting Substances
Organisation for Economic Co-operation
and Development
Financial Sector Development Department
The Gambia River Basin Development
Organization
Organization of the Petroleum ExportingCountries
Operations Procurement Manual
Operations Committee
Private Sector Department
Operational Risk Management Framework
Procurement and Fiduciary Services
Department
Results and Quality Assurance Department
Transition Support Department
Partial Credit Guarantees
Investment Climate and Forest GovernanceSupport Project
Regional Development and Job Creation
Support ProgrammeGreen Morocco Plan Support ProgrammeProject Appraisal ReportSupport Program for Reconstruction of
Grassroots Communities
Partial Risk Guarantees
Programme d’appui aux réformes
financières et à la sécurité alimentaire(PAREFSA) (Financial Reforms and Food
Security Support Program)Performance-Based Allocation
Program and Budget Document
Program-Based Operation
Post-Conflict Countries Facility
Partial Credit Guarantee
Project Completion Report291

Annexes

Annex III – Continued
B — Abbreviations and Acronyms

PDC
PECAM
PECOD

PEP
PERSIF
PIDA
PL
PMIR
PML
PPP
PPP
PSEM
PSF
PSO
PRG
PSRGSP
PUAREF
PWP
RBCSP
RDAs
RECs
RHS
RIPoS
RISP
RMCs
RMF
RMPs
RPA
RR
RRC
RRS
RWSSI
S&P
SAB
SADC
SAFAC

292

Pre-determined Criteria
Permanent Committee for Annual Meetings
Permanent Committee on the Review and
Implementation of Decentralization of theBank’s Activities
Partnership for Economic PolicyPost-Ebola Recovery Social Investment
Fund ProjectProgram for Infrastructure Development in
AfricaProfessional Level
Road Infrastructure Modernization ProjectPrudential Minimum Level of Liquidity
Public–Private Partnership
Purchasing Power Parity
Public Sector and Economic Management
Private Sector Credit Enhancement Facility
Private Sector Operations
Partial Risk GuaranteePower Sector Reform and GovernanceSupport Program
Emergency Economic and Financial Reform
Support ProgramPublic Works ProgramResults-Based Country Strategy Papers
Risk Distribution Agreements
Regional Economic Communities
Right-Hand Side
Regional Integration Policy and Strategy
Regional Integration Strategy Paper
Regional Member Countries
Results Measurement Framework
Risk Management Products
Risk Participation Agreements
Readiness Review
Regional Resource Centers
Results Reporting System
Rural Water Supply and Sanitation Initiative
Standard & Poor'sSanctions Appeal Board
Southern African Development Community
Southern Africa Forum Against Corruption

SANC
SANFO
SANO
SAP
SAPP
SCB
SCB-MfR
SCO
SCFFs
SDEP
SDGs
SDR
SE4ALL
SEFA
SEOG
SFFs
SGLs
SIDA
SMCC
SMEs
SOEs
SPARS
SRAS
SREP
SRI
SRP
SSA
SSDEE
STAARS
TFLOCs
TFP
TSF
TSSP
TTF

Sanctions Commissioner
Senegal Field OfficeSanctions Commissioner
Systems, Applications, and Products
Southern African Power Pool
Standard Chartered Bank
Statistical Capacity Building Program forManaging for Development Results
Staff Council
Soft Commodity Finance Facilities
Skills Development and Entrepreneurship
Project
Sustainable Development Goals
Special Drawing Right
Sustainable Energy for All
Sustainable Energy Fund for Africa
Office of the Special Envoy on GenderSoft Commodity Finance Facilities
Sovereign Government LoansSwedish International Development
Cooperation Agency
Senior Management Coordination
Committee
Small- and Medium-Sized Enterprises
State Owned Enterprises
Strategic Plans for Agriculture and Rural
Statistics
Strategic Resources Assessment Software
Scaling Up Renewable Energy Program in
Low Income Countries
Socially Responsible Investors
Staff Retirement PlanSub-Saharan Africa
Support to Skills Development for
Employability and EntrepreneurshipStructural Transformation of African
Agriculture and Rural Spaces
Trade Finance Lines of Credit
Trade Finance ProgramTransition Support Facility
Transport Sector Support Program
Thematic Trust Fund

Annual Report 2015

Annexes

Annex III – Continued
B — Abbreviations and Acronyms

TVET
TW
TYS
UA
UK
UN
UNCAC
UNDP
UNECA
UNFCCC echnical Vocational Education and Training
TTerawatts
Ten-Year Strategy
Unit of AccountUnited Kingdom
United Nations
United Nations Convention Against
Corruption
United Nations Development ProgrammeUnited Nations Economic Commission for
AfricaUnited Nations Framework Convention on
Climate Change

US
USA
USAID
USD
VfM
VP
WAEMU
WEO
WSS
ZimFundUnited States
United States of America
United States Agency for International
Development
United States Dollar
Value for MoneyVice President
West African Economic and Monetary
UnionWorld Economic Outlook
Water Supply and Sanitation
Zimbabwe Multi-Donor Trust Fund

Note: Annex III B is applicable to both the partial and full volume of this Report.

293

Annexes

Annex IVA — Thematic Trust Funds/Special Funds Resources Available for Commitment
as of 31 December 2015

Amount in the Agreement
Trust Fund
Donor Currency
UA
Africa Climate Change Fund (ACCF)
Germany-GIZ
USD 6,191,640
3,995,406

Africa Legal Support Facility (ALSF)
USD 713,812
Belgium
USD 50,000
BIDC
USD 199,371
BOAD
USD 4,535,970
CanadaUSD 726,464
UK-DfID
USD 5,000,000
FranceUSD 5,022,316
Netherlands
USD 2,441,570
NorwayUSD 3,000,000
USAID
USD 50,000
World Bank
USD 16,148,678
AfDB
Africa Trade Fund (AfTRA)
CanadaCAD 15,000,000

African Community Practice (AfCOP)
ADF
USD 6,765,000

25,875,663

Area of Intervention
Climate financereadiness●● Climate change●● Green growth
mainstreaming●●●●

Legal Support

294

EUR 100,000
EUR 6,900,000
EUR 6,009,290
EUR 11,271,800
EUR 7,349,358
EUR 82,222
EUR 25,441,047
EUR 5,361,083
EUR 17,052,415
EUR 25,000,000
EUR 15,000
EUR 12,000,000
EUR 16,788,685
EUR 174,963
EUR 12,195,623
EUR 12,000,000

Capacity building, technical assistance, co-financing
climate-resilient and low-carbon projects andprograms●● Knowledge management and information sharing,
analytical work related to green growth andadvocacy●● Recruitment of national and international
consultants, training, consultations workshops,
regional and international meetings, communication,
advocacy, translation services●●

Commercial creditor litigation
Negotiations of complex commercial transactions●● Enhancing the capacity of Regional Member
Countries to carry out those services themselves●●●●

9,221,973

4,620,144

TradeEconomic Growth●● Regional Integration●● Infrastructure(water and energy)

134,392,187

Technical AssistanceTraining●● Capacity Building●● Preparation of Policy and Sector Studies

●●

●●

●●

●●

Regional Integration
Capacity Building●● Technical Assistance●●●●

African Water Facility (AWF)
Algeria
Austria
Australia
AfDB
Bill and Belinda Gates
Foundation
Burkina Faso
CanadaDenmark
DfID
European Union
Egypt
FranceNorwaySenegalSwedenSpain

Activities●●

Water Sector

Knowledge sharing on Managing for Development
Results (MfDR)●● Linking MfDR knowledge to regional processes●● Synergies between regional and national processes●● Project management●●

Technical AssistanceStudies●● Operational Support●●●●

Annual Report 2015

Annexes

Annex IV – Continued
A — Thematic Trust Funds/Special Funds Resources Available for Commitment
as of 31 December 2015

Amount in the Agreement
Trust Fund
Donor Currency
UA
Agriculture Fast Track Fund (AFT)SIDA
USD 7,837,175
14,809,155
USAID
USD 12,024,325
Denmark
USD 1,822,656
ClimDev-Africa
SwedenEuropean Commission
Nordic Development FundSEK 75,000,000
EUR 27,380,000
EUR 5,000,000

Congo Basin Forest Fund (CBFF)UK DfIDEUR 37,679,513
NorwayEUR 61,251,956
CanadaEUR 14,226,775

Area of Intervention
Agricultural
infrastructure●● Health●●Activities
Market research
Financial modeling●● Business plan development●● Environmental and social impact studies●●●●

34,482,083●●

100,230,476

●●

●●

●●

●●

Global Strategy to Improve Agriculture & Rural Statistics
USD 5,819,710
3,974,560

