African Development Bank GroupAt the Centerof Africa’s
Transformation
Strategy for 2013–2022

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African Development Bank GroupAt the Centerof Africa’s
Transformation
Strategy for 2013–2022

African Voices“Let me say to you that Africa is rising! Africa is transitioning! Africa continues to be committed to those
processes that will lead to rationalization of its own natural resources to accountability, transparency, tomutuality and responsibility.”
Ellen Johnson Sirleaf, President of the Republic of Liberia and Nobel Prize Winner, 2013
“What makes us so confident that Africa’s time has arrived and that we can achieve our dream within
50 years, or even less? Six of the world’s 10 fastest growing economies are African, and the continent has been growing at an average of 5% per annum for over a decade, despite the global financial
and economic crisis. We have a growing, vibrant, resourceful and youthful population, who are being
equipped with critical skills that would be necessary to drive Africa’s transformation.”
Nkosazana Dlamini Zuma, Chairperson of the African Union Commission, 2013
“Africa is once again being seen as a continent of opportunity—the last emerging investment frontier. We see this optimism in the number and diversity of businesses and countries flocking to invest in
the continent. It is an optimism based on strong economic growth which even the global financial crisis
was only able to reverse briefly. And increasingly, this growth is being used to diversify economies andinvest in the bedrock of successful societies—in education, in health and vital infrastructure.”
Kofi Annan, Seventh Secretary-General of the United Nations, 2011
“It has become fashionable to talk about ‘Africa Rising’. ‘The Hopeless Continent’ has become the next
investment frontier, as investors consistently make returns impossible elsewhere. . . . Over the pastten years, the general trend across African governance is positive. We have seen a marked decline inconflicts, sustained economic development, and significant gains in Human Development. We are morepeaceful, prosperous, healthy and well-educated than at the turn of the millennium.”
Mo Ibrahim, Founder of Mo Ibrahim Prize for Achievement in African Leadership, 2012
“It is in this respect that I see Africa as a hope for the world; Africa holds a lot of promise for the world.
And, in my view, Africa might simply be the world’s ticket out of the current international economic crisis.
The continent’s resources, youthful age structure and growing population, and increasing middle classand consumers are major resources for the world. The continent can be a source of ideas and innovative solutions. As such, Africa must be placed at the center to resolve the current international crisis.”
Cristina Duarte, Minister of Finance and Planning, Cape Verde, 2012
“Africa is now the new frontier, an important growth pole for economic recovery and an attractive business destination for capital. The perception gap is closing and there are serious investors who are seriously interested in Africa. It is now Africa’s time!”
Ngozi Okonjo-Iweala, Finance Minister of Nigeria, 2011
“The balance of evidence suggests that the next half century in Africa offers good prospects for realizing
the African vision of a dynamic, diversified and competitive economic zone in which extreme poverty iseliminated within peaceful, stable and vibrant societies.”
African Development Bank Group, 2011

Copyright © 2013 by the African Development Bank.

Foreword

In 2006 a Panel of Eminent Persons helped the Bank chart a vision for the African continent anda path for this organization. Investing in Africa’s Future—The African Development Bank in the 21stCentury in turn inspired the strategic choices that guided the Bank’s work from 2008 to 2012. The
focus on infrastructure, economic integration and private sector development coincide with theneeds of a growing Africa and remain as relevant as ever.
Africa is now the world’s second fastest-growing continent. In this decade of seismic shifts in
the global economy, Africa has defied the pessimists, accelerating its economic pulse and seeing
significant improvements in its Human Development Indicators. But these positive developments
have been tempered by a crisis in jobs, youth unemployment and growing inequality. These are
now the challenges. Growth must bring jobs and opportunities for all. That will happen if growthis sustained and leads to the structural change and economic transformation that will enable thecontinent to join global value chains. It will do this by closing the infrastructure gap, speeding up
economic integration, dealing with conflicts old and new, and developing human capital.
This is what makes the next decade so decisive. This is what makes this new Bank Strategy for
2013–2022 so vital.
It is a strategy that reinforces the choices of the last five years, building on lessons learned andaddressing the challenges of tomorrow. It is a strategy that provides a response not only to sustainable growth, but also to the sustainable management of natural resources. Africa’s development is
so closely tied to nature, and economic growth is not sustainable without preserving the continent’s
natural capital, land, water, marine, forests and energy resources. These were the commitments
made at Rio+20.
The Strategy also addresses the issue of development finance. New global patterns of financeand capital flows, and the discovery of significant oil and gas resources, now make it possible
for Africa to mobilize its own savings through, among other things, better management of natural
resources. This is an area where the Bank will play a catalytic, leveraging role.
Underpinning this Strategy are a resilient, robust institution and its staff, who are committed todelivery and excellence.
I would like to thank all those inside and outside the Bank who have played their part in developing this Strategy, our compass for the next decade.

Donald Kaberuka
Presidentiii

Acknowledgments

The Strategy was prepared by a team led by Kapil Kapoor, Director for Strategy, African Development Bank Group. Mthuli Ncube, Chief Economist and Vice President, provided overall guidance.
The core team consisted of Cecile Ambert, Dennis Brougham, Khadija Dhaouadi, Bitsat Yohannes
Kassahun, Seliatou Kayode-Anglade, Alan Lukoma, Mateus Magala, Geoffrey Manley, Carlos Mollinedo, Alex Mubiru, John Phillips, Preeti Sinha, Ravi Dhananjayen Soopramanien, Frank Sperling,
Kate Tench, and Aminata Camara Traore.
A High Level Panel of advisors, comprising Henock Kifle, Callisto Madavo, Elene Makonnen, Anil
Sood and Graham Stegmann, worked as part of the team and guided at every step of preparation. The team benefited from 22 background papers, prepared by the various complexes within
the Bank and coordinated by the Economics Department under the guidance of Steve KayizziMugerwa. Bruce Ross-Larson was the principal editor.
Aly Abou-Sabaa and Hela Cheikhrouhou provided leadership for the work on transitioning togreen growth, and Simon Mizrahi and his team contributed to the development of the results framework. We gratefully acknowledge the role of numerous senior staff, including vice presidents, directors, heads of departments in the various complexes, and country representatives.
Substantive comments and suggestions on the draft strategy were received from members of
the Board, the Senior Management Coordination Committee, regional directors, sector directors,
and resident representatives who reviewed the document at various stages. Valuable contributions
and support were also received from Hawa Adama, John C. Anyanwu, George D. Azagne, Awa
Bamba, Kokil Beejaye, Gisela Geisler, Sering Jallow, Marlene M. Kanga, Kpourou Janvier Litse,Charles Leyeka Lufumpa, Nono J.S. Matondo-Fundani, Anthony O. Nyong, Franck Joseph Marie
Perrault, Anthony Musonda Simpasa, Agnes Soucat, Lawrence C. Tawah, Desire J. M. Vencatachellum, Georg Weiers, Laetitia Yattien-Amiguet and Ginette Ursule Yoman.

iv

Contents

Executive Summary

1Part 1 Africa’s Transformation

5Part 2 The Bank’s Strategic Approach

10Part 3 Financing the Strategy—Mobilizing and Leveraging Resources

23Part 4 Transforming to Support Transformation

26

Africa’s visionWhat Africa must do to realize the vision

The guidance of the High Level Panel and lessons from the Medium Term StrategyTwo objectives—inclusive growth and the transition to green growthCore operational priorities
Areas of special emphasis
The post-2015 Millennium Development Goals agenda

Innovating in existing windows
Expanding the sources of financing
Leveraging Bank capital and new instruments

5
6

10
10
13
19
22

23
23
25

The partner of choice26
Enhancing institutional effectiveness
28
Focusing on results
30
Operationalizing the Strategy
30Conclusion31

Notes32
Annex

Results Indicators for the Strategy

Boxes

1
2
3

Drivers of change
Infrastructure to integrate the region
Working with partners

33
7
15
27

Figures
1
2
3
4
5
6

Upside—The number of FDI-financed greenfield projects in Africa is on a par withindividual BRIC countries . . . as is its real GDP growthDownside—Fragility is a concern . . . and the majority of African countries score below
5 (out of 10) in Transparency International’s 2011 Corruption Perception Index
The drying up of Lake ChadBank investments in infrastructure support the agricultural value chain and increase
food security—from farm to mouthPotential sources of financeOperationalizing the Strategy at three levels

5
8
12
20
24
31

v

At the Center of Africa’s Transformation   Strategy for 2013–2022

Milestones for the African Development Bank Group
1966—Côte d’Ivoire

The African Development Bank begins operations with a capital base of
USD250 million, 33 African member countries and 10 staff members.

1972—Algeria

The Bank and 13 non-regional countries establish the African Development Fund. This concessional window for low-income countries mobilized
USD327 million for the first cycle.

1976—Nigeria

The government of the Federal Republic of Nigeria and the Bank establish the
Nigeria Trust Fund with an initial contribution of USD80 million.

1982—Zambia

Capital is opened to non-regional member countries. The Bank’s authorized
capital increases to about USD3.4 billion in 1983 and to USD22.3 billion in
1987, following the 200% Fourth General Capital Increase.

2003—Tunisia

The Bank temporarily relocates operations from Abidjan to Tunis.

2010—Côte d’Ivoire

The Sixth General Capital Increase triples the Bank’s authorized capital, which
now stands at USD101.4 billion, with 77 member countries (53 African and
24 non-African) and 1,900 staff.

2010—Tunisia

The 12th three-year replenishment of the African Development Fund mobilizes
USD9.5 billion, the highest in the fund’s history. Extended for 10 years in 2008,
the Nigeria Trust Fund’s resources stand at USD241.3 million in 2010.

2012—Tanzania

South Sudan joins the Bank, becoming its 54th regional member country.

viExecutive
Summary

The African Development Bank’s Strategy for
2013–2022 reflects the aspirations of the entire
African continent. It is firmly rooted in a deep
understanding and experience of how far Africa
has come in the last decade, and where it
wishes to go to in the next.
Africa has embarked on a process of economic transformation. This process has seensolid and sustained growth over a decade,but it has been uneven and without a sufficiently firm foundation, and it is not—by any
estimation—complete.
This Strategy is designed to place the Bankat the center of Africa’s transformation and to
improve the quality of Africa’s growth. It aims
to broaden and deepen that process of transformation, mainly by ensuring that growth isshared and not isolated, for all African citizens
and countries, not just for some. It also aims
to bring about growth that is not just environmentally sustainable, but also economicallyempowering. When growth is inclusive as well
as “green”, it creates the jobs that the continent
needs now and that it will need in ever greaternumbers as millions more young people enter
the job market, with energies and aspirations
to match.
The Bank’s vision is thus Africa’s vision,and its future is Africa’s future. The Bank’s
many successes reflect the successes of
the continent it serves—while the gaps in its
achievements reflect the impediments to truetransformation across its regional member
countries. The goal of a regionally integrated
and economically diverse Africa—determined
to include young and old, women and men,rural and urban communities alike, while
being increasingly green—will establish Africa
as the next global emerging market. The

African Development Bank will be its development voice and its development partner ofchoice.
The Strategy is built around two objectives,supported by five operational priorities in which
the Bank has unmatched advantage, expertise,access and trust.

Two objectives

The first objective
is to achieve growththat is more inclusive.
The second objective
is to ensure that
inclusive growthis sustainable

This ten-year Strategy will focus on two objectives to improve the quality of Africa’s growth:
inclusive growth, and the transition to green
growth.

Inclusive growth
The first and overarching objective is to achieve
growth that is more inclusive, leading not justto equality of treatment and opportunity but todeep reductions in poverty and a correspondingly large increase in jobs.
Unlocking the continent’s great potential—
and increasing its chances of reaping a demographic dividend—inclusive growth will bringprosperity by expanding the economic baseacross the barriers of age, gender and geography. The Bank will invest in infrastructurethat unlocks the potential of the private sector,
championing gender equality and community
participation. It will help improve skills for competitiveness, ensuring that those skills better
match the opportunities and requirements oflocal job markets.

