At the Center of Africa's Transformation - African Development Bank Group Strategy for 2013-2022
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African Development Bank Group
At the Center
of Africa’s
Transformation
Strategy for 2013–2022The African Development Bank (AfDB) and its Board of Directors do not guarantee the accuracy of the data included in this publication, and accept no responsibility for any consequence of their use. By making any designation of or reference to a particular territory of geographic area, or by using the term ‘country’ in this document, AfDB does not intend to make any judgements as to the legal or other status of any territory or area. AfDB encourages printing or copying exclusively for personal and non-commercial use with proper acknowledgement of AfDB. Users are restricted from reselling, redistributing or creating derivative works for commercial purposes without the express, written consent of AfDB.
African Development Bank Group
At the Center
of Africa’s
Transformation
Strategy for 2013–2022African Voices
“Let me say to you that Africa is rising! Africa is transitioning! Africa continues to be committed to those
processes that will lead to rationalization of its own natural resources to accountability, transparency, to
mutuality and responsibility.”
Ellen Johnson Sirleaf, President of the Republic of Liberia and Nobel Prize Winner, 2013
“What makes us so confident that Africa’s time has arrived and that we can achieve our dream within
50 years, or even less? Six of the world’s 10 fastest growing economies are African, and the conti-
nent has been growing at an average of 5% per annum for over a decade, despite the global financial
and economic crisis. We have a growing, vibrant, resourceful and youthful population, who are being
equipped with critical skills that would be necessary to drive Africa’s transformation.”
Nkosazana Dlamini Zuma, Chairperson of the African Union Commission, 2013
“Africa is once again being seen as a continent of opportunity—the last emerging investment fron-
tier. We see this optimism in the number and diversity of businesses and countries flocking to invest in
the continent. It is an optimism based on strong economic growth which even the global financial crisis
was only able to reverse briefly. And increasingly, this growth is being used to diversify economies and
invest in the bedrock of successful societies—in education, in health and vital infrastructure.”
Kofi Annan, Seventh Secretary-General of the United Nations, 2011
“It has become fashionable to talk about ‘Africa Rising’. ‘The Hopeless Continent’ has become the next
investment frontier, as investors consistently make returns impossible elsewhere. . . . Over the past
ten years, the general trend across African governance is positive. We have seen a marked decline in
conflicts, sustained economic development, and significant gains in Human Development. We are more
peaceful, prosperous, healthy and well-educated than at the turn of the millennium.”
Mo Ibrahim, Founder of Mo Ibrahim Prize for Achievement in African Leadership, 2012
“It is in this respect that I see Africa as a hope for the world; Africa holds a lot of promise for the world.
And, in my view, Africa might simply be the world’s ticket out of the current international economic crisis.
The continent’s resources, youthful age structure and growing population, and increasing middle class
and consumers are major resources for the world. The continent can be a source of ideas and innova-
tive solutions. As such, Africa must be placed at the center to resolve the current international crisis.”
Cristina Duarte, Minister of Finance and Planning, Cape Verde, 2012
“Africa is now the new frontier, an important growth pole for economic recovery and an attractive busi-
ness destination for capital. The perception gap is closing and there are serious investors who are seri-
ously interested in Africa. It is now Africa’s time!”
Ngozi Okonjo-Iweala, Finance Minister of Nigeria, 2011
“The balance of evidence suggests that the next half century in Africa offers good prospects for realizing
the African vision of a dynamic, diversified and competitive economic zone in which extreme poverty is
eliminated within peaceful, stable and vibrant societies.”
African Development Bank Group, 2011
Copyright © 2013 by the African Development Bank.Foreword
In 2006 a Panel of Eminent Persons helped the Bank chart a vision for the African continent and
a path for this organization. Investing in Africa’s Future—The African Development Bank in the 21st
Century in turn inspired the strategic choices that guided the Bank’s work from 2008 to 2012. The
focus on infrastructure, economic integration and private sector development coincide with the
needs of a growing Africa and remain as relevant as ever.
