2

Resilient growth in the face of global and regional headwinds
Drivers of Africa’s growth
GDP growth (%)

10Strong public investment
in infrastructure

8
6Asia Pacific4

AfricaNorth America

2Strong domestic
consumer base

Europe
0
2006
-2

2007

2008

2009

2010

2011

2012

2013

2014

2015

Latin America
and theCaribbean

Burgeoning
services sector-4-6Gradual economic
diversification

3

Diverse country-specific factors driving growth
4%
2%

North
AfricaFive of the ten fastest-growing
countries in the world withreal GDP growth above 7%
are in Africa

2014

6%

West
Africa2014

Ethiopia

CentralAfricaCôte d’Ivoire
DRC

6%

2014

Rwanda7%

Tanzania

East
Africa2014

Southern
Africa

3%

2014

2015

3%
2015

4%

2015
6%

2015

2%

2015

Growth picked-up on the backof improvements in politicaland economic stability

Lower growth due to depressedcommodity prices as well as tothe impact of the Ebola outbreakDecline in oil and metal prices
adversely affected growth in
the region
Political instability in Burundi
and South Sudan weighed downon growth in the region
Growth impacted by acuteshortages of power, hostile
weather conditions and low
commodity prices4Macroeconomic environment remains relatively stable

Low commodity prices depressed
revenues, contributing to the widening ofboth fiscal and current accounts

Current Account Balance (% GDP)
2013

2014

2015

2

Fiscal and monetary policies have
proven prudent, keeping inflation
generally stable aided by low fuel prices
in importing countries

0-2

Fiscal Balance excluding grants (% GDP)
2013

2014

2015

0

Inflation (%)

-4
-6

10

-8

-2

8

-10
Oil-Exporting-4

Oil-Importing

Africa

-6

6
4

-8
2

-10
Oil-Exporting

Oil-Importing

AfricaThe strengthening of the US dollar also put
additional pressure on the exchange rate ofa number of countries

Oil-Exporting

Oil-Importing

Africa

0
2013

2014

2015

5

Africa’s growth should remain favorable, in spite of challenges
Africa has shown its resilience and should continue to maintainits position as the second fastest growing region of the world

4.5%
2017

3.7%

2016

3.6%
2015

6

7

At the center of Africa’s transformation

8

High 5s - Scaling up implementation of the Ten Year Strategy

Improve the quality of life
for the people of Africa
Develop innovative flagshipprograms to open up
opportunities for youth
employment, improve accessto basic services and create
economic opportunities forthe extreme poor

Light up and power Africa
Unlock the continent’s
energy potential inorder to drive muchneeded industrialization

Feed Africa

Industrialize Africa

Integrate Africa

Transform agriculture toincrease productivity, lower
food prices, enhance foodsecurity, revive rural areasand create jobs for Africans

Lead other partners in theprocess of industrializing
Africa and developing theprivate sector to create
wealth from natural assets

Address barriers, create
regional value chains andleverage complementarities
in order to tap thecontinent’s huge market
potential

9Light up and power Africa
Energy in Africa,a grey pictureOver 640 million Africans
lack access to electricity

To provide universal energy
access by 2025
Hydropower
provides about afifth of current
capacity but not evena tenth of its total
potential is harnessed

Per capita use of electricity
Africa 613 kWh; USA 13,000
kWh; Europe over 6,500 kWh

Ourambition••••

162 GW electricity
generation
130 million on-gridconnections
75 million off-gridconnections
150 million households withaccess to clean cooking
solutionsInsufficient energy accessPower shortages
estimated to cost
2% GDP annually,
undermining
economic growth,
employment creationand investment







Causes hundreds of thousands of deaths
annually through the use of woodburning stoves
Undermines hospital and emergency
services operations
Compromises educational attainment
Drives up cost of doing business due tothe use of generators

Africa’s poorest pay
60 – 80 times more
per unit in northern
Nigeria thanresidents of
New York
and London

AfDB to invest USD 12 billion and leverage about USD 50 billion over 5 years

Partnership-driven effort
Work with partners to develop
a framework that takes into
account different energy
sources, geographic conditions,
regulation and pricing,technologies and distribution
mechanisms

10Feed Africa
Agriculture employs over 60% of the African workforce and accounts
for 33% of the continent’s GDP, yet Africa is the world’s mostfood-insecure region
Heavy dependence on food imports (over USD 35 billion)
More than 1 in 4 Africans is malnourished
Droughts, water scarcity and famine are well-known and real
60% of arable land in the world not yet put to production is in Africa

Africa’s potential for agricultural production is enormous

Poor infrastructure

Inadequate
mechanization

Limited access tocredit, fertilizers andtechnology

Insecure land tenure

How is AfDB tackling these challenges?
“Feed Africa initiative” will deploy financial resources to enable Africancountries to seize the opportunity to promote agriculture relatedindustrialization
Accelerate support for massive agricultural transformation across Africa to:

Our
Goals:

Adequately
feed 150
millionadditional
peopleLift
100 million
people outof poverty

Restoreproductivity
to 190 million
hectares

AfDB’s investment to quadruple from a current annual average of USD 612 million to about USD 2.4 billion

11

Industrialize Africa
African economies are largely dependent
on sectors with low added value••