Green growth
The second objective is to ensure that inclusive
growth is sustainable, by helping Africa gradually transition to “green growth” that will protect
livelihoods, improve water, energy and foodsecurity, promote the sustainable use of natural1

At the Center of Africa’s Transformation   Strategy for 2013–2022

The Strategy outlines
five main channels
for the Bank todeliver its work andimprove the qualityof growth in Africa

resources and spur innovation, job creation andeconomic development.
The Bank will support green growth byfinding paths to development that ease pressure on natural assets, while better managing environmental, social and economic risks.
Priorities in reaching green growth include
building resilience to climate shocks, providing
sustainable infrastructure, creating ecosystemservices and making efficient and sustainable
use of natural resources (particularly water,which is central to growth but most affected byclimate change).

Five operational priorities
The Strategy outlines five main channels for the
Bank to deliver its work and improve the quality of growth in Africa. First recommended by
the High Level Panel review of 2007, and later
enshrined in the Medium Term Strategy for
2008–2012, these are areas in which the Bank
has the greatest comparative advantage andproven track record. Over at least a decade,Bank and other research has repeatedly confirmed that they provide a compelling and consistent framework for the Bank’s operations.
The 2011 review of the Medium Term Strategy
showed that the focus on these priorities had
served its clients well, but that a longer planning horizon and a longer term strategy wereneeded—underpinned by three-year rolling
action plans.

Infrastructure development
Africa still has massive infrastructure needs.
It invests only 4% of its GDP in infrastructure,compared with 14% in China. Bridging theinfrastructure gap could increase GDP growthby an estimated 2 percentage points a year.
The Bank has made significant contributions to
infrastructure development in Africa, and tensof millions of Africans are now better off thanks
to Bank investments in transport, energy andwater. The Bank intends to scale up infrastructure financing to the continent significantly—not
just through its own lending but by leveraging
its financial resources.

2

Regional economic integration
Integration is essential for Africa to realize
its full growth potential, to participate in the
global economy and to share the benefits ofan increasingly connected global marketplace.
Having 54 individual countries, often without
the physical and economic machinery to act
in tandem, seriously limits this possibility. The
Bank is well positioned to play a leading rolein fostering Africa’s economic integration tocreate larger, more attractive markets, to link
landlocked countries, including fragile states,
to international markets and to support intraAfrican trade.

Private sector development
The dynamics of wealth and job creationin Africa—and a number of the tasks of­government—are increasingly driven by private
rather than public funds. Working both directly
and indirectly with governments, the Bank willcontinue to be an increasingly active partnerand facilitator for private investment in Africa.
Delivering finance and providing advice andtechnical assistance, it will design activities
that respond to the specific needs, opportunities and challenges of the private sector. It will
focus on African entrepreneurship, addressing the constraints that face women andyoung entrepreneurs and supporting micro,
small and medium enterprises. In strengthening the financial sector, it will stimulate lending
to micro, small and medium-size enterprises,
help develop local capital markets, promotebetter governance and risk management offinancial institutions and promote the adoption
and implementation of financial standards andregulations.

Governance and accountability
Economic growth can only be built on the firmest foundations of just, transparent and efficient
governance and institutions administered by
the capable state. Responding to demands
in Africa for better governance and basic services, the Bank will assist institutions that support inclusion and promote accountability—for

Executive Summary

example, by strengthening the capacities ofparliamentarians, the media and civil society
organizations. To improve public financial management, the Bank will do more to support
fiscal decentralization and domestic resource
mobilization.

Skills and technology
Unemployment across Africa is unacceptably high, especially among young people. To
increase the supply of skilled workers, the Bank
will step up its support for technical and vocational training linked to specific needs in thelabor market. The aim is to equip young people
with the right skills for both the formal and informal sectors, including the skills to create small
businesses.

networks), the Bank will help countries increase
agricultural productivity and competitiveness.
By investing in regional infrastructure andengaging in policy dialogue to remove tradebarriers to importing food and inputs such as
fertilizers, it will help restrict food price volatility
and reduce food insecurity.

GenderThree areas of special emphasis

Increasing the capabilities and opportunities
of women and girls can boost the productivity and participation of half the African population. A focus on knowledge, skills development
and legal and property rights is the precursor
to empowering women’s enterprise. Womenand girls bear significantly more than half of thecontinent’s burdens, but they also carry disproportionately high potential as generators ofincome.

In implementing its ten-year Strategy, and as anintegral part of the two objectives, the Bank will
pay particular attention to fragile states, agriculture and food security, and gender.

Financing the Strategy—mobilizing
and leveraging new sources ofdevelopment finance

Fragile states
Supporting fragile states can strengthen these
economies, which house a fifth of the continent’s people and a significant proportion of its
poverty. Fragility is contagious as well as episodic—it calls for support tailored to diverse
needs and a continuum and regional approach
built around dialogue, local ownership and thecelebration of success.

Agriculture and food security
Strengthening agriculture and food security
through an integrated value chain approach
can improve the livelihoods of Africans who livein rural areas. Many are reliant on subsistence
farming, and a sizable proportion is chronicallyvulnerable to climatic uncertainty. Africa lives
off its land, and more than 70 percent of Africans work on the land, which too often fails toprovide for their needs. By continuing to invest
in rural infrastructure (such as rural roads, irrigation, electricity, storage facilities, access tomarkets, conservation systems and supply

In implementing its
ten-year Strategy,
the Bank will pay
particular attention
to fragile states,
agriculture and foodsecurity, and gender

The Bank’s financial resources will always bea small fraction of Africa’s requirements. Current fiscal constraints in donor countries suggest that official development assistance could
well be largely stagnant in the coming years.
The Bank will therefore seek new and creative
ways of mobilizing resources to support Africa’stransformation, especially by leveraging its own
resources.
The Group will of course continue to build
on and expand the size and the practical operations of both the African Development Bankand the Africa Development Fund. But with thechanging global economic landscape, it will
explore options for attracting additional investment from emerging economies and from newfunders and donors, including sovereign wealthand pension funds. It will use its existing instruments better, while developing new ways of
ensuring that a dollar invested by the Bank
unlocks significantly more from other investors. Wider use of public-private partnerships,
co-financing arrangements and risk-mitigation
instruments will draw in new investors.

3

At the Center of Africa’s Transformation   Strategy for 2013–2022

Transforming to support
transformation

This Strategy reflects
Africa’s vision foritself—a vision oftransformation thatis achievable

4

The Bank is a unique proposition: as an African organization serving Africans, it is a motor
for economic progress and integration, and thevoice of Africa and African development acrossthe continent—and far beyond. It is already wellon the way to increasing its development effectiveness through increased decentralization
to field offices, strategically focused areas ofengagement and a strong balance sheet witha high risk-bearing capacity. All this has contributed to consistently maintaining the AAA
rating by which its African and global reputation
is assured.

The Bank must continue to evolve to stay
relevant. It has to become more decentralized,
integrated, efficient, effective and results-oriented, measuring its progress by real improvements on the ground. It must also continue
to streamline its business processes—operational, institutional and budgetary. And it muststrengthen its roles as an adviser, knowledge
broker, catalyst and convener.
This, then, is the ten-year Strategy of theAfrican Development Bank—of Africa’s bank.
It reflects Africa’s vision for itself—a vision oftransformation that is achievable. “At the centerof Africa’s transformation”, the Bank will measure success by the lasting changes it brings to
the lives of the African people.

part

one

Africa’s
Transformation

The past decade of unparalleled growth andstability has changed perceptions about Africa
for the better. Between 2000 and 2010, sixof the world’s 10 fastest growing economies
were in Africa, and economists project growth
to remain strong. High commodity prices haveplayed a role but so have improved macroeconomic policies and sustained reform, as well as
stronger governance and better conditions forprivate sector development. Conflict remains a
concern, but its incidence has declined—reducing the contagion for neighboring countries andboosting investor confidence in many regions.
And many countries are advancing towardmeeting the Millennium Development Goals.
With new investments and faster growth,Africa has an opportunity over the next decade
to become the next emerging market andglobal growth pole (Figure 1). Growing external

Africa’s vision
Africa sees itself becoming a prosperous
continent with high-quality growth that creates more employment opportunities for all,especially women and youth. In this vision,
sound policies and better infrastructure will
drive Africa’s transformation by improving theconditions for private sector development andby boosting investment, entrepreneurship andmicro, small and medium enterprises. In thiscontext, transformation means diversifying thesources of economic growth and opportunity
in a way that promotes higher productivity,

Africa sees itself
becoming aprosperous continent
with high-quality
growth that creates
more employment
opportunities
for all, especiallywomen and youth

Upside—The number of FDI-financed greenfield projects in Africa is on a par withindividual BRIC countries . . . as is its real GDP growth

2,000

GDP growth (%)

Number of greenfield FDI projects

Figure 1

demand for Africa’s exports—and growinginternal demand—could bring this about, if
Africa can seize its potential in water, agriculture, renewable energy and other sectors,
especially oil, gas and minerals.

10

8

1,500

BRICs

China
6
India

1,000

AfricaAfrica4

Brazil500

2
Russia

0

0
2003

2005

2007

2009

2011

2003

2005

2007

2009

2011

2013

2015

2017

2019

2022

Source: UNCTAD 2011 (left); AfDB using IMF data 2012 (right).

5

At the Center of Africa’s Transformation   Strategy for 2013–2022

A critical elementin the continent’s
growth will beboosting agricultural
productivity on asustainable platformof water security

6

resulting in sustained and inclusive economic
growth. It also means supporting the development of industries that increase the impact of
the existing sources of comparative advantage and enhance Africa’s global competitive
position.
In this transformation—indeed driving it—
growth will become much more inclusive,extending beyond some countries, some
sectors and some workers. Many of Africa’s
fragile states will be on a path to growth andrecovery. Stronger institutions of governance(domestic and regional) will reinforce the ruleof law, facilitate transparency and accountability and peacefully resolve conflicts. Africa will
attract greater private investment from foreignsources. Faster growth, more formal economic
activity and improved wealth management will
greatly increase domestic resource mobilization, reducing the dependence on donor aid.
And more of Africa’s capital will be invested
domestically, not parked offshore. But successful transformation requires visionary anddetermined leadership.
Africa will seize opportunities for greener,
more sustainable growth to become more
resilient in the face of climate change. By
incorporating green principles in development
plans, African countries will extend access towater, energy and transport, boost agricultural
productivity and create new jobs and expertise. They will also build sustainable cities anddevelop their natural resources while reducing
waste. They will chart their own green growth
paths—reinforcing, not compromising, theirdevelopment efforts.
Africa as a continent will be much more
integrated. Goods, services and people will
move across countries and regions—creatinglarger markets, increasing companies’ competitiveness and expanding intra-African tradeopportunities. Fostering cooperation withintrans-boundary basins will support growth,
peace and stability. Such regional approaches
will also make resource use more efficient.
This vision reflects what the Bank heard
during its widespread consultations withgovernments, private sector actors, academics and representatives of civil society. It
coincides with the ambitions of African leaders and the vision of the African Union’s New
Partnership for Africa’s Development as acontinent where growth is inclusive—embracing the continent’s youth, its women, its fragile
states—and sustainable. It also coincides withthe ambitions of regional members as set out
in their long-term poverty reduction and development strategies.1

What Africa must do to realize thevisionRealizing this vision will not come easily(Box 1). Several economies on the continentremain fragile, and infrastructure remains
underdeveloped, hindering regional integration and reducing enterprise competitiveness(Figure 2). Many African economies rely on raw
materials, with limited diversification of theirproductive structures. Poverty rates remain
unacceptably high. Inequality is also high: sixof the 10 most unequal countries in the world
are African. Recent global food crises andongoing struggles with hunger in some partsof Africa, particularly in the Horn, emphasize
the need for greater food security. Africa mustalso harness more of its own capital—human,natural and financial—to invest in future
development.
Overcoming such formidable challenges will
require a new mindset where Africa’s leadersand people fully assume ownership for theirdevelopment—much in the way China, India,
the Republic of Korea and Singapore havedone. And it will require continuing support
from the international community to reinforce
Africa’s efforts and resources and build capable states with robust public administrations.
A critical element in the continent’s growth
will be boosting agricultural productivity on asustainable platform of water security. Africa is
the only continent where per capita food production has declined over the past 30 years.
And unemployment must be significantly
reduced. In 2009 the unemployment rate

Africa's Transformation

Box 1

Drivers of changeCore drivers of change, internal and external, are changing the development landscape for Africa, with profound
implications for the continent.