Africa is now the world’s second fastest-growing continent. In this decade of seismic shifts in
the global economy, Africa has defied the pessimists, accelerating its economic pulse and seeing
significant improvements in its Human Development Indicators. But these positive developments
have been tempered by a crisis in jobs, youth unemployment and growing inequality. These are
now the challenges. Growth must bring jobs and opportunities for all. That will happen if growth
is sustained and leads to the structural change and economic transformation that will enable the
continent to join global value chains. It will do this by closing the infrastructure gap, speeding up
economic integration, dealing with conflicts old and new, and developing human capital.
This is what makes the next decade so decisive. This is what makes this new Bank Strategy for
2013–2022 so vital.
It is a strategy that reinforces the choices of the last five years, building on lessons learned and
addressing the challenges of tomorrow. It is a strategy that provides a response not only to sustain-
able growth, but also to the sustainable management of natural resources. Africa’s development is
so closely tied to nature, and economic growth is not sustainable without preserving the continent’s
natural capital, land, water, marine, forests and energy resources. These were the commitments
made at Rio+20.
The Strategy also addresses the issue of development finance. New global patterns of finance
and capital flows, and the discovery of significant oil and gas resources, now make it possible
for Africa to mobilize its own savings through, among other things, better management of natural
resources. This is an area where the Bank will play a catalytic, leveraging role.
Underpinning this Strategy are a resilient, robust institution and its staff, who are committed to
delivery and excellence.
I would like to thank all those inside and outside the Bank who have played their part in develop-
ing this Strategy, our compass for the next decade.
Donald Kaberuka
President
iiiAcknowledgments
The Strategy was prepared by a team led by Kapil Kapoor, Director for Strategy, African Develop-
ment Bank Group. Mthuli Ncube, Chief Economist and Vice President, provided overall guidance.
The core team consisted of Cecile Ambert, Dennis Brougham, Khadija Dhaouadi, Bitsat Yohannes
Kassahun, Seliatou Kayode-Anglade, Alan Lukoma, Mateus Magala, Geoffrey Manley, Carlos Mol-
linedo, Alex Mubiru, John Phillips, Preeti Sinha, Ravi Dhananjayen Soopramanien, Frank Sperling,
Kate Tench, and Aminata Camara Traore.
A High Level Panel of advisors, comprising Henock Kifle, Callisto Madavo, Elene Makonnen, Anil
Sood and Graham Stegmann, worked as part of the team and guided at every step of prepara-
tion. The team benefited from 22 background papers, prepared by the various complexes within
the Bank and coordinated by the Economics Department under the guidance of Steve Kayizzi-
Mugerwa. Bruce Ross-Larson was the principal editor.
Aly Abou-Sabaa and Hela Cheikhrouhou provided leadership for the work on transitioning to
green growth, and Simon Mizrahi and his team contributed to the development of the results frame-
work. We gratefully acknowledge the role of numerous senior staff, including vice presidents, direc-
tors, heads of departments in the various complexes, and country representatives.
Substantive comments and suggestions on the draft strategy were received from members of
the Board, the Senior Management Coordination Committee, regional directors, sector directors,
and resident representatives who reviewed the document at various stages. Valuable contributions
and support were also received from Hawa Adama, John C. Anyanwu, George D. Azagne, Awa
Bamba, Kokil Beejaye, Gisela Geisler, Sering Jallow, Marlene M. Kanga, Kpourou Janvier Litse,
Charles Leyeka Lufumpa, Nono J.S. Matondo-Fundani, Anthony O. Nyong, Franck Joseph Marie
Perrault, Anthony Musonda Simpasa, Agnes Soucat, Lawrence C. Tawah, Desire J. M. Vencatach-
ellum, Georg Weiers, Laetitia Yattien-Amiguet and Ginette Ursule Yoman.