Climate change

Environment
Reduce deforestationand degradation●● Poverty reduction●● Sustainable forest
management●● Sustainable
development●● Capacity building●●

Agricultural statistics

Generation-wide dissemination and use of
reliable and high-quality climate information fordevelopment in Africa●● Capacity enhancement of policy makers and policysupport institutions through the generation of quality
analysis and evidence on climate change and its
implications for Africa●● Implementation of pilot adaptation practices that
demonstrate the value of mainstreaming climate
information in development planning and practice,for subsequent awareness raising and advocacy toinform decision-making●●

Assessment and funding of Projects
Establishment of CBFF secretariat and systems●● Governing Council meetings●● Preparation of annual work plan●● Monitoring missions of CBFF projects●● Sensitization workshops and seminars●● Establishment of Monitoring & Evaluation system

Technical assistanceTraining●● Improvements in the coverage and quality of theminimum core data set, focusing on both nationaland regional priority data needs●● Greater integration of agricultural statistics into the
NSSs
●●
●●

Governance Trust Funds (GTF)
Transfer from Nordic Trust for
Governance:
USD 84,068
Finland
USD 84,308
Denmark
USD 76,882
NorwayDonor Contributions:
NorwaySwedenSwitzerland

USD 1,124,986
USD 2,286,789
USD 3,131,525

4,653,976●●

Governance

Measures to analyze and improve governance andreduce corruption.
●● Promotion of credible audit.
●● Accountability mechanisms and oversight
institutions●● Good Financial management including public
procurement●● Support to investment climate and businessenvironment●● 2014 Work Plan approved, new call for proposals in
April 2015 pending replenishment●●295

Annexes

Annex IV – Continued
A — Thematic Trust Funds/Special Funds Resources Available for Commitment
as of 31 December 2015

Amount in the Agreement
Trust Fund
Donor Currency
UA
Infrastructure Consortium for Africa (ICA)
3,618,093
USD 3,020,990
DfID
USD 200,000
RussiaUSD 1,147,871
CanadaUSD 472,749
Italy
USD 81,840
USAID
USD 400,570
EIB
USD 130,613
Germany/KFW
USD 99,900
South Africa

Making Finance Work for Africa (MFW4A)
EUR 500,000
AfD
EUR 166,298
DfID
EUR 369,950
EIB
EUR 1,564,960
Germany/GIZ
EUR 300,000
Netherlands
EUR 143,315
SIDA
EUR 120,464
DANIDA
EUR 758,266
USAID
EUR 580,678
MinBuza(Contribution in
AfDB
kind)
MENA Trust FundIBRD
USD 21,543,900

Microfinance Capacity Building Fund (MCBTF)
Spain
EUR 5,000,000
UNCDF
EUR 119,550●●

Activities

Help improve thelives and economic
well-being of Africa’s
people throughencouraging,supporting andpromoting increased
investment ininfrastructure in Africa,
from both public andprivate sources

4,503,931●●

14,713,366

●●

●●

●●

●●

4,533,946

Migration and Development Initiative FundFranceEUR 7,000,000
6,480,500
IFAD
EUR 162,615
USAID
EUR 154,906
Multi-Donor Water Partnership Programme (MDWPP)
CanadaEUR 3,302,815
4,727,293
Denmark
EUR 2,010,841
SIDA Support to the FirstEUR 10,524
African Water Week
IsDB Support to the FirstEUR 13,690
African Water Week

296

Area of Intervention

Financial sector
development ranging
from access to financeto Capital Markets

Finance
Trade●● Governance●●Microfinance

Investing in Sustainable Growth
Inclusive Development and Job Creation●● Enhancing Economic Governance●● Competitiveness and integration
Consultancy services
Training●● Capacity Building●● Preparation of policy and sector studies
●●
●●

●●

●●

Migration andDevelopment

Water Sector●●●●

Studies
Technical Assistance

Policies
Workshops●● Conferences●● Training●● Studies and Seminars●●●●

Annual Report 2015

Annexes

Annex IV – Continued
A — Thematic Trust Funds/Special Funds Resources Available for Commitment
as of 31 December 2015

Amount in the Agreement
Trust Fund
Donor Currency
UA Area of Intervention
Activities
NEPAD Infrastructure Project Preparation Facility Fund (NEPAD-IPPF)●● Regional Project identification
48,710,464 ●● ICT
DKK 17,700,000
Denmark●● Transport●● Preparation, Workshops, Seminars in line with
CAD 19,750,000
Canada●● Energy
NOK 45,000,000
NEPAD Agenda
Norway●● Water and Sanitation●● RECs Capacity Building
GBP 9,000,000
UK-DfIDEUR 12,000,000
Germany Government
EUR 2,001,194
SPAIN
UA 6,300,000
ABD Contribution
DKK 5,000,000
Danish Fund for Technical
Assistance
USD 193,670
DfID Co-financing Project
USD 1,000,000
USAID
Rural Water Supply and Sanitation Initiative Grants (RWSSI)●● Policy and strategy
133,070,614 ●● Water Sector
EUR 82,571
Burkina Faso●● Capacity building
CanadaEUR 26,404,626●● Training
EUR 30,829,647
Denmark●● Programmes and project preparation
FranceEUR 66,000,000
Italy
EUR 500,000
Switzerland
EUR 23,085,654
EUR 9,287,804
Netherlands
South–South Cooperation Trust Fund (SSCTF)●● Technical Assistance
USD 5,999,802
3,908,131 ●● Agriculture andBrazil●● Capacity Building(Financial status as of
Agribusiness●● Private Sector●● Human Resources Development
September 2014)●● Seminars
Development●● Clean Energy●● Workshops●● Governance●● Health●● Social Development
Special Fund for Reconstruction and Development for the Great Lakes Region (SFRD)●● Address the specific needs and circumstances of
3,022,360 ●● Security
USD 500,000
Angola●● Democracy and good
USD 80,606
Burundithe Great Lakes Region
Congo, Democratic Republic of USD 1,000,000
governance●● Economic development
USD 967,500
Congo●● Regional integration
USD 1,027,355
Kenya●● Humanitarian, social,
USD 100,000
RwandaUSD 250,000
Ugandaand environmental
USD 500,000
ZambiaissuesSustainable Energy Fund For Africa (SEFA)●● Project preparation for projects of total investment
Denmark
USD 51,933,100
38,882,355 ●● Renewable Energy●● Energy Efficiency
USAID
USD 5,000,000
needs of USD 30-200 million (support of projects
with an independent power producer or within a
PPP structure; sovereign entities are not eligible asproject sponsors)●● Contribution of equity to a Private equity fund●● Creation of an enabling environment for private
investments in sustainable energy297Annexes

Annex IV – Continued
A — Thematic Trust Funds/Special Funds Resources Available for Commitment
as of 31 December 2015

Amount in the Agreement
Trust Fund
Donor Currency
UA
Trust Fund for Countries Transition (TFT)
DfID
EUR 3,258,244
5,092,762
DANIDAEUR 2,719,335

Area of Intervention

Finance
Trade●● GovernanceValue for Money Sustainability & Accountability in Social Sectors (VfM)
NORAD
USD 1,403,465
465,253 ●● Health●● Education
GAVI
USD 400,000●● Social protection

Zimbabwe Multi-Donor Trust Fund (Zim-Fund)
USD 139,802,263
Denmark
Germany
UK
Switzerland
SwedenNorwayAustralia

95,477,697

703,462,387
Source: AfDB Resource Mobilization and External Finance Department.