Climate. Climate variability and climate change arestraining economic and social infrastructure and land
productivity and threatening rural livelihoods, with adverse implications for water, food and energy security.

Demography. Africa’s population is young and growing,
and a rapidly expanding number of job-seekers must be
incorporated into labor markets (see figure below). The
number of graduate students tripled in Sub-Saharan Africa between 1999 and 2009, yet young people accountfor about 60% of the region’s unemployed. Population
growth rates are even higher in cities, where an estimated 40% of Africa’s population lives. By 2030 urban
populations will increase by an additional 300 million
people.

Development finance. The aid landscape has changed
with new partners and the entry of the emerging economies, not only as trading partners and investors but also
as development partners. Private investment is growing relative to aid, with greater reliance on market-based
financing. More countries are financing their development with their own resources, including taxes, remittances and royalties from extractive industries.
Shifting trade and investment patterns. Major shifts intrade and capital flows to and from Africa are gamechanging, and emerging economies, such as the
BRICs, are influencing Africa’s growth.

Governance. Governments, along with regional andcontinental institutions, have taken responsibility for
resolving conflicts and strengthening institutions ofaccountability and the rule of law, thus fostering economic stability. Many African countries are also implementing policy reforms to improve the businessenvironment.

Science, technology and innovation. The new broadband
infrastructure and the proliferation of mobile banking andother wireless applications can be harnessed to “leapfrog” older ones and accelerate growth and job creation.

Water security. Africa’s water resources are abundant
but unevenly distributed in time and space—only 5% of
Africa’s available water resources are developed. Massive investments in integrated water development andmanagement are central to sustainable water, food andenergy security for green and inclusive growth.

Global demand for resources. Continuing strong global
demand for water, energy, minerals and agriculturalcommodities will offer new opportunities for growthand pose significant policy and resource management
challenges.

The economically active population is growing

37% of total population

2000

39% of total population

2010

42% of total population

2020

CentralAfrica

2030

0

East
Africa

100

200

North
Africa300

Southern
Africa

400

500

West
Africa600

51% of total population

700

800

Millions of people

Source: Africa Progress Panel, Jobs, Justice and Equity: Seizing Opportunities in Times of Global Change, 2012, using AfDB data.

7

At the Center of Africa’s Transformation   Strategy for 2013–2022

Downside—Fragility is a concern . . . and the majority of African countries score below 5(out of 10) in Transparency International’s 2011 Corruption Perception Index

Corruption Perceptions Index

Figure 2Tunisia

Libya

Strengthening
regional economic
communities and otherregional partnerships
will facilitate regional
planning andeconomic integration

Egypt

Mali
Sudan
Chad
Guinea-Bissau

9
8
7

Djibouti

GuineaCôte d’Ivoire

Sierra Leone

10

Liberia6

Togo
Central African RepublicSouth Sudan

Botswana

Somalia5

Congo

Cape Verde
Mauritius Rwanda

BurundiFragile states
Recent instability
Other

4

Democratic Republic of Congo

Comoros

Zimbabwe32
1
0

Source: UN and AfDB 2012 (left); Transparency International 2011 (right).

was 23.4% in North Africa and 12.1% in SubSaharan Africa.2 Efforts to support productive
safety nets and to increase the participationof women, young people and disadvantaged
or marginalized groups must be strong andsustained. Africa must make growth more
inclusive.
Africa must also seize the many opportunities in its gradual transition to green growth,
responding to the challenges of climate change
and reducing the ecological footprint on its
natural capital, as a springboard for development. The green agenda reinforces the continent’s development path and the efforts of individual countries. First-movers such as Ethiopia,
Rwanda and South Africa—aware that greening their economies creates opportunities for
growth and job creation—are already showing
the way.
Africa must, in addition, redouble efforts tobuild efficient, resilient and capable states—
founded on functioning institutions—which have
key roles in private sector–led growth. It has
to improve the investment climate, measured
by the ease of doing business for all types ofenterprise, domestic and foreign, formal andinformal. It has to link skills development and8

education systems to labor markets. And it
has to strengthen regulatory, institutional andfinancial frameworks, leading to more effective rule of law and reduced corruption. Only
politically stable states can promote greater
inclusion, as their citizens have more voice indecision-making.
With the support of the African Union andregional economic communities, Africa needs
to integrate—to draw on its human resources
more effectively, to consolidate its internalmarkets and to make resource use more efficient through regional approaches. Building
transport and communications infrastructure
will improve physical and virtual connectivity.
Strengthening regional economic communities and other regional partnerships will facilitate regional planning and economic integration, making it easier for goods and people tocross borders, creating larger, more attractive
regional markets and boosting intra-African
trade. Only capable regional economic communities can truly accommodate Africa’s
diverse populations.
To drive sustainable growth, Africa
must develop and manage its vast natural resources sustainably, with water central

Africa's Transformation

to agriculture, energy, industry and mining.
Whether endowed with water, oil, land or
minerals, African countries must put in placeframeworks to attract the necessary investment and expertise and to install the right governance structures. They should ensure that

substantial benefits go to local populations
and national economies through safeguarding the environment and providing basic social
services.
If Africa does all these things, it can be thenext global emerging market.

9

two

part

The Bank’s
Strategic Approach

this Strategy will
position the Bank as
the partner of choice,as a catalyst, adviser
and knowledge
broker—and as
Africa’s premierdevelopment
institution

The Bank will build on its achievements andcomparative advantages as a resilient andtrusted continental institution with a unique African character and high franchise value. Overthe next decade it will respond to the manychanges in Africa’s development landscape.
With a new strategic orientation, this Strategy
will position the Bank as the partner of choice,as a catalyst, adviser and knowledge broker—
and as Africa’s premier development institution.

The guidance of the High Level
Panel and lessons from the Medium
Term Strategy
In 2007 the High Level Panel set out the fundamentals for the Bank’s Medium Term Strategy
for 2008–2012. It also provided a compelling
framework for the Bank’s operations in the continent over the longer term.3
To support Africa’s development, the Bank
would become a voice for Africa in international
discourse, engaging in strategic partnerships,with greater capacity to disseminate knowledge
and lead new policy initiatives. Selectivity would
be a cornerstone for effective development
assistance, with an ambitious agenda focusing
on growth and economic integration.
The 2011 review of the Medium Term Strategy showed that the Bank’s selectivity andfocus on core areas of comparative advantage
had served clients well, but that it needed a longer planning horizon and a long-term strategy.
Core operational priorities highlighted for continuing support included private sector development, regional integration, governance, andskills development, with infrastructure identified as a strong area of the Bank’s comparative advantage and a good sectoral entry point
for delivering results. Also identified as priorities

10

were mainstreaming gender into all activities,
scaling up interventions in fragile states andhelping Africa deal with climate change andfood insecurity.
These operational priorities and focus areas
remain the main elements of this Strategy.
What is new, after a year of consulting with clients, donors and beneficiaries, is the explicit
adoption of inclusive growth and the transition
to green growth as the Strategy’s two objectives. Also new is pursuing new and creative
ways of mobilizing resources to support Africa’stransformation—and the many ways the Bank
will work differently to streamline its businessprocesses for greater efficiency and flexibility inresponding to the needs of individual countries.

Two objectives—inclusive growth
and the transition to green growth
The strategy will pursue two objectives aimed
at improving the quality of growth in Africa.
The first and overarching objective is to makegrowth inclusive by broadening access to economic opportunities for more people, countries
and regions, while protecting the vulnerable.
The second is to make growth sustainable
by helping the continent to transition gradually to green growth. Improving the quality ofgrowth can put Africa on the path to structuraltransformation—to moving from primary products to value-added manufacturing and services. In supporting this quest, the Bank will
maintain its strategic focus while responding to
the many new challenges.

Inclusive growth
Inclusive growth has four elements: economic
inclusion, social inclusion, spatial inclusion andpolitical inclusion. Despite increases in GDP

The Bank’s Strategic Approachover the past decade, African growth has been
narrowly concentrated in a few sectors andgeographic areas. It has not been inclusive
enough, nor has it led to deep reductions inpoverty and inequality. That is why the Bank’s
Strategy emphasizes wider access to economic
opportunities for Africans across age, genderand geographic divides.4 It will help countries
address the constraints that limit the participation of women and youth in the economy andhelp fragile states acquire finance and knowledge to build capable institutions. The Bank
will assist African member countries in building safety net programs to reduce vulnerability
and increase the integration of disadvantaged
and marginalized groups. Safety net programs,
as part of a broader social protection agenda,
would address the risks, vulnerability and social
exclusion that these groups normally face.
• Broadening the economic opportunities for
women. This is important in its own rightand as a driver of economic competitiveness, because economies that harness theenergy and talent of women will outperform
those that do not. Studies show that a levelplaying field for women can boost productivity, particularly in agriculture, and reduce
inequality.5 Providing basic services willease the burden of women and free theirtime for more productive activities. Giving
women more voice is also associated with
better outcomes for children.
• Broadening the economic opportunities foryouth. A large majority of young people in
Africa are out of work, accounting for up to
60% of unemployment in the region.6 Even if
working, most young people engage in lowproductivity and poor-quality jobs, mostly in
the informal economy. According to International Labor Organization estimates, roughly
90% of the region’s jobs are in the informal
economy. Hampering the productivity ofyoung workers is their lack of technical andentrepreneurial skills—and of information
about jobs and market needs.
• Broadening the economic opportunities forfragile states. Africa’s fragile states, home tomore than 200 million people, face a daunting array of challenges, with as much as
80% of their population surviving on subsistence agriculture and more than 50%
living on less than USD1.25 a day. Poor
infrastructure depresses their productivity
by an estimated 40%. Their limited social
cohesion, weak governance institutions
and processes, and high unemployment,poverty and inequality can also be sourcesof insecurity and instability in neighboring
countries. All this makes close attention tofragile states imperative.
• Supporting countries as they build safety
net programs. Safety nets are inextricably
linked with inclusion and poverty reduction in the most vulnerable and disadvantaged groups. They cushion economic andsocial shocks, thus helping to include theexcluded and vulnerable in the benefits ofbroad economic opportunities.
To improve transparency, accountability
and reporting, the Bank will develop an index
to measure and track progress on inclusive
growth in Africa.

The Bank will assist
African member
countries in building
safety net programs to
reduce vulnerability
and increase theintegration ofdisadvantaged andmarginalized groups

The transition to green growth
The ecological footprint of Africa increased
240% between 1961 and 2008—a result of
growing populations and rising per capita consumption. Some of the resulting environmental
degradation is visible (Figure 3). Looking ahead,
and assuming that resource constraints do
not limit growth, Africa’s ecological footprint
is projected to double by 2040. In July 2011 in
Malabo, Equatorial Guinea, the African Union
Heads of State and Government urged member states to ensure that Africa’s interests on
green economy issues within the context ofsustainable development, poverty eradicationand institutional frameworks for sustainable
development would be defined and taken into
account at the 2012 United Nations Conference on Sustainable Development (Rio+20).
They further called on the Bank, and other partners, to support this position. Rio+20 affirmed
the different paths available to each country, in

11

At the Center of Africa’s Transformation   Strategy for 2013–2022

Figure 3

The drying up of Lake Chad

1963
By improving foodsecurity and reducing
water stress, greener
growth can improve
the livelihoods ofmillions of Africans

Niger

Chad

Nigeria

2001

Chad

Niger

Nigeria

Cameroon

Cameroon
Water

Former shoreline

Vegetation

Source: Philippe Rekacewicz, UNEP/GRID-Arendal.

accord with national circumstances and priorities, to achieve sustainable development.
It defined green growth not as an end in itself
but as an important path for sustainable development and wealth creation in the context ofinclusive growth.
Africa’s interest in transitioning to a green
economy is clear from the support its leadersgave to participating in that conference. And
in July 2012 in Addis Ababa the African Union
Summit of Heads of State and Government
asked the Bank and other partners to continue working with countries implementing the
Rio+20 outcomes.
African leaders have acknowledged theefforts of several African countries in identifying opportunities and challenges in the gradual transition to a green economy. By improving food security and reducing water stress,
greener growth can improve the livelihoodsof millions of Africans. Indeed, transitioning toa green economy is about creating jobs, notlimiting them. It can also ease the pressure
on natural assets by managing environmental
and social and economic risks. It is thus aboutsustaining natural capital, not just managing
the use of water, gas, oil and coal. But it will
be achieved on the continent only through a

12

gradual transition, tailored to national circumstances, supporting national development
strategies and providing policy options without
becoming a barrier to investment.
The Africa Consensus Statement notesthat the transition to green growth will require
greater investments, greater access to green
technologies and considerable capacity building. The Bank will therefore be proactive in
mobilizing additional resources from the international community to supplement national
resources and ensure that investments in green
growth do not lead to new conditionality.
Green growth in Africa means promoting
and maximizing opportunities from economic
growth through:• Building resilience. Africa’s people and economies must become more resilient in theface of shocks, whether triggered by environmental or socioeconomic events. Thisrequires identifying adaptation and mitigation measures to reduce climatic, economic
and social risks and avoid the loss of lives,incomes and productive assets. Options
include climate-proofing infrastructure,developing stronger insurance schemes,
establishing productive safety nets andmanaging risk to counter price volatility.

