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African Development Bank
African Development Bank
Highlights 2000 to 2004
Highlights 2000 to 2004
Highlights 1995 to 1999
Highlights 1995 to 1999
Table of Contents
Table of Contents
I. Bank Group Profile (1995  2004)
I. Bank Group Profile (1995 2004)
The Bank Group embodies an effective partnership for the development
The Bank Group embodies an effective partnership for the development
Through its three constituent windows, the Bank Group addresses the
Through its three constituent windows, the Bank Group addresses the
The Bank Group supports critical sectors in all regions of Africa
The Bank Group supports critical sectors in all regions of Africa
Bank Group financial assistance is maintained at a level that ensures
Bank Group financial assistance is maintained at a level that ensures
Country ownership, greater selectivity and rigorous project selection
Country ownership, greater selectivity and rigorous project selection
Development of competitive private sector across Africa is a strategic
Development of competitive private sector across Africa is a strategic
The significant increase in the ADF replenishment level demonstrates
The significant increase in the ADF replenishment level demonstrates
The Banks largest shareholder, Nigeria, supports the Bank Group and
The Banks largest shareholder, Nigeria, supports the Bank Group and
Cofinancing and partnership are critical elements of the Bank Groups
Cofinancing and partnership are critical elements of the Bank Groups
The Bank Group champions critical initiatives for the continent
The Bank Group champions critical initiatives for the continent
The Banks governance activities include the promotion of transparency
The Banks governance activities include the promotion of transparency
II
II
Most African countries will not achieve the Millennium Development
Most African countries will not achieve the Millennium Development
The Bank Group is well positioned to scale up its activities to meet
The Bank Group is well positioned to scale up its activities to meet
The Banks comprehensive approach to re-engineering its operations is
The Banks comprehensive approach to re-engineering its operations is
Objectives of the Action Plan, a comprehensive time-bound program that
Objectives of the Action Plan, a comprehensive time-bound program that
III
III
ADB Summary Financial Information
ADB Summary Financial Information
The Banks strong risk bearing capacity is reflected in the growth in
The Banks strong risk bearing capacity is reflected in the growth in
The Bank continues to allocate increasing amounts of net income9 to
The Bank continues to allocate increasing amounts of net income9 to
Strong shareholder support underscores the Banks strong financial and
Strong shareholder support underscores the Banks strong financial and
The Bank has substantially improved its risk15 bearing capacity
The Bank has substantially improved its risk15 bearing capacity
The Banks ratios are well within conservative interest coverage16 and
The Banks ratios are well within conservative interest coverage16 and
Bank wide financial controls and risk management culture lead to
Bank wide financial controls and risk management culture lead to
The Bank maintains conservative gearing and leverage ratios
The Bank maintains conservative gearing and leverage ratios
The Banks portfolio is better diversified than those of other MDBs
The Banks portfolio is better diversified than those of other MDBs
The Bank uses the derivatives market to provide the most attractive
The Bank uses the derivatives market to provide the most attractive
The Banks effective communication strategy is facilitating investor
The Banks effective communication strategy is facilitating investor
The Bank is committed to the development of local capital markets
The Bank is committed to the development of local capital markets
The Bank nurtures a diversified investor base with presence across
The Bank nurtures a diversified investor base with presence across
The Bank leverages its AAA credit rating to accelerate economic and
The Bank leverages its AAA credit rating to accelerate economic and
More information is available at www
More information is available at www
Appendices
Appendices
ADB Statement of Income and Expenses
ADB Statement of Income and Expenses
ADB Balance Sheet Highlights
ADB Balance Sheet Highlights
Appendices
Appendices
Steady and broad based economic growth across Africa
Steady and broad based economic growth across Africa
Sound macroeconomic policies are leading to a sharp decline in fiscal
Sound macroeconomic policies are leading to a sharp decline in fiscal
The era of high inflation rates in Africa is over
The era of high inflation rates in Africa is over
Official Development Assistance to Africa is increasing albeit below
Official Development Assistance to Africa is increasing albeit below
Africas key social indicators are below the average for developing
Africas key social indicators are below the average for developing
The Millennium Development Goals
The Millennium Development Goals
Notes and Glossary
Notes and Glossary

: African Development Bank. : . : African Development Bank.PPT. zip-: 1870 .

