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2011 Financial Presentation The African Development Bank Group Lisbon 2011 Exchange Rates As at 31 December of each year: 2005: 1 UA = 1 SDR = 1.42927 US Dollar 2006: 1 UA = 1 SDR = 1.50440 US Dollar 2007: 1 UA = 1 SDR = 1.58025 US Dollar 2008: 1 UA = 1 SDR = 1.54027 US Dollar 2009: 1 UA = 1 SDR = 1.56769 US Dollar 2010: 1 UA = 1 SDR = 1.54003 US Dollar This report has been prepared by the African Development Bank (the “Bank”). No part of the report may be reproduced in any manner without permission of the Bank. Financial Presentation Table of Contents Introduction ….……………………………………………............................................................. 2 Section 1: African Economic Overview and Outlook .................................................. 3 Drivers of Growth in Africa ….……………………………………………............................................ 4 On the Road to Pre-Crisis Levels ….……………………………………………................................. 5 Regional Disparities ….……………………………………………...................................................... 6 A Brighter Tomorrow ….……………………………………………..................................................... 7 Section 2 : Leveraging our Financial Strength .............................................................. 8 Financial Strength ….……………………………………………......................................................... 9 Risk Capital ….……………………………………………................................................................... 10 Risk Exposure ….……………………………………………............................................................... 11 Prudential Ratios ….……………………………………………........................................................... 12 Income Allocation ….…………………………………………….......................................................... 13 Annual Borrowing Programme ….……………………………………………...................................... 14 Market Issuance ….……………………………………………............................................................ 15 USD Global Benchmark Bond ….……………………………………………...................................... 16 Socially Responsible Investments ….……………………………………………................................ 17 Section 3 : Bank Group Operations: An Overview ...................................................... 18 Key Challenges ….……………………………………………............................................................. 19 A Road Map for Africa ….……………………………………………................................................... 20 Infrastructure ….……………………………………………................................................................. 21 Transport ….……………………………………………....................................................................... 22 Energy ….……………………………………………........................................................................... 23 Water & Sanitation (1) ….……………………………………………................................................... 24 Water & Sanitation (2) ….……………………………………………................................................... 25 Good Governance ….……………………………………………......................................................... 26 Agriculture ….……………………………………………..................................................................... 27 Private Sector Operations (1) ….……………………………………………....................................... 28 Private Sector Operations (2) ….……………………………………………....................................... 29 Education ….……………………………………………...................................................................... 30 Climate Change ….……………………………………………............................................................ 31 Knowledge Development ….…………………………………………….............................................. 32 Decentralization ….……………………………………………............................................................ 33 General Capital Increase ….…………………………………………….............................................. 34 ADF Replenishment ….……………………………………………...................................................... 35 Operational Consolidation ….……………………………………………............................................. 36 Conclusion ….…………………………………………….................................................................... 37 Website ….……………………………………………......................................................................... 38 Appendix ….……………………………………………....................................................................... 39 Statement of Income and Expenses ….……………………………………………............................. 40 Balance Sheet Highlights ….…………………………………………….............................................. 