The Bank’s Strategic Approach•

Managing natural assets efficiently and sustainably. Africa can use its abundant water,
forest and mineral resources for growth
while maintaining biodiversity and ecosystem goods and services. Innovation ingreen technologies offers new opportunities
for growth and for productive employment.
• Promoting sustainable infrastructure. Africa
can develop transport systems compatible
with environmental concerns. It also needs
to build integrated water infrastructure to
support agriculture, energy, transport andindustry and to promote health and hygiene.
And in the face of rising urbanization, it can
reduce pollution, improve the provision ofbasic services and build sustainable cities to minimize disaster risk. It can also
do more to improve its water and energy
security through harnessing wind, solar andhydro energy.
In supporting the transition to green growth,
the Bank will tailor its work to the specific circumstances of African countries and seize
opportunities to help countries ease the pressure on their natural capital. Minimizing the negative environmental and social consequencesof operations consistent with its safeguard policies, it will also seek opportunities consistent
with national priorities and inclusive growth. But
again, it will not impose green conditionality inits portfolio.

Core operational priorities
The Bank’s interventions will support the two
objectives of inclusive growth and the transition
to green growth to deliver on Africa’s vision asa stable, integrated and prosperous continent.
It will improve the quality of growth in the continent by limiting its engagement to five core
operational priorities.
• Infrastructure development. The Bank will
invest in infrastructure that unlocks thegrowth and development potential of theprivate sector, encourages value additionand structural transformation, improves
agricultural productivity and food security
and enhances community participation.

Infrastructure development has the greatest benefits for fragile states, and it impacts
upon the chances of young people andwomen.
• Regional integration. The Bank will leverage its financial support by using its knowledge and convening power to help countries mobilize additional resources, either
domestic or foreign, and through publicprivate partnerships where possible. Africa’s trans-boundary water basins provide
a unique opportunity to facilitate regional
integration. The Bank will support transboundary basins and basin organizations tofoster cooperation and improve integration
across Africa.
• Private sector development. The Bank
will increase support to micro, small andmedium enterprises and social businesses7
as engines for job creation and inclusion.
• Governance and accountability. The Bank
will support the development of capablestates founded on effective institutions,
good governance and regulation for economic growth—specifically, property rights,
equal access to effective justice and greater
participation in decision-making.
• Skills and technology. The Bank will invest
in skills for competitiveness and ensure thatthose skills better match the opportunities
and requirements of local job markets.
The Bank will engage only in sectors where
it has a demonstrated comparative advantage.

In supporting thetransition to green
growth the Bank will
tailor its work to thespecific circumstancesof African countries

Infrastructure development
The Bank will continue to narrow the gap in Africa’s huge infrastructure needs. Inadequate waterand sanitation infrastructure is costing Africa theequivalent of 5% of GDP. High transport costs
add 75% to the price of African goods, andabout 30 countries have chronic power outages.
Bridging these gaps could add 2 percentage
points to Africa’s annual GDP growth.
Since 2008 the Bank has helped build andrehabilitate 25,000 kilometers of main roads13

At the Center of Africa’s Transformation   Strategy for 2013–2022

The Bank will
allocate a significant
proportion of its
new commitments
to infrastructuredevelopment

14

and feeder roads, linking rural areas to transport corridors and markets, benefiting morethan 10 million people. It has also helped
increase power generation by 3,000 megawatts
and build, rehabilitate and install 15,000 kilometers of transmission and distribution lines,
benefiting more than 13 million people. And it
has helped increase access to clean drinking
water with 24,000 wells, boreholes and sanitation facilities, benefiting more than 12 million
Africans. It has supported the development ofmulti-purpose water storage infrastructure andirrigation systems to enhance agricultural productivity, produce energy and mitigate floods
and droughts. And it has promoted cooperation in trans-boundary basins. Such improvements cut across sectors by contributing toregional integration, private sector development
and better governance in fragile states—all
contributing directly to inclusive growth.
Africa requires nearly USD100 billion tomeet its annual infrastructure investment
needs, but the investments so far made coverabout half that amount. As the High Level Panelnoted, “The Bank’s role in infrastructure must
be seen in its broadest sense, as an enabler of
productivity and growth, contributing directly toresults in other sectors.” A road becomes themarket space for rural populations to sell theirgoods and earn income, boosting intra-regional
trade and reducing spatial inequalities not only
between countries but also within nationalboundaries. Rural electrification creates jobs
and increases energy security, reducing rural
poverty. Infrastructure built to support agricultural value chains increases food security.
This Strategy envisages scaling up infrastructure investments substantially, with a view
to increasing productivity and competitiveness,to deepening physical, economic and social
integration, to creating opportunities and promoting inclusion and to contributing to sustainable economic transformation.
The Bank will allocate a significant proportion of its new commitments on infrastructuredevelopment to improve transport and logistics chains, meet the rising demand for energy,

enhance water resources development andexpand broadband telecommunications. It will
help to manage urban growth and develop
sustainable urban infrastructure systems, particularly urban transport and urban water, sanitation and waste management. In addition tophysical infrastructure, the Bank will support
policy, institutional and regulatory reforms topromote private participation and enhance theefficiency and sustainability of infrastructure
investments. And to maintain its leadership rolein continental infrastructure initiatives, such as
the New Partnership for Africa’s Development
and the Infrastructure Consortium for Africa, itwill expand its analytical and advisory capabilities in infrastructure.

Regional integration
Given the many small African economies,
regional integration is essential for the continent
to realize its potential for sustainable and inclusive growth, to participate in the global economy and to share the benefits of an increasinglyconnected global marketplace.
Since 2009 the Bank has financed more than
70 multinational operations for a total of USD3.8
billion, resulting in the construction of 467 kilometers of cross-border roads and the construction and rehabilitation of 776 kilometersof cross-border transmission lines. It has supported the reform and modernization of customs, the strengthening and development of
one-stop border posts, the implementation of
trade facilitation agreements at the World Trade
Organization and the development of logistics
services. These interventions contributed to asignificant increase in intra-African trade, whichmore than doubled from USD47 billion in 2005
to USD108 billion in 2011. Similarly, Africa’s
share of global trade has risen from 2.5% in2005 to 3.1% in 2011.
The Bank is well positioned to foster Africa’s
economic integration to create larger, more
attractive markets, link landlocked countries tointernational markets and support intra-African

The Bank’s Strategic Approach

trade. With infrastructure a key impediment totrade, the Bank will take a regionally integrated
approach to infrastructure development. Africa
has about 80 trans-boundary water basins,
which hold tremendous opportunity for fostering cooperation between riparian states forjointly developing large infrastructure, for sharing benefits equitably and for promoting peaceand development. Roads, ports, transmission
lines and ICTs will be essential to facilitate thisprocess. National infrastructure investments
will be critical building blocks for regional infrastructure development that will help Africa form
large, connected and competitive markets to
replace today’s small, isolated and inefficientones (Box 2).
With a clear mandate from the African
Union, the Bank will help lead the continentwide Program for Infrastructure Developmentin Africa (PIDA). Adopted by the African Heads
of States in January 2012, PIDA frames thecontinent’s efforts to develop key regional
infrastructure. For these efforts to work, Africa
needs engagement and commitment at thehighest levels of government as well as financial leadership at the national and continental
levels. The responsibility for preparing “bankable” projects and driving implementation
rests with the regional economic communities,
project preparation facilities and implementing agencies. But national governments (supported by institutions such as the Bank) willcontrol the regulatory and legal environment to
attract financing.
Africa also needs to address the “soft”
aspects of regional integration. According to
Box 2

the World Trade Organization, the value of Africa’s exports grew 11.3% a year between 2000
and 2009, compared with the world averageof 7.6%.8 But only 12% of this trade is intraregional, the lowest in the world. For goods tomove and results to show, countries have tosimplify and harmonize complex and lengthy
trade and customs procedures and regulations,rationalize restrictive rules of origin and tackle
corruption and other informal trade barriers.
Across fragile states and across the entire
continent, regional integration connects Africa’s
people and allows them to cross borders andexplore trading opportunities and markets. The
Bank will promote legal and regulatory frameworks that help labor and capital move easily, tailoring its interventions with regionalism
in mind. In addition to policy dialogue, it will
invest in one-stop border posts and national
immigration offices with well trained and motivated officials. It will also help Africans develop
the skills to take advantage of more integrated
economies.
The Bank will help governments andregional institutions ensure that infrastructure
projects are integrated and inclusive, providing access to rural areas and poor households,
creating links to micro, small and medium
enterprises, increasing the share of local skilledworkers and transferring knowledge to local
companies and authorities. It will also help
them ensure that projects are sustainable anddeveloped through a consultative process thatreflects international environmental and social
standards. And to develop more bankableinfrastructure projects, it will increase financing

The Bank is well
positioned to foster
Africa’s economic
integration tocreate larger, more
attractive markets, link
landlocked countries
to international
markets and support
intra-African trade

Infrastructure to integrate the region

With a clear mandate from the African Union, theBank will help lead the continent-wide Program for
Infrastructure Development in Africa (PIDA). Adopted
by the African Heads of States in January 2012,
PIDA frames the continent’s efforts to develop key
regional infrastructure. For these efforts to work,
Africa needs engagement and commitment at thehighest levels of government as well as financial

leadership at the national and continental levels. The
responsibility for preparing “bankable” projects anddriving implementation rests with the regional economic communities, project preparation facilities
and implementing agencies. But national governments (supported by institutions such as the Bank)
will control the regulatory and legal environment to
attract financing.

15

At the Center of Africa’s Transformation   Strategy for 2013–2022

for regional project preparation. These efforts,
articulated in the Bank’s new Regional Integration Framework, will help countries boost theirtrade within Africa.