African Development Bank

African Development Bank.PPT
1 African Development Bank

African Development Bank

Financial and Operational Analysis May 2005

2 Highlights 2000 to 2004

Highlights 2000 to 2004

Highlights 2000 to 2004

2004

2003

2002

2001

2000

2

Commission for Africa established and UN Millennium Project launched The tenth replenishment of the African Development Fund (ADF) was the highest ever Launched US$ 14.2 billion Rural Water Supply and Sanitation Initiative to accelerate access to safe water for Africa Post conflict country facility (PCCF) established Reaffirmation of AAA credit ratings by Fitch, JCR, Moodys and Standard & Poors Highest level of operations and income as well as lowest cost of funds ever achieved in the capital markets

African Ministers Council on Water (AMCOW) appoints Bank Group as host of the African Water Facility Successful execution of business continuity plan and smooth relocation to back up facilities Nigeria creates a Technical Co-operation Fund to promote intra-Africa technical cooperation Upgrade by Standard & Poor's to 'AAA' The largest bond transaction by the Bank - USD 1 billion global

Monterrey Consensus on Financing for Development Ninth replenishment of the ADF New organization structure and Strategic Plan 2003-2007 to enhance selectivity and responsiveness Initiated the establishment of the African Law Institute Championed a donor coordinated initiative to clear arrears owed by Democratic Republic Congo, the bulk of arrears owed to the Bank Group International Financing Review's (IFR) Agency/Supranational Bond of the Year Award received for first global bond (US$ 500 million)

New Partnership for Africa's Development (NEPAD) launched by African Heads of State NEPAD appoints the Bank Group as leader on infrastructure, banking and financial standards First Bank Group Annual meeting outside Africa - Valencia, Spain International Accounting Standard (IAS) 39 adopted by the Bank Unlimited Global Debt Issuance Facility set up to enhance flexibility with respect to capital markets activities First Hong Kong dollar and Singapore dollar bond transactions by the Bank

Millennium Development Goals adopted Creation of the African Union Omar Kabbaj re-elected as President of the Bank Group New financial products, including guarantees and risk management products, approved First guarantee transaction executed (a local currency syndicated loan to MTN-Cameroon) JPY 50 billion bond transaction by the Bank

3 Highlights 1995 to 1999

Highlights 1995 to 1999

Highlights 1995 to 1999

1999

1998

1997

1996

1995

Enhanced Highly Indebted Poor Country Initiative (HIPC) implemented Established Joint Africa Institute with World Bank and IMF Developed Bank Group's Vision Statement through broad consultations with all stakeholders Eight replenishment of ADF One billion Euro-commercial Paper facility established

Fifth General Capital Increase raised authorized capital by 35 % to US$ 34 billion Project AFRICA, a bankwide initiative to streamline business processes using SAP as platform First Rand denominated line of credit to Development Bank of South Africa First Rand denominated bond issue

HIPC Initiative approved African Heads of State meet to deliberate on the future of the Bank Group Seventh replenishment of ADF Financial reforms initiated FRF 2 billion bond transaction by the Bank

3

Uganda becomes the first country to qualify for HIPC New loan products offering clients interest rate and currency choice South African Rand introduced as a borrowing and lending currency First Yen structured private placement bond transaction issued by the Bank

New Credit Policy adopted Accession of Republic of South Africa to Bank membership Omar Kabbaj elected as President of the Bank Group Strategic renewal and Institutional reforms initiated AAA credit ratings by Fitch, JCR, Moodys, AA+ by Standard & Poors US$ 400 million subordinated debt issued in Yankee market