Our ambition

Africa’s share of global manufacturing at around 1.9%
62% of imports and 19% of exports are manufactured

Commodity dependence(% government revenue)••

Industry GDP per capita
North America
USD 11,500

Libya
98%

East Asia
USD 3,400•••

Equatorial Guinea
85%
Angola80%•

AfricaUSD 700

Nigeria
74%••

Move Africa to the top of the value chain
Increase industrial GDP by 130% to USD 1.55
trillion by 2025
Develop efficient industry clusters
Provide policy advisory services, technicalassistance to governments and funding to key
PPP projects
Increase investment/financing to lend tosmall and medium enterprises (SMEs) andincrease their capacity
Improve access to market finance for African
enterprises
Catalyze funding into infrastructure andindustrial projects
Link up African enterprises and major projects
with potential partners and investors

We cannot do it alone!

Low value-added activities leadto low GDP/capita

AfDB to invest about USD 5.6 billion per year

12

Integrate Africa
PolicyRegulatory

Regional integration challenges:
Institutional

Infrastructural

Intra-African trade at 15%, lowest globally compared to
70% in the EU

African countries are losing out on billions ofdollars in potential trade every year becauseof fragmented regional markets and lack of
cross-border production networks that canspur economic dynamism

The Bank Group focus

Building regional
infrastructure

Boosting
intra-African
trade andinvestment

Facilitating
movement ofpeople acrossborders

60% in Asia

54% in the
North America
Free Trade Area

Our ambition…..to lead several continent-wide initiatives targeting both “hard”
and “soft” infrastructure• Continental Free Trade Area – to address Africa’s low internal and external
trade performances• Comprehensive Africa Agriculture Development Program• Program for Infrastructure Development in Africa – designed to develop
a vision and strategic framework for the development of regional andcontinental infrastructure• Sahel and the Drought Resilience and Sustainable Livelihoods Program in theHorn of Africa

AfDB to invest about USD 3.5 billion per year from 2016 to develop high quality regional infrastructure

13

Improve the quality of life for the people of Africa

Our vision

•
•

Build
critical skills

Widespread inclusive growth, allowing all Africans
across different countries to have access to
Basic services (education, health care, water and sanitation)
Productive employment and entrepreneurship opportunities

Ensuring that Africa’s demographic growth yields significant
economic dividends and contributes to inclusive growth will

Offer a new hope foryounger generations

Contribute to halting
the migration flows
draining African youth

Createmillions of jobs

Improve accessto water andsanitation

Catalytic
approachwill turndemographic
growth into
economic
dividends

Strengthen
health systems

Create 80 million
jobs

14

Path to green growth
Several African countries have already embarked on ambitious programs
that integrate climate action with sustainable development
AfDB is committed
to tripling climate
finance to USD
5 billion per yearby 2020
ClimateInvestment
Funds
USD 973
millionRwandaNational Strategy for
Climate Change and Low
Carbon Development

Ethiopia

GlobalEnvironment
Facility
USD 252
millionAfrica Climate
Change Fund
USD 11
millionSustainable
Energy Fund for
AfricaUSD 102
millionGreen
Climate FundUSD 2.5billion funding
target for 2016

Climate Resilient
Green Economy
Strategy

One of the world’s most ambitious
renewable energy strategies• Combines sustainability, wealth creationand poverty reduction measures• Power generation from renewableenergy to increase to 50% by 2017from 4% in 2008

A comprehensive approach to mitigate theimpact of climate change• Almost all electricity comes from hydropowerand generation capacity has tripled since 2005
• 53.5% of the population now enjoying accessto electricity compared to 16% eight years ago

15

Water, the development nexus

Currently

30%

70%

> 30%

of people in Africa
have no access toreliable water
sources

do not haveaccess tomodernsanitationof water points
in rural areas are
non-functional

Water is the lifebloodof the High 5s
Food security
Energy security
hydropower

Countries in Africa can lose up to

5%

25%

2%

of annual GDP
to poorcoverage ofdrinking waterand sanitationof annual GDP
to droughts
and floods inaffected
countriesof annual GDP
to frequent
power
outagesIndustrializationwater is a key input and facilitator
Regional integrationtransboundary waters
Improving quality of life
through impact on health,education, gender equity,
employment and livelihoods

3 key initiatives hosted by AfDB:

African
Water
Facility

Rural Water
Supply andSanitation
Initiative

Multi-donor
Water
Partnership
ProgramHelp countries
achieve the objectivesof the Africa Water
Vision 2025

Increase financing
for water supply
and sanitation inrural areas

Promote effective
water management
policies and practices

In 2015, 13 projects worth USD 531 million wereapproved for development of the water andsanitation sector in Africa

16Delivering on a strong pipeline of projects
Sectoral distribution of 2015 approvals

In USD million

8,778
7,316

6,754

Industry: 0.1%

Finance: 21.3%

Breakdown of infrastructure
approvals

Agriculture: 8.1%
2013
ADB

2014
ADF

NTF

2015

Communications
1.40%

Special Funds
Infrastructure: 48.6%

Approvals by region

Social: 9.4%

Energy13.80%

22.80%

20.80%
17.70%

18.30%
Multi-sector*: 12.5%

10.80%

9.60%

Water
Supply andSanitation
6.30%* Multi-sector includes public finance management and other governance-related operations

