African Development Bank
The African Development Bank Group is a multilateral development finance institution, headquartered in Abidjan, Ivory Coast, since September 2014. The AfDB is a financial provider to African governments and private companies investing in the regional member countries.
The AfDB was founded in 1964 by the Organisation of African Unity, which is the predecessor of the African Union.
The AfDB comprises three entities: The African Development Bank, the African Development Fund and the Nigeria Trust Fund.
History
Following the end of the colonial period in Africa, a growing desire for more unity within the continent led to the establishment of two draft charters: one for the establishment of the Organization of African Unity and one for a regional development bank.A draft accord was submitted to top African officials and then to the Conference of Finance Ministers on the Establishment of an African Development Bank. This conference was convened by the United Nations Economic Commission for Africa in Khartoum, Sudan, from July 31 to August 4. It was here that the agreement establishing the African Development Bank was cosigned by 23 African governments on August 4, 1963. The agreement came into force on September 10, 1964.
The inaugural meeting of the Board of Governors of the bank was held from 4 to 7 November 1964 in Lagos, Nigeria. The bank's headquarters opened in Abidjan, Ivory Coast, in March 1965 and the bank's operations commenced on 1 July 1966.
Originally, only African countries were able to join the bank, but in 1982, it began allowing the entry of non-African countries as well. According to the AfDB, the inclusion of non-regional members helped contribute to economic and social development through low-interest loans, additional banking expertise and access to markets outside of the region.
From February 2003 to September 2014, the bank operated from its Temporary Relocation Agency in Tunis, Tunisia, owing to the prevailing political conflict in Ivory Coast during the Ivorian civil war at the time. The bank was able to return to its original headquarters in Abidjan in late 2013 once the political crisis was over.
By June 2015, over 1,500 staff had returned to the bank's Abidjan headquarters out of the more than 1,900 total staff the bank.
Since its founding, AfDB has financed 2,885 operations, for a total of $47.5 billion. In 2003, it received an AAA rating from the major financial rating agencies and had a capital of $32.043 billion. In November 2019, the bank's capital was reported as $208 billion.
In the African Development Bank's 2022 Annual Report, a decrease in Africa's GDP growth to 3.8%, down from 4.8% the previous year, was recorded. The 16th replenishment of the African Development Fund, which provides soft loans and grants, served as a significant financial enhancement, gathering US$8.9 billion. Within this sum, US$429 million was designated specifically for climate change-related initiatives. The Bank's project approval amounts reached UA 6.16 billion, which is close to the pre-COVID-19 pandemic benchmark of UA 7.3 billion from 2019. The High 5 strategic priority areas saw robust increases in funding, with renewable energy projects receiving notable emphasis as they accounted for 100% of the approvals for energy generation projects. Investment in other key areas also increased, with food security receiving UA 1.34 billion, industrialization UA 1.59 billion, and infrastructure UA 1.13 billion. The Bank's active portfolio grew to UA 44.33 billion, with 58% of projects rated satisfactorily. Disbursements for the year totaled UA 3.5 billion, and the Bank maintained its AAA credit rating.
Also in 2022 the AfDB signed a cooperative strategic partnership agreement with the Caribbean Development Bank.
Group entities
The African Development Bank Group has two other entities: the African Development Fund and the Nigeria Trust Fund.African Development Fund
Established in 1972, the African Development Fund started operations in 1974. It provides development finance on concessional terms to low-income RMCs which are unable to borrow on the non-concessional terms of the AfDB. In harmony with its lending strategy, poverty reduction is the main aim of ADF activities. Twenty-four non-African countries along with the AfDB constitute its current membership. The largest ADF shareholder is the United Kingdom, with approximately 14% of the total working shares followed by United States with approximately 6.5% of the total voting shares, followed by Japan with approximately 5.4 percent. The Federal Reserve Bank of New York was designated as the depositor bank for the fund according to telegraphs sent from the U.S. Embassy in Abidjan in 1976.The ADF's general operations are decided by a Board of Directors, six of which are appointed by the non-African member states and six designated by the AfDB from among the bank's regional Executive Directors.