Private sector development
growth in Africa willbe led by the private
sector working inclose partnership withthe public sector

The Bank’s members see the private sector as
the main engine for growth and job creation.
So the Bank will help Africa significantly expand
domestic and foreign investment and promote
African businesses and entrepreneurs, by supporting the development of a conducive policy
environment and providing a range of financial
and non-financial services.
There is a broad consensus that growth inAfrica will be led by the private sector working
in close partnership with the public sector. The
African private sector contributes about 80% of
the continent’s GDP and creates about 90% of
all jobs. Micro, small and medium enterprises,
65% of them informal, create 70–80% of jobs
and contribute 30–35% of GDP. But there is a
“missing middle,” with medium-size enterprises
employing only 20–30% of the workforce. And
base-of-the-pyramid micro and small enterprises operate outside the formal economy,
inhibiting their access to finance, markets, andservices—and thus their ability to grow and create value and jobs.
Over the past five years the Bank has
become a partner and facilitator of private
investment in Africa, and this will continue.
Between 2009 and 2011 it invested morethan USD5 billion in the private sector, 61% of
it in low-income countries, resulting in foreignexchange savings of USD2.8 billion and generating government revenues of USD1.9 billion.
With a catalytic multiplier of 5 to 7, these investments are expected to mobilize over USD30
billion in investment from other sources. To
help develop small and medium enterprises
in Kenya, Cameroon, and the Democratic
Republic of the Congo, the Bank helped atleast 200,000 such enterprises get small loans
to support work in the informal sector. These

16

investments have generated USD650 million in
new turnover and created or maintained around
350,000 new jobs.
Advisory services and institutional support at the policy and project levels are criticalenablers of private sector development, and the
Bank will support the ongoing continent-wide
effort to improve the business environment. It
will emphasize innovative financial instrumentswith strong credit enhancement features,such as guarantees and other risk-mitigation
instruments. It will expand its syndication andresource mobilization activities, tapping bothpublic and private resources. It will develop
co-financing opportunities and integrated
approaches through greater internal collaboration among sector departments. To catalyze additional investment beyond its resourceenvelope for a country, it will pursue integrated
infrastructure development that combines concessional resources with non-sovereign guaranteed financing. When feasible, it will position
its knowledge and financing solutions to support private and commercially operated initiatives and institutions and not substitute forthem, so that operations crowd in commercial
operators, rather than crowd them out.
The Bank also supports private enterprise through its investments and institutional
support. By investing in infrastructure, skills
development and the enabling environment,
it will help create a more conducive businessclimate. By providing institutional support, it
will help governments strengthen the quality
and effectiveness of administrative services toenterprises. It will also support value-chain links
and clusters, particularly in agribusiness andextractive industries. It will channel equity anddebt financing through multi-country private
equity funds to inject long-term resources. On
a limited basis it will directly finance mediumsize enterprises, particularly in fragile states
and low-income countries. And it will deploy
risk-sharing instruments through such financial
intermediaries as commercial banks, microfinance institutions and national and regional
development finance institutions.

The Bank’s Strategic Approach

Africa’s formal financial sector is in the earlystages of its development and faces problems of scale, volatility, long-term liquidity andadverse risk perception from global counterparts. To deepen and expand financial andcapital markets, the Bank will support initiatives
that encourage a range of financial institutions
and services (such as venture capital and leasing); new regulatory frameworks developed
in close coordination with other international
financial institutions, including in cross-borderregulation; and financial instruments such as
bonds, equities, and warrants that can mobilize
term finance and schemes aimed at increasing
local currency borrowing to fund private sector projects. It will support initiatives to improve
Africa’s financial infrastructure, including collateral registries, credit bureaus, credit ratings, and payment and settlement systems, allof which are needed to foster financial stability and to operate modern integrated financial
markets. A healthy, efficient and stable financial sector remains the cornerstone of a private
sector–led development strategy.
African firms need affordable trade credit. In
response to the collapse of commercial financing since the global financial crisis, the Bank
piloted a trade finance initiative. Its lessons,and those of other multilateral institutions withsimilar initiatives, have informed an operational
trade finance program focusing on agriculture,smaller enterprises and higher risk markets as
primary beneficiaries.
While there is broad support for this multipronged approach to delivering finance anddeveloping local financial capacity, there arecalls for the Bank to do more, especially tohelp micro, small and medium enterprises.
Social businesses—as a recognized movementthat promotes inclusion, private sector development, social innovation and entrepreneurship—can be combined with microfinance tobroaden its effectiveness, development impact
and sustainability. They present new areas ofopportunities that can be piloted to provide
demonstration effects in increasing the provision of much needed basic services andecosystem services. Social entrepreneurs havealready established a track record as alternative
providers of microfinance, education, health,drinkable water, energy and other social needs,
mainly to disadvantaged communities, including women and youth. But successful direct
lending to micro, small and medium enterprises
requires specialized human resources and astrong local presence. It also requires an appetite for risk and processes that are not compatible with the Bank’s current credit and due
diligence policies. The Bank will thus consider
other options to provide or scale up support tosuch enterprises and to initiatives that enhancefinancial inclusion, complemented by initiatives
aimed at providing guarantees and insurance
mechanisms, such as the African Guarantee
Fund. The Bank will also explore supporting initiatives that enhance financial inclusion. To thisend, it will leverage this opportunity to support
microfinance activities and enhance the support it provides to social business in the context
of inclusive growth, private sector development
and innovative finance for development.
Assembling a resource pool to finance economic and sector work and specific technicalassistance will help to deliver knowledge operations. The Private Sector Development Strategy will guide it in achieving all these objectives,
including how the Bank intends to operationalize its range of financial and non-financial
services.

By investing ininfrastructure, skills
development
and the enabling
environment, theBank will help createa more conducive
business climate

Governance and accountability
Continuing gains in governance will improve theability of the capable state to ensure the quality of growth. The Bank, with other donors, will
support initiatives that increase accountability
for the provision of essential services and help
countries manage their natural resource wealthbetter to finance greater diversification, competitiveness and productive employment.
Between 2008 and 2011 the Bank channeledmore than 22% of its resources to governance operations, designed to strengthen the17

At the Center of Africa’s Transformation   Strategy for 2013–2022

As part of its inclusive
growth strategy, theBank will scale up
governance work forextractive industries
and investment inrelated infrastructure

18

capacity and capability of state institutions.
This was above the target of the Medium Term
Strategy, and investments in governance are
set to continue in the coming years. Improving governance and accountability will underpin the Bank’s country and regional strategies. The recent client assessment indicatedthat the Bank has an important role in thisarea, especially in helping regional member
countries build capacity in government agencies and in other institutions of voice andaccountability.
Across the 14 countries where the Bank
invested in strengthening revenue systems, tax
revenue as a share of GDP rose from 10.5%
to 14.7%, while tax rates for business fell from
93.6% of commercial profits to 53.9%. In the
24 countries where the Bank supported public financial management reforms, the averageCountry Policy and Institutional Assessmentscore for quality of budgetary and financial
management rose from 3.22 out of 6 in 2005 to
3.78 in 2011, indicating more credible budgets
and an improved capacity to direct resources
into development programs and basic services.
Across the 18 countries where the Bank supported private sector reforms, the time required
to start a business fell from 43 days in 2005
to 23 in 2011, and net foreign direct investment
rose from 4% of GDP to 6%.
As an African institution with credibility
across the continent, the Bank will support African initiatives for monitoring transparency andgood governance, as well as greater involvement in the African Peer Review Mechanism. It
will support citizen initiatives that hold governments and service providers accountable forbetter service delivery. It will work to strengthen
the capacity and reach of parliamentarians,
particularly the committees responsible forpublic accounts and budgets. It will do thesame for government and civil society organizations that focus on anti-corruption, extractive
industry transparency and accountability for
public spending and service delivery. As part ofits capacity-building work, the Bank will assist
regional member countries in building debt

management capacity, to enable them to formulate, adopt and implement prudent borrowing policies that ensure the long-term sustainability of public debt.
Public financial management remains amajor challenge for many regional member
countries, and the Bank can add value in procurement and auditing, especially in fragile
states where other donors have difficulty providing predictable financing. This support will
be coordinated with other donors, to ensure acomprehensive approach without duplicating
effort. The Bank will broaden its approach to
public financial management to address:• Demand-side governance. The Bank will
pay more attention to empowering nonstate actors to engage in accountability
mechanisms.
• Fiscal decentralization. To improve local
governance, the Bank will support thegrowing demand for strengthening subnational public financial management.
• Domestic resource mobilization. The Bank
will help governments mobilize additionaldomestic resources and develop healthy
public financial management systems.
As part of its inclusive growth strategy, theBank will scale up governance work for extractive industries (mining, water and forestry) andinvestment in related infrastructure (water,energy, roads and transportation). Doing morein advising the extractive industries on contracts, local value addition and the sustainable
use of resource flows will require working on
policy and institutional reforms and strengthening environmental and social management.
It will also require partnerships and strategic
engagement with civil society, the private sector and regional and international institutions for
improved natural resource governance.
To support transparency in the management of natural resources, fair deals andaccountability, the Bank will strengthen thecapacity and reach of its African Legal Support
Facility. The Extractive Industries Transparency
Initiative has been a good first step, but regulatory frameworks and the capacity for contract

The Bank’s Strategic Approachnegotiations need to be bolstered to ensure
current and future generations will enjoy lasting
benefits from Africa’s vast resource base.
The Bank’s new Governance Framework
articulates how it will support Africa’s efforts
to improve governance and use resources forinclusive development.

Skills and technology
To promote inclusive growth, the Bank will help
African youth develop the skills to find jobs.
By 2020, 250 million Africans will be between
15 and 24 years old. Africa’s challenge is not
only to create jobs fast enough to keep pacewith this population growth but also to equip
everyone with the skills to join a productive
workforce.
There is a disconnection between the skills
the education system produces and the ones
the private sector wants. Educational quality isoften low. African students rank lowest internationally in reading and computational skills. To
support the rapidly changing demands in African economies, the education system needs tobuild skills in traditional professions—such asteachers, nurses and lawyers—and in science,technology, engineering and mathematics. Alsourgent is the need to develop skills for micro,
small and medium enterprises.
Investment in technology and science will
be at the center of the Bank’s skills development agenda. To increase the supply of skilledworkers, the Bank will step up its support fortechnical and vocational training linked to specific needs in the labor market, in both the formal and informal sectors, including the skills
to create small businesses. It will also support
programs for women studying in technical andscientific areas.
The Bank will create a Governance Framework to support education, emphasizing innovation and entrepreneurship. New approaches
will focus on better education and better
matching the supply and demand for skilledworkers to address youth unemployment.

To help countries overcome barriers totrade and mobility, the Bank will strengthenscientific research and innovation through African networks of excellence. It will help create
dynamic innovation networks with global links
and develop mentorship programs (using thediaspora) to prepare the next generation ofentrepreneurs.
As a knowledge broker, the Bank will support African governments in developing skills in
traditional professions as well as in such areas
as engineering, research, and science andtechnology to support the continent’s rapidlychanging political, social and economic development. Universities and regional vocational
training institutions will be at the center of thiseffort. To operationalize this agenda, the Bank’s
new Human Capital Development Framework
is consistent with the objectives and focus inthis Strategy.

Investment intechnology andscience will beat the center ofthe Bank’s skills
development agenda

Areas of special emphasis
For its work on each of the five core operational
priorities, the Bank will emphasize fragile states,
agriculture and food security, and gender.

Fragile states
The 2007 Principles of Good International
Engagement in Fragile States guide the Bank’swork. Although fragility varies across countries,
the major features remain the same: a legacy
of conflict, violence and insecurity, weak institutions, poor economic and administrative governance and an inability to deliver public goods
adequately, efficiently or equitably. Adverse
economic and social spillovers to neighboring
countries can enflame entire regions, as in the
Sahel and the Horn of Africa. So, addressing
fragility from a regional perspective is often
more useful than a country-centered approach.
In 2008 the Bank developed a corporate
strategy for enhanced engagement in fragile
and conflict-affected states, tailoring operations to their needs. It has since opened offices
in another five fragile states, bringing the total
to 11. It has provided financial assistance of19

At the Center of Africa’s Transformation   Strategy for 2013–2022

Drawing on its
experience, theBank will refine its
approach in fragile
states to provide
more comprehensive
support beyond
financeabout USD2.5 billion, building 850 kilometers offeeder roads, rehabilitating 1,100 rural markets,
improving 26,000 hectares of agricultural land,
drilling and rehabilitating 3,000 boreholes andtraining 6,000 farmers—60% of them women—in agricultural technology and land use. Microfinance programs have helped create 120,000
microenterprises, benefiting more than 2.7 million people in fragile economies.
Drawing on its experience, the Bank willrefine its approach in fragile states to provide
more comprehensive support beyond financeand employ a “continuum approach” that goesbeyond a pre-identified pool of countries. That
will make it easier to support fragile situations rather than fragile states alone—building
capable states bolstered by strong, effective,
trained, transparent institutions (both of government and of its partners in the delivery ofservices) that can marshal the delivery of inclusive growth. The Bank will explore options to
broaden its analytical framework for understanding state fragility and its regional dimensions and spillovers, assess the different
development goals and peace-building andstate-building needs of fragile states and design
support programs that respond to these needs
effectively and efficiently. The Bank’s analyticalstudies and knowledge products will contribute

Figure 4

to greater understanding of the causes of fragility and the ways to build resilient states.
In dealing with fragile states and fragile situations, the Bank will stay closely engaged in
the field and be quicker to exploit windows ofopportunity for change. It will be more sensitive to the dynamics of political economy andconflict and share more cross-country experiences. It will take a hands-on approach tostrengthening weak institutional capacity. Keypriorities will include security, capacity building,employment creation and the provision of basic
infrastructure. The Bank will pay special attention to donor coordination in order to facilitate
its work with fragile states. It will also review
procedures to ensure that fragile states benefit
most from support, while it maintains the best
possible risk management.