Transport
27.20%

17

Bamako - San Pedro Corridor
Improve the traffic flow
and reduce transportation
time and costs between
Mali and the port of
San Pedro

Governmentof Côted’Ivoire andMali
USD 33.5
million

AfDB
USD 56.2
millionCorridor will serve asa transit port forneighboring countries

Before implementation
West African
Economic andMonetary
Union
USD 3.3
millionTotal Cost:
USD 235.8 million

2015
26 November
Project Approval

Expected impact

ADF
USD 142.7
million

2016

2017

2020
January
Start of civil works

Completion18

Africa Backbone ProjectContributes to thediversification of
Cameroon’s economy
GlobalEnvironment
Facility
USD 1.8
millionGovernmentof Cameroon
USD 8.4
millionPromotes regional
integration by enablingneighboring countries
to access fiber optic
infrastructure

Before implementation

Expected impact

ADF
USD 42.4
millionTotal Cost:
USD 52.6 million

2015
3 JulyProject Approval

2016

2020
Start of civil works

June
Completion

19

Dar Es Salaam Bus Rapid Transit System Project - Phase 2
Enhance and improve
traffic flow

Positively impact
businesses
Governmentof Tanzania
USD 17.6
millionAfrica Growing
Together Fund
USD 44.3
million

Before implementation

Expected impact

ADF
USD 97.4
millionTotal Cost:
USD 159.3 million

2015
30 September
Project Approval

2016
SeptemberStart of civil works

2017

2019
DecemberCompletion

20

Private sector - Nacala Rail and Port - Mozambique, Malawi

Total Cost
USD 4.6 billion•

Support the construction/rehabilitation of 912 kmof railway and associated port infrastructure from
Mozambique to Malawi•

Provide efficient and environmentally-friendly
transport of mineral resources, general freightand passengers•

Facilitate trade and development across the region•

Improve global competitiveness of the region’s
mineral, agricultural and manufacturing exports

AfDB financing
USD 300 million

21

Arusha Sustainable Urban Water Project - Tanzania

Total Cost
USD 234 million•

Existing sanitation system caters to only 7.6% of
Arusha city, and is concentrated in the Central
Business District. The sewage treatment plant is
critically overloaded•

Project will provide safe, reliable and sustainable
water and sanitation services in Arusha•

Contribute to improvements in health, social
well-being and living standards of the more than
850,000 residents

AfDB Financing
USD 169 million

22Addressing the energy gap
Low electricity access rates

Guinea12%

Guinea-Bissau
19%

Gambia35%

Gambia, Guinea, Guinea-Bissau, Senegal•

The Gambia River Basin
Development Organization
Energy Project••

Pooling of hydropower to end power
shortages
1.3 million people will benefit from
regular and more affordable electricity
Interconnection network among thefour countries will help share energy frompower plants in the area

USD 1 billion with USD 134 million financed by the Bank

Senegal57%

UgandaUganda14%••

Rural Electricity Access•

58,000 rural households in 16 districts
representing around 280,000 people will
benefit from the investment
Project will significantly improve public
institutions and businesses in the area
Provide a reliable energy supply to 5,320
business centers and 1,470 public
institutions

USD 121 million project with USD 100 million financed by the Bank

23

Fostering development through Trade Finance
Ample array of trade finance products
Unmet demand estimated at USD 120 billion annually

Trade Finance Programprovides:• Guarantees to majorinternational banks• Trade liquidity support
to local banks and soft
commodity corporates

Local partners provide
finance to SMEs and local
corporates, promoting
intra-African andinternational tradeTwo-thirds of thetransactions benefited SMEs

Benefits countries by facilitatinginternational trade, critical for
economic growthUSD1billionConsistent partner, even in timesof market stressSupported more than 1,000 tradetransactions worth USD 3 billion
since inception

Liquidity and risk mitigation to more than
85 local banks in more than 20 Africancountries, most of which are in
low-income countries and/or fragile
and transition states

USD
305
millionRisk Participation
Agreements

Trade FinanceLines of Credit

USD
110
millionSoft Commodity
Finance Facilities

AfDB 2014
Best Development
Financial
Institution in
Trade Financein Africa
24Building resilient health systems
AfDB made a valuable contribution towards the rapid containment of the Ebola outbreak

Many lives saved versus theprediction of millions dying

Health systems strengthened, humanresources capacity built to respondeffectively to Ebola virus disease andother infectious diseases

Communities empowered toeffectively respond to Ebola

Psychosocial support
provided to survivors

An estimated 321 million
people in the ECOWAS
sub region benefited from AfDB
Ebola containment projects

Bank now supporting
Post Ebola efforts through the
Post Ebola Recovery Social
Investment Fund project25

Deepening and broadening African capital markets
Leading regional financial markets integration operations
Investment in Africlear Global, a pan-African
platform providing technology to other African
Central Securities Depository companies

Piloting the integration of 4 regional hubs
(Casablanca, Nigeria, Johannesburg, Nairobi stock
exchanges) in collaboration with the Africa Stock
Exchanges Association (ASEA)

 To ensure a sound ecosystem for regional
financial infrastructure
 To drive efficiency and lower costs of capital
markets clearing settlements and depositorytransactions
 To create Africa based products that will add value
to institutional investors and listed companies