ivContents
Executive Summary 1
Part 1 Africa’s Transformation 5
Africa’s vision 5
What Africa must do to realize the vision 6
Part 2 The Bank’s Strategic Approach 10
The guidance of the High Level Panel and lessons from the Medium Term Strategy 10
Two objectives—inclusive growth and the transition to green growth 10
Core operational priorities 13
Areas of special emphasis 19
The post-2015 Millennium Development Goals agenda 22
Part 3 Financing the Strategy—Mobilizing and Leveraging Resources 23
Innovating in existing windows 23
Expanding the sources of financing 23
Leveraging Bank capital and new instruments 25
Part 4 Transforming to Support Transformation 26
The partner of choice 26
Enhancing institutional effectiveness 28
Focusing on results 30
Operationalizing the Strategy 30
Conclusion31
Notes32
Annex Results Indicators for the Strategy 33
Boxes
1 Drivers of change 7
2 Infrastructure to integrate the region 15
3 Working with partners 27
Figures
1 Upside—The number of FDI-financed greenfield projects in Africa is on a par with
individual BRIC countries . . . as is its real GDP growth 5
2 Downside—Fragility is a concern . . . and the majority of African countries score below
5 (out of 10) in Transparency International’s 2011 Corruption Perception Index 8
3 The drying up of Lake Chad 12
4 Bank investments in infrastructure support the agricultural value chain and increase
food security—from farm to mouth 20
5 Potential sources of finance 24
6 Operationalizing the Strategy at three levels 31 vAt the Center of Africa’s Transformation Strategy for 2013–2022
Milestones for the African Development Bank Group
1966—Côte d’Ivoire The African Development Bank begins operations with a capital base of
USD250 million, 33 African member countries and 10 staff members.
1972—Algeria The Bank and 13 non-regional countries establish the African Develop-
ment Fund. This concessional window for low-income countries mobilized
USD327 million for the first cycle.
1976—Nigeria The government of the Federal Republic of Nigeria and the Bank establish the
Nigeria Trust Fund with an initial contribution of USD80 million.
1982—Zambia Capital is opened to non-regional member countries. The Bank’s authorized
capital increases to about USD3.4 billion in 1983 and to USD22.3 billion in
1987, following the 200% Fourth General Capital Increase.
2003—Tunisia The Bank temporarily relocates operations from Abidjan to Tunis.
2010—Côte d’Ivoire The Sixth General Capital Increase triples the Bank’s authorized capital, which
now stands at USD101.4 billion, with 77 member countries (53 African and
24 non-African) and 1,900 staff.
2010—Tunisia The 12th three-year replenishment of the African Development Fund mobilizes
USD9.5 billion, the highest in the fund’s history. Extended for 10 years in 2008,
the Nigeria Trust Fund’s resources stand at USD241.3 million in 2010.
2012—Tanzania South Sudan joins the Bank, becoming its 54th regional member country.
viExecutive
Summary
The African Development Bank’s Strategy for African Development Bank will be its devel- The first objective
2013–2022 reflects the aspirations of the entire opment voice and its development partner of is to achieve growth
African continent. It is firmly rooted in a deep choice. that is more inclusive.
understanding and experience of how far Africa The Strategy is built around two objectives,
The second objective
has come in the last decade, and where it supported by five operational priorities in which
is to ensure that
wishes to go to in the next. the Bank has unmatched advantage, expertise,
Africa has embarked on a process of eco- access and trust. inclusive growth
nomic transformation. This process has seen is sustainable
solid and sustained growth over a decade, Two objectives
but it has been uneven and without a suf- This ten-year Strategy will focus on two objec-
ficiently firm foundation, and it is not—by any tives to improve the quality of Africa’s growth:
estimation—complete. inclusive growth, and the transition to green
This Strategy is designed to place the Bank growth.
at the center of Africa’s transformation and to
improve the quality of Africa’s growth. It aims Inclusive growth
to broaden and deepen that process of trans- The first and overarching objective is to achieve
formation, mainly by ensuring that growth is growth that is more inclusive, leading not just
shared and not isolated, for all African citizens to equality of treatment and opportunity but to
and countries, not just for some. It also aims deep reductions in poverty and a correspond-
to bring about growth that is not just environ- ingly large increase in jobs.
mentally sustainable, but also economically Unlocking the continent’s great potential—
empowering. When growth is inclusive as well and increasing its chances of reaping a demo-
as “green”, it creates the jobs that the continent graphic dividend—inclusive growth will bring
needs now and that it will need in ever greater prosperity by expanding the economic base
numbers as millions more young people enter across the barriers of age, gender and geog-
the job market, with energies and aspirations raphy. The Bank will invest in infrastructure
to match. that unlocks the potential of the private sector,
The Bank’s vision is thus Africa’s vision, championing gender equality and community
and its future is Africa’s future. The Bank’s participation. It will help improve skills for com-
many successes reflect the successes of petitiveness, ensuring that those skills better
the continent it serves—while the gaps in its match the opportunities and requirements of
achievements reflect the impediments to true local job markets.