41 Financial Presentation African Development Bank The African Development Bank is pleased to present its financial and operational performance and highlights for the year 2010, as well as an overview of certain recent developments in the Bank Group and in Africa. Africa during 2010 began to recover from the adverse effects of the global financial and economic crises. While 2009 was a year during which the Bank Group played its countercyclical role by substantially scaling up development assistance to regional member countries facing severe fiscal constraints, 2010 was a year of operational consolidation. During 2010, as in prior years, there was strict and consistent adherence to prudent financial and risk management policies, to assure the long-term financial sustainability of the Bank and its AAA ratings. The presentation that follows highlights the operational and financial achievements of the Bank Group. The first part of the presentation provides a brief synopsis of the economic outlook for Africa. Real GDP grew by 4.9% in 2010 against 3.1% in 2009, driven by higher domestic demand, stronger export revenues and increased FDI, remittances and ODA flows. GDP growth for Africa is expected to drop to 3.7% in 2011, due in large part to the socio-political unrests in certain countries, before rebounding to 5.8% in 2012. Regional disparities in growth remain and the benefits of such growth also remain unevenly distributed, underscoring the need for more inclusive development. The second part presents the Bank’s financial strength and an overview of capital market activities during 2010. Strong shareholder support, ample risk bearing capacity, a robust liquidity position and prudent financial management policies collectively underpin the Bank’s AAA-standing in the capital markets. Such standing in turn enhances the ability to deliver cost-effective funding to support our development financing activities. The Bank continued to strengthen its standing with international investors during the course of the year and raised cost-effective resources on the global benchmark market. It successfully launched and implemented a program of Socially Responsible Investments in response to increased investors’ demand for such product. The presentation concludes with an overview of the Bank Group’s operational activities. The Bank Group’s total approvals were maintained above pre-crisis levels in 2010, following the record amount of approvals in 2009. Consistent with the Bank’s selected strategic areas of focus, operations were substantially oriented towards infrastructure, thereby helping to address the structural bottlenecks to Africa’s economic growth. Progress in areas of clean energy, food security, governance and private sector development has been appreciable. The Bank intends to maintain its strategic focus, while at the same time addressing the urgent need for social and economic inclusiveness across the continent. The tripling of the Bank’s authorized capital in 2010 and the substantial twelfth replenishment of the African Development Fund, both occurring at a time of serious fiscal constraints in many of the Bank’s member countries, not only further reinforce the Bank Group’s capacity to pursue its mandate, but also represent resounding votes of confidence in the Bank Group’s capacity to deliver. In partnerships with existing as well as emerging partners, the Bank Group is better positioned than ever before to tackle the challenge of inclusive development. Charles Boamah Pierre Van Peteghem Vice President, Finance Treasurer Financial Presentation 2 1 African Economic Overview and Outlook African Economic Overview and Outlook Financial Presentation 3 Recovering from the global economic and financial crisis Recovering from the global economic and financial crisis Drivers • Global recovery especially in emerging economies Main macroeconomic changes in 2010 • Higher growth of gross domestic product • Robust domestic demand due to the fiscal stimulus • Improving current account and fiscal balance in oil exporting countries • Increased remittances • Higher corporate revenues • Increased official development assistance and stronger donor mobilization • Faster decrease of inflation, especially in oil-importing countries • Rebound of trade and commodity prices African Economic Overview and Outlook Financial Presentation 4 On the road to pre-crisis levels On the road to pre-crisis levels Improved fiscal balance… 2% 4.8% 11.0% 1.9% -2% -6% 8.0% 10.4% 10.0% 2.8% 2.5% Real GDP Growth (%) Inflation Fiscal Balance as % of GDP 6% Return to growth… Back to single digit inflation… 6.0% 9.0% 7.2% -3.3% -5.2% 2005 2006 2007 2008 2009 2010 7.0% 5.0% 6.9% 7.7% 5.9% 2005 2006 2007 2008 2009 2010 ... as a result