 To enhance regional capital markets policy
dialogue and transparency of information
 To create new financial products (indices) To facilitate cross-border trading andcapital raising to improve liquidity in
Africa’s capital markets

Bolstering the financial markets ecosystem with a
USD 2.2 million Trust Fund providing grants andtechnical assistance to strengthen the regulatory
and legal framework

African Financial Markets Initiative (AFMI) to
support the development of domestic bond markets

 To support the financial technology
infrastructure
 To improve capacity building in Eastern,
Western and North Africa

 Launch of the African Financial Markets Database,the most comprehensive and accurate knowledge
hub on African debt markets, in partnership with
African Central Banks Launch of the African Domestic Bond Fund, a USD
500 million fund with AfDB the anchor investor
and promoter, to provide additional sources offunding for local African governments andcorporate bond issuers

Financial markets haveplayed an importantrole in Africa’s recent
economic progress byproviding better
access to financing forvarious African
governments andcorporates

The AfDB isfacilitating strong
financial systemgovernance, providing
technical assistance, andinstitutional
strengthening programs toaddress institutional
deficiencies

26

Improving governance in Africa
Over 100 governance projects completed, resulting in better macroeconomic management, increased
tax revenue, more foreign direct investment and less time required to start a businessMali USD 21 million
to improve public expenditure managementin support of economic recovery
Project will enhance fiscal decentralization,
ensure greater efficiency and transparency
in public procurement and strengtheninternal controls

Tanzania USD 69 million
for policy reforms in the power
utilities sector
Reforms will address governance ofstate owned enterprises

Morocco USD 111 million
to strengthen the commercial legal system,
institute tax reforms and promote PublicPrivate Partnerships (PPPs) and institutions
to combat corruption
Project will support competitivenessand SME growth

Zimbabwe USD 3 million
to support Civil Society Organizations
working in economic and financial
governance, women’s rights andParliamentary capacity building
initiatives on women’s economic
empowerment27

African Legal Support Facility producing results
Commercial
creditor litigation
Capacity building

A publicinternationalorganization
created andhosted by the
AfDB

59 members,
including 52 states
and 7 internationalorganizations

Negotiation ofcomplexcommercial
transactions

Benin, Burkina Faso, Cameroon, Ethiopia
Gambia, Mali, Mauritania and Senegal
Kenya, Tanzania, Togo, Sierra Leone, Malawi,
Comoros, Mauritania , Guinea-Bissau, Somalia
and Madagascar

28

Consolidating the gains from decentralization
Tunisia

Country/Customized
liaison office
Regional resource center

Morocco

Mauritania

Algeria

Mali

Egypt
Sudan

Chad

SenegalBurkina
Guinea Guinea Faso Benin
Nigeria
Bissau Sierra
South Ethiopia
Leone
CAR
Ghana
Sudan
Liberia Ivory TogoCameroon
Uganda
Congo
Coast
Kenya
Gabon
(HQ) Sao
DRC Rwanda
BurundiTomeandTanzania
Principe
AngolaZambiaMalawi
Zimbabwe

Madagascar

Mozambique

MauritiusSouth
Africa29

30

Innovating and crowding-in resources to do more
Large scale partnerships that enlarge the Bank’s footprint in Africa
USD
3 billion

USD
2 billion

Enhanced Private Sector
Assistance for Africa(Japan)Africa Growing Together Fund
(China)USD
1 billion

USD
830 million

Africa 50

Risk transfer instruments improving capital efficiency•

Risk sharing vehicle that enables AfDB to
support more private sector projects inlower income countries to increasedevelopment impact•

Expected to catalyze USD 1 billion of
additional lending over 3 years

Private Sector Credit
Enhancement Facility

31

Addressing the perception of Africa as high risk

Africa has been less successful thanother developing regions in attracting
private investment

AfDB Guarantees

Risk Sharing
Risk perception often leads to an
additional 10-15% risk premium on projects
compared to other regions of the world

Crowding In

This skewed perception of risk impacts
the cost and volume of commercial
financing and capital investment

32Partial Risk Guarantee, aninnovative political risk mitigation instrument
PRGs extended by the Bank forSovereign governments and sovereign owned entities
with the Bank signing a counter-guarantee with therespective governments

Risk sharing withprivate sector

Facilitates privatizations
and PPPs

To protect private lenders against…
Inability to repatriate
or convert currency
earned in the country

Confiscation,
expropriation,nationalization anddeprivation

Not honoring
contractual obligations

Changes in law andforce majeure risks

Project benefits fromBank’s safeguards

No additional contingent
liability to the country33

Over USD 2.7 billion in investments catalyzed through AfDB PRGs
Kenya

October
2013

Nigeria

December2013

Lake Turkana Wind Farm Project

Energy Sector Reformand Restructuring Program

EUR 20 million

USD 180 million

 300 MW wind energy capacityand 428 km of transmission lines Boost private sector confidence to invest in
independent power producers (IPPs) throughthe operationalization of Nigeria’s Bulk
Electricity Trading Plc (NBET), a government
entity established to act as intermediary for
an interim period between IPPs anddistribution companies

 PRG used to cover risk of
construction and completion
delays in the transmissioninterconnection by KETRACO,
the state-owned transmission
company PRG used to mitigate the risk of NBET not
fulfilling its payment obligations under its
PPAs with IPPs