298

Activities

●●

●●

●●

●●

Infrastructure
investments in water &sanitation●● Energy●●

Technical Assistance
Fosters partnerships for technical cooperation
projects

Evidence-based
sector policies and strategies●● Systems’ results orientation and performance●● Stakeholder cooperation●● Value for money●● Sustainability and accountability for health results●● Planning and budgeting for results●● Governance and accountability structures and tools
●●
●●

●●

Rehabilitation of infrastructure projects

Annual Report 2015

Annexes

Annex IV
B — Bilateral Trust Funds Resources Available for Commitment
as of 31 December 2015

Donor Country
CanadaCanadian Grant for Technical
Assistance (TCA 2008)

Amount in the Agreement
Donor Currency
UA

Area of Intervention
Activities that will strengthen the Bank’s
capacity in the following sectors: Development
effectiveness, gender, good governance,
natural-resource management and private
sector development

Activities
Policy articulation
Studies●● Capacity building

CAD 5,023,528
CAD 573,187
from the CATF

3,592,299

USD 2,000,000

1,348,538●●

All sectors●●

Bill & Melinda Gates
Bill & Melinda Gates
Foundation

USD 2,853,000

2,027,379●●

Multiple sectors●●

FinlandFinnish Consultancy TrustFund II

EUR 14,426,305

12,698,260

●●

China
Chinese Trust FundFranceProgramme de Coopération
BAD/France Fonds
d’assistance Technique
India
Indian Trust Fund●●Environment
Climate-change adaptation and mitigation●● Science and technology related to renewable
and clean energy●● Forestry management●● Water and irrigation●● Education●●●●

As agreed with theFoundation, it could be
different from one projectto another●●Technical assistance●●Technical assistance●●

EUR 3,350,000

3,638,845●●●●

USD 6,753,686

4,172,096

All sectors
Resources are partially tied

Infrastructure
Private sector●● Information and communications technology●● Trade●● Science and Technology

Technical assistance
Capacity building●● Training seminars●● workshops●● Consultation andknowledge sharing on
policy issues

●●

●●

●●

●●

Italy
Cooperation Programme
AfDB/Italy

EUR 2,783,573

2,913,176

●●

Japan
The Policy and Human
Resources Development Grant
of JAPAN (PHRDG)

JPY
2,783,888,691

16,134,183

●●

●●

●●

●●

USD 46,723,727
USD 2,000,000(Amount for old
Korea TechnicalCooperation Fund
(KTCF))

33,275,779

Korea
Korea-Africa Economic(KOAFEC) TechnicalCooperation Trust Fund

Project identification,
preparation, studies

Risk Mitigation

Trade and Customs
Social Business●● Higher Education●● (Work Programme agreed in TICAD V)
Infrastructure and natural resources
Information and communications technology●● Knowledge sharing on Korea’s economic
development experience●● Human resources development
●●
●●

●●

●●

Fully earmarked forthe Initiative for Risk
Mitigation in Africa
Analytical work
Capacity Building andWorkshops

Implementation of
Korea-Africa Economic
Cooperation (KOAFEC)
Action Plan299

Annexes

Annex IV – Continued
B — Bilateral Trust Funds Resources Available for Commitment
as of 31 December 2015

Donor Country
Nigeria
Nigeria Technical Cooperation
Fund (NTCF)

NorwayNorway Technical Cooperation
Agreement(Financial status as of
September 2014)
PortugalPortugal TechnicalCooperation

SwedenSwedish TechnicalCooperation Fund
Switzerland
Swiss grant for Technical
Assistance

UK-DfID (New agreement)
DfID—Technical Cooperation
Framework Arrangement

Total

Amount in the Agreement
Donor CurrencyUA
USD 25,000,000
Maximum of USD
2.5 million canbe committed per
year

18,783,044

NOK 21,000,000

2,100,998●●

EUR 2,336,236

1,990,420●●

Capacity building and regional integration in theareas of:●● Science and technology●● Human development (health and education)●● Agriculture●● Public administration●● Business and finance

Gender and provision of technical assistants;balance earmarked for African Women in
Business initiative

Private-sector development
Infrastructure●● Renewable energy and energy efficiency●● Good governance and capacity building●● Agriculture●● Water●● Promotion of Portuguese language in the Bank’s
operations●●

SEK 47,543,711

4,370,871●●

CHF 5,576,413 +CHF 5,900,000

8,178,955●●

GBP 2,000,000

2,156,899●●

117,381,743

Source: AfDB Resource Mobilization and External Finance Department.

300

Area of Intervention

All sectors

Pre-feasibility andfeasibility studies●● Project identification●● Preparation●● Appraisal●● Post-evaluation●● Mid-term review●● Rehabilitation of existing
projects experiencing
difficulties●● Training●● Capacity building●●●●

Fully programmed

Project cycle activities
including pre-feasibility
and feasibility studies●● Capacity building
and human resource
development●● Policy and sector studies●● Institution and policy
dialogue●●●●

Earmarked for Private
Sector Strategy

TA Position in OWAS already funded
The Swiss TF has been replenished but theresources will be dedicated to enhance theBank’s ability to identify and address situationsof fragility and conflict

Consulting services and technical assistance insupport of project-cycle activities, and policy andsector studies●● Training, capacity building and provision of
institutional support●●

Activities

GenderFragile states●● Climate change●● Results management●● Helping the Bank
improve its proceduresand processes, suchas procurement andbudgeting●● Deliver commitments on
institutional effectiveness●●●●Annual Report 2015

Annexes

Annex VThe African Development Bank GroupThe African Development Bank (ADB). Resources for thisfacility are generally raised from the capital market for onwardlending on non-concessional terms to the Bank’s Regional
Member Countries (RMCs). The ADB window is also used
to support private sector projects in all the RMCs throughdirect loans, lines of credit, trade finance facilities, equity andquasi-equity participations, guarantees to financially soundand viable private enterprises, and multinational projects that
promote regional integration.

currently offered through the Bank’s Risk Management
Products in SGLs, thereby providing fully customized flexibility
in interest rate and currency conversion to borrowers. It also
has a maturity-based pricing structure that has increased the
maximum tenor, grace period, and average maturity (weighted
average time to repay a loan) of SGLs from the previous 20,
5, and 12.75 years to 25, 8, and 17 years, respectively toallow borrowers to select loan profiles that match their fundingneeds and debt-management capacities.

The standard loan product of the ADB has evolved over The lending rate on the FFL is also consistent with that oftime, with terms that are increasingly more responsive to the EVSL plus a maturity premium, where applicable. With
client needs. The current standard loan product provided maturity-based pricing, loans with average maturity less thanto sovereign and sovereign-guaranteed clients is called the or equal to 12.75 years will not attract a maturity premium.
Enhanced Variable Spread Loan (EVSL). The EVSL gives However, loans with average maturity greater than 12.75 years
borrowers a high degree of flexibility to manage interest-rate but less than or equal to 15 years will attract a 10 bps maturity
risks. For non-sovereign-guaranteed clients, the loan product premium, while loans with an average maturity greater thanoffered is the Fixed Spread Loan (FSL).
15 years attract a 20 bps maturity premium.
The lending rate on the EVSL comprises of a floating baserate (6-month LIBOR for USD and YEN, 6-month EURIBOR
for euro, and 3-month JIBAR for ZAR), a funding margin thatis a function of the Bank’s cost of funding relative to LIBOR,EURIBOR, or JIBAR computed every six months, and acontractual spread that has been set at 60 basis points (bps)since 1 January 2011. At a borrower’s request, the EVSL
offers a free option to convert the floating base rate into afixed component (amortizing swap rate set at borrower’s
request for disbursed loan balances). The repayment period
for sovereign and sovereign-guaranteed loans (SGLs) is up
to 20 years, including a grace period not exceeding 5 years.

The resources from the African Development Fund (ADF)
financing window emanate from contributions and periodic
replenishments by ADF-State Participants, usually on a 3-yearbasis. Prior to the current ADF-13 replenishment, the ADF wasoperating under differentiated lending terms for ADF-eligible
countries classified as blend, gap, and graduating, versus
ADF-only countries. Accordingly, loans extended to blend,gap, and graduating countries had a maturity period of 30
years, including a grace period of 8 years with an interest
rate of 1 percent per annum. For ADF-only countries, loans
had a maturity period of 50 years, including a grace periodof 10 years, with no interest rate. The standard commitment
fee of 0.50 percent per annum on undisbursed amounts andservice charge of 0.75 percent per annum on outstandingbalances were still applicable for all ADF loans.

The lending rate on the FSL comprises a floating base rate
as for the EVSL and remains floating until maturity date, or a
fixed base rate plus a risk-based credit spread. Non-sovereignguaranteed loans (NSGLs) have repayment periods of up In order to preserve the long-term financial sustainability
to 15 years including a grace period not exceeding 5 years. and capacity of the ADF facility, the ADF-13 replenishment
introduced two main accessibility criteria: (i) hardened andIn December 2013, the ADB Board of Directors approved differentiated lending terms, and (ii) two sub-groups of ADFthe introduction of the Fully Flexible Loan (FFL) to a suite of only countries: the “regular” or the “advance” group. The
products available to sovereign and sovereign-guaranteed financing terms for regular and advance ADF-only countries,
borrowers. The FFL embeds risk management features as well as for blend, gap, and graduating countries, were301

Annexes

Annex V – Continued
The African Development Bank Grouphardened. An accelerated repayment clause and a voluntary
prepayment framework were also introduced.
Accordingly, new loans extended under ADF-13 to regular ADF
countries have a maturity of 40 years, including a grace periodof 10 years, and loans extended to advance ADF countries
have a maturity of 40 years, including a grace period of 5 years.
The standard commitment fee of 0.50 percent per annum on
undisbursed amounts and service charge of 0.75 percent per
annum in outstanding balances remain applicable. Loans toblend, gap, and graduating countries have a maturity of 30
years including a 5-year grace period, and an interest-rate
charge of 1 percent per annum in addition to the standard
commitment and service fees.

