the african development bank group lisbon · african economic overview and outlook financial...

2011Financial Presentation

LisbonThe African Development Bank Group

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 Dollar2007: 1 UA = 1 SDR = 1.58025 US Dollar2008: 1 UA = 1 SDR = 1.54027 US Dollar2009: 1 UA = 1 SDR = 1.56769 US Dollar2010: 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 ContentsIntroduction ….……………………………………………............................................................. 2

Section 1: African Economic Overview and Outlook .................................................. 3

Drivers of Growth in Africa ….……………………………………………............................................ 4On the Road to Pre-Crisis Levels ….……………………………………………................................. 5Regional Disparities ….……………………………………………...................................................... 6A Brighter Tomorrow ….……………………………………………..................................................... 7

Section 2 : Leveraging our Financial Strength .............................................................. 8

Financial Strength ….……………………………………………......................................................... 9Risk Capital ….……………………………………………................................................................... 10Risk Exposure ….……………………………………………............................................................... 11Prudential Ratios ….……………………………………………........................................................... 12Income Allocation ….…………………………………………….......................................................... 13Annual Borrowing Programme ….……………………………………………...................................... 14Market Issuance ….……………………………………………............................................................ 15USD Global Benchmark Bond ….……………………………………………...................................... 16Socially Responsible Investments ….……………………………………………................................ 17 Section 3 : Bank Group Operations: An Overview ...................................................... 18Key Challenges ….……………………………………………............................................................. 19A Road Map for Africa ….……………………………………………................................................... 20Infrastructure ….……………………………………………................................................................. 21Transport ….……………………………………………....................................................................... 22Energy ….……………………………………………........................................................................... 23Water & Sanitation (1) ….……………………………………………................................................... 24Water & Sanitation (2) ….……………………………………………................................................... 25Good Governance ….……………………………………………......................................................... 26Agriculture ….……………………………………………..................................................................... 27Private Sector Operations (1) ….……………………………………………....................................... 28Private Sector Operations (2) ….……………………………………………....................................... 29Education ….……………………………………………...................................................................... 30Climate Change ….……………………………………………............................................................ 31Knowledge Development ….…………………………………………….............................................. 32Decentralization ….……………………………………………............................................................ 33General Capital Increase ….…………………………………………….............................................. 34ADF Replenishment ….……………………………………………...................................................... 35Operational Consolidation ….……………………………………………............................................. 36Conclusion ….…………………………………………….................................................................... 37Website ….……………………………………………......................................................................... 38Appendix ….……………………………………………....................................................................... 39Statement of Income and Expenses ….……………………………………………............................. 40Balance Sheet Highlights ….…………………………………………….............................................. 41

Financial Presentation 2

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

African Development Bank

Financial PresentationAfrican Economic Overview and Outlook 3

1 African Economic Overview and Outlook


Recovering from the global economic and financial crisisRecovering from the global economic and financial crisis

Main macroeconomic changes in 2010 Drivers

•  Global recovery especially in emerging economies

•  Robust domestic demand due to the fiscal

stimulus

•  Increased remittances

•  Increased official development assistance and stronger donor mobilization

•  Rebound of trade and commodity prices

•  Higher growth of gross domestic product

•  Improving current account and fiscal

balance in oil exporting countries

•  Higher corporate revenues

•  Faster decrease of inflation, especially in oil-importing countries


On the road to pre-crisis levelsOn the road to pre-crisis levels

...although at higher levels than before

the crisis

... as a result of prudent fiscal policies and economic recovery

… yet still below pre-crisis levels

5.9%

6.2%

6.5%

5.5%

3.1%

4.9%

2.0%

4.0%

6.0%

8.0%

2005 2006 2007 2008 2009 2010

Real GDP Growth (%)