4 Table of Contents

Table of Contents

Bank Group Profile (1995 2004) Bank Group Action Plan for the Future ADB Financial Profile Appendices ADB Financial Statements Africa at a Glance

4

5 I. Bank Group Profile (1995  2004)

I. Bank Group Profile (1995 2004)

6 The Bank Group embodies an effective partnership for the development

The Bank Group embodies an effective partnership for the development

of Africa

African Development Bank (ADB) Established in 1964 Subscribed capital - US$ 33.54 billion 53 African and 24 non-African countries African Development Fund (ADF) Established in 1972 Subscriptions - US$ 19.98 billion Primarily financed by non-African countries Nigeria Trust Fund (NTF) Established by Nigeria in 1976 Total assets of US$ 572 million

Africa

Europe

North & South America

Middle East

Asia

6

Austria Belgium Denmark Finland France Germany Italy

Netherlands Norway Portugal Spain Sweden Switzerland UK

Algeria Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Chad Comoros Congo Cote dIvoire D. R. Congo Djibouti Egypt Equatorial Guinea Eritrea Ethiopia Gabon Gambia Ghana Guinea Guinea Bissau Kenya Lesotho Liberia

Libya Madagascar Malawi Mali Mauritania Mauritius Morocco Mozambique Namibia Niger Nigeria Rwanda S. Tome & Principe Senegal Seychelles Sierra Leone Somalia South Africa Sudan Swaziland Tanzania Togo Tunisia Uganda Zambia Zimbabwe

Argentina Brazil

Canada USA

Kuwait Saudi Arabia

China Korea

India Japan

7 Through its three constituent windows, the Bank Group addresses the

Through its three constituent windows, the Bank Group addresses the

diverse needs of African countries

African Development Bank Up to 20 years maturity including 5-year grace period Market-based lending terms African Development Fund Up to 50 years maturity including 10-year grace period Service charge of 75 bp and commitment fee of 50 bp starting 120 days after signature Grants represent 44% of ADF-X resources Nigeria Trust Fund All African countries are eligible to NTF funding Up to 25 years maturity including 5-year grace period Interest rate of 2% to 4% and commitment fee of 75 bp starting 120 days after signature

Eligible to ADB funding (13 countries) Eligible to ADF funding (38 countries) Eligible to ADB and ADF funding (2 countries)

7

8 The Bank Group supports critical sectors in all regions of Africa

The Bank Group supports critical sectors in all regions of Africa

Over 3,000 cumulative approvals amounting to USD 52 billion as of 31 December 2004

8

9 Bank Group financial assistance is maintained at a level that ensures

Bank Group financial assistance is maintained at a level that ensures

high quality operations

2004 APPROVALS IN US$ Bank Group approvals amounted to US$ 4.33 billion Heavily Indebted Poor Countries (HIPC) approvals amounted to US$ 1.57 billion including US$ 905 million for Democratic Republic of Congo ADB approvals excluding HIPC amounted to US$ 1.26 billion1 ADF approvals excluding HIPC amounted to US$ 1.49 billion NTF approvals amounted to US$ 14.4 million

2 787

2 374

2 039

1 766

540

In SDR million

9

10 Country ownership, greater selectivity and rigorous project selection

Country ownership, greater selectivity and rigorous project selection

have resulted in a high quality portfolio

Credit policy directs ADB market-based lending to lower risk countries, while ADF concessional resources are directed at the low income countries Heavily Indebted Poor Countries (HIPC) debt relief effectively guarantees debt service on market-based ADB loans made to low income countries prior to the adoption of the credit policy in 1995

10

11 Development of competitive private sector across Africa is a strategic

Development of competitive private sector across Africa is a strategic

priority for the Bank Group

Continue to emphasize financial intermediation, focusing on lines of credit with technical assistance, syndication, leasing and trade finance Expand infrastructure intervention through public private partnerships, focusing on renewable energy such as hydro, wind, water purification in rural areas Expand franchising, support to women entrepreneurs, corporate governance and corporate social responsibility Co-financing with partners to share risk and expertise