●●

●●

●●

First option: (i) no interest charges on NTF loans; (ii) a
service charge of 0.75 percent per annum on outstandingbalances; (iii) a commitment fee of 0.5 percent per annum
on undisbursed commitments; and (iv) a 20-year repayment
period, including a grace period of 7 years.
Second option: (i) no interest charges on NTF loans; (ii) a
service charge of 0.75 percent per annum on outstandingbalances; (iii) a commitment fee of 0.5 percent per annum
on undisbursed commitments; and (iv) a 15-year repayment
period including a 5-year grace period.
Third option: Same terms as for the ADB private sectorloans, taking into consideration provisions of the Guidelines
for the Bank’s private sector financing as well as the risk
analysis of the project.

The Nigeria Trust Fund (NTF) resources are provided entirelyby the Federal Republic of Nigeria under an Agreement
signed with the Bank in 1976 for an initial period of 30 years.
Following its revision in April 2008, the Agreement provides Loans granted prior to the revision of the Agreement carried
that resources from the NTF shall be used in accordance with interest at rates ranging from 2 percent to 4 percent, with athe terms of the following three options.
commission of 0.75 percent on undisbursed portions.

302AppendicesAppendices

Appendix I–1
ADB Organizational Chart as of 31 December 2015

IDEV

Independent
Development
Evaluation
CRMU

Compliance
Review &Mediation Unit
SABS

Secretariat
to the Sanctions
Appeals Board
TRIB

Administrative
Tribunal

Board of Governors
BGOV

BDIR

Board of Directors

President
Akinwumi A. Adesina
PRSTFirst Vice President/COO
Chair of SMCCFVP/COOOAGLOffice of the
Auditor General

IACD

Integrity &Anti-corruption

Office of the
President

SAPR

Staff Integrity& Ethics OfficeGroup Chief
Risk Officer

Communication &External Relations

Special Envoyon Gender

General Counsel& Legal Services

Security

SIEO

Abidjan Return
Directorate

CERD

GCRO

GECL

SEOG

Secretary
GeneralBoard Affairs

Corporate
Services

GeneralServices &Procurement

SGBA

Finance

Treasury

CGSP

Protocol &Conference

Operations II
Sector Operations

SECU

Operations I
Country & Regional
Programs & Policy

FTRY

Human
Resources
Management

SGPC

SEGL

Strategy &Operational
Policies

COO

Director
FVP/COO& SMCC
Secretariat

Financial
Control

CHRM

Language
Services

CSVP

COSP

Programming& Budget

FFCO

Corporate
IT Services

SGLS

FNVP

Agriculture &Agro Industry

ONEC

Energy,Environment,& Climate
ChangeResults &Quality
Assurance

COPB

Staff
Retirement
Plan

CIMM

OIVP

OSAN

Transport & ICT

ORQR

Operations
Committee
Secretariat

SRPU

Operations III
Infrastructure,
Private Sector &Regional Integration

ORCE

Human
Development

OITC

Business
Development
Office

OPSC

ORVP

ORPF

Northern Africa
RegionOSHD

Private Sector

COBD

OSVP

DIRA

Chief Economist

ECON

EDRE
Transition
Support

ORNA

Governance& Financial
Management

OPSD

Asia External
Representation
OfficeFRMBResource
Mobilization& External
Finance

Central Africa
RegionStatistics

ORTS

OSGE

ASRO

Procurement &Fiduciary
Services

ESTA

Nigeria
Country Office

SARC

Southern Africa
Regional
Resource
CentreDelivery &Performance
Management
OfficeDevelopment
Research

AfricanDevelopment
Institute

ORNG

Water &
Sanitation

COPM

EADI

Western Africa
RegionONRI

Nepad,
Regional
Integration& TradeFinancial
Management

OWAS

Decentralization

EARC

Staff Appeals
Committee

FFMA

Eastern Africa
Regional
Resource
CentreFinancial Sector
Development

PECOD

ORWA

African Natural
Resources
CenterAPCU

Sanctions
OfficeOFSD

Ombudsman

SANO

ANRC

OMBU

306

Annual Report 2015

Appendices

Appendix I–2
Principal Officers of the Bank Group as of 31 December 2015

TITLE
SURNAMEPRESIDENCY, UNITS REPORTING TO THE PRESIDENT, AND UNITS REPORTING TO THE BOARDS
President
ADESINA
Director of Cabinet/Chief of Staff
MOYO
Group Chief Risk Officer
TURNER
Special Envoy on Gender
FRASER-MOLEKETIGeneral Counsel and Director
GADIO
Auditor General
OKONKWO
Director, Integrity, & Anti-Corruption
BOSSMAN
Director, Compliance Review, & Mediation
TOURE
Evaluator General
NANGIAFIRST VICE PRESIDENCY/COO
First Vice President, Chief Operating Officer
MBI
Director, Strategy, & Operational Policies
KAPOOR
Director, Results, & Quality Assurance
MIZRAHI
SECRETARY GENERAL
Secretary General & Vice President
AKINTOMIDEOFFICE OF THE CHIEF ECONOMIST
Officer in Charge, Chief Economist, & Vice President
LUFUMPACORPORATE SERVICES
Acting Vice President, Corporate Services
NWABUFOFINANCE
Vice President
BOAMAH
Acting Director, Financial Control
HOLLIST
Director, Treasury
N’SELEOPERATIONS I: COUNTRY & REGIONAL PROGRAMS & POLICY
Acting Vice President
LITSE
OPERATION II: SECTOR OPERATIONS
Vice President
ABOU-SABAAOPERATIONS III: INFRASTRUCTURE, PRIVATE SECTOR & REGIONAL INTEGRATION
Vice President
ASAMOAH

OTHER NAMESCOMPLEX

Akinwumi Ayodeji
Sipho
Timothy
Geraldine Joslyn
Kalidou
ChukwumaAnna
Sekou
Rakesh

PRST
PRST
GCRO
SEOG
GECL
OAGL
IACD
CRMU
IDEV

Emmanuel Ebot
Kapil
Simon

FVP/COO
COSP
ORQR

Cecilia

SEGL

Charles

ECON

NnennaCSVPCharles Owusu
OmobolaHassatou

FNVP
FFCO
FTRY

Janvier Kpourou

ORVP

Aly Abdel-Hamed

OSVP

Solomon

OIVP

Source: AfDB Human Resources Management Department.

307

Appendices

Appendix II–1
Resolutions Adopted by the Board of Governors in 2015 for the ADB

B/BG/2015/01
B/BG/2015/02
B/BG/2015/03
B/BG/2015/04
B/BG/2015/05
B/BG/2015/06
B/BG/2015/07
B/BG/2015/08

Updated Revised Procedure for the Designation of the Members of the Bureau and the Joint Steering Committee of theBoards of Governors
By-election of an Executive Director of the African Development Bank
Updated Rules for the Designation of the Members of the Standing Committee of the Board of Governors on the Conditions of Service
of Elected Officers
The Annual Report and Audited Financial Statements for the Financial Year Ended 31 December 2014
Allocation and Distribution of the Allocable Income of the ADB for the Financial Year Ended 31 December 2014
Distribution of part of the Income of the Nigeria Trust Fund for the Financial Year Ended 31 December 2014
Election of the President of the African Development Bank
Vote of Thanks of the Board of Governors to Dr. Donald KABERUKA, outgoing President, for the Eminent Services rendered to theAfrican Development Bank Group

Source: Office of the Secretary General, AfDB.

