African Development Bank GroupSUPPORTING the Transformationof the Private Sector in Africa
Private Sector Development Strategy, 2013-2017

July 2013

Acronyms and Abbreviations
AAA
AAAA
AfDB
ADF
ADOA

Lowest risk rating of institutional long-term credit
Analytical, Advisory, and Advocacy Activities
African Development Bank
African Development Fund
Additionality and Development Outcome
Assessment
ADR
Africa Development Report
AML-CFT Anti-money laundering and combating thefinancing of terrorism
AsDB
Asian Development Bank
BEE
Business Enabling Environment
BDS
Business Development Services
DAC
Development Assistance Committee of OECD
DPs
Development Partners
CFF
Commodity Finance Facility
CIMM
Corporate Information Management and Methods
Department (AfDB)
COBS
Programming and Budget Department (AfDB)
CoSTConstruction Sector Transparency Initiative
CSP
Country Strategy Paper
CSR
Corporate Social Responsibility
DFID
Department for International Development (UK)
EBRD
European Bank for Reconstruction andDevelopment
EPZs
Export processing zones
EITI
Extractive Industries Transparency Initiative
ESW
Economic and Sector WorkFAPA
Fund for African Private Sector Assistance
FDI
Foreign Direct Investment
FIs
Financial Intermediaries
FTRY
Treasury Department (AfDB)FNVPFinance Vice Presidency
GBS
General Budget Support
GCI-6
Sixth General Capital Increase
GDP
Gross Domestic Product
GTLP
Global Trade Liquidity Program
GTF
Governance Trust Fund
IADB
Inter-American Development Bank
IBRD
International Bank for Reconstruction andDevelopment
ICD
Islamic Corporation for the Development of thePrivate Sector
IDA
International Development Agency
IFC
International Finance Corporation
IFIs
International Financial Institutions
IFRS
International Financial Reporting Standards
ICF
Investment Climate Facility
ICT
Information and Communication Technology
IsDB
Islamic Development Bank
ISPs
Institutional Support Projects

ISS
KPI
LIC
MDB
MIF
MIGA
MIC
MSMEs
MTS
NSO
ODA
OECD
OIVP

OPSM
ORCE
ORPF
ORPC
ORQR
ORVP
OSAN
OSGE
OSHD
OSVP
PBA
PBO
PPP
REC
RPA
PRG
PSD
PSDSC
PSO
RECs
RFIP
RISP
RMC
RMF
SBS
SMEs
TA
TFLOC
USAID
WARR

Integrated Safeguards System
Key Performance Indicator
Low Income Country
Multilateral Development Bank
Multilateral Investment Fund (of the Inter-American
Bank)
Multilateral Insurance Guarantee Agency
Middle Income Country
Micro, Small and Medium Sized Enterprises
Medium Term Strategy
Non-Sovereign Operations
Official Development Assistance
Organization for Economic Cooperation andDevelopment
Infrastructure, Private Sector, Water & Sanitation
and NEPAD, Regional Integration and Trade
Operations Vice Presidency (AfDB)
Private Sector and Microfinance Department(AfDB)
Central Africa Department (AfDB)
Procurement and Fiduciary Department (AfDB)
Operational Resources and Policies Department(AfDB)
Results Department (AfDB)
Operations Vice Presidency for Country & Regional
Programs & Policy (AfDB)
Agriculture and Agro-Industry Department (AfDB)
Governance, Economic / Financial Sector Reform
Department (AfDB)
Human Development Department (AfDB)
Corporate Services Vice Presidency (AfDB)
Performance-Based Allocation
Policy Based Operation
Public-Private Partnership
Regional Economic Communities
Risk Participation Agreements
Partial Risk Guarantee
Private Sector Development
PSD Steering Committee
Private Sector Operations
Regional Economic Communities
Regional Framework for Investment Promotion
Regional Integration Strategy Paper
Regional Member Country
Results Monitoring Framework
Sector Budget Support
Small and Medium-Sized Enterprises
Technical Assistance
Trade Finance Line of Credit(US) Agency for International Development
Weighted Average Risk Rating

Acknowledgments
The report was prepared by the Strategy Department of the African Development Bank, led by Kapil Kapoor,
Director of Strategy. The core team preparing the strategy consisted of Cécile Ambert, Chiara Calvosa,
Komal Hassamal, John kaNyarubona, Séliatou Kayode-Anglade, Jing Li, Mateus Magala, Carlos Mollinedo,
Alex Mubiru, John Phillips, Kate Tench, and Yemesrach Workie. The Chief Economist and VP, Mthuli Ncube,
provided valuable guidance to the team.
Important contributions were made by the Departments throughout the Bank. In particular, valuablecomments were provided by Aly Abou-Sabaa, Gerald Ajumbo, Ibrahim Amadou, Yannis Arvantis, Cecilia
Akintomide, Souley Amadou, Neside Anvaripour, Tas Anvaripour, Aissatou Ba, Lamin Barrow, Barbara
Barungi, Felix Baudin, Catherine Baumont-Keita, Abdirahman Beileh, Maina Benson, Raymond Besong,
Charles Boamah, Jean-Luc Bernasconi, Jean-Baptiste Bilé, Zuzana Brixiova, Mahamudu Bawumia, Hela
Cheikhrouhou, Athanasius Coker, Khadija Dhaouadi, Koedeidja Diallo, Masamba Diene, Sarah Cooper,
Olivier Eweck, Trevor De Kock, Ebrima Faal, Yacine Fal, Gabriele Fattorrelli, Ilmi Granoff, Issa Faye, Kalidou
Gadio, Mohamed Hassan, Alfred Helm, Peter Ide, Sering Jallow, Caroline Jehu-Appiah, Mohamed Kalif,
Tonia Kandiero, Bitsat Kassahun, Steve Kayizzi-Mugerwa, Christian Kingombe, Jacob Kolster, Wolassa
Kumo, Laurence Lannes, Ronald Leung, Christian Lim, Charles Lufumpa, Densil Magume, Christophe
Malherbe, Mohamed Manai, Caroline Manlan, Dennis Massart, Kennedy Mbekiani, Gilbert Mbesherubusa,
Delenia McIver, Sam Mivedor, Gertrude Mlachila, Leila Mokadem, José Morte-Molina, Gabriel Mougani,
Thibout Mourgues, Hela Mraidi, Moono Mupotola, Victor Murinde, Angela Nalikka, Rakesh Nangia, Gabriel
Negatu, Bleming Nekati, Mouhamadou Niang, Josephine Ngure, Emily Nwankwo, Chiji Ojukwu, Ralph
Olaye, Sunita Pitamber, Richard Schiere, Ravi Soopramanien, Tilahun Temesgen, Alex Rugamba, Zondo
Sakala, Vinay Sharma, Preeti Sinha, Agnes Soucat, Amadou Souley, Frank Sperling, Frederick Teufel,
Aminata Traoré, Thouraya Triki, Tim Turner, Pierre Van Peteghem, Désiré Vencatachellum, James Wahome
and Ralph Westling. The Committee on Development Effectiveness (CODE) of the AfDB Group Board also
made contributions to earlier drafts of the document.
The report also benefitted from consultations with government officials from the Bank Group’s Regional
Member Countries, development partners, the private sector, think tanks, regional economic communities,
academia, youth, civil society and non-governmental organizations. External consultations included faceto-face meetings with key stakeholders from across the continent in Tanzania and South Africa (for theSouthern African region, June 2012), Morocco (for the North, West and Central African regions, June 2012);
and Ethiopia (for the Eastern Africa region, July 2012).In addition, the draft Strategy documents were postedon the Bank Group’s website for additional comment.

Voicesfrom Africa“Assistance to the private sector goes beyond the provision of incentives,and government is looking at wider interventions to lower the cost of doing
business. Improvements are being made to economic infrastructure such as
ports, roads and electricity generation to cater for the needs of business.”

Pravin Gordhan, Minister of Finance, The Republic of South Africa, 2012
“At the time I started my first business in the 1950s, it was difficult fora young African to dream of political freedom, let alone entrepreneurial
success. Today, Africa is free and democracy is taking root. The African
economy is growing, and presenting opportunities for entrepreneurs thatat my time were a pipe dream.”

Richard Maponya, Lifetime Achievement Award Winner, Africa Awards for
Entrepreneurship, 2012
“While many of the challenges facing businesses in key African markets
are no more significant than elsewhere in the world, the rewards on offer
are substantial. Critically, it is this risk-reward equation that makes African
investment so compelling – the returns remain among the highest in theworld, while risks are diminishing and can be effectively managed.

Diana Layfield, Africa CEO, Standard Chartered Bank, 2013
“As governments, we need to improve the business environment andstrengthen dialogue with the private sector. Our efforts to create wealthwill be in vain if we fail to create an environment that allows entrepreneurs
to thrive.”

Mompati Sebogodi Merafhe, Honorable Vice President of the Republic ofBotswana, 2012
“Despite the options available for government to raise finance, theoverwhelming consensus is that it cannot be done without private funds.
At their best, private funds ease budget constraints and raise efficiency byleveraging private sector management expertise and innovation.”

Sanusi Lamido Sanusi, Governor of the Central Bank of Nigeria, 2012
“Africa needs its business leaders as never before – to help it generate
more electricity, grow more food, and create more jobs to keep growing
strongly, while also improving people’s well-being through less poverty,
better health and education, and more hope.”Thierry Tanoh, C.E.O. Ecobank Group, 2012
“Our analysis of gains in political stability, deep investments in infrastructure
and improved environments for doing business in select geographic regionsin Africa suggests that the time for large-scale manufacturing clusters is
ripe.”

Jean-Louis Warnholz,Co-founder and Managing Director, Fastafrica , 2013

Table of Contents
ACRONYMS AND ABBREVIATIONSEXECUTIVE SUMMARY

II
VI

1.

INTRODUCTION

2

1.1 Why a Strategy Now?

2

1.2 Lessons from Previous Private Sector Strategies

3

THE AFDB PRIVATE SECTOR DEVELOPMENT STRATEGY (2013-2017)6

2.1 Vision and Objectives

6

2.2 Bank Group Positioning

6

2.3 Operational Principles

7

2.4 Pillars and Priorities

7

2.5 Areas of Special Emphasis

18

IMPLEMENTING THE STRATEGY

21

3.1 Leadership21

3.2 Ownership22

3.3 Partnership23

3.4 Monitoring and Evaluating Results

24

4.

RISKS AND MITIGATION MEASURES

25

5.

CONCLUSION

28

6.

ANNEXES29

6.1 Annex I: Lessons from Previous Activities

30

6.2 Annex II: Pillar-Related Operational Areas

31

6.3 Annex III: Summary of Bank-Wide Institutional Arrangements

35

6.4 Annex IV: Results Monitoring Framework (RMF)

36

Figure 1: Strategy 2013–2022 – Core Operational Priorities

2

Figure 2: Key Lessons from Previous PSD Strategies

4

Figure 3: Key OPEV Recommendations on NSOs

5

Figure 4: The AfDB Private Sector Development Strategy

8

Figure 5: Predictability of Regulatory Changes

9

Figure 6: Inland Transport Costs

12

Figure 7: Percentage of Firms Identifying Access to Finance as a Major Constraint

14

Figure 8: PSD Results Monitoring Framework24

Box 1: Scaling Up Work in Trade Finance15

Box 2: Fine-Tuning Interventions via Financial Intermediaries

17

Box 3: Implementation Schedule of Key Recommendations by OPEV

22

Box 4: Equity Investments

26

2.

3.

Figuresboxes

Executive Summary
Africa is experiencing unprecedented economic growth,and the key objective of the Bank Group’s Strategy 20132022 is to support the transformation of the continent byimproving the quality of that growth – making it shared andmore sustainable.
The future of African economic growth – and the futures of
millions of Africans and thousands of African communities– is closely tied to the private sector.
However, the primacy of the private sector in African growthmust be seen in context. The public sector still needs tocreate an environment in which the private sector can thrive
and the two must work together to deliver services andopportunities.
African business offers both a potential blessing and apotential curse. Fifteen million new job seekers enter the
African market annually and; they can shine in employment.
Trapped in unemployment, they will become a threat tothemselves and society.
It is African businesses that will create African jobs, bytraining and using African talent, and by developing thepotential of services and industries, through the sustainable
management and prudent use of Africa’s considerable
natural resources. This will plough the dividends of enterpriseback into the lives of Africans and African societies. The
private sector can also deliver services to society’s mostvulnerable people and – if it is properly regulated andresponsible – it can help to make society at large wellregulated and responsible.
There has been a fundamental change of Africans’ thinking
in recent years, as governments recognize the centrality ofthe private sector’s role in generating more business. The
African Development Bank is responding to this change.
The Bank issues this Private Sector Development Strategy
for 2013 to 2017 at a time that the private sector alreadygenerates two-thirds of Africa’s investment, three-quartersof its economic output, and nine-tenths of its formal andinformal employment. While the bulk of Bank lending is togovernments, it has directly and indirectly supported private
sector operations in Africa since the end of the 1980s. Its
private investment operations have increased nearly tenfold
since 2000, from US$250 million in 2005 to US$2 billion in
2012. Increasingly, the Bank is moving and will continue tomove from public to private investment, and from making
investments itself toward encouraging others to do so, by
unlocking further funds. Recent research shows that adollar of AfDB money invested in the continent brings in aadditional six from the private sector.
The private sector faces many obstacles in Africa, including
inadequate government regulation, restrictive policies, poor
infrastructure (particularly in power and transport), severe
skills shortages and mismatches between employers’ needs
and available workers (particularly those just out of school),
trade restrictions, tariff and non-tariff barriers to African
exports, difficulties in obtaining medium- and long-term
finance on affordable terms, and a large informal sector.
Business has also harmed itself when companies have failed
to recognize the need for, and the potential of, widening
their activities. Private sector growth in Africa, where it has
occurred, has often been uneven, and exploitation of natural
resources – the continent’s largest area of growth – hasfailed to create enough new jobs.
This new Strategy’s overriding vision is of a competitive
private sector across Africa that will be an engine ofsustainable economic growth, employment and poverty
reduction on the continent in the next decade and beyond.
Several features distinguish this Strategy from its
predecessors. It looks at Africa’s private sector in its entirety,
rather than at just some of its component parts. It commits
to upstream policy work – across nations, regions andsectors, and using all available Bank expertise – as muchas to individual projects, recognizing that short-sighted
policies can quickly diminish the development impact ofprojects. It makes stronger linkages between the moneythat the Bank lends to governments and the money it lends
to private organizations. It promises significant support tosmall businesses – key elements of any economy – while notignoring larger ones. It is carefully aligned with the Bank’s
overarching vision, by putting two objectives at its core: thequest for inclusiveness (that growth and opportunity should
be shared by all – women and men, young people and old,rural communities and urban) and the gradual transition togreen development as Africa commits to moving toward
environmentally sustainable growth. The Bank moreoverstrengthens the implementation of the Strategy withestablishment of a new steering committee to reinvigorate
private sector development as a priority throughout theorganization. In so doing, it sets measurable targets, andexpects to be held accountable and to be able to continue
to show what it has achieved.
The strategy is built around three pillars of activity thatcombine analysis and advice with practical assistance andfinancing. Activities dictated by these pillars will be delivered
through sovereign and non-sovereign lending and throughnon-lending and other activities.
First, the strategy aims to improve Africa’s investment andbusiness climate by supporting governments’ efforts tostrengthen the laws, policies, tax systems, rights, regulations
and procedures that govern business, as they nurture not justtheir domestic private sectors, but also those of their regions.
This also means helping governments fight corruption,
promote financial transparency, and further develop theformal sector. The Bank will also help governments plan
infrastructure investments, deepen and expand their financial
and capital markets, strengthen their labor markets, andbuild the business skills of young people and entrepreneurs.
Second, it aims to expand business access to social andeconomic infrastructure. ‘Hard’ infrastructure (transport,
telecommunications, water, power systems, and fixed
assets needed to provide education, health and sanitation)and ‘soft’ infrastructure (legal and regulatory frameworks,
payments clearance and settlement systems, financial
intermediaries and capital markets, collateral registries, credit
rating agencies, and skills development) are prerequisites
for business as much as for society. The infrastructure
gap in Africa remains huge, dramatically limiting national,
regional and international trade. The Bank will continue tofinance infrastructure. It will also use its resources to attract
private investment to fill the infrastructure gap, supporting
both public and private sectors to do so, knowing this will
galvanize business activity.
Third, it aims to promote enterprise development by helping
business gain access to finance, building its skills, and helping
to add value to its activities. The Bank will continue to provide
financing for small businesses, using a variety of channels
and ways of lending. It will also direct some of its training
and mentoring work with small businesses to equip them toreceive and use such money to the best effect and highest
return. The Bank will also work to make sure Africans candraw the greatest benefit from their raw material products byensuring that primary resources are managed sustainably andused efficiently, and that downstream stages of processing
and production (in key areas such as extractive industries,
forestry and fishing) occur in Africa. It will also invest intechnology that can stimulate agricultural businesses.
An important new venture within this third pillar involves
financing trade. Beyond the Bank’s support to businessstart-ups for domestic markets, a new facility will pave theway for, and actively invest in, trade among and beyond
African nations.
Mirroring the Bank Group 2013-2022 Strategy, three further
priorities will apply to these pillars. Activities are to support
fragile states as much as strong states – with a commitment
to take risks for them where necessary and to be both flexible
and versatile to achieve quick and tangible results. They
are to work to empower women, as half of the workforce,to achieve their full economic potential. Finally, they are to
support initiatives to sustainably manage and prudently use
African agricultural potential, deal with food security andopen the way for greener development.
A vibrant private sector is both an engine of growth and an
agent for development through eroding poverty, strengthening
communities and societies, and providing services for all.
This strategy embodies the African Development Bank’s
development of a vision for private sector growth to drive
African growth, and a plan to implement it.