Non-sovereign guaranteed lending accounts for 6% of the total ADB portfolio New private sector strategy leverages the Banks experience with sovereign guaranteed operations Introduction of private sector country profiles, a country by country comprehensive analysis of private sector issues to be included in the Banks country strategy Dedicated portfolio management group to monitor projects

11

Sector Distribution

Weighted average risk rating

Approvals in SDR million

12 The significant increase in the ADF replenishment level demonstrates

The significant increase in the ADF replenishment level demonstrates

support of the donor community to Africa

KEY HIGHLIGHTS OF ADF-X Grant resources more than doubled from 21% under ADF-IX to 44% To curtail their debt burden 26 countries will receive 100% of assistance in the form of grants instead of loans Initial allocation of SDR 100 million (US$ 155 million) made to the Banks Post-Conflict Country Facility (PCCF), with the possibility of further increases, if need be Up to 30% of the financial requirements of the Rural Water Supply and Sanitation Initiative will be provided by ADF Allocation to multinational projects increased from 10% to15% in the context of regional integration and NEPAD

12

2

13 The Banks largest shareholder, Nigeria, supports the Bank Group and

The Banks largest shareholder, Nigeria, supports the Bank Group and

continent through the Nigeria Trust Fund

NTF has approved 72 projects for US$ 402 million in 30 countries since 1976 Concessionality of loans extended by reducing interest rates in 2003 to a minimum of 2% Participate in the HIPC Trust Fund through 10% net income allocation Nigeria created a US$ 25 million technical cooperation fund in 2004

Sector Distribution

13

14 Cofinancing and partnership are critical elements of the Bank Groups

Cofinancing and partnership are critical elements of the Bank Groups

strategy

Since inception, 833 projects have benefited from cofinancing with US$ 74 billion mobilised from sources other than the Bank Group In 2004, 31 projects benefited from cofinancing with US$ 3.1 billion raised from other sources and implying a leverage of more than 2.3 times the Bank Groups resources Memorandum of Understanding with various multilateral agencies. 25 technical cooperation grants managed by the Bank Group

Sector Distribution

14

15 The Bank Group champions critical initiatives for the continent

The Bank Group champions critical initiatives for the continent

Rural Water Supply and Sanitation Initiative African Water Facility

International Comparison Program

HIPC Initiative

African peer review mechanism

15

16 The Banks governance activities include the promotion of transparency

The Banks governance activities include the promotion of transparency

responsibility and accountability

Credit ratings

African Peer Review Mechanism

19 countries already rated by international credit rating agencies while some other countries are in the process United Nations Development Program (UNDP) and the United States (US) sponsored initiatives facilitate the process

24 countries have so far acceded to the African Peer Review Mechanism (APRM), a voluntary self monitoring governance mechanism The Bank Group is an APRM strategic partner in economic and corporate governance and country assessment

16

17 II

II

Bank Group Action Plan for the Future

18 Most African countries will not achieve the Millennium Development

Most African countries will not achieve the Millennium Development

Goals if development efforts are not accelerated

18

19 The Bank Group is well positioned to scale up its activities to meet

The Bank Group is well positioned to scale up its activities to meet

Africas development challenges

19

20 The Banks comprehensive approach to re-engineering its operations is

The Banks comprehensive approach to re-engineering its operations is

reflected in the shareholder support for its Action Plan

1996 to 1999

2000 to 2004

2005 to 2007

Three-year phased approach to leverage the Banks experience with managing corporate growth Over 400 additional staff including 300 for field offices by 2007

US$ 80 million increase by 2007 in Bank Group administrative budget to enhance institutional capacity Number of field offices to be increased from 9 to 25 by 2006