308

Annual Report 2015

Appendices

Appendix II–2
Board of Governors and Voting Powers of Member Countries
as of 31 December 2015

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29

Country
Algeria
AngolaBenin
Botswana
Burkina Faso
BurundiCabo Verde
Cameroon
Central African Republic
Chad
Comoros
Congo
Congo, Democratic Republic ofCôte d’Ivoire
Djibouti
Egypt
Equatorial Guinea
Eritrea
Ethiopia
Gabon
Gambia, The
Ghana
GuineaGuinea-Bissau
Kenya
LesothoLiberia
Libya
Madagascar

30
31
32
33
34
35
36
37
38
39
40

MalawiMali
Mauritania
Mauritius
MoroccoMozambique
Namibia
Niger
Nigeria
RwandaSão Tomé & Príncipe

41
42
43
44
45
46
47
48
49
50
51
52
53
54

Senegal
Seychelles
Sierra Leone
SomaliaSouth Africa
South Sudan
Sudan
Swaziland
Tanzania
Togo
Tunisia
UgandaZambiaZimbabwe
Total Regionals

Governor
Abderrahmane Benkhalfa
Armando ManuelLionel Zinsou
Ontefetse Kenneth Matambo
Jean Gustave Sanon
Tabu Abdallah Manirakiza
Cristina Duarte
Louis Paul Motaze
Florence Limbio
Mariam Mahamat Nour
Mohamed Ali Soilihi
Gilbert Ondongo
Henri Yav Mulang
Albert Toikeusse Mabri Abdallah
Ilyas Moussa Dawaleh
Hisham Ramez
Miguel Obiang Engonga
Berhane Habtemariam
Abdulaziz Mohammed
Regis Immongault
Abdou Kolley
Seth Terkper
Mohamed Diare
Geraldo Joao Martins
Henry Kiplagat Rotich
Mamphono Khaketla
Amara Mohamed Konneh
Kamel A. Elhassi
François Marie Maurice Gervais
Rakotoarimanana
Goodall Edward Gondwe
Mamadou Igor Diarra
Sid Ahmed Ould Raiss
Seetanah Lutchmeenaraidoo
Mohammed Boussaid
Adriano Afonso MaleianeCarl Hermann Gustav Schlettwein
Saidou Sidibe
Kemi Adeosun
Claver Gatete
Americo D’Oliveira Ramos
Amadou Ba
Jean-Paul Adam
Kaifala Marah
Mohamed Adam Ibrahim
Pravin Jamandas GordhanDavid Deng Athorbei
Badr Eldien Mahmoud Abbas
Martin Gobizandla Dlamini
Saada Mkuya Salum
Adji Oteth Ayassor
Yassine Brahim
Matia Kasaija
Alexander Bwalya Chikwanda
Patrick Anthony Chinamasa

Alternate
Miloud Boutabba
Job Graça
Komi Koutche
Taufila Nyamadzabo
Lassane Kabore
Côme Manirakiza
Carlos Furtado
Charles Assamba Ongodo
Assane Abdallah Kadre*
Alfeine Sitti Soifiat Tadjiddine
Raphael Mokoko
Lamy Lamiel
Niale Kaba
Ahmed Osman Ali
Sahar Nasr
Valentin Ela Maye
Martha Woldegiorghis
Ahmed Shide
Christian Magnagna
Abdoulie Jallow
Henry Kofi Wampah
Sekou Traore
Degol Mendes
Kamau Thugge
Mapalesa Rapapa
Mounir Siaplay
Ali Mohamed Salem
Pierre-Jean Feno
Ronald Mangani
Mamadou Gaoussou Diarra
Cheikh El Kebir Moulaye Taher
Dharam Dev Manraj
Driss El Azami El ldrissi
Ernesto Gouveia Gove
Ericah B. Shafudah
Mohamed Boucha
Mahmoud Isa-Dutse
Uzziel Ndagijimana
Maria Do Carmo Trovoada Pires
De Carvalho Silveira
Lat Diop
Caroline Abel
Edmund Koroma
Bashir Isse
Mcebisi Hubert Jonas
Kornelio Kariom Mayiik
Magdi Hassan Yassin
Hlangusemphi Dlamini
Servacius Beda Likwelile
Kossi Assimaidou*
Keith Muhakanizi
Fredson Kango Yamba
Willard L. Manungo

Total Votes Voting Powers %271,650
4.191
74,867
1.155
13,0300.201
70,0771.081
26,2730.405
15,894
0.245
5,544
0.085
70,227
1.083
3,327
0.051
5,153
0.079
1,167
0.018
29,8250.460
83,4141.287
240,188
3.705
1,838
0.028
351,035
5.415
10,870
0.168
2,628
0.041
102,258
1.577
77,538
1.196
10,3880.160
137,755
2.125
26,544
0.409
2,177
0.034
93,601
1.444
4,348
0.067
13,0280.201
215,118
3.319
41,8950.646
18,471
28,4894,329
42,688228,243
38,70822,742
16,773574,669
9,105
4,975

0.285
0.439
0.067
0.659
3.521
0.597
0.351
0.259
8.865
0.140
0.077

67,962
2,448
19,097
2,566
324,558
32,65522,036
8,010
49,668
10,69590,80031,36980,813
133,699
3,867,225

1.048
0.038
0.295
0.040
5.007
0.504
0.340
0.124
0.766
0.165
1.401
0.484
1.247
2.063
59.658309

Appendices

Appendix II–2 – Continued
Board of Governors and Voting Powers of Member Countries
as of 31 December 2015

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Country
Argentina
Austria
BelgiumBrazilCanadaChina
Denmark
FinlandFranceGermany
India
Italy
Japan
Korea
KuwaitLuxembourg
Netherlands
NorwayPortugal
Saudi Arabia
Spain
SwedenSwitzerland
TurkeyUnited Kingdom
United States of America
Total Non-Regionals
Grand Total

Source: AfDB Treasury Department.
Note: * Vacant

310

Governor
Axel Kicillof
Johann Georg Schelling
Johan Van Overtveldt
Nelson Barbosa
Stephane Dion
Zhou XiaochuanMartin Bille Hermann
Elina Kalkku
Bruno Bézard
Thomas Silberhorn
Arun Jaitley
Pier Carlo Padoan
Taro Aso
Kyunghwan Choi
Anas Khalid Al-Saleh
Pierre Gramegna
Lilianne Ploumen
Tone Skogen
Maria Luis AlbuquerqueYousef Ibrahim Albassam
Luis De Guindos Jurado
Ulrika Modéer
Raymund Furrer
Cavit Dağdaș
Justine Greening
Jacob Joseph Lew

Alternate
Alejandro Vanoli Long
Edith Frauwallner
Ronald De Swert
Claudio Alberto Castelo Branco Puty
Rob Stewart
Yi Gang
Birgitte Markussen
Pekka Puustinen
Guillaume Chabert
Marianne Kothé
Shakitikanta Das
Filippo GiansanteHaruhiko Kuroda
Juyeol Lee
Hesham Al–Waqayan
Georges Heinen
Christiaan Rebergen
Henrik Harboe
Manuel Rodrigues
Ahmed Mohammed Al-Ghannam
Inigo Fernandez De Mesa
Per Örnéus
Chantal Nicod
Ahmet Genç
Grant Shapps
Catherine Novelli

Total Votes Voting Powers %
6,472
0.100
29,3940.453
41,7820.644
26,6980.412
246,629
3.805
74,364
1.147
76,461
1.180
32,1200.495
242,606
3.743
266,265
4.108
16,7190.258
156,9882.422
354,493
5.469
30,7860.475
29,8330.460
13,2840.205
56,4550.871
75,3791.163
16,0470.248
13,0450.201
69,8781.078
100,182
1.545
95,113
1.467
7,197
0.111
113,384
1.749
423,4876.533
2,615,061
40.342
6,482,286
100.000

Annual Report 2015

Appendices

Appendix II–3
Board of Directors of ADB: Voting Powers and Countries Represented
as of 31 December 2015

Executive Director
Tarik Al-Tashani
Hussein Abdi Halane (Alternate)

For
Libya
Somalia
Mauritania

Mulu Ketsela
VacantEthiopia
Eritrea
Kenya
RwandaSeychelles
Tanzania
UgandaShahid Khan
Bheki Sibonangaye Bhembe (Alternate)

South Africa
Swaziland
Lesotho

Amadou Kone
Bernardo Abaga Ndong Mayie (Alternate)

Côte d’Ivoire
Equatorial Guinea
GuineaMahomed Rafique Jusob Mahomed
Heinrich Mihe Gaomab II (Alternate)

Mozambique
Namibia
AngolaZimbabwe

Soraya Mellali
Alfredo Mendes (Alternate)

Algeria
Bissau-Guinea
Madagascar

Abdelmajid Mellouki
VacantMoroccoTogo
Tunisia

Abdallah Msa
Ousman Sougui Abakar (Alternate)

Comoros
Chad
Benin
Burkina Faso
Cabo Verde
Gabon
Mali
Niger
SenegalPetronella Mukelabai Nawa Mwangala
Cornelius Karlens Dekop (Alternate)

ZambiaBotswana
Malawi
Mauritius

Alieu Momodou Ngum
Miata Beysolow (Alternate)

Gambia,The
Liberia
Ghana
Sierra Leone
Sudan

Bright Erakpoweri Okogu
Maria das Neves Ceita Batista de Sousa (Alternate)

Nigeria
São Tomé & Príncipe

Total Votes
215,118
2,566
4,329
222,013102,258
2,628
93,601
9,105
2,448
49,66831,369291,077
324,558
8,010
4,348
336,917240,188
10,87026,544
277,60238,70822,742
74,867
133,699
270,016
271,650
2,177
41,895
315,722
228,243
10,69590,800329,738
1,167
5,153
13,03026,2735,544
77,53828,48916,77367,962
241,92980,81370,077
18,471
42,688212,049
10,38813,028
137,755
19,09722,036202,303574,669
4,975
579,644