01

Introduction
A vibrant private sector1 is the engine of growthwhich generates decent jobs and creates increased
opportunities for more inclusive and green growth.
While government can empower poor people throughregulation, funding and providing public goods, private
initiative can also provide services and generate muchneeded employment. A large and formal private sector
can also be a strong advocate for policy reform anda force for good governance, establishing a virtuous
circle in which an improving business environment
brings private sector growth, which in turn strengthens
governance reforms.
This strategy sets out the framework for African
Development Bank Group (AfDB) Private Sector
Development (PSD) activities for 2013 to 2017. Those
activities go beyond its non-sovereign private sector
operations, and include other lending and non-lending
interventions, many backed by sovereign guarantee,
which support private sector development. The Strategy
is based on the vision of a transformative African private
sector promoting inclusive and sustainable economic
growth and poverty reduction in RMCs by contributing
to income generation and increasing private investment

1 In this document, the ‘private sector’ refers to a basic organizing principle ofeconomic activity where private ownership is an important factor, where markets
and competition drive production and where private initiative and risk taking set
activities in motion – based on the OECD’s Development Assistance Committee’s(DAC) guidelines. See, Organization for Economic Cooperation and Development.
1995. Support of Private Sector Development. Development Cooperation Guidelines
Series. OECD. Paris.

Figure 01

in infrastructure, creating sustainable livelihoods for all
segments, including the vulnerable.
Therefore, the Bank Group identified private sector
development as a core operational priority in its Strategy
2013-2022 (Figure 1). Continent-wide consultations
reaffirmed Africa’s ambition to be a global growthpole. The Bank Group Strategy 2013-2022 puts the
Bank at the center of Africa’s transformation into a
more stable, integrated and prosperous continent withcompetitive, diversified and sustainable economies,
with the private sector at its core. The Bank believes
that private sector development is fundamentally about
people – releasing and harnessing their productive
potential and satisfying their needs and desires, andcreating pluralistic societies that provide both freedom
and security. The strategy emphasizes promoting Africanbusiness, local entrepreneurship, and integration into
global value chains to promote economic efficiency
and competitiveness, social welfare, and inclusive andsustainable growth.

1.1 Why a Strategy Now?
Africa is at an important junction. Its economies are
growing faster than those of many other regions. They
are growing at twice the rate of the 1990s. Following
decades-long market-oriented reforms and peace
across much of the continent, exports are booming
and export markets have become more diversified.
Africa has exhibited exceptional resilience since theStrategy 2013–2022 – Core Operational Priorities

Infrastructure Development
Inclusive
GrowthRegional Integration
Private Sector Development

Transition
to Green
GrowthSocial andEconomic
Infrastructure

Governance and Accountability
Skills and Technology

2

Investment
and BusinessClimateEnterprise
Development

Private Sector Development Strategy, 2013-2017

global financial crisis began in 2008. The continentis enjoying higher savings rates, rising demand andstronger capital markets. Driven by a combinationof trade and investment, Foreign Direct Investment(FDI) has increased by a factor of six during the past
decade. Increasing flows of private capital to thecontinent offer real alternatives to Official Development
Assistance (ODA).2 With FDI exceeding ODA in Africa, theengagement of the private sector is key for successfully
promoting the transition to green growth. There is also
an emerging African middle class of several hundred
million consumers. Africa’s young people are embracing
new technologies that provide information, opportunityand connectivity. Private entrepreneurs, many of themyoung, have emerged as a dynamic force for change,
driving innovation and transforming outdated businessmodels.
At the same time, Africa aces significant structural
deficiencies and other challenges. The continent has
deep and persistent inequalities, which can bringdevastating consequences. They slowly erode thetrust that holds societies together, and they undermine
economic growth, productivity and the development ofmarkets, as well as public confidence in governments andinstitutions. The challenge of inequality is compoundedby high rates of youth unemployment, with 15 million
new job seekers coming onto the job market each year.
These young people are increasingly educated, with highexpectations which, if unmet, could lead to social unrest.
Furthermore, several of the continent’s middle-income
countries, especially in Southern Africa, seem to havereached a ‘middle income trap’ that is contributing tothese challenges.
An opportunity now exists to help Africa to create millionsof new, decent (productive, well-paid and secure) private
sector jobs in the next decade, which could lead tosustained social and economic development. Continued
political and social stability makes Africa more attractive
for investors; growing intraregional trade and the creationof new regional common markets has attracted new
economic partners and private investors.
A healthy and growing African private sector can2 See Boston Consulting Group. 2010. “The African Challengers: Global Competitors
Emerge from the Overlooked Continent.” BCG, Boston; Paul Collier. 2010. “The Casefor Investing in Africa.” McKinsey Quarterly, June; and, Charles Roxburgh, Norbert Dörr,
Acha Leke, Amine Tazi-Riffi, Arend van Wamelen, Susan Lund, Mutsa Chironga, Tarik
Alatovik, Charles Atkins, Nadia Terfous, and Till Zeino-Mahmalat. 2010. “Lions on theMove: The Progress and Potential of African Economies.” McKinsey Global Institute.

Private Sector Development Strategy, 2013-2017

promote inclusive growth and offer opportunities formore comprehensive development efforts that value
human, social and natural capital, efficiently andsustainably use ecosystem goods and services, andbuild resilience as countries, industries and people are
become increasingly interconnected. A growing private
sector can also be a major source of wealth, dynamism,
competitiveness and knowledge. It can also support theoverriding goal of all development assistance because
jobs and more equitable distribution of incomes createdby private enterprises would lead to a fairer sharing ofgrowth’s benefits among more people. Micro, small
and medium-size enterprises (MSMEs) in particular candirectly help in lowering poverty and integrating womenand other marginalized groups into society. Private
sector development can also engage Africans more
actively in productive and decision-making processes
that affect their lives.
A growing private sector also creates new stakeholders
in the economy, bringing about a more pluralistic civilsociety that can lead to more accountable politicalsystems. The combination of greater competition, market
forces and the profit motive can lead to better use of
Africa’s human and material resources. It expands thetax base, and the potential for market-based policy
instruments designed to make the best use of financial,social and environmental capital by pursuing investmentsthat use resources more productively and efficiently.
Africa’s development partners, including the AfDB, haveto recognize the importance of these changes andadjust their development partnership strategies. For the
AfDB, this means adopting a more focused strategy,
in close coordination with others, aimed at assisting
the continent build on the foundations for sustainablegrowth by targeting known obstacles to private sector
development.
The rest of this section briefly discusses key lessons fromprevious private sector strategies. Section 2 presents the
key features of the proposed Private Sector Development
Strategy; Section 3 focuses on implementation; andSection 4 on risk and mitigation issues.

1.2 Lessons from Previous Private Sector
Strategies
In January 2008, the Board of Directors approved an
update of what was then the Bank’s Private Sector
Development (PSD) Strategy and the 3-year Business

3

Plan for its private sector operations (PSOs).3 Covering
the period 2008 to 2010, the update built on the Bank’s
2004 PSD Strategy, and was informed by the Bank
Group’s High-Level Panel Report, ADF-11 discussions,and preparations for the Bank’s 2008-2012 Medium
Term Strategy (MTS). A Mid-Term Review of that Strategy
was released in 2010 to take stock of the progress in
implementation and integrate lessons learned in the firsttwo years of strategy implementation.
The 2008 PSD Strategy update set out five related
priorities: improving the investment climate, supporting
private enterprises, strengthening financial systems,
building competitive infrastructure and promoting regional
integration and trade. These areas had been identified
as pivotal when the 2004 Private Sector Development
Strategy was drawn up. Implementation of that Strategy
concentrated the Bank’s efforts on diagnostics andstrategy development, enabling environment programs,
and non-sovereign catalytic transactions to encourage
investment from other sources of finance. These three
activities aimed to improve the status of private sector
in Regional Member Countries (RMCs) and to foster
strong private sector-led growth in Africa.
3 The Bank Group has had PSD strategies and policies for almost 25 years, startingin October 1989 with the approval of the first Private Sector Development Strategy and
Policy. The most recent Strategy dates back to 2004, and was updated in 2008 to lastthrough 2012. See, African Development Bank Group: “Private Sector Development
Strategy”; Bank Board Document No. ADB/BD/WP/90/77; September 18; 1990
(supplemented by an Addendum: Bank Board Document No. ADB/BD/WP/90/77/
Add.1; November 30, 1990). That Strategy was subsequently updated and replacedby the Revised Private Sector Operations Policies (Document No. ADB/BD/WP/94/127/
Rev.2), which was adopted by the Boards in 1995 and supplemented by the Strategy
for Private Sector Operations approved by the Board in May 1996 (Document No.
ADB/BD/WP96/38/Rev.1), approved by the Board in May 1996). At its meeting on
20 December 2004, the Bank Boards approved a revamped PSD Strategy, which,in response to comments and issues raised by Board members while approving thestrategy, prompted Management to submit more specific clarifications (Document.
No. ADB/BD/WP/2004/71/Rev.1/Add.5 / Fund Board Doc. No. ADF/BD/WP/2004/81/
Rev.1/Add.5) on 26 January 2005 and updated in 2008.

Figure 02

Reviews of past PSD strategies have noted that while
the broad priorities and operational areas have been
relevant, implementation has often fallen short, often
because of inadequate adoption of the PSD mandate
across the Bank and insufficient cooperation between
Bank Group sovereign and non-sovereign operations(Figure 2). Regarding the latter, the Bank has not always
improved the development effectiveness of its private
sector activities as much as possible. Stand-alone
private sector operations have often had limited effecton more fundamental sector- or country-wide private
sector challenges and have not fully exploited economies
of scale. On the other hand, fiscal constraints and weak
institutional capacity have precluded achievement ofbetter development results through public intervention
alone.
This PSD Strategy therefore takes into account all Bank
Group activities that contribute to development throughthe private sector. In effect, this implies a need forconsistent cooperation and action between its sovereignand non-sovereign windows. It also points to a needfor greater coordination with various stakeholders ingovernment, among donors, in civil society and in theprivate sector.
Evaluation of Private Sector Operations: Nonsovereign operations (NSOs) are an integral part ofthe Bank’s support to private sector development
through various interventions such as, direct loans,credit lines, direct equity investments, participation in
private equity funds, and to a lesser extent through risk
sharing facilities. From single digit levels prior to 2000,
non-sovereign operations have since averaged about 30
percent of total Bank lending. Between 2008 and 2011,

Key Lessons from Previous PSD Strategies
Unclear corporate priorities for PSD, resulting in strategic drift;
Insufficient attention to weak institutional environment and regulatory constraints;

The need to mainstream PSD, with country and sector strategies reflecting PSD as a priority;
Insufficient coordination between the Bank’s sovereign and non-sovereign operations;
The need to ensure a better balance between the Bank’s objectives and risk management; andThe need for greater attention to the developement of the financial sector and financial intermediation.

4

Private Sector Development Strategy, 2013-2017

NSD approvals amounted to UA 4.8 billion, accounting
for 30 percent of the Bank’s total new commitments.
While the independent Evaluations Department has notevaluated all Bank Group private sector development
activities, it recently assessed its non-sovereign
operations (NSO)4 from 2006 to 20115. The assessment
found that through its NSOs, the Bank Group has
generally achieved good alignment of its operations withthe private sector strategy, particularly in infrastructure
and the catalytic effect of its non-sovereign operations in
mobilizing additional investment and funding. The Bank
has also adopted industry best practices for measuringand managing risk in its private sector portfolio andhas remained within defined exposure limits. The Bank
has also done well in aligning staff resources to private
sector operations and in developing a wide array ofskills across the sectors and functional disciplines thatare central to its strategy.

4 The Bank Group’s NSOs include (i) private sector operations (PSOs) including theprivate dimension of Public-Private Part-nerships (PPPs); (ii) operations by governmentowned (or parastatal) enterprises, including utilities, with autonomous character andindependent legal identity; and (iii) ‘enclave’ projects sponsored by RMCs.
5 African Development Bank. 2013. Fostering Private Sector Development in Africa:
An Independent Evaluation of Non-Sovereign Operations, 2006-2011. Operations
Evaluation Department (OPEV).

Figure 03

At the same time, the evaluation identified areas for
NSOs requiring additional attention and made a seriesof recommendations. These include better handling ofcompeting priorities; greater attention to financial sector
intermediation operations, particularly through lines ofcredit and equity funds; widening the Bank’s range of
instruments; reviewing the Bank’s equity portfolio toaddress its underperformance; and ensuring properbalance between the Bank’s core strategic objectives
and its risk management guidelines.
The key recommendations from the evaluation aresummarized in Figure 3. It should be noted that of theeight OPEV recommendations in this evaluation, four
were specific to the financial sector. Indeed, actions in thefinancial sector are suggested under each of the strategicpillars of this Strategy—something unsurprising given thatthe financial sector including banks, other intermediaries,
and capital markets serve the real sectors of the economy.
Furthermore, Annex I includes several other key lessons
from other reviews of the Bank Group’s PSD activities,
and how they have informed this Strategy.
6 For details, see management response to the Independent Review of the Bank’s
Private Sector Operations (PSO), 2013.

Key OPEV Recommendations on NSOs6

Recommendation to review Bank’s strategy, policies and procedures for financial sector investments,
particularly intermediation through lines of credit.
Recommendation to be more selective in approving new equity investments, increase the Bank’s
underwriting restrictions and reduce the overall rate of growth of new interventions.
Recommendation to examine options to further refine the Bank’s risk management framework without
jeopardizing its financial integrity.
Recommendation to utilize a wider range of instruments at the project-level, including guarantees and tradefinance.
Recommendation to adopt a more systematic approach to capacity building in client financial institutions.
Recommendation to review the Bank’s ADOA framework.
Recommendation to adjust NSO strategic choices in recognition of constraints imposed by prudent portfolio
risk management, to achieve a balance between core strategic objectives, strategic priorities, and risk
management guidelines;
Recommendation to monitor the Bank’s overall capital adequacy and the consequent headroom for further
growth in private sector operations.
Recommendation to streamline NSO approval process.