Return to growth…

2.5%

4.8%

1.9%

2.8%

-5.2%

-3.3%

-6%

-2%

2%

6%

2005 2006 2007 2008 2009 2010

Fiscal Balance as % of GDP

Improved fiscal balance…

7.2%

5.9%

6.9%

10.4% 10.0%

7.7%

5.0%

7.0%

9.0%

11.0%

2005 2006 2007 2008 2009 2010

Inflation

Back to single digit inflation…


Disparities in economic performance in 2010

Central Africa East Africa

Southern Africa

West Africa

North Africa

GDP growth

4.7% GDP

growth 6.2%

GDP growth

3.3%

GDP growth

6.7%

GDP growth

4.6%

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%


A bright outlook in the face of ongoing challenges

Growth outlook

Estimated 3.7% real GDP growth in 2011 5.8% projected in 2012

Support from development partners

Rebound of global trade

Strengthening of domestic sectors

High commodity prices

High import prices for food and energy

Political and social unrest in several countries

High unemployment notably of the youth

Main challenges

Vast infrastructure gap

Inclusive Growth

A bright outlook in the face of ongoing challenges

Financial PresentationLeveraging our Financial Strength 8

2 Leveraging our Financial Strength


Financial strength at the service of Africa

High capital and risk bearing capacity

Strong member support and franchise value

Financial strength at the service of Africa

Robust liquidity position Prudent financial management

and policies


Strong capacity to sustain planned business growth

Counterparty Risks

Strong capacity to sustain planned business growth Utilization: 58% of Risk Capital Risk Capital

** Net of translation adjustments * Net of cumulative exchange adjustment on subscriptions

Loans

Equity Investments

Guarantees

External events/shocks

Failed systems & processes

Market Risks

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

Credit Risk (91%)

Treasury Risk (7%)

Operational Risk (2%)

3,230 3,439 3,365 3,431 3,377

3,468 4,001 3,814 4,002 4,047

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2006 2007 2008 2009 2010

(USD mn)

Paid-in capital* Reserves**


Managed risk exposure to safeguard the sustainability of operations

• Credit risks related to lending activities are mapped to an internal rating scale

Exposure profile

The Bank’s internal credit risk rating scale: WARR as of 31 December 2010

1 Very Low

Risk

10 Very High

Risk

3 4 Moderate Risk

MTS* Target Range 2.3

* Medium Term Strategy, 2008-2012

• Mitigate counterparty credit risk through minimum credit ratings and exposure limits and collateral exchange agreements for derivatives

• Prohibited from taking currency risk

• Minimizing liquidity risk by holding one year of liquid resources at all times

• No direct market exposure and well protected against interest rate risk

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2006 2007 2008 2009 2010

(USD mn)

Sovereign Portfolio Non-Sovereign Portfolio

8,849

12,432

13,389

9,354 8,124


Conservative prudential ratios provide confidence to stakeholdersConservative prudential ratios provides confidence to stakeholders

All of the Bank’s key prudential ratios are well below their limits

Gearing = Loans (including undisbursed) + Equity investments and Guarantees / (Unimpaired subscribed capital + Surplus + Reserves)

RCUR = (Used Risk Capital = (Exposure) x (Risk capital allocation)) / Total risk capital

Leverage = Debt / (Paid-in capital + Reserves + Callable capital of non-borrowing countries rated A- and above)

Limit (100%)

53% 53%

24%

60% 58% 63%

85% 84%

39%

2009 2010 2011

Gearing Risk Capital Utilisation Rate (RCUR) Leverage

GCI-VI effect


Building reserves while maximizing development impactsBuilding reserves while maximizing development impacts

Allocable income* 2010 allocation for development initiatives

Special Relief Fund

DRC Arrears Clearance

Mechanism

MIC Trust Fund

African Development

Fund

* 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

165

359

251

190 159

33

33

37

44

35

56

79

123

141 169 254

471

411 375 363

-

50

100

150

200

250

300

350

400

450

500

2006 2007 2008 2009 2010

(USD mn)

Development Initiatives Surplus

Retained in Reserves Allocable Income

Reserves have the first claim on allocable income


A solid capacity to meet the increased financial requirements of the BankA solid capacity to meet the increased financing requirements of the Bank

Annual borrowing programme

* Limit approved by Board

Leveraging the AAA-rating to raise cost-effective resources

1,144 1,724

7,545

2,800

6,400

2007 2008 2009 2010 2011*

(USD mn)

Actual Initial

5,500

• USD Global Market • Domestic Markets • African Currency Markets • Private placements • Uridashi • Euro Commercial Paper • Loans

• Global Debt Issuance Facility • Euro Commercial Paper

Programme


Tapping into diversified funding sources

USD 49%

EUR 37%

JPY 3%

ZAR 7%

CHF 2% CAD &

SEK 2%

Tapping into diversified funding sources Issuance by market segment Proven market access

Swapped to meet disbursements and for asset/liability management purposes

USD

EUR CHF

GBP

AUD

ZAR

JPY

HKD

SGD

CAD BWP

GHS

NGN TZS

KES

NZD

UGX

ZMK

TRY

BRL

SEK

Public 60.0%

Uridashi 23.8%

Private Placements

12.8%

Loans 2.8% Local

Currency 0.6%

As of 31 December 2010 As of 31 December 2010


A reputable issuer in the USD Global benchmark market

• 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

Distribution by investor type:

AfDB USD 1 bn 2.5% due March 2016

Distribution by region:

Central Bank/ Official

Institution 50%

Banks 34%

Fund managers

15% Other 1%

37%

24%

17%

11% 11%

Americas Europe Middle East Asia Africa


Satisfying individual Japanese investors’ appetite for Socially Responsible InvestmentsSatisfying individual Japanese investors’ appetite for Socially Responsible Investments

In line with our core operational priorities

Direct amount equal to net proceeds to finance projects in respective fields on a best efforts basis

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)

NZD 109mn due Feb 2011

(Clean Energy)

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)

Financial PresentationBank Group Operations: An Overview 18

3 Bank Group Operations

An Overview


Key challenges of the continent

Massive infrastructure deficit

Weak institutions and governance

Nascent private sector

Paucity of skills for a competitive economy

Food crisis

Stiff competition for MICs in a global market place

Crises and conflicts

Shallow and fragmented markets

Gender imbalances

Environmental degradation

Challenges of climate change

Ineffective dissemination of knowledge

AfDB: Taking a strategic perspective

Key challenges of the continent


A road map for the Bank at a critical time for AfricaA road map for the Bank at a critical time for Africa

Infrastructure Development

Good Governance

Deepening Private Sector Development

Higher Education, Technology and

Vocational Training

Agriculture and Rural Development

Deeper engagement in MICs

Support to Fragile States

Regional Integration Promoting

Gender Equality

Ecologically Sustainable Development

Combatting Climate Change

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

Ambition, realism, deliverables

Core operational priorities - - whilst mainstreaming key

cross-cutting themes - impacting broader development goals -


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

Modern, reliable & affordable infrastructure prioritized

in the national agenda of African countries

Building the continent’s infrastructure

USD 0.6 bn

Developing the continent’s untapped

water potential

Water Supply & Sanitation

USD 1.4 bn

Leading financier in the African energy

sector

Energy Supply

USD 1.9 bn

Challenges in 2010 exacerbated by the

global crisis

Transport

USD 50 mn

Two ICT projects in Rwanda and Cape

Verde

Communications

Building the continent’s infrastructure


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

National road projects in Benin, Burundi, Ghana,

Kenya, Mozambique, Senegal, Togo and Tunisia

Multinational road projects in Zambia,

Malawi and Mozambique

Air transportation projects in DRC and

Senegal

Railroad infrastructure projects in South

Africa and Morocco

Keeping Africa’s transportation on track

The Bank Group helped 15.9 mn people receive improved access to transport between 2008-2010

Key transport projects in 2010

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


Lead financier in energy

Suez Thermal Power Plant in Egypt

Semi-Urban and Rural Electrification in DRC

Iringa-Shinyanga Transmission Line in

Tanzania

Electricity Transmission System in Ethiopia

Power Transmission System in Kenya

Dibamba Power Project in Cameroon

Cabeolica Wind Power Project in Cape Verde

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

•  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

Key energy sector operations in 2010

The Bank Group helped 16.5 mn people gain better reach to power between 2008-2010

Lead financier in energy


Sourcing health, food security and growth through water

The Bank’s focus

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

Sourcing health, food security and growth through water

•  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

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

8.5 mn people with new or improved access to water and sanitation over 2008-2010


Africa is behind all other regions in developing its hydro-potential

= 500 TWh

Economic Potential (TWh/year)Hydropower production in 2004 (TWh)

OECD North AmericaBrazilOther Latin America

OECD EuropeTransition economiesAfrica

RussiaMiddle EastIndia

ChinaRest of developing AsiaOECD Paci�c © AICD


Advocating for good governance across AfricaAdvocating for good governance across Africa

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

Supporting Regional initiatives Investment Climate Facilityto improve: • Property rights • Financial and labor markets • Obstacles to doing business

(corruption...)

Strengthening country systems & capacities

Improving governance at sector level

Budgeting and auditing systems and standards (Benin, Togo, Tanzania)

Extractive Industries Transparency Initiative (Liberia, Mozambique, Sierra Leone, Tanzania)

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

Sharpened focus


Agriculture supports 80% of African livelihoods

Increase in food prices

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

Agriculture Sector Strategy 2010-2014

1. Development of Agricultural & Rural

Infrastructure

2. Renewable Natural Resource Management

Agricultural productivity

Irrigation Investment

Agro-Processing

Marketing networks (incl. Transport &

Storage)

Sustainable food security

Investments in:

Up to 40% of post-harvest produce lost annually before reaching the consumer

Depletion of food stocks

Rising transport & fertilizer

costs

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

Agriculture supports 80% of African livelihoods


A partner of choice to Africa’s private sectorA partner of choice to Africa’s private sector