Agriculture and food security
Unlocking Africa’s agricultural potential andtackling food insecurity will require sustained
multi-sectoral interventions, using an integrated
value-chain approach (Figure 4). Agriculture isAfrica’s backbone, and it holds great promisefor future growth and job creation. It employs
65–70% of the African workforce and accounts
for roughly a third of the continent’s GDP.
Women make up more than half of Africa’s

Bank investments in infrastructure support the agricultural value chain and increase
food security—from farm to mouth

Inputs/R&D

Production

Processing

Logistics

Marketing

Irrigation
Community units

Roleof theBank

Storage
Rural markets
Rural roads
Power generation and distribution

Results

20• Improved accessto seeds and fertilizer• Increased productivity• Reduced vulnerability
to climate shocks• Value addition• Reduced post-harvest
losses• Increased market
access• Enhanced food security• Increased farmer
incomes

The Bank’s Strategic Approach

farmers and produce up to 90% of the continent’s food. Promoting agricultural productionis therefore one of the most effective ways todrive inclusive growth and reduce poverty.
The Bank contributes primarily by developing agricultural infrastructure through investments in rural roads, irrigation, storage facilities
and markets, its areas of comparative advantage. It works in partnership with specialized
agencies such as the Food and Agriculture
Organization, the International Fund for Agriculture Development and others better positioned
to intervene in other parts of the value chain,such as seeds, fertilizer, and research andextension. It is also a leading financier of private investment in agriculture and agribusiness.
For example, in 2012 it launched the Agvance
Africa Fund of Funds, the continent’s first agricultural value-chain fund, to scale up private
financing dramatically.
By continuing to invest in rural infrastructure(such as rural roads, irrigation, electricity, storage facilities, access to markets, conservation
systems and supply networks), the Bank will
help countries increase their agricultural productivity and competitiveness. By investing inregional infrastructure and engaging in policy
dialogue to remove trade barriers to importingfood and inputs such as fertilizers, it will help
dampen food price volatility and reduce foodinsecurity, so that excess production in somecountries can offset shortfalls in others. The
Bank will also strengthen partnerships andcomplementarity with other donors and financing institutions through such programs as theComprehensive Africa Agriculture Development
Program.

GenderGender inequalities persist in most Africancountries, and data on gender outcomes
show a complex canvas of gains and missed
opportunities in women’s social and economic
development and in their political and legal
status. Africa must address gender disparities to capture the demographic dividend of
its young population and the energies of its

women. Women and girls carry the burdenof fetching water over long distances for longhours, resulting in forgone opportunities forgirls to attend school and for women to participate in more productive economic activities. The lack of adequate sanitation facilitiesin schools also results in high rates of school
dropout for girls. Gender segregation in economic activities and earnings remains pervasive throughout the continent—for example,
women in agriculture operate smaller plots andhave less access to inputs. Disparities in voice
and agency persist—for example, fewer than
one in five members of parliament are women,
and in many countries women suffer pervasive
legal discrimination.
To reduce gender inequalities, the Bank
will focus on promoting women’s economic
empowerment, strengthening women’s legal
and property rights and enhancing knowledge
management and capacity building. For example, the Bank will invest in infrastructure such as
water, energy and transport, particularly in rural
areas, that frees time for women to pursue economic activities and increase their productivity.
Through its private sector programs it will work
to level the playing field for women and improvetheir economic opportunities and incomes. Thismeans improving access to finance and building skills in science, technology and entrepreneurship. Through its governance programs,
the Bank will promote justice sector reforms
that strengthen women’s legal status and voicein public affairs, reduce gender-based disparities and violence and improve land tenure rights
for women.
In line with its role as a knowledge hub andbroker, the Bank will support gender-specificanalytical work and gender-disaggregated statistics that underpin results tracking and measurement. The Bank is developing a Strategic
Gender Framework to guide its activities ingender and development. The framework will
promote gender equality and women’s empowerment across the full range of its operations.
Internal capacity will be strengthened to equip
the Bank to mainstream gender across its

Africa must address
gender disparities
to capture thedemographic
dividend of its young
population and theenergies of its women21

At the Center of Africa’s Transformation   Strategy for 2013–2022

activities and Bank teams will undertake gender impact assessments to identify opportunities for helping countries address genderdisparities.

The Bank’s operational
priorities and focus
areas will assist
the continent inaccelerating progress
toward achieving
the Millennium
Development Goals

22

The post-2015 Millennium
Development Goals agenda
The Bank’s operational priorities and focus
areas will assist the continent in accelerating progress toward achieving the Millennium
Development Goals, which are increasingly
an African agenda. Africa has made progressin reaching some of the goals, but it still lags
behind the rest of the world on many others. For example, in 1990 only a sixth of theworld’s poor lived in Africa, while today the
figure is more than half, and potentially rising to five-sixths by 2025. The United National

Secretary-General is leading a global exercise
to formulate a consensus around the post2015 agenda, which will build on the foundations of the goals and maintain a strong focus
on results. The African Development Bank,
Economic Commission for Africa, Africa Union
Commission and United Nations Development
Programme’s Regional Bureau for Africa haveinitiated regional and national consultations of
all key stakeholders, to articulate a common
African position on the post-2015 development
framework, with a focus on access to infrastructure, inclusion and sustainability. The Bankand the main Pan-African organizations will playa coordinated role in supporting Africans not
only to shape the development agenda beyond
2015 but to enable Africa to close its development gap.

threepart

Financing the Strategy—
Mobilizing andLeveraging Resources

The Bank’s financial resources will always be asmall fraction of Africa’s substantial needs. The
fiscal pressures confronting many traditional
donors are changing international development
capital flows, just as new sources of development capital from emerging economies and theprivate sector are becoming more important.

Innovating in existing windows
The Bank Group will continue to strengthen
its role as the development financier for Africa
through its Bank and Fund windows. But withthe changing models of development financeand the new circumstances in many Africancountries (including those graduating to middle-income status), the Bank will leverage its
different financing instruments in ways driven
by African needs and priorities, not corralled byseparate windows and resource envelopes.
Blending Bank and Fund resources could
mean reclassifying countries for lending purposes, with instruments linked to country
needs, and with more flexible resources forregional projects without compromising theprinciples of performance-based allocation anddebt sustainability. It could also mean fostering synergies between the Bank’s public andprivate sector windows, particularly throughmore coordinated public-private partnershiptransactions. This would bolster the vision ofa nimble institution that can adapt to changing
circumstances.
The Bank will continually explore new ways
to mobilize resources within the changing
development landscape. Perhaps expanding
the Bank’s membership, options must be considered within the context of the Bank maintaining its identity and credibility as an African
institution. Other possibilities could include

low-interest loans from partners’ funds or cofinancing facilities that invest in Bank-supported
projects.
Trust funds mobilize additional resources forcapacity building, project preparation, knowledge and analytical work and for enhancing thedevelopment impact of Bank projects. Growing contributions in recent years from Australia,
Brazil, India and the Republic of Korea bring
added resources from non-traditional partners.
To make trust funds more effective, the Bank
will seek ways to consolidate and rationalize
them, emphasizing the ease of access.

The Bank willcontinually explore
new ways to mobilize
resources within thechanging development
landscapeExpanding the sources of financing
Along with its current finance pools, the Bank
will improve its ability to tap new sources ininnovative ways. This is an opportune time forbold and pioneering approaches to development finance in Africa, particularly in infrastructure, where an African Infrastructure Finance
Facility could help the continent bridge its wide
gap. It will also assist all aspects of the project value chain, including project preparation. A
recent study polling major institutional investors
found that Africa has the greatest investment
potential of all frontier markets globally.9 Figure 5 illustrates the sources of finance the Bank
could target to mobilize additional financing.

Africa’s own resource mobilization
Because the continent has substantial natural
resources, countries with extractive industries
can tap this important source of revenue. With
political determination to create appropriate
governance mechanisms, Africa’s extractive
revenues should drive the continent’s transformation by investing in competitiveness, diversification and efficient resource use.

23

At the Center of Africa’s Transformation   Strategy for 2013–2022

Figure 5

Potential sources of financeReserves of foreignexchange and gold, 2011
4,328

Africa’s extractive
revenues should
drive the continent’s
transformation
by investing incompetitiveness,diversification andefficient resource use

Pension funds, 2010

Sovereign wealthfunds, 2010

(total investments)a

BRICs

BRICs
(Brazil, Russia,
India, China)

734

60

398

114
UnitedStates 152

512

UnitedStates

10,588Africa260

Global10,817

Diaspora estimatedsavings, 2009
BRICs 81Africa 53

BRICs
UnitedStatesAfricaGlobal398b

Global4,000

AfricaGlobal19,339Note: All values are USD billions.
a. Except for Africa, estimated assets under management.
b. Diaspora from developing countries.
Source: OECD (2011), Africa Investors, AfDB Triki and Faye (2011), Deutsche Bank (2010), IMF International Financial Statistics(2012), World Bank Mohapatra and Ratha (2011).

African solidarity will grow as countries
graduating to middle-income status contribute
more to reducing poverty in low-income countries and fragile states. Egypt and South Africa
already contribute to the African Development
Fund, but other countries with large pools of
liquidity could also contribute.
The Bank will build on its experience in issuing local currency bonds. By identifying andtackling barriers to bond market development,
the Bank’s African Financial Markets Initiative
will broaden the market for and deepen theliquidity of domestic fixed-income markets. The
goal is to help African financial markets build
the capacity to raise long-term finance for infrastructure development and the private sector
efficiently and effectively.
As countries develop and can borrow morefrom external sources, they will be more able toissue bonds, including infrastructure and diaspora bonds, opening new sources of financein both international and local markets. With
growing savings pools and the institutions tomanage them—statutory and non-statutory
pension funds, asset management firms andsovereign wealth funds—a core domestic
investor base should appear. This will support
the long-term development and sustainability

24of resource mobilization from local capital
markets.
The Bank’s country strategies will lay out adomestic resource mobilization plan for eachcountry and also advise governments on how
illicit capital flows can be reversed and used asresources for development.

Climate financeAn array of financial vehicles can provide additional liquidity for Africa’s gradual transition togreen growth, including the Global Environment
Fund, the Climate Investment Fund and theGreen Climate Fund, soon to become operational. The Bank’s Sustainable Energy Fund for
Africa provides development capital for small
and medium-size clean energy projects. Greenbonds recently issued by the Bank could set
the stage for attracting a new class of investors.
The Bank also hosts the African Water Facility,
the Rural Water Supply and Sanitation Initiative,
the Multi-Donor Water Partnership Program
and the NEPAD Infrastructure Project Preparation Facility.

Emerging economies
In the changing global economic landscape,the Bank can be a trusted broker in mobilizing

Financing the Strategy—Mobilizing and Leveraging Resources

resources from emerging economies, especially from the BRICs. And with the Bank’s help,
the labor, environment, governance and debt
sustainability concerns linked with these modesof financing can be managed more effectively in
the interests of regional member countries. As
South-South investment increases, the Bank
will develop innovative capital market instruments, such as infrastructure bonds for Africa.
It will also design comprehensive and multidimensional relationship-based coordinationplans for these new development partners.