of prudent fiscal policies and economic recovery African Economic Overview and Outlook ...although at higher levels than before the crisis 6.5% 5.9% 6.2% 5.5% 4.9% 4.0% 3.1% 2.0% 2005 2006 2007 2008 2009 2010 … yet still below pre-crisis levels Financial Presentation 5 Disparities in economic performance in 2010 North Africa West Africa GDP growth 6.7% GDP growth 4.6% Central Africa East Africa GDP growth 4.7% North Africa: Fiscal Balance: -2.4% of GDP / Inflation: 7.1% West Africa: Fiscal Balance: -6.1% of GDP / Inflation: 10.4% East Africa: Fiscal Balance: -3.3% of GDP / Inflation: 9.3% Central Africa: Fiscal Balance: 0.5% of GDP / Inflation: 5.5% Southern Africa: Fiscal Balance: -3.3% of GDP / Inflation: 6.4% African Economic Overview and Outlook GDP growth 6.2% Southern Africa GDP growth 3.3% Financial Presentation 6 A bright outlook in the face of ongoing challenges A bright outlook in the face of ongoing challenges Growth outlook Main challenges Rebound of global trade High import prices for food and energy Strengthening of domestic sectors High commodity prices Political and social unrest in several countries High unemployment notably of the youth Vast infrastructure gap Support from development partners Inclusive Growth Estimated 3.7% real GDP growth in 2011 5.8% projected in 2012 African Economic Overview and Outlook Financial Presentation 7 2 Leveraging our Financial Strength Leveraging our Financial Strength Financial Presentation 8 Financial strength at the service of Africa Financial strength at the service of Africa Strong member support and franchise value High capital and risk bearing capacity Robust liquidity position Prudent financial management and policies Leveraging our Financial Strength Financial Presentation 9 Strong capacity to sustain planned business growth Strong capacity to sustain planned business growth Utilization: 58% of Risk Capital Risk Capital 8,000 Loans (USD mn) 7,000 6,000 5,000 3,468 4,001 3,814 4,002 4,047 Credit Risk (91%) Equity Investments Guarantees 4,000 3,000 2,000 3,230 3,439 3,365 3,431 3,377 1,000 - 2006 2007 Paid-in capital* 2008 2009 Operational Risk (2%) Market Risks Counterparty Risks External events/shocks Failed systems & processes Reserves** * Net of cumulative exchange adjustment on subscriptions ** Net of translation adjustments • • • 2010 Treasury Risk (7%) Available Risk Capital: 42% (as of 31 December 2010) Sound management of the utilization of risk capital & credit exposures through prudential and operational limits Sufficient capital buffer to withstand shocks GCI-VI strengthens the Bank’s capacity to deliver on its mandate Leveraging our Financial Strength Financial Presentation 10 Managed risk exposure to safeguard the sustainability of operations • • • • • Credit risks related to lending activities are mapped to an internal rating scale Mitigate counterparty credit risk through minimum credit ratings and exposure limits and collateral exchange agreements for derivatives Prohibited from taking currency risk Exposure profile 14,000 (USD mn) 12,000 10,000 8,124 8,000 8,849 13,389 9,354 6,000 4,000 2,000 0 2006 2007 Sovereign Portfolio Minimizing liquidity risk by holding one year of liquid resources at all times No direct market exposure and well protected against interest rate risk 12,432 2008 2009 2010 Non-Sovereign Portfolio The Bank’s internal credit risk rating scale: WARR as of 31 December 2010 1 Very Low Risk 2.3 MTS* Target Range 3 4 Moderate Risk 10 Very High Risk * Medium Term Strategy, 2008-2012 Leveraging our Financial Strength Financial Presentation 11 Conservative prudential ratios provide confidence to stakeholders Conservative prudential ratios provides confidence to stakeholders All of the Bank’s key prudential ratios are well below their limits Limit (100%) GCI-VI effect 84% 85% 60% 53% 53% 63% 58% 39% 24% 2009 2010 Gearing Gearing = Loans (including undisbursed) + Equity investments and Guarantees / (Unimpaired subscribed capital + Surplus + Reserves) Risk Capital Utilisation Rate (RCUR) 2011 Leverage RCUR = (Used Risk Capital = (Exposure) x (Risk capital allocation)) / Total risk capital Leveraging our Financial Strength Leverage = Debt / (Paid-in capital + Reserves + Callable capital of non-borrowing countries rated A- and above) Financial Presentation 12 Building reserves while maximizing development impacts Building reserves while maximizing development impacts 2010 allocation for development initiatives Allocable income* 500 (USD mn) 471 450 79 411 375 400 363 33 350 300 123 African Development Fund Special Relief Fund MIC Trust Fund 141 254 169 37 250 56 200 DRC