Kenya

October
2014

Power generation with Geothermal
Development Corporation
USD 12.4 million
 Three 35 MW geothermal
power plants
 PRG to mitigate the risk of
non-payment from Kenya Powerand Lighting Company for powerpurchases and the Geothermal
Development Company of Kenya
for non-supply of steam

34

Partial Credit Guarantees crowd-in investors for Africa’s transformation

PCGs extended by AfDB for Eligible Regional Member
Countries
 Sovereign owned entities
 Private sector project sponsors
that meet the Bank’s due diligencecriteria for loans

To protect against

For the benefit of

Debt service defaults, including both

 Private lenders to both private
sector clients and/or sovereignclients
 Bondholders of both publicand corporate debt

Political risk
 Availability of foreign exchange
and convertibility into foreignexchange Expropriation and nationalization
 Contractual obligations
 Changes in law

 Commercial risks such as
demand risk, market risks, etc.

35

Partial Credit Guarantees helping Africa open access to debt markets

CAMEROONMULTINATIONALSEYCHELLESCAMEROONMTN PCGGOWE PCG

POLICY REFORM PCG

DERIVATIVES PCG

EUR 13 MILLION

USD 16 MILLION

USD 10 MILLION

USD 500 MILLION(2000)(2007)(2010)(2015)

Growth Oriented Women’sEnterprises (GOWE)
Portfolio Guarantee
together with USAID
extended a 50% loss
sharing portfolio guarantee
to African banks

Seychelles Economic
Reform Partial Credit
Guarantee, part of a policybased program to support
the implementation of
economic reforms by
reducing public debt tomore sustainable levels

Facilitated access to financefor women entrepreneurs
and SMEs throughguarantees

Eased re-entry into
international capital markets
following a crisis / default
which facilitated therestructuring of USD 320
million worth of debt

Guarantee to allow
syndicate of lenders toprovide local currency toinvest in IT telephony
expansion across Cameroon

Introduced limited recourse
project finance to local
banks allowing them toprovide longer term
funding (5 years) in anenvironment where thelongest maturity was
limited to 2 years

Partial Credit Guarantee tothe Republic of Cameroon
covering its payment
obligations under crosscurrency swaps executedwith commercial banks tohedge the proceeds of an
USD denominated Eurobond

Lowered FX exposure,provided better andcheaper terms fromhedging counterparties
and an estimatedEUR 24 million in
annual savings36Providing innovative financial solutions

New Fully Flexible Loan allows middle-income countries toExtend the maximum
maturity of loans from
20 to 25 years andgrace period from
5 to 8 years byintroducing maturitybased pricing

Cap, collar or convert
the base interest ratefrom floating to fixedand vice versa
throughout the lifeof the loan

Convert the currencyof disbursed orundisbursed loans
throughout the lifeof the loans into any
other lending currency,
including local
currencies, on a best
efforts basis

37Local currency loans to facilitate infrastructure and entrepreneurship
Foreign exchange risk management throughsynthetic local currency loans

Loans
denominatedand disbursed
in foreign
currency

Clients’ repayments
denominated inforeign currency but
indexed to local
currency interest
and exchange rates
through an agreed
formulaSupporting Africa’s micro, small andmedium size enterprises

Limits potential
increases inamounts due inlocal currency
terms

XINA Solar One ProjectSouth Africa

Africa SME Program LOC - Mozabanco

Mozambique

Moulin Moderne du mali

Mali

LEKKI Toll Road Project

Nigeria38

A solid institution to pursue Africa’s development goals

Criticaldevelopment
mandateSolid financial risk
management

Robustcapitalization

Diversified
funding profile

Aaa/AAA/AAA“Our assessment of
AfDB's financial profile
as very strong, predominantly
reflects an improvement in
the Bank's capital adequacy.”
S&P
September 2015

Strong levelsof liquidity

Preferred
creditor status

Strong support
from shareholders

Intrinsic financial strength bolstered by shareholders’ support39

Prudent management
Capitaladequacy

Risk Capital
Utilization Ratio
2013

2014

2015

62%

61%

61%

Concentration
risks

Five largest country
exposures
2013

2014

2015

70%

66%

47%

Asset
coverageratio= Σ [[ Exposure] * [Risk capitalcharge]]/Total risk capital

Asset coverage ratio
2013

2014

2015

48%

46%

47%

Operationalrisks= (Paid-in-capital + reserves)/(Gross loans
outstanding + equity participations)“AfDB’s high level of capitalisation is
one of the key factors supporting its‘AAA’ rating” Fitch, September 2015

“The AfDB’s Asset Coverage
Ratio (ACR)… exceeds themedian Aaa ACR of 29.8%...”
Moody’s, August 2015

“Continued improvement in singlename sovereign concentrations…”
S&P, September 2015

Maximize
exposure
to development
related risks

Minimize market risks

Interestrate

Liquidity

2013

2014

2015

27%

25%

31%

“AfDB’s liquidity is excellent” Fitch, September 2015

Foreignexchange

Counterparty
credit40

Strong risk bearing capacity to support business growth
Risk capital increased by USD 2 billion since 2006
Amount in UA

