African Development Bank Financial and Operational Analysis May - PowerPoint PPT Presentation

African Development Bank Financial and Operational Analysis May 2005

Highlights 2000 to 2004  Commission for Africa established and UN Millennium Project launched 2004  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, Moody’s and Standard & Poor’s  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 2003  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 2002  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 2001  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 2000  Creation of the African Union  Omar Kabbaj re-elected as President of the Bank Group 2  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

Highlights 1995 to 1999  Enhanced Highly Indebted Poor Country Initiative (HIPC) implemented 1999  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 1998  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  Uganda becomes the first country to qualify for HIPC 1997  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  HIPC Initiative approved 1996  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  New Credit Policy adopted 1995  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, Moody’s, AA+ by Standard & Poor’s 3  US$ 400 million subordinated debt issued in Yankee market

Table of Contents Bank Group Profile (1995 – 2004) I. II. Bank Group Action Plan for the Future III. ADB Financial Profile Appendices  ADB Financial Statements  Africa at a Glance 4

Bank Group Profile (1995 – 2004) I.

The Bank Group embodies an effective partnership for the development of Africa Europe Africa Austria Netherlands Algeria Libya  African Development Bank (ADB) Belgium Norway Angola Madagascar Denmark Portugal Benin Malawi – Established in 1964 Finland Spain Botswana Mali France Sweden Burkina Faso Mauritania – Subscribed capital - US$ 33.54 billion Germany Switzerland Burundi Mauritius Italy UK Cameroon Morocco – 53 African and 24 non-African countries Cape Verde Mozambique Central African Rep. Namibia Chad Niger Comoros Nigeria North & South America Congo Rwanda  African Development Fund (ADF) Cote d’Ivoire S. Tome & Principe Argentina Canada D. R. Congo Senegal – Established in 1972 Brazil USA Djibouti Seychelles Egypt Sierra Leone – Subscriptions - US$ 19.98 billion Equatorial Guinea Somalia Eritrea South Africa Middle East – Primarily financed by non-African countries Ethiopia Sudan Gabon Swaziland Kuwait Saudi Arabia Gambia Tanzania Ghana Togo Guinea Tunisia  Nigeria Trust Fund (NTF) Asia Guinea Bissau Uganda Kenya Zambia – Established by Nigeria in 1976 Lesotho Zimbabwe China India Liberia Korea Japan – Total assets of US$ 572 million 6

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  Eligible to ADB funding – Grants represent 44% of ADF-X resources (13 countries)  Eligible to ADF funding (38 countries)  Nigeria Trust Fund  Eligible to ADB and ADF – All African countries are eligible to NTF funding funding (2 countries) – 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 7

The Bank Group supports critical sectors in all regions of Africa Social 32.5% Transport Agriculture 11.6% 16.6% & Rural Finance 23.8% Developme 13.4% nt 14.8% 13.8% 18.3% 12.1% Industry 5.5% Other 3.0% 2.7% Water Multi-sector Power Supply 15.3% Supply Central Africa East Africa 7.5% 9.1% North Africa Southern Africa West Africa Multiregional 8 Over 3,000 cumulative approvals amounting to USD 52 billion as of 31 December 2004

Bank Group financial assistance is maintained at a level that ensures high quality operations In SDR million 2004 APPROVALS IN US$ 2 787 3 000 9  Bank Group approvals amounted to 2 374 301 US$ 4.33 billion 2 500 5 2 039  Heavily Indebted Poor Countries (HIPC) 437 708 10 1 766 approvals amounted to US$ 1.57 billion 2 000 263 175 23 2 including US$ 905 million for Democratic 188 Republic of Congo 1 500 945 957 996 697  ADB approvals excluding HIPC 1 000 amounted to US$ 1.26 billion 1 540  ADF approvals excluding HIPC 86 500 880 812 812 746 amounted to US$ 1.49 billion 454  NTF approvals amounted to 0 US$ 14.4 million 1995 2001 2002 2003 2004 ADB approvals excluding HIPC ADF approvals excluding HIPC HIPC approvals (ADB) HIPC approvals (ADF) 9 NTF approvals

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 9.00 concessional resources are directed at the low income countries  Heavily Indebted Poor Countries (HIPC) debt relief effectively guarantees debt 7.00 service on market-based ADB loans made to low income countries prior to the adoption of the credit policy in 1995 5.00 3.29 3.07 2.97 2.97 2.92 3.00 1.00 2000 2001 2002 2003 2004 10 ADB Public Sector Portfolio Risk Rating on a risk scale of 1 (lowest risk) to 10 (highest risk)

Development of competitive private sector across Africa is a strategic priority for the Bank Group Approvals in SDR million Weighted average risk rating 1200 4.7 5.0 4.5 Finance 1000 4.0 54.9% 3.5 Infrastructure 3.5 3.2 800 3.5 19.1% 3.0 Health 0.3% 600 2.5 1115 949 2.0 Miining Manufacturing 400 5.5% Oil & Gas 1.5 2.8% 751 19.1% Tourism 1.0 200 Agribusiness 2.8% 555 0.5 68 1.4% 0 0.0 1995 2001 2002 2003 2004 Sector Distribution Cumulative Approvals Weighted Average Risk Rating  Continue to emphasize financial intermediation,  Non-sovereign guaranteed lending accounts for 6% focusing on lines of credit with technical assistance, of the total ADB portfolio syndication, leasing and trade finance  New private sector strategy leverages the Bank’s  Expand infrastructure intervention through public experience with sovereign guaranteed operations private partnerships, focusing on renewable energy  Introduction of private sector country profiles, a such as hydro, wind, water purification in rural areas country by country comprehensive analysis of  Expand franchising, support to women entrepreneurs, private sector issues to be included in the Bank’s corporate governance and corporate social country strategy responsibility  Dedicated portfolio management group to monitor 11  Co-financing with partners to share risk and expertise projects