Arrears Clearance Mechanism 44 33 359 35 150 251 100 190 165 159 50 Reserves have the first claim on allocable income 2006 2007 2008 2009 Development Initiatives Surplus Retained in Reserves Allocable Income 2010 * Allocable income is the income before distribution adjusted for the unrealized (gain)/loss on derivatives, FVO** and non FVO borrowings, the translation gains/loss, and the fair valuation of the macro hedge swaps ** FVO: Fair Value Option Leveraging our Financial Strength Financial Presentation 13 A solid capacity to increased financial requirements of the Bank A meet solid the capacity to meet the increased financing requirements of the Bank Annual borrowing programme (USD mn) • • Global Debt Issuance Facility Euro Commercial Paper Programme • • • • • • • USD Global Market Domestic Markets African Currency Markets Private placements Uridashi Euro Commercial Paper Loans 7,545 5,500 6,400 2,800 1,724 1,144 2007 2008 2009 Actual 2010 2011* Initial * Limit approved by Board Leveraging the AAA-rating to raise cost-effective resources Leveraging our Financial Strength Financial Presentation 14 Tapping into diversified funding sources Tapping into diversified funding sources Issuance by market segment Uridashi 23.8% Private Placements 12.8% Proven market access CAD Loans 2.8% CHF BWP Local Currency 0.6% EUR BRL GBP AUD JPY 3% ZAR 7% CHF 2% ZMK GHS CAD & SEK 2% HKD ZAR Public 60.0% EUR 37% USD JPY USD 49% UGX As of 31 December 2010 TZS Leveraging our Financial Strength NGN As of 31 December 2010 TRY Swapped to meet disbursements and for asset/ liability management purposes KES NZD SGD SEK Financial Presentation 15 A reputable issuer in the USD Global benchmark market AfDB USD 1 bn 2.5% due March 2016 Distribution by investor type: Distribution by region: 37% Fund managers 15% Other 1% 24% Banks 34% 17% Central Bank/ Official Institution 50% • • Americas Europe Middle East 11% 11% Asia Africa Priced at midswaps plus 4 basis points (equivalent to US Treasuries +26.6 bps) Stronger support from African central banks for the Bank’s bonds over the past few years Leveraging our Financial Strength Financial Presentation 16 Satisfying individual Japanese investors’ appetite Satisfying individual Japanese investors’ appetite for Socially Responsible Investments for Socially Responsible Investments NZD 109mn due Feb 2011 (Clean Energy) AUD 89mn due Nov 2013 (Clean Energy) NZD 48mn due Nov 2013 (Clean Energy) AUD 18mn due Aug 2013 (Green bond) NZD 20mn due Aug 2013 (Green bond) In line with our core operational priorities BRL 37mn due 2017 (Clean Energy) ZAR 1bn due Aug 2013 (Education) AUD 10mn due 2020 (Clean Energy) AUD 63mn due Nov 2014 (Water bond) Direct amount equal to net proceeds to finance projects in respective fields on a best efforts basis Leveraging our Financial Strength Financial Presentation 17 3 Bank Group Operations An Overview Bank Group Operations: An Overview Financial Presentation 18 Key challenges of the continent Key challenges of the continent Massive infrastructure deficit Shallow and fragmented markets Gender imbalances Weak institutions and governance Crises and conflicts Environmental degradation Nascent private sector Stiff competition for MICs in a global market place Challenges of climate change Paucity of skills for a competitive economy Food crisis Ineffective dissemination of knowledge AfDB: Taking a strategic perspective Bank Group Operations: An Overview Financial Presentation 19 A road map for the Bank at a critical time for Africa A road map for the Bank at a critical time for Africa Ambition, realism, deliverables Core operational priorities - - impacting broader development goals - - whilst mainstreaming key cross-cutting themes Infrastructure Development Regional Integration Promoting Gender Equality Good Governance Support to Fragile States Ecologically Sustainable Development Deepening Private Sector Development Deeper engagement in MICs Combatting Climate Change Higher Education, Technology and Vocational Training Agriculture and Rural Development Knowledge Development Staying focused on core priorities while responding to the unfolding economic landscape Staying focused on core priorities while responding to the unfolding economic landscape Bank Group Operations: An Overview Financial Presentation 20 Building the continent’s infrastructure Building the continent’s infrastructure Modern, reliable & affordable infrastructure prioritized in the national agenda of African countries Targeting high-impact projects in infrastructure: • Stimulate an investment-friendly environment • Strengthen competitiveness and productivity • Create jobs • Promote sustainable economic growth • Encourage regional integration • Reduce poverty USD 4 bn representing 70.9% of Bank Group approvals in 2010 Bank Group Operations: An Overview Transport Energy Supply USD 1.9 bn Challenges in 2010 exacerbated by the global crisis USD 1.4 bn Leading financier in the African energy sector Water Supply & Sanitation Communications USD 0.6 bn Developing the continent’s untapped water potential USD 50 mn Two ICT projects in Rwanda and Cape Verde Financial Presentation 21 Keeping Africa’s transportation on track Keeping Africa’s transportation on track • • • • • New roads built in predominantly rural areas Reduced transportation cost Enhanced accessibility to rural populations Improved access to markets Raising income levels of rural communities Transport development empowers the agricultural sector Tangiers-Marrakech Railroad Capacity Increase Project in Morocco Expected Outcomes: Improved rail transportation competitiveness through increased rail travel supply, population mobility and employment Total Cost: USD 578 mn AfDB Loan: USD 393 mn • Largest project ever financed by the Bank in Morocco Key transport projects in 2010 National road projects in Benin, Burundi, Ghana, Kenya, Mozambique, Senegal, Togo and Tunisia Air transportation projects in DRC and Senegal Multinational road projects in Zambia, Malawi and Mozambique Railroad infrastructure projects in South Africa and Morocco The Bank Group helped 15.9 mn people receive improved access to transport between 2008-2010 Bank Group Operations: An Overview Financial Presentation 22 Lead financier in energy Lead financier in energy Key energy sector operations in 2010 Cabeolica Wind Power Project in Cape Verde Electricity Transmission System in Ethiopia Suez Thermal Power Plant in Egypt Power Transmission System in Kenya Semi-Urban and Rural Electrification in DRC Dibamba Power Project in Cameroon Cabeolica Wind Power Project in Cape Verde Expected Outcomes: • Utilize the island’s considerable wind and solar resources • Increase renewable sources of energy to 50% by 2020 • Increased energy capacity by 25MW • Fall in greenhouse gas emissions • Benefit from the Clean Development Mechanism • Reduced dependence on fossil fuel use Iringa-Shinyanga Transmission Line in Tanzania • • • • Over USD 1.35 bn for 14 new projects in 2010 Supporting low-carbon development USD 639 mn in clean energy investments expected to triple by 2012 Dealing with Africa’s energy deficit The Bank Group helped 16.5 mn people gain better reach to power between 2008-2010 Bank Group Operations: An Overview Financial Presentation 23 Sourcing health, food security and growth through water Sourcing health, food security and growth through water Only 20% of Africa’s irrigation and 6% of its hydropower potentials developed Water storage capacity less than 100 m3/person vs. 3,500 m3 in Europe, and 6,000 m3 in the US The Bank’s focus • • • • • Focus on poorest 65% of rural population Increase drinking water supply and sanitation financing Water resources management: • Reduce levels of unaccounted water • Cross border water resource management Capacity building Policy reform programs Less than 5% of agricultural land irrigated The Lake Victoria water and sanitation program • USD 116 mn grant targeting 15 towns in Kenya, Uganda, Tanzania, Rwanda, Burundi • 85% of households with access to water within 250 meters by 2015 • 60% increase in management of solid waste • 50% of public places have sanitary facilities 8.5 mn people with new or improved access to water and sanitation over 2008-2010 Bank Group Operations: An Overview Financial Presentation 24 Africa is behind all other regions in developing its hydro-potential = 500 TWh Economic Potential (TWh/year) Hydropower production in 2004 (TWh) OECD North America Brazil Other Latin America Bank Group Operations: An Overview OECD Europe Transition economies Africa Russia Middle East India China Rest of developing Asia OECD Pacific Financial Presentation © AICD 25 Advocating for good governance across Africa Advocating for good governance across Africa Sharpened focus Improve the business-enabling environment and investment climate for private sector-led growth Strengthen policies and institutions for more effective, transparent, and accountable management of public finances Strategic direction & Governance Action Plan • • • • • African countries have the prime responsibility for improving their own governance to fight against poverty Sequence and tailor governance-related operations to country circumstance Consider corruption as a symptom of broader