Amount in USD

8,818

9,000
8,000

7,440

7,432

7,178

8,695

7,494

7,424

6,699

7,000
6,000
5,000

8,672

8,207

5,340
4,660

4,708

4,453

4,881

4,821

4,741

6,275

5,986

5,726

Adequate portionof earnings
incorporated into
reserves

4,000
3,000
2,000
1,000

0
2006

2007

2008

Reserves in UA“AfDB is one of themost highly capitalized
regional MDBs”
Fitch,
September 2015

2009

2010

Paid-in Capital in UA

2011

2012

Reserves in USD

2013*

2014*

2015*

Paid-in Capital in USD

Reinforced capitalbase bolstered by
payments received
under the sixth
general capitalincrease approvedin 2010* In 2013, AfDB adopted the economic capital framework and as a result, in computing risk capital, reserves were reduced after
taking into account adjustments for valuations of equity investments and borrowings through other comprehensive income

USD 1.8 billion of additional paid-in capital expected from 2016 to 2026
41

A comfortable cushion for risk bearing activities
Measuring and monitoring capital requirements for credit,
counterparty, market and operational risks
9,000

AfDB risk
capitalsupports a
USD 19 billion
portfolio ofsovereign,commercial
and equity
financing aswell as a USD
12 billion
treasury
portfolio

8,695
In USD million

8,000
3,427

7,000
6,000
883

5,000

241

73

- 211

5,268

1,229

4,000
3,000

351

Availableriskcapital
(39%)

5,268

2,702

Risk
capitalutilized
(61%)

2,000
1,000
0

As of 31 December 2015
* Diversification benefit stems from correlation between risks

Capital utilization driven by the volume and quality of the Bank’s various risk exposures

42

Building resilience and relevance
Limits set to protect against concentration risks
 Sovereign limit: 45% of risk capital Non-sovereign limit: 45% of risk capital Non-core risk limits (e.g. market and operational):
10% of risk capital Country limit: 15% of risk capital Equity limit: 15% of risk capital Single name limit: 6% of the non-sovereign risk capital Sector limit: 25% of the non-sovereign risk capital(for financial sector 35%)

V

V

V

Similar to other regional
Multilateral Development Banks(MDBs), AfDB’s credit rating isaffected by concentration risksFirst MDB Exposure Exchange
Agreement (EEA)* withWorld Bank and Inter-American
Development Bank (IADB)
to reduce sovereign
concentration risk

EEA has substantially
improved both lending
capacity and capital
adequacy ratios* The EEA involves a simultaneous exchange of equivalent credit risk on defined sovereign credit exposure with each participating MDB
retaining a minimum of 50% of the total exposure to each country that is part of the EEA. Under the EEA, the MDB that originates thesovereign loans continues to be the lender of record.

43

Safeguarding stakeholders’ interests
Key prudential ratios well within statutory limits
100%

Limit

80%

60%

58%

Leverage

Leverage
Debt / usable capital(usable capital =Σ paid-in capital, reserves,
callable capital of nonborrowing countries rated
A- and above)

Gearing

40%
28%

20%
Leverage ratio

Gearing ratio

0%
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Gearing

Loans* + equity
investments +guarantees / subscribed
capital** + surplus +reserves*Including undisbursed** Unimpaired

44

Managing the Bank’s portfolio in a challenging environment
Bank’s internalrisk rating

Portfolio risk profile

5

Sovereign WARR

Non-sovereign WARR

Combined WARR

4

4.0 (B)3

3.0 (BB)
2.63 (BBB-)

2
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Falling commodity prices
have negatively impacted
resource based non-sovereign
projects

WARR: Weighted Average Risk Rating

notwithstanding….

A defined risk appetite for the lending portfolio: BB+ to B- (i.e. 3 to 4)

Sovereign

In USD million

Non-sovereign

20,00017,53016,00012,000
8,000

8,044

8,952

9,180

2006

2007

2008

12,08813,0932009

2010

18,577

19,055

19,282

2013

2014

2015

combined WARR at thestronger endof the targeted risk appetite

14,788

4,000
0
2011

2012

45

Positive income in a negative operating environment
USD 2.9 billion of allocable
income since 2006

Allocable income at
comfortable level reinforces
the Bank’s financial capacity

USD 1.2 billion allocatedto reserves

Reserves have firstclaim on earnings

USD 1.7 billion allocated to highdevelopment impact initiatives
and surplus accounts

African Development Fund
Middle Income
Country Trust Fund
Special Relief Fund

287

In USD million•

Non-sovereign operations generated a proportionallylarger share of revenue but higher profit margins werecounterbalanced by slightly higher provision rates•

Increase in non-sovereign operations provisioning
resulted from unfavorable operating context•

Low interest rate environment

234
190

109
88
146

2013
Allocation to reserves

58
178

2014

132

2015

Allocation to development initiatives

AfDB cost-to-income ratio continues to be the lowest among peers

46

Managing market risks
Minimize credit risk exposure withcredit and derivative counterparties
 Minimum credit ratings established
for investments (A) Minimum ratings for derivative
counterparties (A-)

Mitigating interest rate risk
 Minimized by matching interest ratecharacteristics of assets and liabilities Stabilize net interest margin

Prohibited from taking foreign exchange
rate risk
 Liabilities in any currency matchedwith assets in the same currency
 Currency composition of net
assets aligned with the SDR*
currency basket