Private Sector Development Strategy, 2013-2017

5

02

The AfDB Private Sector Development Strategy(2013-2017)
Certain conditions must be in place for the private sector
to thrive, encourage inclusive growth, and cut poverty bycreating jobs. These conditions include rule of law; good
‘hard’ and ‘soft’ infrastructure; a stable macroeconomic
environment; an educated, skilled and healthy workforce;and access to financial services. Africa’s private sector
also needs deeper financial markets, more access tohigher education and training, and more gender equality
if it is to be globally competitive, and for this to resultin significantly more intra-African and external trade.

2.1 Vision and Objectives
The private sector now generates 70 percent ofAfrica’s output, 70 percent of its investment and 90
percent of its employment. That sector, though, isstill largely composed of mostly informal micro andsmall enterprises, with limited capacity to contribute toaccelerated development.7 Large differences among
African countries persist – much of formal employment
comes from government jobs. Africa’s private sector
also has to contend with limited public sector capacity
to regulate it effectively, a generally restrictive businessenvironment, poor infrastructure (particularly in power
and transport), serious skills shortages and mismatches,and difficulties in gaining access to finance. While theextractive industries sector has been an important driverof economic growth, such growth has not resulted inequally impressive job creation and poverty reduction.
This highlights the urgent need for RMCs to transformand diversify the structure of their economies in orderfor such growth to be sustainable and inclusive.
This strategy envisions a competitive private sector
that will be an engine of sustainable economic growth,
generating a decent work environment that offers
productive employment in Africa in the next decadeand beyond.
Its main objective is therefore to contribute to sustainable
African development and poverty reduction by promoting
broad-based economic growth through effective private
sector development. To help meet the objectives of7

6

African Development Bank. 2011. African Development Report (ADR). AfDB. Tunis.

inclusive growth and transition to green growth, AfDB will
aim to catalyze and leverage private sector resources.
This objective is consistent with:• the Bank’s 1964 Charter, which calls for the Bank “topromote investment in Africa of public and private
capital in projects or programs designed to contributeto the economic development or social progress of
its regional members”8; and• theBank’s 6th General Capital Increase (GCI-6) andthe 12th replenishment of the African Development
Fund (ADF-12) strategic goal of fostering development
through the private sector.
The AfDB Group will achieve this objective by increasing
as much as possible the development impact of its
private sector activities by capitalizing on its trackrecord, its comparative advantages, its unique businessperspective, and lessons it has learned from previous
strategies in a way consistent with its institutional goals.

2.2 Bank Group Positioning
The Bank Group has a unique position as an Africanorganization serving Africans. Its main source ofcomparative advantage is its African character and its
central place in the African development institutionalarchitecture.
Established fifty years ago by independent African states
to contribute to “the sustainable economic development
and social progress of its regional members individuallyand jointly”9, the Bank has delivered on its mandate withover US$100 billion in financing of projects for Africa’s
development, an increasing number of which focus on
private sector development. The Bank Group is majority
African-owned and completely focused on the continent.
Through its analytical products and the knowledge of its
staff, it has deep understanding of Africa’s institutional
history and political economy. In addition to its African

8 Article 2, “Agreement Establish-ing the African Development Bank”; signed August
4, 1963 (Khartoum, Sudan).
9

Ibid., Article 1.

Private Sector Development Strategy, 2013-2017

character, which ensures privileged access to, andsupport by, regional member states, the Bank serves
as an important forum for interaction among these 54
RMCs and its 24 non-African member countries.
The Bank Group needs a clear definition of its role inassisting its RMCs if it is to contribute meaningfully
to efforts to achieve broad-based economic growth,
inclusive social development and gradual transition togreen growth through an effective private sector. As
Africa’s leading development institution, the Bank has
a unique business perspective based on the areas of its
comparative advantage and core operational priorities,
as summarized in Figure 1.
Since private sector development has to take place ona vast scale in Africa, the Bank has to refine its businessmodel to ensure that its efforts are aligned with market
forces to create conditions that support private initiative.
Likewise, the Bank must systematically assess how
its projects are helping private sector development,
especially in coordination with other development
partners in Africa.

2.3 Operational Principles
The proposed private sector strategy is anchored in thefive underlying operational principles of the 2013 Private
Sector Development Policy10:• Ultimate ownership of the PSD agenda lies with RMCs;• The Bank is selective in its interventions;• The Bank demonstrates ‘additionality’ in its intended
interventions;• T he Bank aims to attract other partners in its
interventions; and• Bank interventions do not compromise its financial
integrity.
The PSD Strategy specifies Management’s intended
directions for the Bank Group on the PSD agenda overthe medium term. The Strategy is guided by the PSD

10 The PSD Policy (ADB/BD/WP/2011/85/Rev.3 and ADF/BD/WP/2011/46/Rev.3)
presents the highest level of mandatory principles proposed by Management on the
Bank Group’s private sector development agenda approved by the Board. The Policy
also helps define the universe of acceptable areas for Bank interventions throughits delineation of unacceptable areas such as speculative activities, commercially
unviable projects and projects deemed illegal under host country rules or international
conventions and agreements, etc. All these guide PSD strategy. However, because staff
may need more specific guidance to be able to comply with the Policy in the specificareas in which they work, other types of directional statements (e.g., guidelines) may
follow from the Policy, again focusing on key principles and mandatory rules. The
PSD Policy is not expected to change much over time although it can be adjustedwith Board approval.

Private Sector Development Strategy, 2013-2017

Policy, but also by the Bank Group Strategy 20132022, evaluations by OPEV, lessons learned from past
strategies, and strategic advice from Senior Management.
It includes strategic pillars and operational priorities
to guide Country Strategy Paper (CSP) and Regional
Integration Strategy Paper (RISP) development teams,
intended results and approaches to attain them, and isnotably informed by Bank Group stakeholder demands.
While strategic directions in it are not expected to change
in the short or medium term, their progress is monitored
and they may be fine-tuned or updated periodicallyto adjust to changing conditions. The Strategy also
benefits from business plans and specific directionalguidelines to guide staff in specific areas in which theywork, where necessary.

2.4 Pillars and Priorities
The strategy focuses its resources on the biggest
opportunities for job creation across the continent,
and is built around three pillars of activity (Figure 4):(i) improving Africa’s investment and business climate;(ii) 
e xpanding access to social and economic
infrastructure; and(iii) promoting enterprise development.
In deploying interventions across these three pillars,Management knows Bank financial resources will always
be a small fraction of Africa’s requirements. Given
Africa’s enormous needs, the Bank will seek new ways
to mobilize resources to support Africa’s transformation,
especially by leveraging its own resources. It will continue
to build on and expand the size and the practicaloperations across both its windows of support, while
exploring options for attracting new investment fromemerging economies and from new funders and donors,
including sovereign wealth and pension funds. The
Bank Group will also use its existing instruments better,
while developing new ways to ensure that each dollar it
invests unlocks significantly more from other investors.
Wider use of public-private partnerships, co-financing
arrangements and risk-mitigation instruments will also
draw in new investors.

7

Figure 04

The AfDB Private Sector Development Strategy

Vision
A competitive private sector, which will play a significant role as an engine of sustainable economic growth andpoverty reduction in Africa, in the next decade and beyond

OBJECTIVE
To contribute to sustainable development and poverty reduction in Africa by promoting broad-based economic
growth, employment and inclusive development through effective private sector development.

STRATETICPILLARSEXPECTEDOUTCOMES

Pillar I: Investment andbusiness climate

An enabling businessclimate supporting
investment and thedevelopment of socially
responsive enterprises

Pillar II: Access tosocial and economic
infrastructure

Increased access tosocial and economic
infrastructure

Pillar III: Enterprisedevelopment

A diverse, dynamic,
entrepreneurial,
innovative, and broadbased enterprise sector,
producing goods andservices for domestic andforeign consumption

OUTPUTS
Private sector development capacities to support Regional Member Countries achieve more inclusive andenvironmentally sustainable economic growth, improved access to social and economic infrastructure, andenhanced competitiveness of the private sector across Africa.

MAJOR
ACTIVITIESSupport for enabling
policy, legislative andregulatory environment(“soft infrastructure”)
for private sector
development.

Assistance to regional
member countries
to address known
and targetable "hard"
infrastructure constraints
to private sector
development, particularly
in transport and energy.
Select activities inskills improvement andeducation.

Assistance to countries
to address specificenterprise-level challenges
to private sector
development, including
skills shortages, difficulties
in accessing finance, lackof scale, value chain gaps
and weakness.

• Program-based
operations• Project loans and grants• Direct financing
assistance: long-term
debt, equity, guarantees,
loan syndications, andunderwriting• Technical assistanceand capacity building

KEY
INSTRUMENTS• Economic and sector
work• Project loans andgrants• Policy dialogue andadvisory services• Donor coordination

8• Technical assistance andcapacity building• Economic and sector
work• Program-based
operations• Advisory services• Technical assistanceand capacity building• Policy dialogue andadvisory services• Donor coordination

Private Sector Development Strategy, 2013-2017

PILLAR 1 Investment and Business Climate

environment across Africa for large and small enterprises
alike, compared with other parts of the world.

The opportunities and incentives to invest productively,
create jobs, and expand are shaped by the costs andrisks associated with the business and investment
environment, and other non-physical barriers tocompetition. Efficient and well-regulated public
services, effective law enforcement, and transparent
procurement practices all contribute to a better
investment and business climate, and faster growthand development.

Africa’s underdeveloped financial markets present
further investment and business barriers to private
sector development. African formal financial systems
and capital markets are embryonic and face problems ofscale, volatility, long-term liquidity, and macroeconomic
and regulatory stability, and are perceived as risky byoutsiders. Current global financial uncertainty is acomplicating factor, as are increasing economic risks
in the wake of the 2008-2009 global financial turbulence,
which have led to much more expensive short-termcommercial financing, especially in trade finance. Accessto long-term credit is even scarcer on the continent.
The flow of credit to the private sector also remains
below other developing regions’ levels. Close to half ofAfrica’s small businesses report that gaining access tofinancial services is a major constraint. Only 22 percent
of African companies hold a loan or a line of credit
from a financial institution, compared to 31, 47, and48 percent in developing parts of Asia, America andEurope, respectively.11

Key Challenge – Restrictive Business
Environment
Africa’s investment and business climate is characterized
by a wide range of regulatory and labor, trade andbusiness obstacles that reduce competitiveness andconstrain the private sector. These obstacles are seenin two ways: first, through inconsistent policies at themacro and sector levels and in each sector (regulationand taxation, stability and security, finance, labor skills
development, infrastructure); and second, throughdiminished credibility, public trust and legitimacy forgovernance institutions, and an absence of channels
for wide participation in policy formulation. Despite wide
variations across Africa, these structural deficiencies
often result in bureaucratic red tape, poor control ofrent-seeking and lack of transparency, all of whichsignificantly reduce the credibility of public policy andadministration, and hinder governments’ enabling role(see Figure 5). Where corruption is a threat, businesses
prefer to remain unregistered to escape what they see
as predatory policies. This makes for a difficult business

Figure 05

Furthermore, Africa’s financial infrastructure is generally
in nascent stages of development. Financial infrastructure
comprises a set of market institutions, networks andshared physical infrastructure that enable the effective
operation of financial intermediaries, the exchange of
information and data, and the settlement of payments
between wholesale and retail market participants.
Credit bureaus, collateral registries and credit rating
11 African Development Bank, 2011. African Development Report (ADR). AfDB. Tunis.

Predictability of Regulatory Changes% of firms who rated regulatory changes as fully or somewhat predictable

63

53

52

43

51
38

54

53

50

Coastal47

Land Locked

55%

58

Net Oil Importing

75%

36

35%

Net Oil Exporting

Central Africa

Southern Africa

West Africa

East Africa

North Africa

Fragile states

ADF countries

ADB countries

15%

Source: Staff calculations based on enterprise survey data, 2010.

Private Sector Development Strategy, 2013-20179systems are only beginning to be developed in several
African countries. On a cross-regional comparativebasis, sub-Saharan Africa has the least developed
payment and settlement systems, with many economies
predominantly cash-based, and several countries stillusing manual check processing and clearing houses.

• S upport initiatives to improve Africa’s financial
infrastructure including collateral registries, credit
bureaus, credit ratings, and payment and settlement
systems, all of which are necessary to foster financial
stability and the successful operation of modern
integrated financial markets;

Finally, Bank research reveals an acute mismatch
between the skills young people bring when they leave
the education system, and those that are sought in labormarkets, particularly in the private sector.12 This points tothe poor quality of education, and a disconnect between
education systems and employers. At the tertiary level,
young Africans are confronted with university systems
that have traditionally focused on educating for public
sector employment, with little regard for private sector
needs.

• Support initiatives to improve innovation, entrepreneurship, knowledge and skills, particularly throughproviding assistance to more effective vocational
training;

Going Forward – Operational Priorities
The Bank will work with partners (government,
development partners, the private sector, civil society,and others) to help RMCs address key structural businessand investment climate challenges. Specifically, it will:• Support policy initiatives that champion reducing theattraction of informal-sector activities by supporting
improvements to increase the ease of doing businessand reduce the cost of business creation, expansion
and closure. In particular, it will support initiatives
promoting greater transparency, predictability
and accountability in business and investment
regulatory frameworks13, particularly in tax policy andadministration; strong property rights; and soundcorporate governance;14• Support initiatives to deepen and expand financial
and capital markets, including those that encourage
creation of a diversity of financial institutions andservices (e.g. insurance, leasing), development offinancial instruments (e.g. bonds, equities, guarantees)that can mobilize term finance, and efforts aimed atincreasing local currency borrowing to fund private
sector projects;
12 African Development Bank et al. 2012. Africa Economic Outlook (AEO). AfDB. Tunis.
13 See, joint AfDB-OECD report that focused on legislation, policies and practices
to combat bribery of pub-lic officials in business transactions in 20 African countries,“Stocktaking of business integrity and anti-bribery legislation, policies, and practices
in twenty African countries,” OECD. Paris.
14 This also includes Anti Money Laundering/Combating the Financing of Terrorism
initiatives, for which the Bank has a strategy. (see Bank Group Strategy For The
Prevention Of Money Laundering And Terrorist Financing In Africa ADB/BD/WP/2007/70
and ADF/BD/WP/2007/46).

10• Facilitate policy dialogue between regional, national,
and, where necessary, sub-national private sector
stakeholders;• Support initiatives that improve the institutional andoperational frameworks for public-private partnerships(PPPs); including strengthening the analytical capacity
for their selection, evaluation and monitoring, as wellas transaction-level project preparation; and• Assist in strengthening regional economic communities
and national authorities to encourage and support
regional financial sector integration, cross-borderinvestments, elimination of non-tariff trade barriers, theharmonization of investment and engineering codes,
and quality assurance and certification standards
Under this pillar, the most significant Bank instruments
are Policy-Based Operations (PBOs), through which the
Bank supports policy reforms in RMCs. In the spirit of
the Paris Declaration, these policy reforms are agreed
upon in conjunction with governments and otherdevelopment partners. Accordingly, the relatively wide
range of operational priorities under this pillar reflect the
impracticality of identifying ex-ante which aspects of PSDrelated policy reforms the Bank will support and which it
will not as part of a collective effort to support reforms.
Accordingly, the set of operational areas outlined above
will allow the Bank’s Sector Departments and Country
Teams to tailor Bank interventions to country andsub-regional circumstances in cooperation with otherdevelopment partners and stakeholders. The Bank
will take a leadership role where it has a comparativeadvantage, while letting others lead elsewhere.
Another significant instrument for use under this pillar
will be the Bank’s Institutional Support Projects (ISPs),

Private Sector Development Strategy, 2013-2017

which provide capacity building and technical assistanceto institutions that support private sector developmentin RMCs. The ISPs complement policy reform measures
supported under PBOs and allow the Bank to deploy
more focused resources at the request of RMCs.