Voting Power %

3.425

4.490

5.197

4.282

4.165

4.871

5.087

3.732

3.271

3.121
8.942

311

Appendices

Appendix II–3 – Continued
Board of Directors of ADB: Voting Powers and Countries Represented
as of 31 December 2015

Executive Director
Leonard Sentore
Félicité Célestin Omporo Enouany (Alternate)

For
BurundiCongo
Cameroon
Central African Republic
Congo, Democratic Republic ofVacantSouth Sudan

Mohamed Zaghloul
Ali Mohamed Ali (Alternate)

Egypt
Djibouti

Total Regionals
Tomoya Asano
Saleh Barabba (Alternate)Japan
Saudi Arabia
Argentina
Austria
BrazilRonald Meyer
VacantGermany
Portugal
Switzerland

Mariano Munoz-Carpena
Abdenor Brahmi (Alternate)

Spain
FranceBelgium

Dominic O’Neil
Eric Hilberink (Alternate)

United Kingdom
Netherlands
Italy

Hau Sing TseThamer Mohammad Alfailakawi (Alternate)

CanadaKuwaitChina
Korea
TurkeyHeikki Tuunanen
VacantFinlandDenmark
India
NorwaySwedenVacantLuxembourg

VacantMatthew Turner (Alternate)

United States of America
United States of America

TOTAL NON-REGIONALSGRAND TOTAL
Source: AfDB Treasury Department.

312

Total Votes
15,89429,82570,227
3,327
83,414
202,686
32,65532,655351,035
1,838
352,873
3,867,225
354,493
13,045
6,472
29,394
26,698430,102266,265
16,047
95,113
377,425
69,878242,606
41,782354,266
113,384
56,455
156,988326,827
246,629
29,83374,36430,786
7,197
388,80932,12076,461
16,71975,379100,182
300,861
13,284
13,284423,487
423,487
2,615,061
6,482,286

Voting Power %

3.127
0.504
5.444
59.658

6.635

5.822

5.465

5.042

5.998

4.641
0.205
6.533
40.342100.000

Annual Report 2015

Appendices

Appendix III–1
Resolutions Adopted by the Board of Governors in 2015 for the ADF

F/BG/2015/01
F/BG/2015/02
F/BG/2015/03
F/BG/2015/04

Updated Revised Procedure for the Designation of the Members of the Bureau and the Joint Steering Committee of theBoards of Governors
Annual Report and Audited Special Purpose Financial Statements for the Year ended 31 December 2014
Participation of Angola in the African Development Fund
Vote of Thanks of the Board of Governors to Dr. Donald KABERUKA, outgoing President, for the Eminent Services rendered to theAfrican Development Bank Group

Source: Office of the Secretary General, AfDB.

313

Appendices

Appendix III-2
Board of Governors of ADF: Voting Power of State Participants and of the ADB
as of 31 December 2015

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Country
African Development Bank
Argentina
Austria
BelgiumBrazilCanadaChina
Denmark
FinlandFranceGermany
India
Italy
Japan
Korea
KuwaitLuxembourg
Netherlands
NorwayPortugal
Saudi Arabia
Spain
SwedenSwitzerland
TurkeyUnited Arab Emirates
United Kingdom
United States of America
TOTAL

Source: AfDB Treasury Department.

314

Governor

Alternate

Axel Kicillof
Johann Georg Schelling
Johan Van Overtveldt
Nelson Barbosa
Stephane Dion
Zhou XiaochuanMartin Bille Hermann
Elina Kalkku
Bruno Bézard
Thomas Silberhorn
Arun Jaitley
Pier Carlo Padoan
Taro Aso
Kyunghwan Choi
Anas Khalid Al-Saleh
Pierre Gramegna
Lilianne Ploumen
Tone Skogen
Maria Luis AlbuquerqueYousef Ibrahim Albassam
Luis De Guindos Jurado
Ulrika Modéer
Raymund Furrer
Cavit Dağdaș
*Justine Greening
Jacob Joseph Lew

Alejandro Vanoli Long
Edith Frauwallner
Ronald De Swert
Claudio Alberto Castelo Branco Puty
Rob Stewart
Yi Gang
Birgitte Markussen
Pekka Puustinen
Guillaume Chabert
Marianne Kothé
Shakitikanta Das
Filippo GiansanteHaruhiko Kuroda
Juyeol Lee
Hesham Al-Waqayan
Georges Heinen
Christiaan Rebergen
Henrik Harboe
Manuel Rodrigues
Ahmed M. Al-Ghannam
Inigo Fernandez De Mesa
Per Örnéus
Chantal Nicod
Ahmet Genç*
Grant Shapps
Catherine Novelli

Total Votes Voting Powers %1,000.000
50.0000.073
0.004
18.4660.923
20.414
1.021
5.672
0.284
71.3733.569
21.2131.061
24.6961.235
19.8990.995
102.8085.140
103.803
5.190
3.531
0.177
54.947
2.747
108.5525.428
10.064
0.503
7.614
0.381
0.573
0.029
44.6792.234
45.622
2.281
5.919
0.296
11.4210.571
22.6091.130
51.1172.556
38.855
1.943
1.607
0.080
0.327
0.016
98.2774.914
105.8695.293
2,000.000
100.000

Annual Report 2015

Appendices

Appendix III–3
Board of Directors of ADF: Voting Powers and Countries Represented
as of 31 December 2015

Voting Powers Voting Powers by
in %* Constituency in %
7.143
7.143
7.143
7.143
7.143
7.143
7.143
50.000Executive Directors / Alternates
Tarik Al-Tashani
Mulu Ketsela
Shahid Khan
Amadou Kone
Rafique Jusob Mahomed
Soraya Mellali
Abdallah Msa

Participants
ADB
ADB
ADB
ADB
ADB
ADB
ADB

VacantMatthew TurnerUnited States of America
United States of America

5.293

Tomoya Asano
Saleh Barabba

Japan
Saudi Arabia
Argentina
Austria
Brazil

5.428
0.571
0.004
0.923
0.284

Heikki Tuunanen
VacantFinlandDenmark
India
NorwaySweden

0.995
1.235
0.177
2.281
2.556

Ronald Meyer
VacantGermany
Portugal
Switzerland

5.190
0.296
1.943

Hau Sing TseThamer Mohammad Alfailakawi

CanadaKuwaitChina
Korea
Turkey

3.569
0.381
1.061
0.503
0.080

Mariano Munoz-Carpena
Abdenor Brahmi

Spain
FranceBelgium

1.130
5.140
1.021

Dominic O’Neill
Eric Hilberink

United Kingdom
Netherlands
Italy

4.914
2.234
2.747

VacantLuxembourg

0.029

VacantUnited Arab Emirates

0.016

5.293

7.209

7.243

7.429

5.594

7.292

9.895
0.029
GRAND TOTAL

0.016
100.000

Source: AfDB Treasury Department.
* Slight differences may occur in totals due to rounding.

315

Appendices

Appendix III–4
Subscriptions of State Participants and of the ADB to the ADF
as of 31 December 2015

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

Participants
African Development Bank
AngolaArgentina
Austria
BelgiumBrazilCanadaChina
Denmark
Egypt
FinlandFranceGermany
India
Italy
Japan
Korea
KuwaitLuxembourg
Netherlands
NorwayPortugal
Saudi Arabia
South Africa
Spain
SwedenSwitzerland
TurkeyUnited Arab Emirates
United Kingdom
United States of America
Sub-Total
Supplementary Contributions through accelerated encashment to reduce the Gap
Supplementary Contributions through cash to reduce the Gap
GRAND TOTAL

Source: AfDB Treasury Department.
Note: Subscriptions do not include grant compensation amounts totaling UA 13.03 million.