Conservative
principles
underlying
our asset andliability
management

Relying on our own resources in theface of shocks before shareholders’support materializes
 Ability to meet net cash flow
requirements including debt
redemption and loan disbursements
for 1-year without access toadditional resources*SDR: Special Drawing Rights

47

Conservative management of liquidity
Multi-currency portfolio
including:AAA
48%

AA+ toAA50%

USD

A+ and
below
2%

JPY

EUR

CHF

GBP

CAD

ZAR

Investment portfolio

70%

Investment objectives
15%

Capitalpreservation

Liquidity

ReturnSovereign
Supranationaland Agencies

Covered
bonds

6%

5%

Corporate
bonds

ABS/MBS*

4%
Money market
investments* ABS/MBS = Asset/Mortgage Backed Securities

As of 31 December 201548

Shareholders support
Expanding membership
Callable capitalfrom AAA rated
members fully
covers net debt

80 membercountries

77 membercountries

48 membercountries
1979

1994

Preferred
creditortreatment

2015

General Capital Increase
In USD million

60,612

History of consistent
support for capitalincreases demonstrates
strength and stability ofrelationship withshareholders

14,966
527

GCI-I

5,584

GCI-II

1,545

GCI-III

GCI-IV

Convening power allows
the Bank to mobilize andalign stakeholders
around shareddevelopment outcomes

7,857

GCI-V

GCI-VI49

Funding needs driven by development financing commitments
Borrowing program
8,580

In USD million
5,667

3,844

2012

2013

4,664

2014

Outstanding
borrowings of
USD 22 billion

3,912

2015

2016

Issuing AAA bonds across continents…
USD
50%
NZD

JPY

NGN

KES

HKD

SGD

GHS

CAD

SWAPPED INTO…
BRL

BWP

AUD

EUR

USD

VND

ZMK

GBP

UGX

ZAR

TZS

TRY

CHF

SEK

Derivatives used to protect against
currency risks and interest rate risks

EUR
39%

ZAR
6%

JPY
3%
CHF
2%

50

A global footprint
Sourcing funding opportunities for the Bank and its clients while catering to investor demand

CANADAUSD 1mln

RUSSIAUSD 21mln

UK
USD 519mln

Diversified
funding…

SWITZERLAND
USD 353mln
EUROPEAN UNION
USD 163mln

USA
USD 14,389mln

Public domestic issues

SWEDENUSD 241mln

UAE
USD 136mln

MEXICOUSD 147mln
NIGERIAUSD 75mln

Private placements

JAPAN
USD 1,884mln

TURKEYUSD 199mln

INDONESIAUSD 11mln
UGANDAUSD 7mln

Loans
Global benchmarks
Euro commercial paper“AfDB's funding profile
remains very diverse interms of investor base,currency, and maturity.”
S&P, September 2015

SOUTH AFRICA
USD 677mln

AUSTRALIA
USD 3,231mln

NEW ZEALAND
USD 144mln

As of 31 December 2015

Outstanding borrowings before swaps

51

A very good run for AfDB global benchmarks
Feb 2015

Nov 2015

Feb 2016

Apr 2016

USD 1 billion
1.375% due February 2020
US Treasuries + 17.6bps
Midswaps flat

USD 1 billion
0.75% due November 2017
US Treasuries + 20.95bps
Midswaps + 9bps

USD 1 billion
1.125% due March 2019
US Treasuries + 29.5bps
Midswaps + 29bps

USD 1 billion
1.000% due May 2019
US Treasuries + 20.3bps
Midswaps + 13bps

Quality and rarity continue to drive successful issuances
Attracting strong investor interest…
Central Banks and Official Institutions

71%

Asset Managers

Across the globe…

Pristine AAA rating and fundamentals
Solid reputation

Asia
24%
Europe35%

13%Bank Treasuries

8%

Pension Funds

4%

Corporates

3%

Insurance Companies

1%

High quality of execution
Performance in the secondary market
A very strong development mandate
and business profile

Americas30%

Africa9%

Middle-East
2%

52

Socially responsible issuer tapping sustainable markets
Good Environmental, Socialand Governance (ESG)
credentials

Strong name recognition in
Japanese Socially Responsible
Investing (SRI) markets

A strong and transparent Green Bond Framework underpinned
by transformative climate adaptation and mitigation projects

South Africa - Xina Solar One Concentrated Solar Power Plant
USD 20 million Infrastructurebond due July 2025
AUD 100 million Food
Security bond due April 2020

Nigeria - Urban Water Sector Reform and Port Harcourt Water
Supply and Sanitation
Kenya - Lake Turkana Wind Farm
Zambia - Ithezi-Tezhi Hydropower Plant
Morocco - Power Transmission and Distribution Development

Dedicated AfDB green investors
AfDB Green bonds

2015

2013
USD 500 mln

2014
SEK 2 bln

USD 500 mln

Blackrock, California State Teachers Retirement System (CalSTRS),
Calvert Investment Management, Inc., Nordea Investment
Management, Pictet Asset Management, Praxis Intermediate Income
Fund, Raiffeisen Capital Management, State Street Global advisors,
Second, Third and Fourth Swedish National Pension Funds, Teachers
Insurance and Annuity Association (TIAA) Asset Management, Trillium
Asset Management, LLC, Zürcher Kantonalbank Asset Management