The ADF's sources are mainly contributions and periodic replacements by non-African member states. The fund is usually replenished every three years, unless member states decide otherwise. The total donations, at the end of 1996, amounted to $12.58 billion. The ADF lends at no interest rate, with an annual service charge of 0.75%, a commitment fee of 0.5%, and a 50-year repayment period including a 10-year grace period. The tenth United Kingdom replenishment of the ADF was in 2006.
Nigeria Trust Fund
The Nigeria Trust Fund was established in 1976 by the Nigerian government with an initial capital of $80 million. The NTF is aimed at assisting in the development efforts of the poorest AfDB members.The NTF uses its resources to provide financing for projects of national or regional importance which further the economic and social development of the low-income RMCs whose economic and social conditions require financing on non-conventional terms. In 1996, the NTF had a total resource base of $432 million. It lends at a 4% interest rate with a 25-year repayment period, including a five-year grace period. The loans can be used for concessional loan operations with long and short term maturity.
Management and control
The AfDB is controlled by a Board of Executive Directors, made up of representatives of its member countries. The voting power on the Board is split according to the size of each member's share, currently 60%-40% between African countries and “non-regional” member countries. The largest African Development Bank shareholder is Nigeria with nearly 9% of the vote. All member countries of the AfDB are represented on the AfDB Board of Executive Directors.Dr. Akinwumi Ayodeji Adesina is the 8th elected President of the African Development Bank Group, having taken the oath of office on 1 September 2015. He chairs the Boards of both the African Development Bank and the African Development Fund. Dr. Adesina served as Nigeria's Minister of Agriculture and Rural Development from 2010 to 2015.
Member governments are officially represented at the AfDB by their Minister of Finance, Planning or Cooperation who sits on the AfDB Board of Governors. The AfDB Governors meet once a year to take major decisions about the institution's leadership, strategic directions and governing bodies. The Governors typically appoint a representative from their country to serve in the offices of the AfDB's Board of Executive Directors.
Day-to-day decisions about which loans and grants should be approved and what policies should guide the AfDB's work are taken by the Board of Executive Directors. Each member country is represented on the Board, but their voting power and influence differs depending on the amount of money they contribute to the AfDB.
In June 2020, the board of the AfDB agreed to a review of Adesina's management of the bank. Adesina was reelected unanimously for a second five-year term on 27 August 2020.
Unit of Account
The African Development Bank uses a Unit of Account which is registered as ISO 4217, whose standard currency code is. It is not exchanged directly by individuals, but rather only for accounting purposes between state members.Mission
The AfDB's mission is to fight poverty and improve living conditions on the continent through promoting the investment of public and private capital in projects and programs that are likely to contribute to the economic and social development of the region.The AfDB has also supported initiatives to address climate change in sub-Saharan Africa. It has been criticized by environmental and animal welfare activists for continuing to finance greenhouse gas intensive industrial animal agriculture operations despite promising to align its activities with the Paris Agreement.
Functions
The primary function of AfDB is making loans and equity investments for the socio-economic advancement of the RMC. Second, the bank provides technical assistance for development projects and programs. Third, it promotes investment of public and private capital for development. Fourth, the bank assists in organizing the development policies of RMCs.The AfDB is also required to give special attention to national and multinational projects which are needed to promote regional integration.
Status
The AfDB promotes economic development and social progress of its RMCs in Africa and the bank commits approximately $3 billion annually to African countries. Its relatively small lending and tendency to follow in the footsteps of more prominent public institutions like the World Bank, implies that the African Development Bank has been receiving little interest from civil society organizations as well as academia.AfDB emphasizes the role of women along with education reforms, and lent its support to key initiatives such as debt alleviation for Heavily Indebted Poor Countries and the New Partnership for Africa's Development.
The bank is currently based in Abidjan, Ivory Coast again. It employs approximately 1,865 employees as of 2016, and has 80 members: 54 countries in Africa and 26 American, European, and Asian countries.