governance challenges Pursue a strategy of constructive and systemic engagement Strengthen country systems rather than bypass them Strengthening country systems & capacities Budgeting and auditing systems and standards (Benin, Togo, Tanzania) Improving governance at sector level Extractive Industries Transparency Initiative (Liberia, Mozambique, Sierra Leone, Tanzania) Bank Group Operations: An Overview Supporting Regional initiatives Investment Climate Facility to improve: • Property rights • Financial and labor markets • Obstacles to doing business (corruption...) Financial Presentation 26 Agriculture supports 80% of African livelihoods Agriculture supports 80% of African livelihoods Rising transport & fertilizer costs Depletion of food stocks Agriculture Sector Strategy 2010-2014 1. Development of Agricultural & Rural Infrastructure Sustainable food security 2. Renewable Natural Resource Management Agricultural productivity Investments in: Irrigation Investment AgroProcessing Marketing networks (incl. Transport & Storage) Increase in food prices Up to 40% of post-harvest produce lost annually before reaching the consumer Markala Sugar Project in Mali Expected Outcomes: • Growth in agricultural sector from 5.0% to 5.4% • 8 times increase in farmer income • Job creation (8,000 directly, 32,000 indirectly) • Increased energy generation by 30 MW • 165,800 tons of carbon sequestration p.a. First public–private partnership operation with Mali in the agriculture sector Between 2008-2010… 239,915 ha of land with improved water management … 11,319,419 people benefited… six-fold increase in rice production to over 1 mn metric tons across eight West African countries Bank Group Operations: An Overview Financial Presentation 27 A partner of choice to Africa’s private sector A partner of choice to Africa’s private sector Expected outcomes of private sector projects approved during 2009-2010 A selective financier focusing on strong additionality without crowding out commercial banks Playing a lead arranger role and catalyzing additional investment into the continent Increases project efficiency while acting as a partner by sharing ground risks Paves the way for further private sector growth by improving the business environment Bank Group Operations: An Overview Significant foreign exchange earnings/savings for the respective countries of the projects 306,600 jobs created (temporary and permanent) Including credit/business opportunities to be provided to 52,000 women-led businesses USD 15 bn in taxes for governments Financial Presentation 28 Private sector operations, an engine to spur economic growth Trending upwards 2,000 Private sector operations in 2010 (USD mn) Finance 42% Industry 14% 1,500 Energy Supply 11% 1,000 Communication 2% 500 - 2006 Loans 2007 2008 Equity Investments 2009 Guarantees Balanced interventions between Low and Middle Income Countries Bank Group Operations: An Overview Transport 29% Agriculture 2% 2010 Selected private sector approvals in 2010 Transnet, South Africa (USD 418 mn) Egyptian Refining Company (USD 226 mn) Blaise Diagne Airport, Senegal (USD 92 mn) Satellite 03B (USD 49 mn) Africa Agriculture Fund (USD 41 mn) GEF Africa Forestry Fund (USD 20 mn) Financial Presentation 29 Investing in human capital integral to securing Africa’s future Investing in human capital integral to securing Africa’s future Key education projects in 2010 Developing human capital through effective Higher Education, Science & Technology (HEST) • Socioeconomic advancement and integration into the world economy • Capacity building for R+D and innovation • Economic growth and development Comprehensive Technical and Vocational Education & Training (TVET) innovation programs • Addresses the evolving needs of labor markets in African countries • Improved employment opportunities and life chances Technical/ Vocational Training Project in Niger Regional ICT Center of Excellence in Rwanda Higher Education Support Project in Eritrea Education Quality and TVET in Botswana 3.9 mn textbooks and teaching materials supplied and 7,452 classrooms and educational support facilities built or rehabilitated between 2008-2010 Bank Group Operations: An Overview Financial Presentation 30 Leveraging resources resources for for climate climate resilience resilience and and Leveraging low carbon carbon development development low Engagement in Climate Investment Funds The Bank is also in the process of establishing the USD 145 mn ClimDev-Africa Special Fund and has been asked to host the Africa Green Fund Clean Technology Fund USD 625 mn* • Clean Technology Program Strategic Climate