316

Contribution in UA
111,740,678
10,747,844
18,631,870
486,232,779
535,095,203
143,629,532
1,792,693,959
520,020,932
662,767,032
2,628,702
562,332,431
2,644,215,425
2,693,787,078
91,858,841
1,689,929,624
2,765,179,778
266,413,961
179,683,998
14,514,309
1,108,923,791
1,192,306,898
173,560,750
283,700,140
47,482,400
604,398,558
1,321,545,910
926,150,626
40,693,468
8,289,468
2,612,094,189
3,010,479,147
26,521,729,320
109,161,177
65,869,711
26,696,760,208

Annual Report 2015

Appendices

Appendix IV
Classification of Regional Member Countries

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1
2
3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Category A—Countries Eligible for ADF Resources Only*
Benin**
18
Burkina Faso**
19
Burundi20
Central African Republic
21
Chad
22
Comoros**
23
Congo, Democratic Republic of**24
Côte d’Ivoire**
25
Djibouti
26
Eritrea27
Ethiopia**
28
Gambia, The**
29
Ghana
30
Guinea**31
Guinea-Bissau**
32
Lesotho**33
Liberia**
34
Category B—Countries Eligible for a Blend of ADB and ADF Resources
Cameroon
Kenya
ZambiaCategory C—Countries Eligible for ADB Resources Only
Algeria
AngolaBotswana
Cabo Verde
Congo
Egypt
Equatorial Guinea
Gabon
Libya
Mauritius
MoroccoNamibia
Nigeria***
Seychelles
South Africa
Swaziland
Tunisia

Madagascar**
Malawi**
Mali**
Mauritania
Mozambique**Niger**
Rwanda**São Tomé & Príncipe
Senegal**Sierra Leone**
SomaliaSouth Sudan**
Sudan
Tanzania**
Togo**
Uganda**Zimbabwe

Source: AfDB Strategy and Operational Policies Department.
* Except for limited ADB lending for enclave and private sector projects.
**	ADF-only countries, which may be assessed on a case-by-case basis, to access the ADB sovereign window as permitted by the policy on “Diversifying the Bank’s products toprovide eligible ADF-only countries to the ADB sovereign window (2014)”.
*** Nigeria graduated to the ADB-only category in 2014 and is currently benefiting from a transition period of five years which will be concluded on 31 December 2018.

317

African Development Bank Group
Addresses

Headquarters

Liaison Offices

BANQUE AFRICAINE DE DEVELOPPEMENT
Avenue Joseph Anoma
01 B.P. 1387 Abidjan 01
Côte d’Ivoire,Tel: +225 20 20 40 10
Website: www.afdb.org

BENIN
Bureau de Liaison
Banque africaine de développement
sis au PNUD
Rue des Dominicains, Lot 111—
Zone Résidentielle
01 B.P. 506
Cotonou, BENIN
Tel:	+229 21313045/46/79+229 21313134
Fax: +229 21311834
Contact: Mr. Daniel NDOYE,
Economiste Pays Résident
Email: d.ndoye@afdb.org

External Representation OfficeJAPAN
External Representation Office for Asia (ASRO)
African Development Bank Group
7th Floor, NBF Hibiya Building
1-1-7 Uchisaiwai-cho, Chiyoda-ku
Tokyo, 100-0011, JAPAN
Tel: +81-3-4589-8721
Contact: Mr. Tadashi YOKOYAMA,Head of the office
Email: tokyo.info@afdb.org

Regional Resource Centres
KENYA
Eastern Africa Resource Centre (EARC)
African Development Bank Group
Khushee Tower
Longonot Road, Upper Hill
Nairobi, KENYA
Tel: +254 202712925/6/8
Fax: +254 202712938
Contact: Mr. Gabriel NEGATU, RRC Director
Email: g.negatu@afdb.org
SOUTH AFRICA
Southern Africa Resource Centre (SARC)
African Development Bank Group339 Witch-Hazel Avenue
Highveld Ext. 78
Centurion 0157, SOUTH AFRICA
Tel: +27 12 003 6900
Contact: Mr. Kennedy K. MBEKEANI,Regional Economist, OIC
Email: k.mbekeani@afdb.org

318

GUINEA
Bureau de Liaison
Banque africaine de développement
Maison Commune des Nations Unies
Coléah Lansébounyi Corniche Sud
Rue MA 002
B.P. 222
Conakry, GUINÉE
Tel: + 472413 5249
Contact: Mr. Olivier MANLAN,
Economiste Pays Résident
Email: o.manlan@afdb.org
GUINEA-BISSAU
Bureau du Programme National en
Guinée‑Bissau (GWFO)
Groupe de la banque africainede développement
Rua Rui Djassi, Bâtiment des Nations Unies,4è étage
B.P. 179 Codex
Bissau, GUINEA-BISSAU
Tel: +2453201348
Fax: +2453201753
Contact: Mr. Albino José Cherno EMBALO
Email: a.embalo@afdb.org
MAURITANIA
Bureau de Liaison
Banque africaine de développement
sis au Ministère de l’Economie et des Finances,3è étage
Tevragh Zeina (derrière le Palais des Congrès)
B.P. 7653
Nouakchott, MAURITANIE
Contact: Mr. Marcellin NDONG NTAH,
Economiste en Chef Résident
Tel: +222 42 00 33 55
Email: m.ndongntah@afdb.org

MAURITIUS
Mauritius Liaison Office
African Development Bank Group
5th Floor, Anglo-Mauritius House
Intendance Street
Port Louis, MAURITIUS
Tel:	+230 2116172+230 2127953
Fax: +230 2118631
Contact: Mr. Ndoli KALUMIYA,
Economiste Pays (SARC)
Email: n.kalumiya@afdb.org
SÃO TOMÉ & PRÍNCIPE
São Tomé and Príncipe Programme Office(STFO)
African Development Bank Group
Bureau du Programme National de la Banqueafricaine de développement (BAD), PNUD
Avenue des Nations Unies
B.P. 109, São ToméSÃO TOMÉ ET PRÍNCIPE
Tel: +239 2222 123
Fax: +239 2222 198
Contact: Mr. Flávio António SOARES DA GAMA,
Resident Country Economist
Email: f.soaresdagama@afdb.org

Country Offices
ALGERIA
Bureau National de l’Algérie (DZFO)Groupe de la Banque africainede développement
3, Rue Hamdani Lahcène, Hydra
B.P. 148
Algiers, ALGERIA
Tel: +213 21435395
Fax: +213 21435392
Contact: Mr. Boubacar TRAORE,
Représentant Résident
Email: b.s.traore@afdb.org
ANGOLA
Angola Field Office (AOFO)
Banco Africano de Desenvolvimento
Rua: Comandante Gika N0 3, Torre B, 18 Andar
Alvalade – Luanda, ANGOLA
Tel:	+244 222 70 1000/+244 930 04 9256
Contact: Mr. Septime MARTIN,
Resident Representative
Email: s.martin@afdb.org

Annual Report 2015

BURKINA FASO
Bureau National du Burkina Faso (BFFO)
Groupe de la Banque africainede développement
Immeuble Administratif et Techniquede l’ARCEP, 5è étage
Ouagadougou, BURKINA FASO
10 B.P. 13680 OUAGADOUGOU 10
Tel: +226 25375750/51/53
Fax: +226 25375749
Contact: Mrs. Antoinette BATUMUBWIRA,
Resident Representative
Email: a.batumubwira@afdb.org

CHAD
Bureau National du Tchad (TDFO)Groupe de la Banque africainede développement
Immeuble BCC, 2è étage
Avenue Charles de Gaulle
B.P. 193, N’Djamena, TCHAD
Tel:	+235 22524557+235 22524778
Fax: +235 22524996
Contact: Mr. Michel-Cyr DJIENA-WEMBOU,
Représentant Résident
Email: w.djiena@afdb.org

BURUNDI
Bureau National du Burundi (BIFO)
Groupe de la Banque africainede développement
10, Rue des Travailleurs, Kiriri
B.P. 7543 Bujumbura, BURUNDI
Tel: +257 22 27 78 23/24
Fax: +257 22 27 78 25
Contact: Mr. Abou Amadou BA,
Représentant Résident
Email: a.a.ba@afdb.org

DEMOCRATIC REPUBLIC OF CONGO
Bureau National de la R.D. Congo (CDFO)
Groupe de la Banque africainede développement
294, Boulevard du 30 Juin, 6è étage,
Immeuble de la BCDC
(Banque Commerciale du Congo)
Kinshasa/Gombe
B.P. 7525 Kinshasa I
REPUBLIQUE DEMOCRATIQUE DU CONGO
Tel: +243 815560291/2
Fax: +243 815560294
Contact: Mr. Sylvain MALIKO,
Représentant Résident
Email: s.maliko@afdb.org

CAMEROON
Bureau National du Cameroun (CMFO)Groupe de la Banque africaine dedéveloppement
Immeuble Foul’assi - 1067 bis rue 1750
Nouvelle Route Bastos
B.P. 33178, Yaoundé, CAMEROUN
Tel:	+237 22202761+237 22202765
Fax: +237 22202764
Contact: Mr. Racine KANE,
Représentant Résident
Email: r.kane@afdb.org
CENTRAL AFRICAN REPUBLIC
Bureau National de la République
Centrafricaine (CFFO)
Groupe de la Banque africainede développement
Avenue de l’indépendance,dans l’enceinte du Programme desNations Unies
pour le Développement (PNUD)
B.P. 324, Bangui
REPUBLIQUE CENTRAFRICAINE(office closed temporarily)
Contact: Mr. Modibo SANGARE,
Représentant Résident
Email: m.sangare@afdb.org