PILLAR 2 Access to Social and Economic Infrastructure‘Efficient economic infrastructure’ means the facilities
with which a country or a region makes business activity
possible (communication, transportation and distribution
networks, financial institutions and markets, energy
supply systems, etc.). This is critical to tackling some of
the greatest impediments to private sector developmentin Africa. It includes social infrastructure – a a subsetof the infrastructure sector, which typically deals withassets that accommodate social services such as healthand school facilities, as well as the systems that underpin
them. Since Africa is one of the world’s fastest-growing
economic hubs, meeting the demand for, and increasing
access to, key infrastructure is a priority in increasing
market size, deepening regional integration, and lowering
prices through economies of scale.

Key Challenge – Limited Accessto Physical Infrastructure
One of the main impediments to development of Africa’s
private sector and to its socioeconomic transformationis the lack of physical infrastructure. Moreover, existing
infrastructure is often outdated and poorly maintained.
African markets are still largely inaccessible becauseof poor infrastructure and connectivity. Poor road,rail and harbor infrastructure adds 30 percent to 40
percent to the costs of goods traded among Africancountries (see Figure 6).15 In transport, there are specific,
logistics-related challenges continue to generate costly
inefficiencies above physical infrastructure, including:the efficiency of customs and border management
clearance; the ease of arranging competitively priced
shipments; the competence and quality of logistics
services; the ability to track and trace consignments;
and the frequency with which shipments reachconsignees within scheduled or expected delivery
times. The bad state of Africa’s electricity, water, roadand information and communications technology (ICT)

15 Infrastructure Consortium of Africa (ICA). 2005. Africa’s Infrastructure: A Timefor Transfor-mation. World Bank. Washington, DC.

Private Sector Development Strategy, 2013-2017

infrastructure imposes high costs on industries, reducescompetitiveness, and restricts access to local andinternational markets. In so doing, it reduces national
economic growth by two percentage points every
year, and cuts business productivity by as much as 40
percent.16 In energy, at least 30 countries report regularpower shortages and many others face power outages
with varying frequency. This limits growth prospects
for firms of all sizes. However, MSMEs are particularly
affected because they usually cannot invest in theirown electricity generation. Africa has 15 percent of theworld’s hydro-power potential, and less than 10 percentof the continent’s share is currently tapped. There isalso significant potential in renewable sources of powersuch as solar, wind, biomass and geothermal energy.
The lack of infrastructure is a significant obstacle to
the growth and development of the private sector, andresults in a low level of intra-African trade and trade withthe rest of the world. Africa accounts for 12 percent of
the world population, but generates only insignificant
proportions of global GDP and world trade.
Infrastructure development is closely tied to the story of
the continent’s resource and commodity endowments.
Significant resource discoveries in recent years – forexample, oil and gas in East and South-East Africa,
as well as the huge demand, particularly from Asia, foragricultural and natural resources including mineralssuch as iron ore, platinum, coal and copper – are driving
the need for infrastructure. In turn, Africa’s economic
growth continues to be driven by the investment in theinfrastructure needed to extract and transport theseresources to global markets (rail and port infrastructure).
Some RMCs have begun to consider ways of linking
new infrastructure connected to these endowments withother markets, for instance in dual-purpose railways fortransporting both ore and agricultural produce.
Africa’s rapid population growth also places enormous
strains on existing, and often outdated and poorly maintained
economic and social infrastructure. In fact, in many
countries, infrastructure limitations constrain productivity
at least as much other institutional challenges as weak
governance, complex regulation, and lack of access tofinancial services. This is especially true in the power andlogistics industries as well as physical infrastructure for thedelivery of healthcare and basic education.
16

Ibid.

11

Africa’s rapid population growth also places enormous
strains on existing, and often outdated and poorly
maintained economic and social infrastructure. In fact,
in many countries, infrastructure limitations constrain
productivity at least as much other institutional
challenges as weak governance, complex regulation,and lack of access to financial services. This is especiallytrue in the power and logistics industries as well as
physical infrastructure for the delivery of healthcare andbasic education.
In addition to the lack of physical connection between
countries, there is also very limited integration of regional
markets for infrastructure services, particularly, in power,
energy, telecommunications, transport, water andsanitation. This is in part due to weak regional economic
communities that are not structured to make necessary
regional investments. More significantly, governments
have also not worked enough with the private sector andothers to develop and upgrade regional infrastructure(particularly in communications and transport); improvepolicies for industries that fit the productive capabilities
of countries in Africa (for example, in agriculture and foodsecurity); and fully implement protocols of the Regional
Economic Communities that governments have signed.
In addition, significant obstacles remain to themobilization of private financing and investment ininfrastructure.

new infrastructure, and the rest for the maintenance ofexisting infrastructure. Only about US$25 billion a year
is currently being spent on capital expenditure, leaving
a substantial shortfall. New and innovative financing will
be needed to address this gap.18

Going Forward – Operational Priorities
Support to Africa’s infrastructure – the essence of this pillar– is at the core of the Bank’s work and is an area where it
has a comparative advantage. The Bank Group’s Strategy
2013-2022 envisages scaling up infrastructure investments
substantially via both its sovereign and non-sovereign
windows, and particularly in the areas of transport, energy,
water and sanitation, all of which have been identified by
African companies and governments as posing the biggest
challenges for the continent’s transformation.
Under this pillar, the Bank will support RMCs mainly intheir infrastructure development priorities as expressedin their long-term development strategies and, at theregional level, as expressed in the African Union/New
Partnership for Africa (NEPAD) Program for Infrastructure
Development in Africa (PIDA). Bank interventions will help
RMCs increase their productivity and competitiveness,
deepen physical, economic and social integration, andcreate greater opportunities for promoting inclusion andcontributing to sustainable economic transformation.
Specifically, it will:

The costs of overhauling Africa’s infrastructure needs
are estimated at about US$100 billion a year over the
next decade.17 Two-thirds of that is required for entirely• S upport new infrastructure or rehabilitation
initiatives aimed primarily at improving long-termand comprehensive reforms and investments acrosstransport and logistics chains, reducing travel time

17 World Bank. 2005. The African Infrastructure Country Diagnostic. World Bank.
Washington DC.

18 African Development Bank 2011, ‘Closing Africa’s Infra-structure Gap: Innovative
Financing and Risk’, AfDB Economic Brief.

Figure 06

Inland Transport Costs
ExportImport$1.400,00

US$ per container$1.200,00$1.000,00$800,00$600,00$400,00$200,00$0,00
AfricaEast Asia

Eastern Europe& Central Asia

Latin America& Caribbean

South Asia

Source: Larossi, G. 2009. “Benchmarking Africa’s Costs and Competitiveness”. Africa Competitiveness Report 2009. World Economic Forum,
AfDB

12

Private Sector Development Strategy, 2013-2017

between regions, improving access and delivery
of social services, integrating national markets andconnecting them to regional markets and markets
outside Africa19;• Support to initiatives aimed at strengthening accessand capacities to deploy efficient and/or climate-proof
infrastructure systems, including multi-modal transportsystems, which can also offer ways to manage urban
growth, while reducing the overall ecological footprint;• Support initiatives for meeting Africa’s rising demandfor energy, with an emphasis on clean energy andenergy efficiency, or other types of projects that canhelp RMCs exploit ‘green’ opportunities;• S upport private infrastructure and public-private
partnerships through direct and indirect financing
instruments, and through provision of technicalassistance and transaction advisory services;• Support initiatives for strengthening the potential
for RMCs to take advantage of the opportunities tobenefit from export-oriented growth based on thedevelopment of effective export processing zones(EPZs) based on coordinated packages of nondistortionary incentives, infrastructure and services
attractive to investors; and• Boost the Bank’s analytical and advisory capabilities
in maintaining its leadership role in continental
infrastructure initiatives, such as the NEPAD and theInfrastructure Consortium for Africa.
In order to accelerate progress in all the areas mentioned,
there is need for a more systemic and partnershipapproach to increase private investment, create moresustainable jobs, transfer new technologies and skills,
and realize Africa’s true economic and human potential
over the next few decades.

PILLAR 3 Enterprise Development
Further challenges relate to issues directly affecting
the operations and growth of private enterprises, and

19 This includes regional initiatives such as the Program for Infrastructure Developmentin Africa (PIDA).

Private Sector Development Strategy, 2013-2017

especially MSMEs. Under this pillar, the Strategy restricts
its focus on three broad priority areas – access to financeand financial services; entrepreneurial and business
operation skills; and access to technology, innovation,and value chain linkages – all of which present challenges
for African enterprise-level PSD.

Key Challenge – Access to financial
services and the supply of long-term
capitalAfrica’s private enterprises – including an estimated 70
percent of Africa’s approximately 50 million MSMEs – areseverely hampered by insufficient access to long-term
finance (see Figure 7).20 Even large African enterprises
routinely experience financing constraints. 21 Suchunderfunding has led to significant underinvestment,
particularly in capital goods such as machinery andequipment, as well as in research and development.
In turn, this has contributed to low levels of innovation,
productivity and competitiveness.22
African traders, particularly current and potential
exporters, face severe difficulties securing tradefinance. When financing is available, costs are often
prohibitive and duration is often short, especially for
MSMEs. Despite Africa’s trade having more than tripledin value in the last decade (US$1.2 trillion in 2010), there
is an acute shortage of trade finance in Africa, mostly
because of local financial institutions’ lack of financial
and technical resources and an incomplete perceptionof risk by international banks.
Financing constraints vary within countries and across
Africa, as well as by firm size. The differences reflect
difficulties in gaining access to funding from formal
financial institutions, either because of companies’
inabilities to present bankable proposals, or financial
institutions’ reluctance to extend credit to MSMEs.
Deep and durable solutions to the challenges of accessto financial services and the supply of medium- and longterm capital in Africa need to incorporate all available
instruments, including lines of credit, equity and related

20 T. Beck, S. Munzele Maimbo, I. Faye, T. Triki. 2011, Financing Africa, Throughthe Crisis and Beyond, African Development Bank. Tunis.
21

Ibid.

22 World Economic Forum, World Bank, and African Development Bank. 2011. The
African Competitiveness Report 2011. World Economic Forum: Geneva; Gebreeyesus,
M. 2009. “Innovation and Microenterprises Growth in Ethiopia.” UNU-WIDER Research
Paper No. 2009/51; and Onyeiwu, S. 2011. “Does the Lack of Innovation and Absorptive
Capacity Retard Economic Growth in Africa?” UNU-WIDER Working Paper No. 2011/19.

13

instruments, agency lines, risk-sharing, guarantees,
and technical assistance. Action should be taken at
all relevant levels, in firms and in financial institutions,
nationally and globally.

• Support for initiatives to increase the responsiveness ofprivate financial institutions to the increasing demand
for long-term debt, by continuing to extend credit lines
and risk-sharing instruments to enable FIs to on-lendto their clients;

Going Forward – Operational Priorities
The Bank will develop a more holistic approach tofinancial sector competitiveness and inclusivity in waysthat align with country contexts and the capabilities ofthe local financial sector in deploying interventions thatencompass:• Partnering with financial institutions (commercial anddevelopment finance institutions including banks,
private equity funds, etc.) to facilitate intra-Africa
investment and trade and also, to enable them togive better service to MSMEs, traders (see Box 1)
and women;• Working with governments and the private sector toestablish technology-based business models to help
the ‘unbanked’ and the ‘under-banked’;• Supporting initiatives that involve working directly withindividual MSMEs to improve their creditworthiness,financial literacy and growth potential;• Support for direct financial assistance to enterprises
through catalytic, long-term debt and equity,
guarantees, loan syndications and underwriting,particularly initiatives in agribusiness, industrial
modernization, extractive industries (mining,
oil and gas) as well as regional integration andsupport mechanisms (social infrastructure, financial
instruments, etc.) for local communities;• Attracting global leaders’ attention to the issue ofstrengthening the financial sector in Africa; and•D eveloping specific guidelines to support MSMEs andto ensure that financial intermediaries are accountable
for the deployment of Bank funds for purposes
intended.
In light of the importance of the financial sector in boththe Bank’s overall Strategy for 2013 – 2022 as well as inthis Strategy, the Bank is undertaking a comprehensive
review of its approach to the financial sector, which
will lead to the preparation of a new Financial Sector
Development Policy and Strategy to replace the 2003
Financial Sector Policy.

Key Challenge – Specific Obstacles for
Micro, Small, and Medium-Size Enterprises
Africa’s private sector is largely comprised of MSMEs,
with people becoming small-scale entrepreneurs outof both desperation and aspiration. MSMEs are oftenvery small, informal, family-based enterprises, or sole
proprietorships, which can terminate quickly. Manyare run by individuals with no other opportunity for
gainful employment, and who rely on these activities tosurvive or supplement in-kind earnings from subsistence
farming.23 Such entrepreneurs are often untrained, andthey lack crucial market information. All entrepreneurs,

23

Figure 07

African Development Bank. 2011. African Development Report. AfDB. Tunis.

Percentage of Firms Identifying Access to Finance as a Major Constraint

Percentage

Small
60

Medium

50

Large

40
30
20
10
0
AfricaDeveloping
Asia

Developing
AmericaDeveloping
EuropeSource: Staff calculations using enterprise survey data, 2010.

14

Private Sector Development Strategy, 2013-2017

however, face obstacles to growth, such as undercapitalization and capital structures, lack of collateral,a severe skills shortage (including financial literacy),
weak market linkages, as well as the widespread lack ofbusiness development services and networks. Women
entrepreneurs also often have to contend with legal
impediments, and restrictions on access to institutions,and using and owning property, which inhibit their accessto credit, gaining employment or dealing with taxes.

Bank will develop a robust definition of MSMEs thatwould be included in its Guidelines for Non-Sovereign
Operations (currently being drafted) so as to betterclassify and monitor interventions intended for MSMEs aswell as maximize their development impact. This would
be done in consultation with the country authorities.

Between 2008 and 2012, 34 percent of all approved
Bank Group NSD financing targeted MSMEs directly
and the Bank intends to scale up support to MSME
development in Africa. At the same time, it recognizes theconstraints of retail-type operations, which may not becost-effective and in the Bank’s comparative advantage.
Its approach will be aimed primarily at strengthening
skills and business linkages, as well as the provisionof financial assistance. It will also further specify theobjectives, business models and resource requirements
associated with financial inclusion (micro and selfemployment enterprises), and enterprise development(growth and opportunity-driven entrepreneurs).

• Review, and where necessary adjust the frameworkfor supporting micro-finance investments andprograms, particularly those aimed at entrepreneurshipdevelopment. Under its Microfinance Policy24 and inline with the Strategy 2013-2022, the Bank Groupis committed to supporting the development of
improved access to financial services across Africa,
particularly for small-scale economic operators andlow-income households that are not well served by
the conventional banking system;

To be more effective in its interventions in this area, theBox 01

Going Forward – Operational Priorities
Specifically, the Bank Group will:

24 African Development Bank Group (2006): Microfinance Policy and Strategy of
the Bank Group; Board document codes ADB/BD/WP/2006/06/Rev.1/Approved, and
ADF/BD/WP/2006/08/Rev.1/Approved; June 12, 2006; Executive Summary, paragraph
9.4, and Sections 4.4 and 4.5.