Expected outcomes of private sector projects approved during

2009-2010

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

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

Playing a lead arranger role and

catalyzing additional investment into

the continent

A selective financier focusing on strong

additionality without crowding out

commercial banks


Private sector operations, an engine to spur economic growth

Trending upwards

Selected private sector approvals in 2010

Egyptian Refining Company

(USD 226 mn)

Private sector operations in 2010

Balanced interventions between Low and Middle Income Countries

GEF Africa Forestry Fund (USD 20 mn)

Africa Agriculture Fund

(USD 41 mn)

Transnet, South Africa

(USD 418 mn)

Satellite 03B (USD 49 mn)

Blaise Diagne Airport, Senegal

(USD 92 mn)

-

500

1,000

1,500

2,000

2006 2007 2008 2009 2010

(USD mn)

Loans Equity Investments Guarantees

Industry 14%

Energy Supply 11%

Agriculture 2% Transport

29%

Communication 2%

Finance 42%


Investing in human capital integral to securing Africa’s futureInvesting in human capital integral to securing Africa’s future

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

Key education projects in 2010

Higher Education

Support Project in Eritrea

Education Quality and

TVET in Botswana

Technical/ Vocational

Training Project in Niger

Regional ICT Center of

Excellence in Rwanda

3.9 mn textbooks and teaching materials supplied and 7,452 classrooms and educational support facilities built or rehabilitated between 2008-2010


Leveraging resources for climate resilience and low carbon development

Engagement in Climate Investment Funds

• Pilot Program on Climate Resilience • Forest Investment Program • Scaling up Renewable Energy in Low Income Countries

• Capacity building program that assists African countries access carbon finance (USD 1.8 mn)

• Funding to help projects achieve global environmental benefits • USD 25 mn secured for African countries

• 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)

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 Program

* Estimates

Clean Technology Fund

USD 625 mn* Strategic Climate

Fund USD 275 mn*

Africa Carbon Support Program

Global Environment Facility

Sustainable Energy Fund for Africa

Africa Carbon Facility

Leveraging resources for climate resilience and low carbon development


Knowledge development: Flagship publications Intellectual leadership for the continent

•  Comparative economic prospects for African countries

•  Updates on key macroeconomic and sectoral developments

•  Analysis of topics critical to Africa’s development

•  Short term trends in the world economy, the commodity markets, and the

African economies

African Economic Outlook

African Development Report

African Competitiveness Report

Heralded Africa’s voice at key international fora

•  Third Korea–Africa Economic Cooperation meeting •  G20 Summit

Organised workshops (1,395 attendees) aimed at

policymakers to help them design and implement economic policies, and engage in policy dialogue

Data Portal

Sharing knowledge for accelerated developmental awareness

•  Publicly available •  Web-based

•  Direct and easy access

•  Wide range of development data (Over 800 indicators)

Sharing knowledge for accelerated developmental awareness


Enhanced field presence: delivering expertise locally

26 Host Country Agreements for the targeted field offices signed

Delegation of authority to field offices to negotiate, sign and administer loans, manage portfolios, supervise projects

Expand presence in Fragile States 4 new field offices approved: • Burundi • Central African Republic • Liberia • Togo

Relevance, efficiency, and

expertise through the decentralization

process

Morocco Tunisia (TRA)

Egypt

Uganda

Malawi

Ghana

South Africa

Madagascar

Senegal Burkina

Rwanda Gabon

Mali

Nigeria

Mozambique

Sierra Leone

Tanzania

Zambia

Algeria

Ethiopia

Sudan

Kenya

Cameron

Chad

Angola

Zimbabwe

DRC Burundi

Togo

Liberia CAR

Ivory Coast (HQ)

Consolidate regional capacity through knowledge and

expertise building


200% capital increase with 6% paid-in portion raising the capital to around USD 100 bn

Increased lending in line with strategic priorities

Capacity to meet increased level of future demand and

support the business growth plan

Demonstrated strong shareholders support

Reinforce the Bank’s franchise value, key prudential ratios and AAA credit rating

Sixth and largest capital increase of the institution

33,187 -

93,692

-

20,000

40,000

60,000

80,000

100,000

Callable Capital

3,634 -

7,676

-

2,000

4,000

6,000

8,000

10,000

Paid-in Capital

(USD mn) 2010 After Capital Increase

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

Landmark General Capital Increase


Renewed confidence from the donor community for the Bank Group’s mandate

Principal donor and partner for regional integration

Renewed confidence from the donor community for the Bank Group’s mandate

ADF replenishments since 1999

Leadership and innovation in engagements with fragile states

Partial risk guarantees introduced to stimulate additional investment

3.6 4.1

5.4

8.9 9.5

ADF-8 ADF-9 ADF-10 ADF-11 ADF-12

(USD bn)