Co-financing
The Bank will connect and coordinate cofinancing arrangements with partners on bothpublic and private sector projects and especially with partner development institutions
such as the World Bank, the European Unionand major bilateral development agencies
working on the continent. The Bank’s African
Financing Partnership coordinates co-financing
among private development finance institutions
so that one partner can take the lead on a given
project while others follow, avoiding any duplication of effort and doing more projects more
efficiently.

Sovereign wealth and pension funds
Looking for long-term assets, these funds
increasingly view Africa as an attractive investment destination, with infrastructure as a prime
candidate. African sovereign wealth funds arebeing established in Angola, Botswana, Kenya,
Mauritius, Nigeria and other countries to manage inter-generational wealth better. These
funds are mandated to invest in their own andother African economies. The Bank convened
the first Africa Sovereign Wealth Funds Conference in 2010.

Social and philanthropic investors
New philanthropic foundations are emerging,
and with about 2,000 high net worth individuals
in Africa, their number is the fastest growing in
the world.10 The Bank could partner with global
foundations, social investors and philanthropic

funds and leverage resources for development,
particularly to fund projects at the country level.
The Social Business Fund, in which the Bank isparticipating, complements this activity.

Leveraging Bank capital and new
instruments
With its resources, the Bank can deploy current instruments better and leverage new ones.
Examples include more use of public-private
partnerships, risk-mitigation instruments (guarantees) that draw in new investors, and syndications with commercial financial institutions.
The Bank’s financial strength and continental mandate will underpin its role as a risk mitigator to catalyze further investment. But to do
this, the Bank must be prepared to deploy its
risk capital fully and move away from an overly
conservative approach to risk. Risk-mitigation
instruments such as guarantees can leverage
additional finance—but only if they carry lower
capital charges than loans. Other structures,such as first-loss provisions, can create a multiplier effect for the Bank’s funds and attract private capital. Proposals for using concessional
capital for risk mitigation to leverage larger
amounts of commercial capital are ready for
G-20 countries and other partners to consider.
In partnership with selected donors, the Bank
launched the Africa Guarantee Fund to provide
guarantees for financial institutions that financesmall and medium enterprises.
The Bank will evaluate the merits of financing sub-sovereign and municipal entities thathave a direct and inclusive impact on the quality of life.
The Bank will deliver more advisory services
on a cost-recovery basis. This will increase its
relevance to all regional member countries,
particularly those with less need for resources.
As countries develop, financing will move fromaid and grants to lines of credit and structured
finance and to bond and equity financing. Since
the Bank has proven expertise in issuing bonds
in international capital markets, it will advise
African governments seeking access to international debt markets.

The Bank’s financial
strength andcontinental mandate
will underpin its role
as a risk mitigatorto catalyze further
investment

25

part

four

Transforming toSupport Transformation

the Bank will be
judged not only
on lending volume
but also on how
it best supports
the continent’s
development

26

A year short of its 50th anniversary in 2014, theAfrican Development Bank mirrors the imagination of its founders when they conceived it inMonrovia in June 1962—as an African organization, serving Africans. To its uniquely African
character, it adds the wisdom, wherewithal andpolitical will of its 24 non-African member countries, who have chosen to advance the sharedvision of a peaceful, prospering Africa.
For Africans and non-Africans alike, theBank’s legitimacy lies in its African characterand central place in the African architecture.
With an African president and a largely African
staff drawing on the best African talent andexperience, with universal African membershipand an exclusive focus on African development, and with a strong presence across thecontinent, the Bank is set to be a motor for economic progress and integration and the voiceof Africa and African development across thecontinent—and far beyond. The Bank has successfully operated in the most fragile of environments, establishing a solid track record of
responding to emergencies.
The Bank is well on the way to increasing its
development effectiveness through increased
decentralization to field offices, strategicallyfocused areas of engagement and a strong balance sheet with a high risk-bearing capacity. All
this has contributed to it consistently maintaining its AAA rating.
Tested over half a century, and with a cumulative investment in Africa of more than USD100
billion, the Bank is already the partner of choicefor African governments—a fact revealed by anindependent research survey in 2012 by Development Finance International and the University of Oxford (the first ever commissioned by amultilateral development bank).

While there is clear recognition of the Bank’s
advantages and its legitimacy within Africa, thechanges in the global environment require the
Bank to evolve and adapt to remain relevant
and to support Africa’s transformation. It must
become more flexible, responsive and resultsfocused, while maintaining the highest standards of integrity and quality. And it must revisit
its business model to generate more leverage
from its limited financial resources.
In the future the Bank will be judged not
only on lending volume but also on how it best
supports the continent’s development. Delivering knowledge, innovation and advice will be asimportant as lending, especially given the challenges of mobilizing resources in a tighter international fiscal environment.
To catalyze Africa’s transformation over the
next decade, the Bank will systematically leverage its own resources and become a catalyst
for significantly scaling up development financefor Africa and for mobilizing domestic resources.
To reinforce Africa’s emerging dynamism, it will
expand its operations and services—including more non-sovereign financing and advisory
and knowledge services—better tailored to thedemands of a sharply differentiated client base.

The partner of choice
The Bank will focus on developing more effective
partnerships with its regional member countries,
regional economic communities and Africanand international knowledge centers. Partnerships will also promote increased co-financing
and leveraging of the Bank’s scarce resources.
To leverage its capacity, it will emphasize collaboration, coordination, harmonization andinformation-sharing with other development
actors, with a view to maximizing synergies

Transforming to Support Transformationand complementarities. Partnerships will thus
become central to the Bank’s ability to serve
clients (Box 3). The Bank will focus on developing more effective partnerships with its regional
member countries, regional economic communities and African and international knowledge
centers. Partnerships will also promote increased
co-financing and leveraging of the Bank’s scarce
resources. The Bank will provide advice and support on social and economic issues, with a focus

Box 3

on effective implementation of programs andprojects. It will also work with more developed
regional member countries to move away fromdependence on aid and toward more marketbased financing. The private sector and civil society will be key development partners.

A catalyst, convener and connector
The Bank will be a catalyst for development finance and solutions by leveraging its

Working with partners

The Bank is scaling up its transformational agenda
through regional partnerships. One example is the
Bank’s work with the African Union and the secretariat of the New Partnership for Africa’s Development toimplement the Program for Infrastructure Developmentin Africa. Another is the work with African energy ministers and senior officials to coordinate regional energy
infrastructure development initiatives to amplify andbetter articulate Africa’s voice on the green agenda
at the Rio+20 Earth Summit 2012 and its follow-up. A
third is the Bank’s work with the Economic Community of West African States to develop a framework formainstreaming trade facilitation in West Africa. Anda fourth is the African Ministerial Council on Water todeliver on the Africa Water Vision 2025, including support to river and lake basin organizations to promote
the equitable share of benefits from the joint development of water infrastructure among riparian states. By
collaborating with regional economic communities, theBank is supporting regional payments systems in theWest African Monetary Zone, building on earlier experiences with the West African Economic and Monetary
Union. Similarly, the Bank is supporting capacity building and information technology systems to harmonize
trade policy and further consolidate trade integrationin partnership with the Economic Community of Central African States and the West African Economic andMonetary Union. The Bank is also contributing to thedevelopment and harmonization of public procurement systems within the Common Market for Easternand Southern Africa as well as financing a multi-year
capacity-building program to support the implementation of the planned tripartite free trade area set to combine the Southern African Development Community,
the Economic Community of Central African States
and the East African Community.
The Bank has selectively engaged in several catalytic initiatives, including Making Finance Work for

Africa, the African Bond Market Initiative, the African
Investment Climate Facility, the African Peer Review
Mechanism and the Collaborative Africa Budget Reform Initiative. It also lends its support to the African
Organization of Supreme Audit Institutions, the Africa
Regional Technical Assistance Centers and the African Tax Administration Forum.
Equally, the Bank works with the United Nations
Economic Commission for Africa as a member of theBank’s tripartite partnership, along with the African
Union. It is also working with bilateral, multilateral andnon-traditional partners to leverage its development
contribution in Africa, through co-financing, thematic
trust funds and bilateral initiatives, such as the Korea-­
Africa Ministerial Conference. In 2012, to foster dialogue and partnerships and strengthen the Bank’s
advocacy role on African development issues in the
Asia and Pacific region, the Bank opened an External
Representation Office for Asia in Japan.
The EU is Africa’s biggest donor, within the Joint
Africa EU Strategy. Through the African Peace Facility, the EU is supporting the African Union’s role inpreventing and resolving conflicts. It also contributes
to the Infrastructure Consortium for Africa and theAfrican Water Facility AWF and established the EUAfrica Infrastructure Trust Fund in 2007. The Bank
also works closely with sister institutions, including
the World Bank, the Asian Development Bank, the Organisation for Economic Co-operation and Development, the United Nations Development Programme
and the International Monetary Fund, as well as withother international and regional organizations, bilateral donors, the private sector, foundations, nongovernmental organizations, civil society organizations and academia. The Bank has also entered into
co-financing arrangements with several strategic
partners such as India, France, Japan, Korea and theIslamic Development Bank.

The Bank will
be a catalyst fordevelopment
finance and solutions
by leveraging its
partnerships toconvene and connect
the right players

27

At the Center of Africa’s Transformation   Strategy for 2013–2022

Being Africa’s
premier development
institution will requirethat the Bank become
even more responsive,
more efficient andmore effective

partnerships to convene and connect the rightplayers, taking the lead when appropriate. It is
uniquely positioned to catalyze regional cooperation and integration and public-private partnerships in Africa. It will play an increased rolein preparing projects, identifying partners withthe right capacity and expertise and bringing
them together to provide comprehensive solutions to development challenges as a powerfulcomplement to its own investments. And it will
increasingly view those investments as levers
for mobilizing capital from a range of partners—
new and traditional, public and private.

A credible knowledge broker
In a changing landscape where donor
resources are shrinking, knowledge canempower regional member countries to build
on past lessons and make better use of newsources of finance. Consultations confirm that
Africa wants the Bank to develop its role as anhonest and credible knowledge broker. The
Bank will connect clients to relevant knowledge
in partnership with African institutions, suchas the United Nations Economic Commission
for Africa and the New Partnership for Africa’s
Development, and international knowledge
centers, such as the United Nations and theWorld Bank, with the Bank acting as a knowledge hub on African development issues. This
will require stronger knowledge management
within the Bank to ensure that operational lessons are identified and shared. As a productline, the Bank’s knowledge of Africa will provide a good entry point for engagement with
Africa’s new partners. It will also strengthen the
Bank’s authority in regional policy debates andthe links and exchanges of experience among
African governments and the private sector,
as well as other multilateral institutions. The
Bank will promote the creation of national andregional research institutions and centers of
excellence. This will underpin knowledge partnerships and help build institutions that can
improve national policy formulation and implementation. It will also enhance the skills andcapabilities of Africa’s workforce through links

28

between research and the supply of skilled
graduates.

A trusted adviser
Building on its role as a knowledge hub, theBank will also increase its ability to provide
advice and analysis to clients. To maximize its
development contribution, it will help regional
member countries make the most of theiropportunities, such as their abundant natural capital, by providing advisory services fornegotiating fair concessions and using revenues wisely. Already a strong partner, the Bank
will do more to build trust and credibility amongits members as well as external actors.

A voice for development in Africa
As a pan-African development finance institution, the Bank has a unique role as the voice
for Africa in the development community. With
national and regional leaders, the Bank willfurther develop its voice for Africa on development issues, sharing its views and experience.
It will also confidently present the African voice
at multilateral forums on development, financial architecture, commodities, trade and otherissues relevant to African economic and development interests.

Enhancing institutional effectiveness
The Bank has made much progress implementing a number of institutional reforms andpolicies since 2006 and, as the results of therecent client assessment reveal, it has substantially improved its brand value. Being Africa’s
premier development institution will require thatthe Bank become even more responsive, more
efficient and more effective, particularly in fragile states. While maintaining standards of quality
and integrity and strengthening external audit
and integrity functions, the Bank aims to position itself as the employer of choice in Africa,
with a highly performing staff, working together
as One Bank to deliver excellence. Reforminginternational ­organizations—encouraging culturechange, improving human resource management and streamlining business processes—isTransforming to Support Transformation

inherently difficult. The problems and potential
solutions are well known, but it is the executionof reform that drives success or failure. Consultations with staff show an appetite for change.
The Bank will carefully sequence institutional
reforms, starting with “quick wins” to strengthen
initiatives already under way, coupled with asharper focus on delivery and results.