transformation across its regional member
countries. The goal of a regionally integrated Green growth
and economically diverse Africa—determined The second objective is to ensure that inclusive
to include young and old, women and men, growth is sustainable, by helping Africa gradu-
rural and urban communities alike, while ally transition to “green growth” that will protect
being increasingly green—will establish Africa livelihoods, improve water, energy and food
as the next global emerging market. The security, promote the sustainable use of natural
1At the Center of Africa’s Transformation Strategy for 2013–2022
resources and spur innovation, job creation and Regional economic integration
economic development. Integration is essential for Africa to realize
The Bank will support green growth by its full growth potential, to participate in the
finding paths to development that ease pres- global economy and to share the benefits of
sure on natural assets, while better manag- an increasingly connected global marketplace.
ing environmental, social and economic risks. Having 54 individual countries, often without
The Strategy outlines Priorities in reaching green growth include the physical and economic machinery to act
five main channels building resilience to climate shocks, providing in tandem, seriously limits this possibility. The
for the Bank to sustainable infrastructure, creating ecosystem Bank is well positioned to play a leading role
services and making efficient and sustainable in fostering Africa’s economic integration to
deliver its work and
use of natural resources (particularly water, create larger, more attractive markets, to link
improve the quality
which is central to growth but most affected by landlocked countries, including fragile states,
of growth in Africa climate change). to international markets and to support intra-
African trade.
Five operational priorities
The Strategy outlines five main channels for the Private sector development
Bank to deliver its work and improve the qual- The dynamics of wealth and job creation
ity of growth in Africa. First recommended by in Africa—and a number of the tasks of
the High Level Panel review of 2007, and later government—are increasingly driven by private
enshrined in the Medium Term Strategy for rather than public funds. Working both directly
2008–2012, these are areas in which the Bank and indirectly with governments, the Bank will
has the greatest comparative advantage and continue to be an increasingly active partner
proven track record. Over at least a decade, and facilitator for private investment in Africa.
Bank and other research has repeatedly con- Delivering finance and providing advice and
firmed that they provide a compelling and con- technical assistance, it will design activities
sistent framework for the Bank’s operations. that respond to the specific needs, opportuni-
The 2011 review of the Medium Term Strategy ties and challenges of the private sector. It will
showed that the focus on these priorities had focus on African entrepreneurship, address-
served its clients well, but that a longer plan- ing the constraints that face women and
ning horizon and a longer term strategy were young entrepreneurs and supporting micro,
needed—underpinned by three-year rolling small and medium enterprises. In strengthen-
action plans. ing the financial sector, it will stimulate lending
to micro, small and medium-size enterprises,
Infrastructure development help develop local capital markets, promote
Africa still has massive infrastructure needs. better governance and risk management of
It invests only 4% of its GDP in infrastructure, financial institutions and promote the adoption
compared with 14% in China. Bridging the and implementation of financial standards and
infrastructure gap could increase GDP growth regulations.
by an estimated 2 percentage points a year.
The Bank has made significant contributions to Governance and accountability
infrastructure development in Africa, and tens Economic growth can only be built on the firm-
of millions of Africans are now better off thanks est foundations of just, transparent and efficient
to Bank investments in transport, energy and governance and institutions administered by
water. The Bank intends to scale up infrastruc- the capable state. Responding to demands
ture financing to the continent significantly—not in Africa for better governance and basic ser-
just through its own lending but by leveraging vices, the Bank will assist institutions that sup-
its financial resources. port inclusion and promote accountability—for
2Executive Summary
example, by strengthening the capacities of networks), the Bank will help countries increase
parliamentarians, the media and civil society agricultural productivity and competitiveness.