Scaling Up Work in Trade Finance

The Bank’s new Trade Finance Program (TFP) will address persistent market constraints in terms of the availability ofrisk limits and liquidity for trade in Africa. These are exacerbated by the continued stress in the global banking markets,particularly in Europe, as well as the conservative impact of the Basel III banking regulations. Because there is relatively
low risk – and historically low default rates – in the trade finance sector, the TFP is expected to be the lowest-risk capitalconsuming instrument in the Bank’s private sector operations, and to have a positive overall impact on the risk profile of theBank’s portfolio by balancing other higher-risk operations.
The Bank will also focus on business-enabling environment issues that are primarily targeted at trade facilitation bycollaborating with Africa’s regional economic communities (RECs) to harmonize financial policies and regulations at thenational and regional levels, as a way of facilitating cross-border financial transactions and enhancing cross border trade. Key
activities include:• non-operational aspects of trade finance (to address the challenges of access to finance faced by African financial
institutions and MSMEs);• export promotion and investment support services (to address some of the major challenges of inter- and intra-regional
trade, cross border investment and domestic investment); and• commodity market/exchange support activities (to address problems hindering development of profitable agricultural value
chains).
From a development perspective, the Bank’s trade finance program is expected to help the growth of African economies.
The TFP will use a number of instruments to help the Bank support small and medium-scale enterprises, sectors such as
agriculture and manufacturing, and low-income countries.
Over the initial 4-year business-plan period, the TFP aims to support over US$11 billion of African trade, involving about 8000
SME transactions covering more than 110 local financial institutions in at least 30 RMCs.

Private Sector Development Strategy, 2013-201715• Fine-tune its support to MSMEs through financial
intermediaries (Box 3), especially given the OPEV
evaluation which concluded that the Bank could do
more;

can be an effective way of fostering social innovation,
entrepreneurship and value chain development. They
can also be combined with microfinance to broaden
effectiveness, development impact and sustainability.

• Enhance its support to technical assistance initiatives
aimed at the provision of financial services to the
MSME target markets, as well as those meant toensure that the non-financial needs and requirementsof MSMEs are addressed. The latter include measures
to enhance the enabling environment and capacitybuilding support to local intermediaries that provide
assistance to MSMEs, such as Business Development
Services and linkages to markets;

However, because social businesses are still largely
untested in Africa, Bank assistance will focus onproviding demonstration effects, and on helping toincubate the first wave of African social businesses,
such as the pilot programs in Tunisia, Togo and Uganda.
These pilots will deepen understanding, help foster
institutional environments and help establish financial
vehicles (e.g. revolving funds) to assist social enterprises.
The Bank will also consider direct financing, funding forincubators, awareness raising, technical assistance andcapacity building to commercially viable social business
schemes.

• S upport initiatives that systematically create
opportunities to link local enterprises into the supply
chain of international enterprises through subcontracting,licensing, franchise arrangements and public sector anddevelopment partner procurement policies;• Support initiatives that provide enterprises, including
MSMEs, with incentives for promoting technologies
and knowledge leading toward greener industrial
products; and• Deepen its partnerships with others involved in MSME
development in Africa, including co-financing technicalassistance programs with the International FinanceCorporation, L’Agence Française de Développement,
USAID, DFID, AMSCO, PEP-Africa, UNIDO, ILO, IFAD
and others.
In addition, the Bank will explore other options aimed
at scaling up and leveraging financing and services for
MSMEs, supplemented by guarantees and insurance
mechanisms, such as the African Guarantee Fundand the Bank’s Trade Finance Initiative, to encourage
the continent’s financial institutions to increase their
exposure to MSMEs.
The Bank will also explore ways to support new initiatives
that can promote inclusive economic growth andsocial development. Of significant potential are social
enterprises and social businesses.25 These companies
25 The main difference between social businesses and social enterprises is that,while they both may make profits, the former is created for a social benefit rather
than private profit. Lenders and creditors in a social business may recoup their initialinvestment, but all further profits are re-invested into that or other social businesses
targeting particular social objectives. Social enterprises, meanwhile, may or may not
re-invest further profits.

16

Lastly, the Bank will ensure that its actions stressequitable distribution of risk and reward among privatesponsors, governments and communities; encouragetechnology transfers and industrialization; and foster
the involvement of home-grown enterprises in these
sectors, including through joint ventures and by using
local suppliers of goods and services in the enterprise
supply chain.

Key Challenge – Weak Value-Chain Linkages
Sweeping economic changes during the last half century
have provided a huge opportunity for Africa to emerge
as a global economic power. To unleash its potential,
especially given the new spirit of an Africa on the rise,
African countries must embark on a bold transformation
driven by massive industrialization to address youth
unemployment, poverty, and gender disparities. Thereis a real opportunity, for example, for African countries
to create jobs and promote economic transformation
through a commodity-based industrialization process,capitalizing on the continent’s resources, high commodity
prices, and opportunities presented in the changes inthe structure of global production. Exploiting Africa’s
commodities for industrialization involves adding value
to soft and hard commodities and developing forward
and backward linkages to the commodity sector.
Value chains allow widely separated producers,
processors, buyers, sellers, and consumers to add
value to products and services as they pass along thechain. The African private sector is mainly concentrated
in the chain’s less lucrative segments, with limited scope

Private Sector Development Strategy, 2013-2017

for economic diversification. This is especially the casein agriculture and extractive industries.
Value chain development is critical for strengthening
Africa’s ability to capitalize on its resources, forintegrating African enterprises into regional and global
production value chains, and for African industrialization
and agricultural transformation. By understanding theBox 02interactions between the different players, it is possible
for private and public agencies (including development
agencies) to identify ways to increase efficiency andthereby value, and to strengthen the ability of thosealong the chain to increase their share of the total value.
In supporting agro-industrial and other value chains,the Bank will take care not to substitute for local

Fine-Tuning Interventions via Financial Intermediaries

A substantial proportion of the Bank Group’s direct private sector lending is channeled through financial intermediaries(FIs) including commercial banks, micro-finance institutions, private equity funds, regional and national developmentbanks, and insurance and leasing companies. The Bank utilizes FIs as channels to reach projects and entities that areeither too small for the Bank’s originating and supervision capacity or whose financing needs are better addressed byprivate intermediaries. This also contributes to the strategic objective of building the depth and breadth of the financial
system. Under current financing arrangements, the Bank does so along the following lines:• It provides capital, in the form of debt or equity or risk cover in the form of guarantees to an FI, which invests the funds
in multiple sub-projects;• It appraises eligibility for Bank financing on the basis of a pre-identified pipeline of projects;• It does not predetermine the exact use of funds beyond requiring broad geographic, enterprise segment or type, andsectoral parameters;• It does not select, appraise, or monitor the private firms that ultimately receive its funds, but rather delegates thisfunction to respective FIs; and• It requires FIs to periodically report on the financial performance of sub-projects, on development results and theenterprises/projects supported, and to report serious contraventions of environmental and social standards, as part ofits legal agreement.
Delegating most operational decisions to the respective FIs and relying on an ex ante pipeline of projects, without
necessarily clearly defining the development objectives of the Bank Group’s investments, has meant institutional
procedures have sometimes not been sufficiently adapted to intermediary financing. This is partly reflected in weak
self-reporting by FIs and has often meant inadequate monitoring of the Bank’s investment portfolio, which does notadequately capture the development results that are sought by the Bank.
As stipulated in the PSD Policy, the Bank Group will fine-tune its guidelines to investments which are channeled throughfinancial intermediaries by:• Conducting a thorough evaluation of institutional models that support the various target groups and sectors todetermine what works, what lessons have been learned, and how to measure the impact of interventions. In thisregard, Management will examine the prudence of, and where necessary, adopt specific guidelines by some
Development Finance Institutions (DFIs) that either target or exclude certain sectors, require FIs to match the tenor of
the financing provided, restrict the minimum and maximum size of sub-loans to ensure access for specific beneficiaries,
or even require FIs to apply certain environmental and social standards.
• Developing better definitions for its areas of support, to be included in Project Appraisal Reports, and including
specific requirements on support for strong, locally and regionally owned institutions; having a clear and credible
strategy for under-served segments, regions and sectors (including having clear mandates with a focus on sustainable
development and finance for the poor); having strong socio-economic safeguards in line with the Bank’s Integrated
Safeguards System (ISS); and acting as responsible taxpayers.
• Strengthen the capacity of FIs (particularly, local and regional ones) by scaling up technical assistance packages
to FIs aimed at strengthening their business and financial management practices (e.g. portfolio management, risk
management, environmental policies, and corporate governance). In this regard, the Bank will work with client FIs tobuild up their compliance with environmental and social standards.
• Develop adequate mechanisms to ensure that the Bank group support actually reaches intended beneficiaries (e.g.,
MSMEs) in order to ensure that FIs are accountable for the deployment of Bank funds for purposes intended.

Private Sector Development Strategy, 2013-201717

entrepreneurs, will work within existing commercial
initiatives and will avoid establishing new marketing
channels that are unsustainable, even if they offer fairer
terms for target beneficiaries during the project life
span. Care will be taken to avoid creating competition
with existing business and other services, unless their
viability and sustainability is certain. In addressing
market imperfections, particular emphasis will be paid
to changing uncompetitive and inefficient processes andbehavior. The Bank will support new initiatives aimed
at the development and strengthening of value chainsparticularly in extractive industries, agriculture, forestry
and fisheries, but also in other niche areas such as
education and medical research hubs, pharmaceuticals,
and medical devices.

Going Forward – Operational Priorities
Working with other organizations where possible, Bank
assistance will focus on:• Intra-regional investments and export value chains topromote the full benefit of regional supply chains, while
taking into account country and regional differences;• Improvements in market access for small farmers
and MSMEs, as well as those aimed at developing
their skills as agribusiness entrepreneurs with an eye
toward becoming venture capitalists;• Improving the capacity of Africa’s producers,
particularly manufacturers and related industries, tocompete with imported products in local markets,and helping to link them to regional and international
markets;• Ensuring access to information and knowledge;• Developing local skills and technological capabilities
among firms linked together as part of a value chain;increasing the depth of local linkages by targetingskills development, technological capabilities, accessto capital, and buyer–supplier cooperation along
the value chain; engaging lead commodity firms topromote local linkage strategy, including procurement,
sourcing, and processing, and promote the emergenceof local lead firms;• Supporting technology and skills transfer, as well as the
movement of skilled labor within Africa, by facilitating
private investment across borders;18• Capitalizing on the Bank’s significant direct and indirect
financing of large-scale enterprises and projects –including to state-owned entities, joint public-private
ventures, and foreign and domestic entrepreneurs– to demonstrate how their operations can spur thecontinent’s industrial transformation, and in turn,create socioeconomic benefits for a large number ofAfricans; and• Linking value chain development with green growth
criteria (resource use efficiency/sustainability/resilience)and promoting public private partnerships, particularly
in upstream dialogue on enabling conditions for private
sector development as well as in promoting particularprivate sector investments, e.g. by helping to lower
investment risks.

2.5 Areas of Special Emphasis
The Bank Group’s Strategy 2013-2022 highlights threecross-cutting priorities which are crucial to the ultimate
success of the Bank Group’s PSD agenda: fragile states,
agriculture and food security, and gender.
Fragile States
As part of its inclusive growth agenda, the Bank has
made strong commitments to the continent’s fragile andconflict-affected states, central to Africa’s development
agenda in the Bank Group Strategy 2013-2022. Basedon the experience of the Bank Group’s Fragile States
Facility (FSF), which provides supplementary resources
for sovereign operations in those fragile states that
otherwise receive smaller ADF Performance-Based
Allocations (PBAs) ), international good practice andcommitment to the New Deal for Engagement in
Fragile States (Busan 2011) the Bank Group aims totransform the way it engages with Africa’s fragile andconflict-affected states on private sector development
issues. It seeks to ensure that these countries can also
benefit from resources in the Bank’s non-sovereign
window, taking into consideration its risk management
framework. These changes are part of a broader agenda
to improve the absorptive capacity of these countries
while maximizing results.
The current review of the Bank’s Group’s strategy for
Fragile States provides a strong entry point to refine
the institution’s approach to PSD through a fragility
lens. For both sovereign and non-sovereign operations,
supporting PSD in fragile states presents significant
operational challenges, which require adjustments

Private Sector Development Strategy, 2013-2017

by the Bank Group of its generic approach to fragile
countries. In practical terms, this will involve more
informed risk-taking, nimbler operational responses
including the development of innovative instruments
by the Bank Group, more hands-on implementation
support, and new approaches to measure results infragile and conflict-affected states – all based on theaccumulated experience of the Bank.
To this end, the Bank will make greater use of thewide range of instruments to better tailor operational
support to be effective in these situations. These include
strengthening support toward better business- andinvestment-enabling environments, taking into accountthe challenges and opportunities in each of thesestates (Pillar I). They also include greater innovation inundertaking Bank-financed private sector operations
through use of innovative risk mitigation instruments
such as partial risk guarantees that provide private sector
investors with comfort on the contractual undertakingsof governments or state-owned entities (Pillar III).
As part of the ADF 13 replenishment, and at the requestof Deputies, Management has received endorsement for
two new financial instruments for the ADF to enable the
Bank to prudently stretch its risk capital in more risky
countries – and notably fragile states.26 Elsewhere, theBank will also make greater use of multi-donor trust
funds to mobilize and align donor support; support
to non-sovereigns and sub-national entities that may
have capacities (and trust) that central governments arestill developing; greater use of existing programmatic
instruments to finance infrastructure rehabilitation andbasic service delivery (such as joint sector support andmulti-year program-based operations).
Agriculture and Food Security
In Africa, the agriculture sector is essential for growth,
poverty reduction, and food security. More than halfof rural employment in Sub- Saharan Africa consistsof self-employed farmers, many of whom are women.
Agriculture contributes 13 percent to Africa’s GDP, andGDP growth originating in agriculture is about four times
more effective in reducing poverty than GDP growthoriginating outside the sector. It is also the largest source

26 The two new instruments endorsed by ADF Deputies to proceed to detailed
design and proposals for consideration by the Bank’s Boards are (i) a Partial Credit
Guarantee (PCG) and; (ii) a Private Sector Facility (PSF). Both instruments are designed
to leverage the Fund’s scarce resources and crowd in commercial sources of financing
for transformational development projects in low income countries (LICs).