Scale up investments in infrastructure while putting the continent on a low-carbon, climate-resilient growth path


Operational consolidation

Bank Group total approvals maintained above pre-crisis levels

Bank Group Loan & Grant Approvals by Sector 2010

• Responding to the global crisis • Record amount of approvals in 2009 • 16% increase in lending compared to 2008

1,572 2,639 2,783

8,785

3,975 2,324

2,184 2,565

3,805

2,243

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2006 2007 2008 2009 2010

(USD mn)

ADB ADF

Infrastructure 71%

Finance 9%

Multisector 8%

Industry 5%

Social 5%

Agriculture 2%


At the forefront of the global development finance architectureAt 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

Enhanced capacity to increase exposure to Low Income

Countries

Strengthening development activities for the poor in Middle

Income Countries

Positioned better than ever to tackle the challenge of inclusive development


More information on the Bank Group is available at www.afdb.orgMore information on the Bank Group is available at www.afdb.org

•  Financial and Operational Analysis

•  Documentation for Debt Programs

•  Rating Agency Reports

•  Financial Products for Borrowers

•  Annual Report

•  Investor Contact:

[email protected]

Financial PresentationAppendix 39

4 Appendix


AfDB: Income Statement (UA million)As at 31 December 2010 2010 2009 2008 2007 2006 Operational Income and Expenses 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 Income from Others Debt Securities 6.74 7.68 9.29 4.97 - Total Income from Loans and Investments 519.32 518.88 564.45 578.62 542.85 Interest and Amortized Issuance Costs (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 Provision for Impairment on Loan Principal and Charges Receivables (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) - - Translation Gains/(Losses) 4.87 19.63 (9.17) (8.90) 4.10 Other Income (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) Depreciation – Property, Equipment and Intangible Assets (4.59) (4.68) (5.20) (5.37) (6.23) 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

Distributions of Income Approved by the Board of Governors (146.37) (162.68) (257.30) (119.90) (139.20) Net Income for the year 67.30 68.48 47.36 203.77 54.83

1 UA = 1 SDR = 1.50440 USD (2006) = 1.58025 USD (2007) = 1.54027 USD (2008) = 1.56769 USD (2009) = 1.54003 USD (2010)


AfDB: Balance sheet highlights (UA million)

1 UA = 1 SDR = 1.50440 USD (2006) = 1.58025 USD (2007) = 1.54027 USD (2008) = 1.56769 USD (2009) = 1.54003 USD (2010)

As at 31 December 2010 2010 2009 2008 2007 2006 Assets Due from Banks 395.72 318.83 592.64 95.53 129.33 Demand Obligations 3.80 3.80 3.80 3.80 3.80 Treasury Investments 7,433.53 7,412.25 4,575.76 5,328.53 6,093.36 Derivative Assets 1,421.48 764.00 736.09 425.34 273.31 Non-Negotiable Instruments on Account of Capital 4.62 8.19 11.86 15.39 20.38 Accounts Receivable 1,341.66 924.16 649.01 570.88 600.97 Outstanding Loans 8,284.46 7,538.20 5,834.62 5,540.09 5,290.95 Accumulated Provision for Impairment on Loans (105.67) (101.92) (102.64) (196.02) (214.18) Equity Participations, Net 272.24 234.48 188.78 189.25 119.12 Other Debt Securities 79.75 70.81 68.80 94.62 - Other Assets 12.69 11.89 12.23 15.03 14.96

19,144.29 17,184.69 12,570.95 12,082.44 12,332.00 Liabilities, Capital and Reserves Accounts Payable 2,015.04 1,385.68 843.12 584.34 648.96 Securities Sold Under Agreements to Repurchase and Payable for Cash Collateral Received - - - - 877.83

Derivative Liabilities 328.30 477.12 360.30 591.05 481.94 Borrowings 11,980.57 10,580.64 6,707.28 6,198.87 5,870.47 Capital Subscriptions Paid 2,355.68 2,350.26 2,345.81 2,336.46 2,303.06 Cumulative Exchange Adjustment on Subscriptions (162.57) (161.97) (161.03) (160.08) (155.74) Reserves 2,627.28 2,552.96 2,475.47 2,531.80 2,305.48

19,144.29 17,184.69 12,570.95 12,082.44 12,332.00


Notes

African Development Bank Group

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