organizations. To improve public financial man- By investing in regional infrastructure and
agement, the Bank will do more to support engaging in policy dialogue to remove trade
fiscal decentralization and domestic resource barriers to importing food and inputs such as
mobilization. fertilizers, it will help restrict food price volatility
and reduce food insecurity. In implementing its
Skills and technology ten-year Strategy,
Unemployment across Africa is unaccept- Gender the Bank will pay
ably high, especially among young people. To Increasing the capabilities and opportunities
particular attention
increase the supply of skilled workers, the Bank of women and girls can boost the productiv-
to fragile states,
will step up its support for technical and voca- ity and participation of half the African popula-
tional training linked to specific needs in the tion. A focus on knowledge, skills development agriculture and food
labor market. The aim is to equip young people and legal and property rights is the precursor security, and gender
with the right skills for both the formal and infor- to empowering women’s enterprise. Women
mal sectors, including the skills to create small and girls bear significantly more than half of the
businesses. continent’s burdens, but they also carry dis-
proportionately high potential as generators of
Three areas of special emphasis income.
In implementing its ten-year Strategy, and as an
integral part of the two objectives, the Bank will Financing the Strategy—mobilizing
pay particular attention to fragile states, agricul- and leveraging new sources of
ture and food security, and gender. development finance
The Bank’s financial resources will always be
Fragile states a small fraction of Africa’s requirements. Cur-
Supporting fragile states can strengthen these rent fiscal constraints in donor countries sug-
economies, which house a fifth of the conti- gest that official development assistance could
nent’s people and a significant proportion of its well be largely stagnant in the coming years.
poverty. Fragility is contagious as well as epi- The Bank will therefore seek new and creative
sodic—it calls for support tailored to diverse ways of mobilizing resources to support Africa’s
needs and a continuum and regional approach transformation, especially by leveraging its own
built around dialogue, local ownership and the resources.
celebration of success. The Group will of course continue to build
on and expand the size and the practical oper-
Agriculture and food security ations of both the African Development Bank
Strengthening agriculture and food security and the Africa Development Fund. But with the
through an integrated value chain approach changing global economic landscape, it will
can improve the livelihoods of Africans who live explore options for attracting additional invest-
in rural areas. Many are reliant on subsistence ment from emerging economies and from new
farming, and a sizable proportion is chronically funders and donors, including sovereign wealth
vulnerable to climatic uncertainty. Africa lives and pension funds. It will use its existing instru-
off its land, and more than 70 percent of Afri- ments better, while developing new ways of
cans work on the land, which too often fails to ensuring that a dollar invested by the Bank
provide for their needs. By continuing to invest unlocks significantly more from other inves-
in rural infrastructure (such as rural roads, irri- tors. Wider use of public-private partnerships,
gation, electricity, storage facilities, access to co-financing arrangements and risk-mitigation
markets, conservation systems and supply instruments will draw in new investors.
3At the Center of Africa’s Transformation Strategy for 2013–2022
Transforming to support The Bank must continue to evolve to stay
transformation relevant. It has to become more decentralized,
The Bank is a unique proposition: as an Afri- integrated, efficient, effective and results-ori-
can organization serving Africans, it is a motor ented, measuring its progress by real improve-
for economic progress and integration, and the ments on the ground. It must also continue
voice of Africa and African development across to streamline its business processes—opera-
This Strategy reflects the continent—and far beyond. It is already well tional, institutional and budgetary. And it must
Africa’s vision for on the way to increasing its development effec- strengthen its roles as an adviser, knowledge
itself—a vision of tiveness through increased decentralization broker, catalyst and convener.
to field offices, strategically focused areas of This, then, is the ten-year Strategy of the
transformation that
engagement and a strong balance sheet with African Development Bank—of Africa’s bank.
is achievable
a high risk-bearing capacity. All this has con- It reflects Africa’s vision for itself—a vision of
tributed to consistently maintaining the AAA transformation that is achievable. “At the center
rating by which its African and global reputation of Africa’s transformation”, the Bank will mea-
is assured. sure success by the lasting changes it brings to
the lives of the African people.