Private Sector Development Strategy, 2013-2017

of foreign exchange, accounting for about 40 percentof the continent’s hard currency earnings; and the main
generator of savings and tax revenues. The sector also
remains the dominant provider of industrial raw materials
with about two-thirds of manufacturing value-added inmost African countries being based on agricultural raw
materials. Agriculture supports some 70-80 percent of
the total population in Africa, including 70 percent of
the continent’s extreme poor and undernourished. Thismeans labor-intensive growth in the sector holds muchpromise for poverty reduction. Long-term investments
aimed at boosting agricultural productivity will contributeto inclusive growth by creating employment opportunities
for women and youth. Likewise, the agricultural sector
is crucial for finding paths to development that will easepressure on natural assets while managing environmental
and socioeconomic risks better.
The Bank, by investing in rural infrastructure (ruralroads, irrigation, storage facilities, access to markets,conservation systems and supply networks), its areasof comparative advantage, will help improve agricultural
productivity, which is one of the most effective
ways to drive inclusive growth, reduce poverty, andincrease employment. Wherever possible, the Bank
will also support initiatives for building resilience toclimatic shocks like droughts, promoting efficient andsustainable use of land, forest, water and other natural
resources, and providing sustainable infrastructure.
Unlocking Africa’s agricultural potential and tackling foodinsecurity will require sustained coordinated investmentusing an integrated value-chain approach. While theseinterventions may be initiated by the public sector, thereis need for increased linkages with the private sector, bypromoting PPPs in agricultural projects and programs.
The Bank will therefore continue its support as a financier
of private investment in agriculture agribusiness andagriculture value chains (working both directly andindirectly with private sponsors in the sector).
GenderThe Bank Group’s Strategy for 2013-2022 reaffirms the
Bank’s commitment to gender equality as essential for
economic progress and sustainable development. It
states that gender equality is not only part of an inclusive
growth strategy but also an area of special emphasis
for the Bank, particularly as related to private sector
development.
Learning from past successes and failures, the Bank

19

proposes to intensify efforts to reduce gender disparities
by focusing on three key strategic areas during ADF13. These include promoting women’s economic
empowerment, strengthening women’s legal status andproperty rights, and improving knowledge management
and capacity building. The Bank is developing theGender Strategic Framework 2013-2017, which seeks
to align the strategic areas for the promotion of genderequality to the areas of focus of the Bank. As part of thisframework, the promotion of gender equality must be
strengthened in the area of private sector development.
The role of women in creating, running and expanding
businesses is recognized as fundamental for growthand poverty reduction, but women do not have private
sector opportunities equal to those of men in Africa.
Although roughly equal numbers of men and womenare engaged in African commercial activity, womenare predominantly found in informal, agriculture sectorrelated activities. Female entrepreneurs also facedisproportionate obstacles in obtaining credit, training,

20

access to networks and information. They also face
additional legal and policy obstacles.
Going forward, the Bank Group will support initiatives toincrease women’s human capital – skills, management
training, business mentors and networks; to expand
awareness of women’s success as entrepreneurs;
to improve the voice of women in investment climate
policy circles; and to leveling the playing field for womenand improving their economic opportunities. This lastpoint will emphasize improving access to finance andeducation, eliminating gender bias in labor policies, land
tenure and administration, and building skills in science,technology and entrepreneurship.
The three broad implementation modalities will include
finalizing the Bank Group’s Gender Strategic Framework
to guide Bank activities in gender mainstreaming,
improving the effectiveness of gender mainstreamingin operations and improving the monitoring of results.

Private Sector Development Strategy, 2013-2017

03

Implementing the Strategy
Many good strategies do not achieve the intended results due
to inadequate attention to implementation. Although a Bankwide mandate, private sector development has at times been
seen as the exclusive preserve of a few departments within
the organization. Implementation of this strategy will therefore
require a mindset shift that will mainstream private sector
development issues throughout the institution. (Annex III). In
this regard, Bank Management will pay particular attention toa number of leadership, ownership, and partnership issues.
Likewise, Management will pay special attention to monitoringand evaluating the Strategy.

3.1 Leadership
The Strategy has broad implications that will affect theoperations of the Bank Group as a whole, not simply private
sector operations. Work is underway to explore institutional
options to more effectively deliver on the strategic thrust of
the PSD agenda. Management recognizes that there might
be need for fine-tuning the organizational and incentive
structure. Senior management will lead this process by
ensuring adequate staffing and resourcing of the Bank’s
Operational units, particularly Field Offices. Several specificactions in this regard, will include:• F ine-tuning the organizational and incentive
structure. A challenge for the Bank’s structure is theabsence of a dedicated department that oversees theoverall PSD agenda. This has meant that the agenda
is fragmented across the Bank without centralized
and permanent accountability. A high-level Private
Sector Development Steering Committee (PSDSC) will
be set up to ensure effective implementation of theStrategy. Its very creation signals that private sector
development is more than private sector operations andhence, supersedes the organizational responsibility ofa single complex. The PSDSC will play a key role intransforming the organization, whose activities havebeen dominated by public sector interventions, to
one increasingly focused on seeking private sector
solutions and promoting public-private partnerships.
As part of its mandate, the PSDSC will:i. E nsure that the Strategy is translated into a
consolidated, results-focused organizational
business plan, with a clear timeline that matches
Bank activities for implementation of the Strategy;

Private Sector Development Strategy, 2013-2017

ii. Provide guidance to harmonize other strategy andpolicy documents that might impact the effective
implementation of this Strategy; and oversee theeffective implementation of recommendations fromvarious OPEV evaluations affecting the Bank’s PSD
and NSO agendas (Box 3);
iii. Ensure that the overarching goal of private sector
development is inculcated into the Bank’s culture, its
KPIs and incentive structure agreeing on commonly
defined targets, development outcomes, and striving for
optimal contributions from each unit across the Bank;iv. Consolidate and update the Bank’s policy framework
for NSO, including (a) greater coherence between
the Bank’s Risk Management Framework and its
strategic objective of supporting more NSOs in low
income countries; and (b) ensuring that NSOs are
not merely opportunistic, but are part of CSP and
RISP programming, particularly by strengthening
the PSD and NSO orientation of CSPs and RISPS
as mentioned in Section 3.2;
v. Fine-tune Bank’s business processes as related(but not limited) to its PSD agenda, to strengthen
their effectiveness and value for money, as well as
have oversight over resource and quality assurance
in all PSD-related work; andvi. D evelop plans to effectively communicate theStrategy both within and outside the Bank.
•C
 onsolidate the Bank’s work on the financial sector.
In light of the importance of the financial sector inboth the Bank’s overall Strategy for 2013 – 2022 aswell as in this Strategy, the Bank is undertaking acomprehensive review of its approach to the financial
sector, which will lead to the preparation of a new
Financial Sector Development Policy and Strategy toreplace the 2003 Financial Sector Policy. The PSDC
will play a crucial role in guiding this process. In thisregard, the President has constituted a working groupchaired by the Chief Economist and Vice President, withhigh-level representation from several Complexes to:i. Re-express the operational priorities for financial sector

21

operations into measurable objectives linked to the
PSD Strategy pillars and the Bank Group’s overall
strategy for 2013-2022;
ii. Prioritize activities associated with those objectives
that tackle long-term, seemingly intractable problems,(e.g. access to finance, increased and faster takeup of needed harmonized regulatory reforms) andwhich, if proven successful, have potential to achievetransformative scale;iii. Identify needed resources, preferred partners andmilestones for prioritized actions; andiv. Consider how organizational structures, budgets,processes and skills of financial sector operations
can be best aligned to implement prioritized activities
for key objectives.
The working group will fast-track, near-term priorities
before modified approaches are fully implemented
institutionally. That will begin with considering which
sectors and markets (e.g. extractive industries, agriculture,and power) should prioritized actions be tackled.27
27 Illustrative prioritized actions will include the following: (i) sustainable, i.e.
commercially viable, approaches to mitigating risk of lending to SME’s; (ii) linked
policy/regulatory reforms with investments in financial sector infrastructure, e.g.
payments systems, agent networks that are associated with mobile solutions thatare at the heart of more inclusive, deepened financial services; and (iii) capital
market investment products that support increased origination of a variety of credit
assets (leasing receivables, infrastructure bonds, real estate mortgages) for local andinternational institutional investors.

Box 0322• Clarifying links to programming and budget. Under
Steering Committee guidance, the Bank will developa PSD business plan and address the issue of theStrategy’s implications on the Bank’s administrative
budget. In the short term, proposed changes will be
primarily implemented through a shifting of existing staff
into any new structures that are created; and where
necessary, through the creation of a limited numberof new positions. The budgetary impact of theserecommendations will be examined in the annual Programand Budget (PBD) discussions, in close consultation
with the Board. In addition, the Bank’s ADF and ADB
windows will systematically aim to actively mobilize cofinancing from other development partners or commercial
Banks for both its lending and non-lending program. The
Bank will also explore greater efficiencies in the use ofconcessional and grant financing to deliver its catalytic
potential. Further, it will seek to enhance the capacity of
local and regional financial intermediaries through whichsome of its PSD programming is delivered.

3.2 OwnershipTo ensure that private sector development is everyone’s
business and not the concern of only select Bank units,
and also that the Bank’s various Complexes are aligned
to the Strategy, management will focus on the following:• Strengthening country and regional strategy andprogramming. Implementation of the PSD Strategy
in each RMC will require a clear understanding of

Implementation Schedule of Key Recommendations by OPEV

ActionCompletion date

Private Sector Risk Sharing framework

December 2013

Update of the ADOA framework

December 2013

Update of Bank’s capital adequacy policy

December 2013

Consolidated PSD Business Plan

December 2013

Equity Investment Policy

December 2013

Equity Investments operational Guidelines

December 2013

NSO Policy

January 2014

NSO Guidelines

January 2014

Financial Sector Strategy

March 2014

Enclave Projects Policy

June 2014

Enclave Projects Operational Guidelines

June 2014

Lines of Credit Policy

September 2014

Lines of Credit Operational Guidelines

September 2014

Private Sector Development Strategy, 2013-2017

the situation on the ground, including the legal andregulatory environment as well as constraints andopportunities for the private sector to thrive. In thisregard, more effective appraisals of the private sector
will be done for each RMC on a regular basis. Suchassessments, which will be carried out by Country
Teams, will leverage the Bank’s decentralized staff inRegional Resource Centers as well as its Field Offices
and will complement CSPs and RISPs to form the
backbone for deciding possible interventions by the
Bank. Another point of entry will include private sector
development related knowledge products that would
support effective policy dialogue on private sector
development issues, structural transformation issues,
development of capital markets and financial services,and leveraging both public and private investments.
• S electivity. This Strategy emphasizes that Bank
assistance to RMCs will be largely determined bycountry circumstances as enshrined in CSPs and
RISPs, the Bank’s basic business plan for RMCs.
CSPs/RISPs, both aligned to national or regional
development strategies and priorities. This will ensurethat the Bank’s PSD activities will optimize additionality,reflect sound analysis, consultation and ownership.
This will also help build collaboration with other
donors in advancing private sector development in
RMCs and ensure that Bank country-level activities
reflect the Bank’s core competencies, sound analysis,
consultation, and ownership•F ostering ‘One Bank’ teamwork in the
preparation and implementation monitoring of
PSD interventions in RMCs and RECs. The Bank
will foster greater collaboration between the Bank
Group’s sovereign and non-sovereign windows. In
this regard, the PSDC will promote enhanced sharingof “development intelligence” on what works well andwhat does not in individual RMCs or RECs, and foster
multi-sector and multi-skilled analysis of opportunities
and constraints to realizing successful Bank
interventions. This will be done primarily by aligning
the Bank’s non-sovereign operations with country
and regional strategies. Second, new efforts will bemade to strengthen the PSD orientation of sovereign
operations through the fostering of more systematic
review of the Bank’s public sector operations to
consider how they facilitate private investment andprivate enterprise participation.

Private Sector Development Strategy, 2013-2017• Strengthening the Bank’s capacity in private sector
development support. The Bank will roll out a programfor capacity building for Bank staff, as well as RMCs
officials, covering subjects including: PSD-responsive
CSPs; investment climate issues; systematic analysisof the state of the financial sector in RMCs or subregions. Such capacity building programs, conductedby the Bank’s African Development Institute (EADI)
and others, will also train cross-sectoral Bank staff in
the identification of potential areas of Bank support
to deepen and broaden access to financial services
for enterprises and/or capital market development
opportunities; greater effectiveness in-country
dialogue on PSD with various stakeholders in therespective RMCs or sub-regions.
• Improving the PSD and NSO dimension at sector
level. Sector operations departments, with advice
from the PSDSC and other relevant departments will
jointly work to strengthen the Bank’s sector strategy
papers so that they better describe interventions
needed for effective private sector participation. This
will particularly be the case for the sectors highlighted
in this strategy, such as transport and energy. At
the same time, Management will devote particularattention to the need to recruit and maintain staff withthe right skills mix to effectively manage the Bank’s
rapidly growing non-sovereign portfolio.
• Using decentralization for greater operational
effectiveness. The Bank will implement an institutional
capacity-building program to equip decentralized staff
with the requisite tools, skills and budget to deliver
effectively on the PSD agenda and, if necessary
recruit new staff for this purpose. The Bank’s Business
Opportunity Seminars (BOS) will continue to strengthen
the participation of local African enterprises in Bankfinanced projects.

3.3

Partnership

A key instrument for implementing this Strategy will be
strategic partnerships with other development partners,
including DFIs that work directly with the private
sector, policy research institutions and universities,
governments, and of course, the private sector. The
Bank intends to ratchet up engagement with the private
sector through such vehicles as CEO fora, regional,
national and sub-national business trade groups. Special
focus will be given to:23•
K nowledge generation, management andbrokerage. The Bank will seek to position itself as amore visible, effective and relevant knowledge broker
on private sector development in Africa issues. It will
intensify its approach to its PSD knowledge products
and advisory services, as part of an update to its
knowledge management strategy. Bank Management
will redouble efforts to mobilize resources to fund PSDrelated analytical work, in partnership with various
other organizations.
• Strategic initiatives. The Bank will seek to extend
its cooperation and co-financing with a wider rangeof partners at the national, regional, and global levels.
Such partnerships include the Fund for African Private
Sector Assistance (FAPA), African Management
Services Company (AMSCO), the Multi-Donor
Governance Trust Fund (GTF), the Enhanced Private
Sector Assistance (EPSA) initiative, the Investment
Climate Facility for Africa (ICF), the Infrastructure
Consortium for Africa (ICA), the Extractive Industries
Transparency Initiative (EITI), AfriTAC, and the Making
Finance Work for Africa (MFW4A). It will also scale up
support for special initiatives such as the African Legal
Services Facility (ALSF).
• New Partners. New partnerships will be developed
with, for instance, Brazil, China, India, Russia, Turkey
and Singapore, as well as global funds, Islamic funds,
private foundations, African and other Sovereign
Wealth Funds and central banks. Elsewhere, theBank will work closely with the AU, UNECA, the World
Economic Forum, and other fora to support Africa’s
private sector. The Bank will also explore ways ofleveraging the resources of Africa’s Diaspora (US$20
billion of annual remittances), including using diaspora
bonds and other innovative financing.

3.4 Monitoring and Evaluating Results
The effectiveness of the Bank’s private sector
development assistance to RMCs will largely dependon its ability to monitor, measure and evaluate its work
and, where necessary, to make adjustments.
The PSD Strategy is aligned with the Bank’s existing,four-level results monitoring framework (Figure 8). The
RMF, a draft of which is summarized in Annex IV, willallow the Bank’s shareholders and stakeholders tomonitor private sector activities to ensure that they
are making significant contributions toward helping24

the Bank Group to achieve developmental and othermandates.
Bank Group departments will work closely with its
Results Department (ORQR) to revise Bank-wide
public sector development indicators to reflect the PSD
strategic priority. These will then be applied across theorganization.
Given the rapidity of changes in the regional andinternational social and economic landscapes, it is
proposed that this strategy cover a period of five years,
with a mid-term review in the third year of the strategy.

Figure 08

PSD Results Monitoring Framework

What development progress
is Africa making in Private
sector development?

LEVEL 1

How well is the AfDB’s
contributing to private sector
development in Africa?

LEVEL 2Is the AfDB as anorganization managing its
operations in delivering
private sector development
operations effectively?

LEVEL 3Is the AfDB managing its
private sector development
operations efficiently?

