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[Senate Report 110-441]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 937
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-441

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TO AUTHORIZE UNITED STATES PARTICIPATION IN, AND APPROPRIATIONS FOR THE 
   UNITED STATES CONTRIBUTION TO, THE ELEVENTH REPLENISHMENT OF THE 
               RESOURCES OF THE AFRICAN DEVELOPMENT FUND

                                _______
                                

                 August 1, 2008.--Ordered to be printed

                                _______
                                

          Mr. Biden, from the Committee on Foreign Relations,
                        submitted the following

                                 REPORT

                         [To accompany S. 3169]

    The Committee on Foreign Relations, having had under 
consideration the bill (S. 3169), to authorize United States 
participation in, and appropriations for the United States 
contribution to, the eleventh replenishment of the resources of 
the African Development Fund, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Committee Action.................................................2
III. Discussion.......................................................2
 IV. Cost Estimate....................................................3
  V. Evaluation of Regulatory Impact..................................5
 VI. Changes in Existing Law..........................................5

                               I. Purpose

    The purpose of S. 3169 is to authorize United States 
participation in, and appropriations for the United States 
contribution to, the eleventh replenishment of the resources of 
the African Development Fund.

                          II. Committee Action

    S. 3169 was introduced by Senators Biden and Lugar on June 
19, 2008. On June 24, 2008, the committee ordered S. 3169 
reported favorably without amendment, by voice vote.

                            III. Discussion

    S. 3169, the ``African Development Fund Act of 2008,'' 
authorizes U.S. participation in the eleventh replenishment of 
the resources of the African Development Fund. The authorized 
three-year appropriation (2008-2010) of $486.2 million 
represents 8.9% of the total $8.9 billion replenishment.
    The African Development Fund (AfDF) is a concessional 
lending and grant making facility for low-income African member 
countries of the African Development Bank. The African 
Development Bank includes shareholders from 53 African 
countries and 24 non-African countries. The AfDF was created in 
1972 and began operations in 1974; there are currently 38 AfDF 
borrower countries.
    The AfDF is primarily financed by the non-African countries 
with the United States ranked fourth in funding behind the UK, 
Germany and France. Donors negotiate a replenishment agreement 
every three years. In December 2007, negotiations concluded for 
the eleventh replenishment of AfDF resources (AfDF-VI) that 
will provide financing of $8.9 billion during 2008 to 2011. It 
provides grant financing and loans on highly concessional terms 
to Africa's poorest countries. The AfDF financing supports 
investments in infrastructure, health, education, agriculture, 
water supply and sanitation. In addition, it provides technical 
assistance to facilitate basic economic policy and 
institutional reforms in support of sustainable economic growth 
and development.
    In the previous AfDF replenishment, the Congress 
appropriated $407 million out of a total replenishment of $5.4 
billion. In the latest negotiations, the United States 
emphasized the following priorities: managing for results, 
fragile states, regional operations, and private sector-led 
growth.

Managing for Results

    The U.S. pushed for a results-based framework, with 
concrete indicators and objectives, to guide Fund operations 
through 2010. The framework encourages the Fund to focus on 
measurable results rather than merely funding priorities. The 
committee agrees that the Fund should base its funding on 
tangible results and supports this emphasis. The committee 
continues to monitor progress at the African Development Bank 
on anti-corruption efforts in its projects and programs and 
asserts that ensuring that development funds are not stolen or 
misused will result in better project and program outcomes. The 
committee continues to monitor progress at the African 
Development Bank on anti-corruption and transparency promotion.

Fragile States

    The Fund has established a special facility to provide 
targeted assistance to countries in transition from conflict 
and economic failure to stability and growth. Such assistance 
will support the elimination of arrears, provide resources to 
secure a peaceful and stable environment, and supplement 
capacity-building efforts. Countries that will benefit include 
post-conflict states such as Liberia. This committee believes 
this is an important sector where the Fund can exercise a 
comparative advantage. As an eminent persons group on the 
African Development Bank (chaired by former Mozambican 
President Juaquim Chissano and former Canadian Prime Minister 
Paul Martin) advised in its final report in fall 2007, the 
``AfDB has excess capacity and the AfDF has excess demand.'' It 
is critical that fragile states that comprise the majority of 
AfDF borrowing countries have access to sufficient capital in 
order to facilitate their reconstruction and development. The 
committee recognizes the increased challenges for fragile 
states, especially in achieving sufficient capacity to govern 
and maintain accountability within government institutions. 
Fund resources in such situations must be managed with 
extraordinary oversight and the tools to build similar capacity 
locally should be a part of any programs implemented.

Regional Operations

    The Fund will provide further resources to projects that 
enhance regional integration and cross-border infrastructure. 
In addition, the Fund will develop a results measurement and 
development impact framework specifically for regional 
projects. The committee maintains that development in Africa 
cannot be achieved on a country-by-country basis. It is vital 
that regions develop integrated strategies that will leverage 
comparative economic regional advantages.