Fund USD 275 mn* • • • Pilot Program on Climate Resilience Forest Investment Program Scaling up Renewable Energy in Low Income Countries Africa Carbon Support Program • Capacity building program that assists African countries access carbon finance (USD 1.8 mn) Global Environment Facility • • Funding to help projects achieve global environmental benefits USD 25 mn secured for African countries Sustainable Energy Fund for Africa • Supports investment in renewable energy generation and energy efficiency SMEs (operational in 2011) • Aims at providing seed-capital, post-2012 guarantees and address debt financing barriers to stimulate private sector investment in CDM projects in Africa (design stage) Africa Carbon Facility * Estimates Bank Group Operations: An Overview Financial Presentation 31 Sharing knowledge for accelerated developmental awareness Sharing knowledge for accelerated developmental awareness Knowledge development: Flagship publications African Economic Outlook • Comparative economic prospects for African countries Intellectual leadership for the continent Heralded Africa’s voice at key international fora • • Third Korea–Africa Economic Cooperation meeting G20 Summit Data Portal African Development Report • • Updates on key macroeconomic and sectoral developments Analysis of topics critical to Africa’s development African Competitiveness Report • Short term trends in the world economy, the commodity markets, and the African economies Bank Group Operations: An Overview • • • • Publicly available Web-based Direct and easy access Wide range of development data (Over 800 indicators) Organised workshops (1,395 attendees) aimed at policymakers to help them design and implement economic policies, and engage in policy dialogue Financial Presentation 32 Enhanced field presence: delivering expertise locally Tunisia (TRA) Morocco Algeria Expand presence in Fragile States 4 new field offices approved: • Burundi • Central African Republic • Liberia • Togo Relevance, efficiency, and expertise through the decentralization process Egypt Mali Chad Senegal Sierra Leone Sudan Burkina Nigeria Liberia Ivory Coast (HQ) Togo Ghana Consolidate regional capacity through knowledge and expertise building 26 Host Country Agreements for the targeted field offices signed Ethiopia CAR Cameron Uganda Kenya Rwanda Gabon DRC Tanzania Burundi Angola Malawi Zambia Madagascar Zimbabwe Delegation of authority to field offices to negotiate, sign and administer loans, manage portfolios, supervise projects Mozambique South Africa Bank Group Operations: An Overview Financial Presentation 33 Landmark General Capital Increase 200% capital increase with 6% paid-in portion raising the capital to around USD 100 bn 10,000 Sixth and largest capital increase of the institution 2010 After Capital Increase (USD mn) 8,000 6,000 7,676 Demonstrated strong shareholders support 4,000 2,000 - 3,634 Paid-in Capital 100,000 Increased lending in line with strategic priorities 80,000 93,692 60,000 40,000 20,000 - 33,187 Capacity to meet increased level of future demand and support the business growth plan - Callable Capital Reinforce the Bank’s franchise value, key prudential ratios and AAA credit rating Note: Figures before GCI-VI include the temporary callable capital offered by Canada and Korea (UA 1.83 bn / USD 2.81 bn) which is retired after GCI-VI Bank Group Operations: An Overview Financial Presentation 34 Renewed confidence from the donor community Renewed confidence from the donor community for the Bank Group’s mandate for the Bank Group’s mandate ADF replenishments since 1999 Principal donor and partner for regional integration Leadership and innovation in engagements with fragile states 9.5 (USD bn) 8.9 Partial risk guarantees introduced to stimulate additional investment Scale up investments in infrastructure while putting the continent on a low-carbon, climateresilient growth path 5.4 3.6 ADF-8 Bank Group Operations: An Overview 4.1 ADF-9 ADF-10 ADF-11 Financial Presentation ADF-12 35 Operational consolidation Bank Group total approvals maintained above pre-crisis levels Bank Group Loan & Grant Approvals by Sector 2010 14,000 (USD mn) 12,000 3,805 10,000 Multisector 8% Finance 9% 8,000 Industry 5% Social 5% Agriculture 2% 6,000 4,000 2,000 - 2,565 2,184 8,785 2,324 1,572 2006 2,639 2,783 2007 2008 ADB 2,243 3,975 2009 Infrastructure 71% 2010 ADF • Responding to the global crisis • Record amount of approvals in 2009 • 16% increase in lending compared to 2008 Bank Group Operations: An Overview Financial Presentation 36 At the forefront of the global development finance architecture At the