LEVEL 4

Private Sector Development Strategy, 2013-2017

Risks and Mitigation Measures
There are several risks that could adversely impact theeffective implementation of this Strategy. The major
ones are summarized below, along with suggested
mitigation measures. In general, risk management will
be an iterative process during the Strategy’s duration,with new risks identified, assessed, prioritized, and dealt
with throughout the Strategy’s duration. And in line with
the Bank’s Strategy for 2013-2022, Management will
examine the prudence of innovative risk evaluation andmitigation methods.
Inadequate Financing and Capacity to Deliver.
This Strategy is premised on several key assumptions
including that there will be no significant reduction in the
Bank Group’s ADF window resources in real terms overthe next two replenishment cycles, and that the Bank
Group will maintain its Triple-A rating in the absenceof any significant economic or other shocks. However,
the resources available to deliver on this Strategy may
still be insufficient. Given the size of most infrastructure
and industrial projects, prudent risk limits, particularly
for low-income countries (LICs) and fragile states, may
limit the Bank’s ability to constantly undertake significant
volumes of NSO in these countries. The Bank may also
fail to mobilize the necessary skills for the strategy withinbudget constraints.
As a mitigation measure, implementation of the Strategy
will place high emphasis on defining and executing
ways to stretch the Bank’s risk capital, notably throughrisk participation and sharing measures. Moreover, theStrategy is designed to leverage existing Bank Group
resources while attracting those of other partners,
including African governments, the private sector, andnon-traditional development partners including emerging
countries and philanthropic organizations.
The Bank will redouble efforts to make more effective useof bilateral and multilateral trust funds (Special Funds).
The proposed PSD Strategy Steering Committee will
also serve to mitigate the particular delivery capacity
risks internal to the Bank.
Strategic Alignment and Reputational Risk. Parties tothe Bank Group’s transactions may not share the Bank’s
pro-poor focus. The business model for the Bank’s

Private Sector Development Strategy, 2013-201704

allocation of funds to the private sector focuses bothon the commercial potential of enterprises within the
Bank’s risk framework and on amplifying development
benefits, but private parties might focus only on theformer. The tension between the two objectives could
lead to a drift toward financing lower-risk activities inareas mostly favored by investors but which may notprovide the most development benefit.
As mitigation measures, the Bank Group will continue
to emphasize promotion of private sector development
in areas where development benefits are high but
which financial markets regard as too long term or
risky, or not profitable enough. The Bank is developing
corporate governance guidelines to steer its engagement
for partnerships, particularly from the private sector.
Additional mitigating measures include Bank support
to sovereign and non-sovereign clients on preparing
operations (including environmental and social
safeguards); using results-based analytical frameworks
as a basis for the preparation, implementation, andmonitoring of Bank-financed operations; and systematic
attention to sustainability issues (institutional viability,
operations and maintenance; and financial viability) as
well as environmental/social sustainability issues. Bank
guidelines for project teams on corporate governanceand corporate social responsibility (CSR) will also be
developed, to ensure the promotion of good practiceacross the windows of AfDB Group activity.
The Bank will also continue to fine-tune its Assessmentof Development Outcomes and Additionality (ADOA)
procedure for all private sector operations. An ex
post facto evaluation of the accuracy of ADOA will
be undertaken in 2014. Projects for which assessed
ADOA ratings are unsatisfactory will not be eligible forpresentation to the Board. This may mean: developing
new ways of appraising project risks, moderating theapproach of always following the market, and not
being overly dependent on a project-driven model byaddressing all three PSD strategic pillars concurrently.
Governments’ Commitment to PSD. WWhereas mostAfrican governments now recognize the vital role of theprivate sector in economic development and poverty
reduction, many have yet to make sufficient practical25

progress, including by making critical institutional andgovernance reforms. Substantial risk could arise infollowing an unforeseen erosion of Africa’s current
credibility and growing reputation as a preferredinvestment destination.
Mitigation measures would primarily revolve aroundstronger high-level policy dialogue with Governments,
particularly through the dialogue mechanisms with otherdevelopment partners, or via General Budget Support
and Sector Budget Support operations. Steps could
also be taken to boost public awareness and popularsupport, including strengthening the demand for PSDrelated reform. Other mitigation measures would involve
dissemination of quality knowledge products as part ofBank Group analytical and advisory services.
Portfolio Growth and Concentration: Another riskthat the Bank faces is the monitoring of the growth of
its young private sector portfolio. This is particularly
true as most loans are expected to reach the end of
their grace period in 2013/2014, and some borrowers’
credit profiles have deteriorated, and so the limit of risk
capital utilization allocated to high-risk transactions inaccordance with the Bank’s risk appetite? statement

Box 04is about to be reached. Consistent with the GCI
commitments, the Bank has increased its exposure in
LICs, which use risk capital faster than similar projects
in middle-income countries (MICs). Similarly, projects
sponsored by Africa’s emerging entrepreneurs are also
perceived to be more risky than counterparts with a
global presence and track record. This is most evident
with regard to the Bank’s equity investments. (SeeBox 4)In order to build resilience and to protect the Bank’s
AAA rating, the rapid growth of the non-sovereign
portfolio over the last years may need to be balancedwith more efforts in consolidation and portfolio
management particularly to address the potential riskof portfolio concentration. To that end, Management is
adopting mitigation measures. Continuing to strengthen
institutional credit risk governance through undertakings
by the Bank’s Credit Risk Committee (CRC) will continue
to reinforce institutional focus on credit risk governanceand prudential limit management. Through its exclusive
28 See, in this regard, Equity Investment Policy Guidelines (ADB/BD/WP/94/125)
and Review of ADB Financial Policies (ADB/BD/WP/93/86).
29 See, Equity Portfolio – Risk Capital Utilization and Performance (ADB/BD/
IF/2012/238).

Equity Investments

The Bank Group has been making equity investments since the 1970s, the main goal of which has been to leverage more
capital by attracting more investors, and consequently to contribute to the development of Africa’s private sector. Thatdevelopment objective, though, must be accompanied by satisfactory financial returns. Because equity investments are
not primarily held by the Bank for income-generating purposes, current guidelines also require their eventual sale to private
investors when enterprises become self-sustaining.28
In recent years, the Bank’s equity investment portfolio has recorded significant growth while expanding the scope ofinvestments with additional instruments, notably private equity funds. As a portfolio designed to increase development
results as much as possible, it still manages to achieve positive financial returns and is already realizing capital receipts from
dividend payments and sales of certain underlying investments. Nevertheless, this growth has resulted in rapid risk capitalposing particular challenges, given statutory caps on the use of these instruments.29
Bank Group Management is fully aware of the need to reconcile the Bank’s operational objectives with its risk management
framework for equity investments. Going forward, the Bank will continue close monitoring of its portfolio, carefully selecting
investments to balance the Bank’s risk/return while revisiting guidelines and processes to address the inherent riskinessof these types of transactions, including exit mechanisms, all as part of updated Guidelines for Private Sector Operations(currently under review).
In line with the recommendations by the Bank Group’s independent Evaluation Department (OPEV), Management will apply
existing screening and selection methods, bolstered with revamped development impact assessment, to all new equity
investments. This will allow greater selectivity by the Bank and better management of the growth rate of its equity investment
portfolio. Bank Management will also examine the levels of risk capital charges for equity investments to ensure they reflect
the Bank’s experience with these types of instruments, international requirements (including those from International Financial
Reporting Standards) and practices used by fellow IFIs and bilateral development agencies. Furthermore, the Bank will
recruit additional investment and legal officers and provide more specialized training to staff on equity investments.

26

Private Sector Development Strategy, 2013-2017

focus on credit risk issues, the CRC will continue tobe instrumental in strengthening the credit risk culture
across the institution and will closely monitor growthof the Bank’s portfolio, notably for private sector
operations. Management is also reviewing the Bank’s
capital adequacy policy toward an economic capitalframework in line with the best banking practices.
At the same time, Management is increasing use ofalternative instruments, as well as seeking risk-sharing
partners to leverage the Bank’s NSO portfolio andpipeline, while keeping its risk levels within prudential
limits. These measures are intended to enable the Bank
to allocate more headroom to its strategic priorities,
while protecting its financial profile.
In addition, the Bank is improving management ofconcentration risk, particularly in the public sector
portfolio, by pursuing geographic diversification andincreasing sovereign lending to creditworthy countries
to which the Bank is underexposed. The current reviewof the Bank Group’s broader lending landscape is also
expected to pave the way for additional diversification
opportunities. Concentration of risk by sectors or
instruments in the non-sovereign portfolio, particularly inthe financial sector, is also subject to strong monitoring.
Credit Risk. The Bank’s rating reflects its intrinsic
financial strength, its prudent financial management
and policies, and its strong shareholder support. These
strengths offset the relatively high risk profile of its overall
portfolio, which results from its challenging regional
operating environment. However, the Bank’s own
Weighted Average Risk Rating (WARR) of its portfolio
remains within the limits defined by its risk appetitestatement.

counter-parties. However, the its strong capitalization,liquidity buffers and risk-management framework
help to offset risks it carries on its balance sheet, andcreate substantial headroom in risk-bearing capacity
to expand its lending further. Moreover, the Bank’s
private sector operations in its low-income RMCs are an
obvious avenue to achieve greater geographic diversity
to compensate for the concentration of its sovereign
portfolio in a few countries (some of which have recently
been downgraded because of domestic and external
political and economic factors), and hence are anelement of a Bank-wide portfolio risk mitigation strategy.
Business Process Risk. In an effort to strengtheninternal review, the Bank has, at times, made its
approval process too long and onerous relative to the
Bank’s processing capacity. This makes the Bank
less competitive than other IFIs and limits the potential
productivity of the teams processing NSO.
The Bank’s new NSO guidelines will propose a
streamlined approval process, benchmarked with other
IFIs, to ensure that each step retained in the process
presents “value for money” for the Bank and its clients.
Operational Risk. Since the Bank began to originate
non-sovereign guaranteed transactions, the bodyof statutory documents that guide and regulate theits NSOs has developed incrementally, leading to an
accumulation of policy and guideline directives that now
need to be consolidated and updated.
The PSO portfolio review, the new PSD Policy andthis Strategy establish the foundation for a new PSO
guidelines policy to supersede the numerous existing
policies.

In recent years, the Bank Group has considerablyincreased lending to sovereign and private sector

Private Sector Development Strategy, 2013-2017

27

05

Conclusion
The private sector drives Africa’s economic growth.
Economic growth drives Africa’s development. Africancountries recognize these facts and are determined
to harness the tangible benefits of development for
their people: socioeconomic opportunity, humancapital, critical infrastructure, regional competitiveness,environmental sustainability, social inclusion and poverty
reduction, health, safety, literacy, happiness.

In line with its Strategy 2013-2022 and its operational
policies, the African Development Bank will use resources
at its disposal to support private sector development,
not as a distinct sector or instrument, but as a priority
to which all Bank operations can and must contribute.

This Strategy sets out the framework for the Bank
Group’s private sector development activities across
Africa for the medium term. The Strategy affirms the roleof the private sector as an agent of Africa’s development,
and as a partner in delivering on the Bank’s agenda ofinclusive growth and the transition to green growth.

28

Private Sector Development Strategy, 2013-2017

06
Annexes

Private Sector Development Strategy, 2013-201729

6.1 Annex I: Lessons from Previous Activities30
CHALLENGE

SOLUTION (Private Sector Development Strategy)

Strategy Alignment
Operational instruments including regional,
country and sector strategies and business plans
inadequately reflect PSD as a Bank-wide priority.

• Proposed PSD SC to play key role in ensuring that new regional, country andsector strategies, as well as related business plans, fully capture Bank priorities.
• New guidelines to be developed to ensure that revamped regional, country andsector priorities better reflect PSD as a Bank-wide priority.

Institutional Buy-In
Institutional buy-in on PSD not broad enoughacross Bank Group operations to allow
internalization of, and responsiveness to,institutional PSD objectives.

• Proposed PSD SC to oversee, monitor and report on Bank’s overall PSD agenda.
• New guidelines to be developed to ensure that revamped regional, country andsector priorities better reflect PSD as a Bank-wide priority.

PSD Prioritization
Unclear Bank Group PSD priorities often contributeto strategic misalignment in project selection.

• Greater clarity in Bank Group PSD priorities and principles guiding them.

Operations
Insufficient knowledge-based activities informBank Group business-enabling environment (BEE)
operations.

• Revamped and strengthened approach to knowledge-based operations andactivities to be developed to better inform Bank Group’s PSD operations,
including BEE operations.

Insufficient local content in Bank Group’s
procurement of operations to promote PSD.

•F ine-tuning of Bank Group’s communication strategy on PSD opportunities for
local providers in Bank-financed projects, including expansion of its Business
Opportunity Forums.

Insufficient engagement of non-state actors in the
Bank’s PSD agenda.

•R evamped guidelines for country and regional strategies to emphasize sustained
engagement with non-state actors in informing PSD priorities and strategy.

Results and Accountability
Weak corporate PSD Results Monitoring
Framework (RMF) focuses primarily on nonsovereign operations at the expense of the rest of
the Bank Group’s PSD interventions.

• Revamped and strengthened PSD Results Monitoring Framework to be
developed by Results Department in collaboration with various Complexes andoverseen by proposed PSD SC.

Poor results and accountability when targeting
support to MSMEs, particularly through financial
intermediaries.

•B ank Group’s approach to working with financial intermediaries to be fine-tuned.

Lack of measurement framework for catalytic effectof Bank Group’s sovereign and non-sovereign
lending.

•W here appropriate, staff performance indicators to be adjusted to reflect PSD
goals.

Skills Mix
Deficient skills mix across the Bank Group to deliver
effectively on its PSD agenda.

• Bank Group to adjust existing gaps in current human resource skills mix in light of
PSD agenda, though capacity-building and other means.

Safeguards
General lack of use of Bank Group safeguard
measures a dialogue platform for country portfolio
improvement.

• The proposed PSD SC will be the place to bring this issue and propose solutions
in conjunction with ORPC and other relevant units.

Long and onerous approval processes relative tothe Bank’s processing capacity, leading to lack ofcompetitiveness compared to other IFIs.

•S treamlined approval process, benchmarked with other IFIs, to ensure that eachstep retained in the process presents “value for money” for the Bank and its
clients.

Proliferation of NSO policy and guideline directives
that now need to be consolidated and modernized.

•T he NSO portfolio review to lay the foundation for streamlined guidelines tosupersede numerous existing policies.

30 See Annual Development Effectiveness Review 2012 and Mid-Term Review of the Medium-Term Strategy 2008-2012 (Ref. ADB/BD/
WP/2011/52/Rev.1 and ADF/BD/WP/2011/30/Rev.1), the 2008 Strategy Update for Private Sector Development, and the 2008-10
Business Plan for Non-Sovereign Operations; and “Fostering Private Sector Development in Africa: An Independent Evaluation of
Non-Sovereign Operations, 2006-2011”. Operations Evaluation Department (OPEV).

30

Private Sector Development Strategy, 2013-2017

6.2 Annex II: Pillar-Related Operational Areas
Pillars

TargetOutcomes

Operational Areas
1.1.1 Macroeconomic policy reforms, taxation, fiscal incentives toseize green opportunities as well as to promote more inclusive
growth; institutional strengthening
1.1.2 R
 ule of Law: Legal and regulatory reforms (e.g. simplificationof business registration or investment licensing, construction
permits, enforcing contracts, handling business insolvency, etc.)