Private Sector-led Growth

    The Fund will increase support in this area by promoting 
macroeconomic, regulatory, and financial sector reform, as well 
as by helping countries development stronger anti-corruption 
frameworks and improved transparency. This includes helping 
countries implement the Extractive Industries Transparency 
Initiative. Finally, the Fund will also emphasize support to 
the agriculture sector, to alleviate the impact of the global 
food crisis. This represents an area of priority for the 
committee. The committee also encourages the Fund to help 
developing countries link programs and projects with private 
sector partners in order to reduce poverty, promote growth and 
foster job creation. At the same time, it is important that 
recipient countries manage private sector growth in a 
transparent and consistent manner, conforming to global norms 
and standards, especially with regard to extractive industries, 
international environmental standards, and internationally 
recognized workers rights.

                           IV. Cost Estimate

    In accordance with rule XXVI, paragraph 11(a) of the 
Standing Rules of the Senate, the committee provides this 
estimate of the costs of this legislation prepared by the 
Congressional Budget Office.

                            United States Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 31, 2008.

Hon. Joseph R. Biden, Jr.,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3169, a bill to 
authorize U.S. participation in, and appropriations for the 
U.S. contribution to, the eleventh replenishment of the 
resources of the African Development Fund.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jennifer 
Reynolds.
          Sincerely,

                                           Peter R. Orszag.

                                ------                                

               Congressional Budget Office Cost Estimate

                                                     July 31, 2008.

                                S. 3169

A bill to authorize United States participation in, and appropriations 
 for the United States contribution to, the eleventh replenishment of 
             the resources of the African Development Fund

  AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FOREIGN RELATIONS ON 
                             JUNE 24, 2008

Summary

    S. 3169 would authorize the appropriation of $468 million 
to replenish the resources of the African Development Fund.
    CBO estimates that implementing this bill would cost $94 
million in 2009 and $468 million over the 2009-2013 period, 
assuming appropriation of the authorized amounts. Enacting the 
bill would not affect direct spending or revenues.
    S. 3169 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.

Estimated Cost to the Federal Government

    The estimated budgetary impact of S. 3169 is shown in the 
following table. The costs of this legislation fall within 
budget function 150 (international affairs).

                                       Changes in Spending Due to S. 3169
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                                2009    2010    2011    2012    2013   2008-2013
----------------------------------------------------------------------------------------------------------------
Changes in Spending Subject to Appropriation:................
  Estimated Authorization Level..............................     156     156     156       0       0       468
  Estimated Outlays..........................................      94     156     156      62       0       468
----------------------------------------------------------------------------------------------------------------

Basis of Estimate

    The bill would authorize the appropriation of $468 million 
to replenish the resources of the African Development Fund, 
which lends money to African countries. The President has 
requested the appropriation of $468 million to implement an 
agreement with the African Development Fund. International 
agreements to replenish the resources of multilateral 
development banks typically cover a number of years. According 
to Administration documents, the replenishment agreements for 
the African Development Fund cover the 2009-2011 period. CBO 
assumes, for this estimate, that the replenishment amounts 
would be provided in equal installments over that period. CBO 
estimates that implementing this bill would cost $94 million in 
2009 and $468 million over the 2009-2013 period, assuming 
appropriation of the authorized amounts.

Intergovernmental and Private-Sector Impact

    S. 3169 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would not affect the budgets of 
state, local, or tribal governments.

Estimate Prepared by:

    Federal Costs: Jennifer Reynolds
    Impact on State, Local, and Tribal Governments: Neil Hood
    Impact on the Private Sector: Jacob Kuipers

Estimate Approved by:

    Theresa Gullo, Deputy Assistant Director for Budget 
Analysis

                   V. Evaluation of Regulatory Impact

    Pursuant to rule XXVI, paragraph 11(b) of the Standing 
Rules of the Senate, the committee has determined that there is 
no regulatory impact as a result of this legislation.

                      VI. Changes in Existing Law

    In compliance with rule XXVI, paragraph 12 of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new matter is printed in 
italic, existing law in which no change is proposed is shown in 
roman).

The African Development Fund Act

           *       *       *       *       *       *       *

SEC. 219. ELEVENTH REPLENISHMENT.

    (a) The United States Governor of the Fund is authorized to 
contribute on behalf of the United States $468,165,000 to the 
eleventh replenishment of the resources of the Fund, subject to 
obtaining the necessary appropriations.
    (b) In order to pay for the United States contribution 
provided for in subsection (a), there are authorized to be 
appropriated, without fiscal year limitation, $468,165,000 for 
payment by the Secretary of the Treasury.

                                  
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