Helping Africa gradually transition to green growth

DECEMBER 2015

AfDB adheres to the Green Bond Principles

AFRICAN DEVELOPMENT BANKUSD 500,000,000
1.375% Green Bond
Senior Unsecured Notes
Due 2018“Best Green Bond”
EMEA Finance53

Kangaroos and Bulldogs
AUD 375
millionissued in2015

Building a curvein Australia…

Back to Sterling…

A new GBP 250 million bond due December 2018
1000

In AUD million

Distribution by investor type
650

500
250

325

300

130

Jan 2018

Feb 2019

Jan 2020

Mar 2022

Mar 2024

Jan 2025

Central Banksand Official
Institutions
4%

Fund
Managers
11%
Bank
Treasuries85%

Jun 2026

Distribution of Kangaroo trades in 2015 by investor type
Central Banksand Official
Institutions
34%

Bank Treasuries
35%

Fund Managers
21%
Insurance Funds
11%

First issuance in Arab Emirate Dirham (AED)
by AfDB

Note: Bulldogs and Kangaroos are bonds issued in the UK and Australia,
respectively, by a foreign borrower

54

For more informationwww.afdb.org

Investor Contact:
FundingDesk@afdb.org

afdb_acc

AfricanDevelopment
Bank GroupAfDB_Group(225) 20 26 39 00(225) 20 26 19 33

55

56

AfDB Income Statement (UA million)
Year ended 31 December

Operational Income and Expenses
Income from Loans
Income from Investments and related derivatives
Income from Other Securities
Total income from Loans and Investments
Interest and amortized issuance costs
Net interest on borrowing-related derivatives
Unrealized losses on borrowings, related derivatives and others
Provision for Impairment on Loan Principal and Charges Receivable
Provision for Impairment on Equity Investments
Provision for Impairment on Investments
Translation Gains/(Losses)
Other Income
Net Operational Income
Administrative Expenses
Depreciation – Property, Equipment and Intangible Assets
Sundry (Expenses)/Income
Total Other Expenses
Income before Distributions Approved by the Board of Governors
Distributions of Income Approved by the Board of Governors
Net Income for the Year

2015

2014

2013

2012

2011

350.20122.21
3.73
491.20(346.13)180.22(49.51)(65.43)
0.43
14.60
4.27
229.66(122.00)(9.05)(5.44)(136.49)
93.16(124.00)(30.84)342.13132.41
3.85
484.73(375.96)221.21(29.83)(18.02)0.75(4.07)
3.39
282.20(123.16)(7.61)
0.26(130.50)151.69(120.00)
31.69

335.01131.243.95
470.20(302.99)111.8534.11(41.14)
0.76
9.19
13.33
3.02
302.98(110.97)(6.70)(4.98)(122.65)
180.33(107.50)72.83

351.16199.35
4.83
555.34(356.41)
139.16(10.17)(29.69)(0.05)
0.29(2.27)
15.29
309.79(107.55)(4.59)(1.94)(114.07)
195.71(110.00)
85.71

314.92168.855.41
489.18(316.82)
112.16(3.04)(17.68)(0.15)
6.39(27.95)
4.46
246.55(79.50)(4.47)
1.93(82.04)164.51(113.00)
51.51

1 UA = 1 SDR = 1.53527 USD (2011) = 1.53692 USD (2012) = 1.54000 (2013) = 1.44881 (2014) = 1.38573 (2015)57

AfDB Balance Sheet Highlights (UA million)
Year ended 31 December
AssetsDue from Banks
Demand Obligations
Treasury Investments
Derivative Assets
Non-Negotiable Instruments on Account of Capital
Accounts Receivable
Outstanding Loans
Hedged Loans – Fair Value Adjustment
Equity Participations
Other Securities
Other Assets
Total Assets
Liabilities, Capital and Reserves
Accounts Payable
Derivative Liabilities
Borrowings
Capital Subscriptions Paid
Reserves
Total Liabilities, Capital and Reserves

2015

2014

2013

2012

2011

1,214.61
3.80
8,392.26
1,454.62
0.27
489.54
12,868.55
79.84
703.2746.42
93.56
25,346.74

406.713.80
7,341.62
1,143.68
0.74
640.16
12,496.52
112.70596.82
94.11
79.46
22,950.83

954.13
3.80
6,058.45
985.961.20
843.86
11,440.70
32.49
525.01
82.90
41.22
20,996.72

881.45
3.80
6,487.51
1,558.33
1.97
762.67
10,885.80
86.85
438.5676.54
31.06
21,214.55

344.163.80
7,590.47
1,696.68
3.04
914.85
9,373.52
49.87
309.7679.99
13.34
20,261.45

1,332.39
1,084.99
16,449.26
3,727.69
2,921.25
25,346.74

1,211.81
853.74
14,375.95
3,438.23
2,815.32
22,950.83

1,246.11
971.85
12,947.44
3,147.08
2,856.88
20,996.72

2,083.07
512.6013,278.80
2,839.48
2,667.44
21,214.55

1,974.68
502.2912,902.96
2,505.97
2,536.18
20,261.45

1 UA = 1 SDR = 1.53527 USD (2011) = 1.53692 USD (2012) = 1.54000 (2013) = 1.44881 (2014) = 1.38573 (2015)

58