20

21 Objectives of the Action Plan, a comprehensive time-bound program that

Objectives of the Action Plan, a comprehensive time-bound program that

consolidates the Banks achievements over the last decade

Enhancing development effectiveness by strengthening diagnostic studies and country programming managing for results establishing the Bank as a leading knowledge institution pursuing harmonization and alignment Strategic positioning through initiatives such as New Partnership for Africa Development (NEPAD) Rural Water Supply and Sanitation Initiative (RWSSI) building strategic partnerships; Building institutional capacity to deliver mandate by realigning resources to corporate priorities increasing staffing for key activities reinforcing the control framework streamlining business processes. Accelerated decentralization program and new corporate governance functions 16 offices in 2005-2006 for total of 25 inspection function compliance review anti-fraud and anti-corruption mechanisms.

21

22 III

III

ADB Financial Profile

23 ADB Summary Financial Information

ADB Summary Financial Information

(in SDR million)3

1995

2001

2002

2003

2004

2004 US$ million

Approvals including HIPC

454

987

1,068

746

1,520

2,360

Assets

9,553

8,873

8,197

10,034

10,044

15,598

Subscribed Capital4

15,750

21,491

21,510

21,564

21,597

33,542

Paid in Capital net of CEAS5,6

1,445

1,770

1,803

1,866

1,920

2,982

Reserves before IAS 397,8 Adjustment

604

1,195

1,356

1,480

1,572

2,441

Net Income before IAS 398 Adjustment

69

125

189

178

220

341

23

24 The Banks strong risk bearing capacity is reflected in the growth in

The Banks strong risk bearing capacity is reflected in the growth in

its reserves to which more has been added in the past decade than in the first three decades

In SDR million

24

25 The Bank continues to allocate increasing amounts of net income9 to

The Bank continues to allocate increasing amounts of net income9 to

development initiatives to accelerate development

HIPC initiative: 23 African countries out of 32 eligible have received US$ 4.2 billion in debt relief PCCF facilitates the reconstruction efforts of post-conflict countries including arrears clearance. Burundi and Congo benefited in 2004 Increased contribution to the Middle Income Country (MIC) Technical Assistance Trust Fund to enhance competitiveness of operations in Middle Income Countries

144

In SDR million

115

57

22

25

13

12

10

11

14

(*) Proposed allocation for 2004

26 Strong shareholder support underscores the Banks strong financial and

Strong shareholder support underscores the Banks strong financial and

operational condition

The Fifth General Capital increase in 1998 raised authorized capital base by 35% to US$ 34 billion Shareholding of non-regional countries increased form one-third to 40% Revised share transfer rules link subscription to economic capacity of member countries and curtail subscription arrears.

In SDR million

21166

21178

21249

21294

15746

26

4,999

4,151

3,767

3,508

2,021

3,059

1,373

763

1998

27 The Bank has substantially improved its risk15 bearing capacity

The Bank has substantially improved its risk15 bearing capacity

, its financial position has never been healthier and its risk-bearing capacity is sufficient enough to meet expanding operations Japan Credit Rating Agency, 2004

In SDR million

3 942

3 815

3 651

3 459

2 292

27

28 The Banks ratios are well within conservative interest coverage16 and

The Banks ratios are well within conservative interest coverage16 and

debt limits

28

17

29 Bank wide financial controls and risk management culture lead to

Bank wide financial controls and risk management culture lead to

effective mitigation of non-core risks

Loan management practices

Capital adequacy and provisioning policy18

Market risk

Operational risks

Strict sanctions practices including suspension of loan disbursements to clients in arrears for at least 30 days No write-off on public sector loans

ADB capital adequacy policy is derived from the Basle Capital Accord and links its capital requirements to the risk profile of the portfolio ADB ensures that adequate provisions are made for impaired loans

Liquidity risk addressed by holding sufficient liquid assets to meet future cash requirements for at least one year Interest rate risk management strategy stabilizes the Banks net interest margin Statutory prohibition on taking foreign exchange risk