forefront of the global development finance architecture Africa’s preferred partner Important resource mobilisation platform for Africa Leveraging financial strength, advocacy and convening power Key provider of private sector financing on the continent Targeted interventions and complementarities with donors Positioned better than ever to tackle the challenge of inclusive development Enhanced capacity to increase exposure to Low Income Countries Bank Group Operations: An Overview Strengthening development activities for the poor in Middle Income Countries Financial Presentation 37 More information on the Bank Group is available at www.afdb.org More information on the Bank Group is available at www.afdb.org Bank Group Operations: An Overview • Financial and Operational Analysis • Documentation for Debt Programs • Rating Agency Reports • Financial Products for Borrowers • Annual Report • Investor Contact: [email protected] Financial Presentation 38 4 Appendix Appendix Financial Presentation 39 AfDB: Income Statement (UA million) As at 31 December 2010 2010 2009 2008 2007 2006 Income from Loans 293.36 288.24 352.28 341.94 329.03 Income from Investments and Related Derivatives 219.22 222.96 202.88 231.71 213.82 6.74 7.68 9.29 4.97 - 519.32 518.88 564.45 578.62 542.85 (303.04) (306.32) (251.83) (268.02) (245.41) Net Interest on Borrowing Related Derivatives 126.27 73.28 (65.79) (62.71) (35.14) Unrealized Gains/(Losses) on Fair Valued Borrowings and Related Derivatives (27.61) 17.38 12.43 21.24 10.67 Unrealized Gains/(Losses) on Non-Fair Valued Borrowings and Others (13.33) (20.30) (16.68) 34.77 21.07 (26.76) (11.29) 163.28 69.96 (51.69) Provision for Impairment on Equity Investments (0.90) (2.32) (18.46) (0.53) (34.75) Provision for Impairment on Investments 18.58 3.39 (38.13) - - 4.87 19.63 (9.17) (8.90) 4.10 (1.73) 7.34 18.65 7.32 23.74 Net Operational Income 295.66 299.67 358.75 371.75 235.44 Administrative Expenses (75.00) (63.06) (46.78) (42.22) (36.86) (5.20) (5.37) (6.23) Operational Income and Expenses Income from Others Debt Securities Total Income from Loans and Investments Interest and Amortized Issuance Costs Provision for Impairment on Loan Principal and Charges Receivables Translation Gains/(Losses) Other Income Depreciation – Property, Equipment and Intangible Assets (4.59) (4.68) Sundry (Expenses)/Gains (2.41) (0.77) (2.11) (0.50) 1.68 Total Other Expenses (82.00) (68.51) (54.09) (48.09) (41.41) Income Before Distributions Approved by the Board of Governors 213.66 231.16 304.66 323.67 194.03 (146.37) (162.68) (257.30) (119.90) (139.20) 67.30 68.48 47.36 203.77 54.83 Distributions of Income Approved by the Board of Governors Net Income for the year 1 UA = 1 SDR = 1.50440 USD (2006) = 1.58025 USD (2007) = 1.54027 USD (2008) = 1.56769 USD (2009) = 1.54003 USD (2010) Appendix Financial Presentation 40 AfDB: Balance sheet highlights (UA million) As at 31 December 2010 Assets Due from Banks Demand Obligations Treasury Investments Derivative Assets Non-Negotiable Instruments on Account of Capital Accounts Receivable Outstanding Loans Accumulated Provision for Impairment on Loans Equity Participations, Net Other Debt Securities Other Assets Liabilities, Capital and Reserves Accounts Payable Securities Sold Under Agreements to Repurchase and Payable for Cash Collateral Received Derivative Liabilities Borrowings Capital Subscriptions Paid Cumulative Exchange Adjustment on Subscriptions Reserves 2010 2009 2008 2007 2006 395.72 3.80 7,433.53 1,421.48 4.62 1,341.66 8,284.46 (105.67) 272.24 79.75 12.69 318.83 3.80 7,412.25 764.00 8.19 924.16 7,538.20 (101.92) 234.48 70.81 11.89 592.64 3.80 4,575.76 736.09 11.86 649.01 5,834.62 (102.64) 188.78 68.80 12.23 95.53 3.80 5,328.53 425.34 15.39 570.88 5,540.09 (196.02) 189.25 94.62 15.03 129.33 3.80 6,093.36 273.31 20.38 600.97 5,290.95 (214.18) 119.12 14.96 19,144.29 17,184.69 12,570.95 12,082.44 12,332.00 2,015.04 1,385.68 843.12 584.34 648.96 - - - - 877.83 328.30 477.12 360.30 591.05 481.94 11,980.57 2,355.68 (162.57) 2,627.28 10,580.64 2,350.26 (161.97) 2,552.96 6,707.28 2,345.81 (161.03) 2,475.47 6,198.87 2,336.46 (160.08) 2,531.80 5,870.47 2,303.06 (155.74) 2,305.48 19,144.29 17,184.69 12,570.95 12,082.44 12,332.00 1 UA = 1 SDR = 1.50440 USD (2006) = 1.58025 USD (2007) = 1.54027 USD (2008) = 1.56769 USD (2009) = 1.54003 USD (2010) Appendix Financial Presentation 41 Notes Financial Presentation Notes Financial Presentation Notes Financial Presentation African Development Bank Group 13 Avenue du Ghana B.P. 323 1002 Tunis Belvedère Tunisia Tel: (+216)71 333 511 / 71 103 450 Fax: (+216)71 330 632 www.afdb.org