EGYPT
Egypt Field Office (EGFO)
African Development Bank Group
72b, Al-Maahad El-Eshteraky St. 5th floor
AFREXIMBANK Bldg. – Opposite to Marryland
Roxy/Heliopolis
Cairo, EGYPT
Tel: +202 22563790/1
Fax: +202 22563792
Contact: Mrs. Leila MOKADEM,
Resident Representative
Email: l.mokadem@afdb.org

GABON
Bureau National du Gabon (GAFO)Groupe de la Banque africainede développement
Résidence Saint Georges, Quartier Kalikak
B.P. 4075
Libreville, GABON
Tel:	+241 1442952+241 1442953+241 07463455+241 07462048+241 07465134+241 05921010
Contact: Mr. Ali LAMINE ZEINE,
Représentant Résident
Email: a.zeine@afdb.org
GHANA
Ghana Field Office (GHFO)
African Development Bank Group
No.1 Dr. Isert Road, 7th Avenue - Ridge
Accra, GHANA
Tel:	+233 302662818+233 302662835
Fax: +233 302662855
Contact: Mrs. Marie-Laure AKIN-OLUGBADE,
Resident Representative
Email: m.akin-olugbade@afdb.org
LIBERIA
Liberia Field Office (LRFO)
African Development Bank Group
Sophie Community
Old Congo Town
P.O. Box 1844
1000 Monrovia
10 REPUBLIC OF LIBERIA
Tel:	+231 777 11 7773
+231 777 11 7775
Contact: Mrs. Margaret KILO,
Resident Representative
Email: m.kilo@afdb.org

ETHIOPIA
Ethiopia Field Office (ETFO)
African Development Bank GroupGet House Building, 7th and 8th floor
Kirkos Sub City, Kebele 20/21, House No. 056
Addis Ababa, ETHIOPIA
P.O. Box 25543 - 1000
Tel: +251 115546336
Fax: +251 115546335
Contact: Mrs. Josephine NGURE,
Resident Representative
Email: j.ngure@afdb.org

319

African Development Bank Group – Continued
Addresses

MADAGASCAR
Bureau National de Madagascar (MGFO)Groupe de la Banque africainede développement
Tour Zital, 8è étage
Ankorondrano
Rue Ravoninahitriniarivo
B.P. 1718 - Analakely
Antananarivo 101, MADAGASCAR
Tel:	+261 202264361+261 202264189
Ext. 6000-6029
Fax: +261 202264232
Contact: Mr. Abdelkrim BENDJEBBOUR,
Représentant Résident
Email: a.bendjebbour@afdb.org
MALAWI
Malawi Field Office (MWFO)
African Development Bank Group
2nd Floor, Kang’ombe House
P.O. Box 30732, City Centre
Lilongwe, MALAWI
Tel: +265 1774460-62/64
Fax: +265 1774469
Contact: Mr. Andrew MWABA,
Resident Representative
Email: a.mwaba@afdb.org
MALI
Bureau National du Mali (MLFO)
Groupe de la Banque africainede développement
Immeuble SODIES HANDALLAYE - ACI 2000
B.P. 2950
Bamako, MALI
Tel:	+223 20222885+223 20222872
Fax: +223 20222913
Contact: Mme Helene N’GARNIM-GANGA,
Représentante Résidente
Email: h.ngarnim-ganga@afdb.org
MOROCCO
Bureau National du Maroc (MAFO)
Groupe de la Banque africainede développement
30, Lotissement Al Andalous, Hay Riyad
B.P. 21555 Annakhil Rabat Chellah
Rabat, MAROC
Tel: +212 530 17 73 00
Fax: +212 530 17 73 60
Contact: Mrs. Yacine FAL,
Représentante Résidente
Email: y.fal@afdb.org

320

MOZAMBIQUE
Mozambique National Office (MZFO)
African Development Bank Group
267, Zedequias Manganhela,
JAT IV Bldg, 3rd floor
Maputo – MOZAMBIQUE
Tel: +258 21315271/2
Contact: Mr. Joseph Martial RIBEIRO,
Resident Representative
Email: j.ribeiro@afdb.or

SIERRA LEONE
Sierra Leone Field Office (SLFO)
African Development Bank Group
13, Lamina Sankoh Street
5th & 6th floor, Bishop Building
P.O. Box 335, Freetown, SIERRA LEONE
Tel: +232 76541328
Contact: Mrs. Khadidia DIABI,
Principal Country Program Officer, OIC
Email: k.diabi@afdb.org

NIGERIA
Nigeria Country Office (ORNG)
African Development Bank Group8, Lake Chad Crescent
Maitama District
Abuja, NIGERIA
Tel: +234 94621030-59/6657-8
Contact Mr. Ousmane DORE, Director
Email: o.dore@afdb.org

SOUTH SUDAN
South Sudan Field Office (SSFO)
African Development Bank Group
UNDP Compound
Ministries Road
P.O. Box 622, Juba, SOUTH SUDAN(office closed temporarily)
Contact: Mr. Abraham MWENDA,
Lead Economist EARC- OIC
Email: a.mwenda@afdb.org

RWANDA
Bureau National du Rwanda (RWFO)
Groupe de la Banque africainede développement
Boulevard de l’Umuganda
Building Glory House, 3rd & 4th floors
Kacyiru Road
P.O. Box 7329, Kigali, RWANDA
Tel: +250 252 504250
Fax: +250 252 504298
Contact: Mr. Negatu MAKONNEN,
Resident Representative
Email: n.makonnen@afdb.org
SENEGAL
Bureau Régional du Sénégal (SNFO)
Groupe de la Banque africainede développement
Immeuble Coumba, 2è étage
Route de Ngor, Zone 12 - Les Almadies
B.P. 50544 - CP 18524 RP
Dakar, SENEGAL
Tel:	+221 338200888+221 338697544
Fax: +221 338200999
Contact: Mr. Mamadou Lamine NDONGO,
Représentant Résident
Email: m.ndongo@afdb.org

SUDAN
Sudan Field Office (SDFO)
African Development Bank Group
Higleig Petroleum Tower, 7th Floor
Obaid Khatim Street
P.O. Box 644, Khartoum, SUDAN
Tel:	+249 183236131+249 183236240+249 183236320
Contact: Dr. Abdul KAMARA,
Resident Representative
Email: a.b.kamara@afdb.org
TANZANIA
Tanzania Field Office (TZFO)
African Development Bank Group
Garden Avenue, 5th Floor, International House
P.O. Box 6024
Dar Es Salaam, TANZANIA
Tel: +255 22 2125281/2 (office)Fax: +255 22 2125283
Contact: Ms. Tonia KANDIERO,
Resident Representative
Email: t.kandiero@afdb.org

Annual Report 2015

TOGO
Bureau National du Togo (TGFO)
Groupe de la Banque africainede développement
Immeuble de la BOAD, 6è étage
68, Avenue de la Libération
01 B.P. 2722 Lomé, TOGO
Tel:	+228 22228002+228 22203123
Contact: Mr. Serge N’GUESSAN,
Représentant Résident
Email: s.nguessan@afdb.org

Temporary Relocation Agency
Immeuble Zahrabed
Avenue du Dollar, Les Berges du Lac II, Tunis
1053, Tunisia
Tel:	+216 71103900+216 71103930
Fax: +216 71194523

UGANDA
Uganda Field Office (UGFO)
African Development Bank Group
14th Floor, Crested Towers Building
Plot 17/22 Hannington Road
P.O. Box 28509
Kampala, UGANDA
Tel: +256 414236166/7
Fax: +256 414 234011
Contact: Mr. Jeremiah MUTONGA,
Resident Representative
Email: j.mutonga@afdb.org
ZAMBIA
Zambia Field Office (ZMFO)
African Development Bank Group
Banc ABC House, 1st Floor
746 Church Road
Cathedral Hill, Ridgeway
P.O. Box 51449
Lusaka, ZAMBIA
Tel: +260 211257868/869/874
Fax: +260 211257872
Contact: Mr. Damoni KITABIRE, DAMONI,
Resident Representative
Email: d.kitabire@afdb.org
ZIMBABWE
Zimbabwe Field Office (ZWFO)
African Development Bank Group
5th Floor, Joina City
Cnr Jason Moyo Avenue / Julius Nyerere Way
Harare, ZIMBABWE
Tel: +263 4 752 917/838
Fax: +263 4 779 398
Contact: Ms. Mary Manneko MONYAU,
Chief Regional Economist, OIC
Email: m.monyau@afdb.org

321African Development Bank Group
Avenue Joseph Anoma
01 BP 1387 Abidjan 01
Côte d’Ivoire
Telephone: +225 20 20 40 10
Email: afdb@afdb.org
Website: www.afdb.org
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