Operational risks are addressed by periodic review of internal controls and back-up procedures Detailed and tested business continuity plan COSO control framework under implementation

29

30 The Bank maintains conservative gearing and leverage ratios

The Bank maintains conservative gearing and leverage ratios

30

Source: Standard & Poors Supranationals Report October 2004

31 The Banks portfolio is better diversified than those of other MDBs

The Banks portfolio is better diversified than those of other MDBs

31

Source: Standard & Poors Supranationals Report October 2004

32 The Bank uses the derivatives market to provide the most attractive

The Bank uses the derivatives market to provide the most attractive

funding to its clients

Before Swaps

After Swaps

Borrowing portfolio amounted to US$ 8.8 billion as of 31 December 2004

32

33 The Banks effective communication strategy is facilitating investor

The Banks effective communication strategy is facilitating investor

understanding of its strong credit story

ADB US$ 1 billion Global Bond - 1 August 2008

Spread against USD Libor

33

Source: Bloomberg

34 The Bank is committed to the development of local capital markets

The Bank is committed to the development of local capital markets

South African Rand (ZAR): Full treasury operation and third largest lending currency after US$ and EUR Communaut? Financi?re Africaine (CFA): Euro 13 million equivalent guarantee for a private sector project Egyptian Pound (EGP): USD 27 million equivalent in Equity participation in Egypt Actively preparing to launch benchmark issues in several local capital markets

34

35 The Bank nurtures a diversified investor base with presence across

The Bank nurtures a diversified investor base with presence across

capital markets

35

36 The Bank leverages its AAA credit rating to accelerate economic and

The Bank leverages its AAA credit rating to accelerate economic and

social development in Africa

Membership Support Preferred Creditor Status Franchise Value Strong Operational and Financial Condition Prudent Financial Policies and Management Cooperation With Partners

JCR The ratings reflect the strong support that the African Development Bank (the Bank) draws from its members, particularly the industrialized countries, its solid capital base and sound financial position resulting from prudent operations and conservative risk management, and the preferred creditor status that it enjoys

FITCH Capitalisation is sound at AfDB, ranking among the highest of the MDBs

MOODYs Indeed, the AfDBs indicators of risk-adjusted assets are on a par with or compare favourably to those of other Aaa-rated multilateral institutions

S&P In sum, while Africa remains a challenging environment in which to operate, the bank's management in recent years has greatly strengthened the bank's financial profile. AFDB's capital and liquidity, as well as its qualitative features, place it solidly in the 'AAA' rating category.

36

37 More information is available at www

More information is available at www

afdb.org

Financial and Operational Analysis Documentation for Debt Programs Rating Agencies Reports Financial Products for Borrowers Exchange Rates Annual Report

37

38 Appendices

Appendices

I. ADB Financial Statements

39 ADB Statement of Income and Expenses

ADB Statement of Income and Expenses

39

40 ADB Balance Sheet Highlights

ADB Balance Sheet Highlights

40

41 Appendices

Appendices

II. Africa at a Glance

42 Steady and broad based economic growth across Africa

Steady and broad based economic growth across Africa

42

43 Sound macroeconomic policies are leading to a sharp decline in fiscal

Sound macroeconomic policies are leading to a sharp decline in fiscal

deficit

43

44 The era of high inflation rates in Africa is over

The era of high inflation rates in Africa is over

(%)

44

45 Official Development Assistance to Africa is increasing albeit below

Official Development Assistance to Africa is increasing albeit below

what is needed to achieve the Millennium Development Goals

45

46 Africas key social indicators are below the average for developing

Africas key social indicators are below the average for developing

countries

46

47 The Millennium Development Goals

The Millennium Development Goals

47

Source: ADB Statistics Division, UNESCO database 2004, UN Population Division, World Bank

48 Notes and Glossary

Notes and Glossary

African Development Bank
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