1.1 Improved
investment andbusiness climate in
RMCs

Business enabling environment for industrial services andmanufacturing enterprises
Business enabling environment for agribusiness, agro-industry,and rural enterprise

1.1.3 A nti-Corruption institutional reforms and capacity building

1.1.4 P
 roperty Rights: Improvement of land tenure and property
registration systems ensuring rights for equal access for women(and their implementation)
Pillar I:
Investment
and BusinessClimate1.2 More efficient
national andregional factor andproduct markets

Private Sector Development Strategy, 2013-2017

RDs
OSGE

RDs
OSGE
OITC, ONEC,OWAS, OSAN,
OSHD
African Legal
Support Facility

RDs
OSGE
RDs
African Legal
Support Facility

1.2.1 Labor market reforms, vocational training, youth technical skills
development and entrepreneurship promotion

OSHD

1.2.2 Regional market integration:- Financial infrastructure broadening and deepening- Trade policy and related institutional reforms- Labor mobility across regions- Tax systems harmonisation- Standards (including quality assurance and certification)
harmonisation- Investment and engineering codes harmonisation

ONRI
OSGE

1.2.1 Public-Private Partnership frameworks

1.3 Strengthening
corporate
responsibility

KEY UNITS

1.3.1 C orporate good governance1.3.2 E nvironmental and social impact management (including
capacity
to implement the Extractive Industries Transparency Initiative)

OSGE
OPSM
African Legal
Support Facility
OSGE
OPSM
African Legal
Support Facility
ONEC
ORQR
OSGE

31

... 6.2
Pillars

TargetOutcomes

Operational Areas

KEY UNITS
OITC
OPSM
ONRI

2.1.1 Transport: Infrastructure and Services

2.1 Improved physicalinfrastructures andincreased access toservices: Transport,
Communications,
Energy, Water
supplyand Sanitation

2.1.2 Communication: Infrastructure and Services

2.1.3 Energy: Infrastructure and Services (including renewableenergy)2.2 Improved social
infrastructure
and increased
access to services:
Education, Healthcare
2.3 Improved
regulatory
frameworks insocio-economic
infrastructure
sectors

ONEC
OPSM
ONRI
OWAS
OPSM
ONRI

2.1.4 Water Supply and Sanitation

Pillar iI:
Access to socialand economic
infrastructure

32

OITC
OPSM
ONRI

2.1.5 Infrastructure improving agriculture production and foodsecurity (irrigation systems, rural roads, etc.)

OWAS, OSAN
OPSM
ONRI

2.2.1 H igher education, science and technology

OSHD, OPSM

2.2.2 V ocational training

OSHD, OPSM

2.2.3 H ealth-related: Infrastructure and services

OSHD, OPSM

See 1.1.2 and 1.3.2

See 1.1.2 and 1.3.2

Private Sector Development Strategy, 2013-2017

... 6.2
TargetOutcomes

Pillars

Operational Areas

3.1 S
 mall, Medium andMicro Enterprises(MSMEs) andSocial Business

Pillar iII:Enterprisedevelopment

3.2 V alue Chain
Development
and Catalytic
Investments

3.3 Trade Finance

Additional activities

KEY UNITS

3.1.1 Micro, Small and Medium Scale Enterprises (MSMEs)- Scaling up and leveraging financing and services for SMEs :Proposal to create a standalone Facility for SMEs
- Establishment of local systems and institutions to facilitate
micro-enterprise creation- Support for business development services- Capacity building, including in financial literacy- Creation and coordination of business clusters and network- Support to Microfinance Institutions

OPSM
OSGE
OSHD

3.1.2 Social Enterprises:- Support to RMC authorities to prepare or strengthen policy andinstitutional frameworks conducive to social business- Partnerships with selected social businesses

OSHD
OPSM

3.2.1 L esson-sharing between countries

EADI

3.2.2 Strengthening value chains, particularly in extractive industries,
manufacturing, agriculture, forestry and fisheries

OPSM, OSHD,
OSAN

3.2.3 Support to the deepening and expansion of financial andcapital markets

FNVP, AFMI,
MFW4A, ONRI,
OPSM

3.2.4 Catalytic investments with a focus on technology transfers,
industrialization agribusiness, agro-industry, and rural
enterprise

OPSM, OSHD,
OSAN

3.3.1 Implement the 2012 Trade finance initiative

OPSM, ONRI

Instruments

Operational Areas

KEY UNITS

PSD mainstreaming

Coordination

All areas

Proposed PSD Steering
Committee

Integrated or mutuallycomplementary sovereign andnon-sovereign operations,
including Public-Private
Partnership (PPP)

Sovereign and nonsovereign guaranteedloans, guarantees

All Pillars

RDs, Sector Departments,
OPSM

Support to Fragile states

Policy dialogue, policybased assistance, andsector operations

All Pillars

OSFU, RDs, Sector
Departments, OPSM

Support in project design andinstitutional support operations

Analytical, Advisory,
and Advocacy Activities

All Pillars

EDRE, EADI, ESTA, ORPC

Project support

All instruments

All pillars

GECL, ORPF, EDRE(ADOA), FFMA, ONEC,ORQR and Sector
departments.

Business Opportunity Seminars

Internal

All pillars

ORRU
RRCs
FOs

Private Sector Development Strategy, 2013-201733

6.3 Annex III: Summary of Bank-Wide Institutional Arrangements
Regional Departments (RDs) and Field Offices (FOs) will lead in the following activities:• conducting dialogue with active and potential investors and business operators to identify RMCs’ strengths and weaknesses,
opportunities and threats, and the perceptions of investors and business operators;• overseeing policy dialogue with RMCs and RECs on private sector development;• mainstreaming private sector development in CSPs and RISPs, incorporating business enabling environment operations and nonsovereign operations while ensuring synergies;• identification and preparation of integrated or complementary sovereign and non-sovereign operations, including public-private
partnership (PPP) opportunities in collaboration with Sector Departments; and• monitoring the private sector development performance of the Bank Group’s country and sub-regional operations. RDs and FOs willadvise Sector Departments and the Private Sector Department on national and regional development priorities.
Sector Departments (SDs) will lead in:• mainstreaming private sector development in the preparation of Sector Strategies of the Bank Group, in collaboration with the Private
Sector Department;• conducting sector-specific policy dialogue with RMC and sub-regional stakeholders;• preparing and managing the Bank Group’s financing operations – including policy-based and investment operations – contributing
to improving the enabling environment for business. In addition, the SDs will provide the Private Sector Department sector-specificexpertise on project design and implementation monitoring;• providing technical support to SDs in the design of and management of catalytic transactions including PPPs.
Governance, Economic and Financial Reforms Department (OSGE) will lead in:• conducting dialogue and providing advisory services and technical assistance to RMCs and RECs on good governance, macroeconomic stewardship and financial sector reforms;• management of policy-based and institutional support financing operations. The department will also provide technical support to otheroperations departments, on governance aspects of operational strategies, projects and programs.
• Operations support departments will take the lead in mainstreaming private sector development issues in their areas of focus.
• The Fragile States Unit (OSFU) will collaborate with RDs and Field Offices in programming policy dialogue, policy-based assistance,and sector operations toward improving the business environments of post-conflict and other fragile countries.
• NEPAD and Regional Integration and Trade Department (ONRI) will conduct diagnostic studies on the performance of regional
integration initiatives on key goals (including market integration and trade development) and advise the RDs, SDs, and the Private Sector
Department on the regional cooperation, integration and trade issues of private sector development. Also, ONRI will lead in policy
dialogue, on private sector development issues, with regional economic communities (RECs) and specialized regional organizations.
Private Sector Department (OPSM) will take the lead in interactions with local and foreign investors, business operators, parastatal
enterprises, and financial intermediaries. The department’s activities will include:• Leading in the financial structuring of catalytic transactions not covered by sovereign guarantee, and in the management of their
execution, in collaboration with RDs and SDs (the Department may also be asked to lead transactions covered by sovereign guarantees,at the request of the RDs);• Collaborating in operations supporting the development of micro, small and medium scale enterprises (MSMEs);• Leading the mobilization of domestic, regional and external investors and business operators through underwriting of privatization,
syndication of large-scale financing operations, and participation in equity funds and special trust funds targeted at specific private
sector development objectives, such as microfinance, MSMEs and agri-business;• Collaborating with ECON, OSGE and ONRI in supporting RDs in the identification and assessment of impediments in the businessenvironments in RMCs and sub-regions and proposing improvements; assisting SDs in identifying and appraising private sector
development opportunities and proposing approaches their sustainable management and prudent use; and collaborating with ECON in
knowledge generation and dissemination on private sector development and business interaction with other regions of the world.

34

Private Sector Development Strategy, 2013-2017

... 6.3
Chief Economist’s Complex (ECON) will be responsible for:• analytical, policy advisory and dissemination activities, including knowledge generation and dissemination on private sector development
and enabling environment, in collaboration with SDs and RDs;
• serving as the Bank’s key knowledge broker on PSD; and• assessment of the expected impact and value added by the private sector development aspects of Bank Group operations, including
assessment through ex-ante additionality and development outcomes assessment (ADOA) of financing operations. The Complex willplay a leading role in generating differentiated knowledge products on PSD and a supportive role in conducting policy dialogue and in
the design and implementation of policy-based financing operations, including institutional support.
Financial Complex (FNVP) Departments will continue to lead in:• the mobilization of financial resources for Bank operations and the management of liquidity through treasury operations;• use of such operations to support the development of national/sub-regional capital markets;• developing operational guidelines for the Bank’s financing products and instruments;• exercising risk management and prudential oversight on Bank sovereign and non-sovereign financing operations; and• providing fiduciary management of Bank financing operations.
Procurement and Fiduciary Management Department (ORPF) will continue to oversee:• implementation of the rules and procedures on the procurement of goods and contracts for works financed by the Bank Group;• the fulfillment of fiduciary safeguards by the beneficiaries of Bank’s financing. To increase the use of country systems, ORPF will
support capacity-building of RMCs and business sector clients with inadequate institutional competence for procurement and fiduciary
management; but the department will provide oversight until country systems are assessed to be sufficient. ORPF will advise on effective
application of the rules and procedures to increase local firms’ participation in the supply of goods, services and works procured fromBank Group financing.
On a decentralized basis, and working with Regional Resource Centers (RRCs) and Field Office (FOs), the Partnerships andCooperation Unit (ORRU) will expand the Business Opportunity Seminars (BOS) program for African companies. The aim of theseseminars is to increase the participation of companies from RMCs in Bank-financed projects. Generic BOS will also continue to take placeat the Bank’s HQ twice a year.
The General Counsel and Legal Department (GECL) will continue to review legal issues affecting, or arising from, Bank Group
operations, including non-sovereign operations, and advise OPSM and other SDs.
Environment and Social Departments will provide guidance and oversight on the fulfillment of environment and social safeguards inthe preparation and implementation of sovereign and non-sovereign operations financed by the Bank Group, including policy-based
operations. The units will rely on countries’ and private clients’ environmental and social oversight institutions, where these have adequate
monitoring and evaluation capacities. The Bank’s Environment and Social units, therefore, will support capacity-building for RMCs, financial
intermediaries, and private business operators on environment and social impact assessment, mitigation planning and implementation,and safeguards monitoring and evaluation.
Specialized Support Departments and Units: A number of organizational units provide back-office support to Bank Group sovereignand non-sovereign operations.

Private Sector Development Strategy, 2013-201735

6.4 Annex IV: Indicative Results Monitoring Framework (RMF)
This RMF is indicative, and will be developed further in 2013. The proposed set of indicators will be reviewed to ensurethat they are regularly measured, with a thorough methodology from credible sources. Level 1 indicators are mainly
inspired by the RMF for the Bank Group’s Long Term Strategy and by the Annual Development Effectiveness Review(2012). Some Level 2 indicators are taken from ADOA indicators. Missing Level 3 and 4 baseline and target data will be
addressed in the revised version of this indicative RMF. Wherever possible, data will be gender disaggregated.

LEVEL1 - Private Sector Development in Africa

All African Countries
Unit ofmeasurement
Baseline (2011)

SourceList of indicators
General Indicators
Index of unemployment rate (including rates among youth and women)

index

11.3 (15.6 and 17.4)(2008)

ILO, AfDB

Private sector share of employment

%

90

WB

Global competitiveness index scoreindex

3.6 (2009-2010)

WEF% GNI percapita77

WB

Africa; s share of global trade

%

3.1

AfDB

Share of African countries with credit ratings of B and above

%

33

S&P

Transparency International’s Corruption Perceptions Index rating

Index 1-10

2.9

Transparency
International

Country Policy and Institutional Assessment (CPIA) score for property
rights and rule-based governanceIndex 1-6

3.11

AfDB

Business start-up time

days

23

AfDB

Total intra-Africa trade

US$ billion

112.4

IMF-DOTS

Foreign direct investment inflows (% of GDP)

%

2.3

AfDB/
UNCTAD

Exports of goods and services (% of GDP)

%

37

DCS

Ease of access to loans

1-7

2.76

WEF

Business start-up costs

LEVEL2 - AfDB’s contribution to Private Sector
Development in Africa

All African Countries
Unit ofmeasurement
Baseline (2011)

SourceList of indicators
Production of energy – power capacity installed by Bank Group
interventions

MW

1,110 *

AfDB

kilometer

18,777 *

AfDB

%

43%

AfDB

Bank Group private sector projects’ contribution to government revenue

US$ million

12,528 *AfDB

Total number of microcredits granted by Group via FIs

Number

330,660 **AfDB

Credit to MSMEs as share of total balance sheet of FI operations****

US$ million

TBD

AfDB

People benefiting from Bank Group-funded microfinance and social
activities

Number12,829,000 **AfDB

SME effect (turnover from Bank Group investments)

US$ million

650 **

AfDB

Total number of jobs created for women through Bank Group investee
projects and sub-projects/total number of jobs created

number

28,664/349,886 **AfDB

Transport – Km of roads constructed, rehabilitated or maintained by Bank
Group interventions
Local and regional suppliers of goods, works, and services of total
financing volume36

Private Sector Development Strategy, 2013-2017

... 6.4
All African Countries Target
LEVEL3 - AfDB efficiency as an organization in delivering
Unit of
Private Sector Development operations
measurement
Baseline (2011)year

SourceList of indicators
Multiplier effect of US$1 AfDB resources to US$ more invested by thegovernment or other donors

US$

2

TBD

AfDB
(2009)

Multiplier effect through NSO of US$1 value of AfDB resources to USD$
value of total investment

US$

TBD

TBD

AfDB

Volume of non-sovereign financing arranged by the Bank

UA million

959

TBD

AfDB

% of Bank Group operations contributing to Private Sector
Development rated satisfactory%

93.80%TBD

AfDB

months

13.6

TBD

AfDB

%

TBD

TBD

AfDB

Number

TBD

TBD

AfDB

Bank Group non-sovereign portfolio loan impairment ratio

%

1.36

TBD

AfDB

Weighted Average Risk Rating (WARR) of the NSO portfolio

%

3.48

3-4

AfDB

Average time required for Bank Group NSOs from exploratory review
to Board approval
Share of CSPs which include a financial sector diagnostic****Number of sovereign guarantee public sector operations by the Bank
Group supporting PPPs****LEVEL4 - AfDB management of Private Sector
Development operations

All African Countries Target
Unit ofmeasurement
Baseline (2011)year

SourceList of indicators
Share of private sector officers (FOs) based in the field offices or theregional resource centers

%

15

TBD

AfDB

Number of business- and investment-enabling environment (Pillar I)
specialist professionals

Number

2

TBD

AfDB

Share of private sector operations (NSO) task-managed from field
offices

%

60

TBD

AfDB

Global vacancy rate - Private sector operations (NSO) process
professional staff***

%

17.13

TBD

AfDB

* data 2010-2012,** data 2009-2011, *** covering personnel primarily involved in the Bank’s NSO business process: EDRE1, GECL2, FFMA2, FTRY4, ONEC3,
OPSM 0,1,2,3,45. **** data currently unavailable but being developed for future monitoring

Private Sector Development Strategy, 2013-201737

About the African Development Bank Group© African Development Bank/Banque africaine de développement, 2013
Internet : http://www.afdb.org

Production by Phoenix Design Aid A/S, a CO2 neutral company accredited in the fields of quality (ISO 9001),
environment (ISO14001) and CSR (DS49001) and approved supplier of FSC™ certified products.

The AfDB Group is a multilateral development bank whose shareholders include 54 African countries and 24 non-African countries.
The AfDB Group’s primary objective is to contribute to the sustainable economic development and social progress of its regional
members, individually and jointly. It does this by financing a broad range of development projects and programs through public-sectorloans, including policy-based loans, private-sector loans, and equity investments; by providing technical assistance for institutional
support projects and programs; by making public and private capital investments; by assisting countries with development policies
and plans; and by supplying emergency assistance.