Workforce capability
The Bank has grown and decentralized quickly,
and it needs new staff with new vocational,
behavioral and leadership skills. In the light of
the Strategy, it will thoroughly assess its workforce and develop a plan to align the demandand supply of workforce skills and competencies. More will be done to improve management, with a focus on performance priorities,
talent management and succession planning.
The Bank will continue the 360-degree evaluation program and other programs to identify
strengths and weaknesses in management
capabilities.
The Bank will promote a culture of teamwork and collaboration, encouraging initiativeand innovation, clearly specifying accountability
for action and delegating the authority to do so.
Senior leaders are ready to promote an institutional culture focused on results—a culture thatis less risk averse and hierarchical and that values and supports people endeavoring to do theright things. The links between the Bank’s workin infrastructure and such sectors as agriculture
and human development are clear, but better
coordinated delivery could yield more comprehensive solutions. And by coordinating sovereignand non-sovereign interventions in public-private
partnerships, the Bank could catalyze major
national and regional infrastructure investments.
More effective country teams and more detailed
and results-driven country and regional strategies will be the platforms for identifying and coordinating collaborative programs and projects.

Decentralization
The Bank’s decentralized business model
enhances its field presence, allowing it to help

regional member countries achieve real results.
Decentralization calls for greater field office participation in carrying out lending programs andpreparing robust project pipelines. As decentralization continues, the capacity to deliver incountry services will grow not only in country
offices but also in new regional resource centers, which will act as knowledge hubs andprovide a critical mass in the field. Staff in field
offices will have more authority within a clear
accountability framework. And improvements inhuman resource management and informationand communications technology will support amore mobile staff, particularly in operations.

Business processes and budgets
The Bank’s recent client survey highlights theneed to further improve response times, particularly for procurement but also for project preparation, appraisal, approval and disbursement,so that projects and programs deliver results
faster.11 The Bank will continue to streamline
its operational, institutional and budgetaryprocesses, weighing time and resource costs
against added value and needed safeguards.
The goal will be greater efficiency, flexibility andresponsiveness.
Budgets will be more flexible and linked tooutcomes and results rather than inputs andcompliance controls. Budget decision-making
and management will be further decentralized,with managers given more discretion and heldto account for the use of resources throughperformance and accountability agreements.
Better cost accounting will strengthen the links
between resources and results. Annual budgets will become part of a three-year rolling fiscal framework to ensure consistency and predictability over the period of the Strategy.

The Bank willcontinue to streamline
its operational,
institutional andbudgetary processes,
weighing time andresource costs against
added value andneeded safeguards

Corporate infrastructure
The program to improve corporate infrastructure will help staff perform their duties andgive the institution the processes, systems andtechnologies to deliver effective operations.
New information and communications technology will provide a robust connectivity platform

29

At the Center of Africa’s Transformation   Strategy for 2013–2022

The Bank willmeasure success by
the lasting changes
it brings to the livesof African people

available “anywhere, anytime.” The Bank will
explore outsourcing some communications
and other corporate services where that ismore cost-effective.
The details of these processes of businesschange will be captured in a series of strategies including the Bank’s 2013 People Strategy, Information Technology Strategy and new
Human Resources Strategy. These efforts will
ensure that the Bank’s considerable humanand financial resources are targeted to delivering inclusive growth and helping the transition to green growth across its regional member countries. They respond to the calls of ourregional member countries and donor countries
to be more responsive, closer to our clients andmore efficient in delivery. In short, the combined effect of the reform program will be topromote better ways of working, leading to better results—for the Bank and for the continent.

Focusing on results
A regional member country’s advance fromADF grants to ADB loans is the most immediate and visible sign of success. The Bank willcontinue to encourage, monitor and implement
this phased graduation process. Meanwhile tokeep moving in the right direction and meet its
goals, the Bank must be a learning organization committed to continually improving its performance. Monitoring progress and measuring
results and impact on development can identify
where action is needed.
Each year the Bank reports to management
and stakeholders on all four levels through its
Annual Development Effectiveness Review,supplemented by special thematic reviews,
such as the recently completed Development
Effectiveness Reviews for regional integrationand fragile states.
The Annex presents a set of Level 1 indicators to be monitored during the implementation of the Strategy. A more disaggregated
set of results covering all four levels will be presented in the three-year rolling plans preparedto operationalize the Strategy. Monitoring these
indicators regularly will let the Bank continue to30

improve institutional efficiency and effectiveness. The Bank will also do more impact evaluations at the country level and undertake analytical monitoring to better capture the results
and lessons of programs and projects. It will
also strengthen its independent evaluation
function.

Operationalizing the Strategy
Operationalizing the Strategy and ensuringthat the Bank’s program remains selective
and focused in the areas of its comparativeadvantage will occur at three levels: corporate,
country and regional, and sector (Figure 6). The
Bank will limit operations to its five core priorities, each informed by the three areas of special emphasis. Three-year rolling programs andresults-based budgets will prevent strategic
drift. The rolling plans will set out operational
and institutional objectives for each three-year
period, along with the resource requirements
and expected results. Each year the Board
will approve the three-year rolling program
but release the budget only for the first year.
Guided by the Strategy’s objectives and priorities, country strategy papers—developedin consultation with sector departments—will
be at the heart of the planning and budgeting
process and the basis for defining priorities andcarrying out country programs. Sector strategies, serving as technical foundations for country programs, will ensure that the Bank keeps
its comparative advantage in the core operational areas.
Indicators covering all four levels of theResults Management Framework will monitor
progress over the three-year planning horizon reflected in the rolling plan and assess thedevelopment effectiveness of the institution.
Work program execution and budget performance will be evaluated at the end of each year
and will inform the preparation of subsequentplans and budgets, allowing them to reflect
any changes in circumstances or client needs.
Beyond translating the ten-year Strategy into
operational plans, the Bank will align itself to
the Strategy and make necessary changes inTransforming to Support Transformation

Figure 6

Operationalizing the Strategy at three levels

Corporatelevel• Three-year rolling plan
• Annual budget

Country
and regional
level

Operationalizing
the Strategy

Sectorlevel

leadership and staff. All of this will be reviewed
annually, in addition to a planned medium-term
review of the Strategy.

Conclusion
The goal of the Bank’s Strategy, then, is to support Africa’s ambitions to be a stable, integrated
and prosperous continent with competitive,
diversified and growing economies participating• Country strategies• Regional strategy• Sector strategies• Sector action plans

fully in global trade and ­investment—and aspiring to become a future growth pole and thenext global emerging market. The Strategy
reflects Africa’s vision for itself—a vision thatis achievable. The Bank will measure successby the lasting changes it brings to the lives ofAfrican people. “At the center of Africa’s transformation”, this is the Strategy of the African
Development Bank—of Africa’s bank.

31

Notes1.

32

Lower income countries are targeting middle-income
country status, with significantly improved humandevelopment indicators, as captured by the Millennium Development Goals. Africa’s middle-income
countries are aspiring to converge with the moreadvanced emerging economies.

4.

AfDB, Inclusive Growth: An Agenda for the Bank,
2011.

5.

World Bank, World Development Report 2012: Gender Equality and Development, 2012.

6.

ILO, Key Indicators of the Labour Market, 2011.

2.

International Labour Organization, Global Employment
Trends 2011, 2011.

7.

3.

The Bank convened a High Level Panel of Eminent Persons in 2007 to consider the future of Africa’s development and the role of the Bank. Co-chaired by President
Joaquim Chissano of Mozambique and Prime Minister
Paul Martin of Canada—with Soumaila Cisse, Francois-Xavier de Donnea, Timothy Lankester, EmmanuelTumusiime-Mutebile, Poul Nielson, Wiseman Nkhulu,
Ndi Okereke-Onyiuke, Judith Rodin, Jean-Michel
Severino, Joseph Stiglitz and Paul Yuma Morisho as
members—the panel issued a report setting out anambitious long-term agenda for Africa’s development
and the role of the Bank up to 2030, which laid thefoundations for both the Bank’s Medium TermStrategy
for 2008–2012 and this Strategy for 2013–2022.

Social business refers to a business that is driven bysocial objectives but operates as a profit-making business. The profits are used to expand the company’s
reach and improve its products and services. Social
businesses have a good track record of reachingdisadvantaged communities, including women andyouth.

8.

World Trade Organization database.

9.

Invest AD/Economist Intelligence Unit, Into Africa:
Institutional Investors Intentions to 2016, 2012.

10. Capgemini, World Wealth Report 2011, 2011.
11. M. Martin and N. Woods, “The Preferred Partner? A
Client Assessment of the African Development Bank,”
2012.

AnnexResults Indicators
for the Strategy

Level 1 Results: Monitoring Africa’s Progress
Indicator

Unit of measurement

Baselinevalue (2011)

SourceInclusive growth
Population living below USD1.25 a day (PPP)%39

GDP per capita

USD

953

AfDB
AfDB

Income inequality (Gini Index)

%

46

AfDB

Total unemployment rate

index

11.3a

ILO

Youth unemployment rate

index

15.6

AfDB

Women unemployment rateindex

17.4 aILO

Fragile countries

%

31

AfDB

Green growth
Ecological footprint

gha

1.4

Global Footprint Network

People affected by natural disasters (including deaths)

millions

22.6

Centre for Research on the Epidemiology of Disasters

Access to modern infrastructure% of total roads; road density; railway density;
port throughput tonnage; airport capacity

23.4

AfDB

Access to electricity% of population with access

41.8

AfDB

Access to improved water sources% of population with access

66.0

WHO/UNICEF Joint Monitoring Programme

Access to improved sanitation facility% of population with access

41.0

WHO/UNICEF Joint Monitoring Programme

Water resources development% of annual renewable water resources
mobilized

5.0

AMCOW

Increased access to mobile-cellular telephonytelephone subscriptions per 100 people

61.4

International Telecommunication Union

Access to telephone services

per 1,000

559

International Telecommunication Union

Broadband accesssubscribers per 100 people

3.95

Intra-Africa trade% of total African trade

10.4

AfDB

Africa’s share of global trade

%

3.1

AfDB

Infrastructure

ITU, GSMA and Internet World

Regional integration

Private sector development
Africa global competitiveness index ranking

1 to 7

3.6

Center for Global Competitiveness

FDI into Africa% of global FDI

2b

Ernst & Young

Private sector share of total investment

%

63

AfDB

Domestic credit to private sector (share of GDP)

%

78

AfDB

Time required to start a business

days

33

World Bank, Doing Business

Worldwide governance indicators average score–2.5 to 2.5–0.6cWorld Bank

Safety and the rule of law

1 to 10053

Mo Ibrahim Foundation

Participation and human rights

1 to 10045

Mo Ibrahim Foundation

Share of higher education students in science,technology, engineering and mathematics

%

29.9c

UNESCOInternet users

%

16

AfDB

Governance and accountability

Skills and technology

Note: This set of indicative Level 1 results tracks Africa’s progress on key development indicators. The Bank monitors these results throughthe four-level results framework that is currently being revised and that will be presented for each three-year rolling plan. A strong Results Management Framework helps the Bank capture its contributions to Africa’s development across many dimensions. It allows the Bank to manage
against objectives and to adjust course when necessary for greater effectiveness. In line with international good practice, the Bank monitors
and reports on results using a four-level framework. Level 1 monitors progress in Africa toward achieving the long-term priorities of inclusiveand green growth. Level 2 measures how the Bank’s operations contribute to development results in Africa. Level 3 measures the quality and effectiveness of the Bank’s operations. And Level 4 measures the Bank’s efficiency as an organization in supporting and implementing operations.
The selection of indicators is based on having regularly measurable and robust results from credible sources. These results are also monitored
and updated regularly by the various sources.
a. Data are for 2008. b. Data are for 2009. c. Data are for 2010.

33

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