4Africa’s
one Transformation
part
The past decade of unparalleled growth and demand for Africa’s exports—and growing Africa sees itself
stability has changed perceptions about Africa internal demand—could bring this about, if becoming a
for the better. Between 2000 and 2010, six Africa can seize its potential in water, agricul- prosperous continent
of the world’s 10 fastest growing economies ture, renewable energy and other sectors,
with high-quality
were in Africa, and economists project growth especially oil, gas and minerals.
growth that creates
to remain strong. High commodity prices have
played a role but so have improved macroeco- Africa’s vision more employment
nomic policies and sustained reform, as well as Africa sees itself becoming a prosperous opportunities
stronger governance and better conditions for continent with high-quality growth that cre- for all, especially
private sector development. Conflict remains a ates more employment opportunities for all, women and youth
concern, but its incidence has declined—reduc- especially women and youth. In this vision,
ing the contagion for neighboring countries and sound policies and better infrastructure will
boosting investor confidence in many regions. drive Africa’s transformation by improving the
And many countries are advancing toward conditions for private sector development and
meeting the Millennium Development Goals. by boosting investment, entrepreneurship and
With new investments and faster growth, micro, small and medium enterprises. In this
Africa has an opportunity over the next decade context, transformation means diversifying the
to become the next emerging market and sources of economic growth and opportunity
global growth pole (Figure 1). Growing external in a way that promotes higher productivity,
Figure 1 Upside—The number of FDI-financed greenfield projects in Africa is on a par with
individual BRIC countries . . . as is its real GDP growth
2,000 10
Number of greenfield FDI projects
GDP growth (%)
8
1,500
BRICs
China
6
India
1,000 Africa
4
Africa
Brazil
500
2
Russia
0 0
2003 2005 2007 2009 2011 2003 2005 2007 2009 2011 2013 2015 2017 2019 2022
Source: UNCTAD 2011 (left); AfDB using IMF data 2012 (right).
5At the Center of Africa’s Transformation Strategy for 2013–2022
resulting in sustained and inclusive economic governments, private sector actors, aca-
growth. It also means supporting the develop- demics and representatives of civil society. It
ment of industries that increase the impact of coincides with the ambitions of African lead-
the existing sources of comparative advan- ers and the vision of the African Union’s New
tage and enhance Africa’s global competitive Partnership for Africa’s Development as a
position. continent where growth is inclusive—embrac-
A critical element In this transformation—indeed driving it— ing the continent’s youth, its women, its fragile
in the continent’s growth will become much more inclusive, states—and sustainable. It also coincides with
growth will be extending beyond some countries, some the ambitions of regional members as set out
sectors and some workers. Many of Africa’s in their long-term poverty reduction and devel-
boosting agricultural
fragile states will be on a path to growth and opment strategies.1
productivity on a
recovery. Stronger institutions of governance
sustainable platform (domestic and regional) will reinforce the rule What Africa must do to realize the
of water security of law, facilitate transparency and accountabil- vision
ity and peacefully resolve conflicts. Africa will Realizing this vision will not come easily
attract greater private investment from foreign (Box 1). Several economies on the continent
sources. Faster growth, more formal economic remain fragile, and infrastructure remains
activity and improved wealth management will underdeveloped, hindering regional integra-
greatly increase domestic resource mobiliza- tion and reducing enterprise competitiveness
tion, reducing the dependence on donor aid. (Figure 2). Many African economies rely on raw
And more of Africa’s capital will be invested materials, with limited diversification of their
domestically, not parked offshore. But suc- productive structures. Poverty rates remain
cessful transformation requires visionary and unacceptably high. Inequality is also high: six
determined leadership. of the 10 most unequal countries in the world
Africa will seize opportunities for greener, are African. Recent global food crises and
more sustainable growth to become more ongoing struggles with hunger in some parts
resilient in the face of climate change. By of Africa, particularly in the Horn, emphasize
incorporating green principles in development the need for greater food security. Africa must
plans, African countries will extend access to also harness more of its own capital—human,
water, energy and transport, boost agricultural natural and financial—to invest in future
productivity and create new jobs and exper- development.
tise. They will also build sustainable cities and Overcoming such formidable challenges will
develop their natural resources while reducing require a new mindset where Africa’s leaders
waste. They will chart their own green growth and people fully assume ownership for their
paths—reinforcing, not compromising, their development—much in the way China, India,
development efforts. the Republic of Korea and Singapore have
Africa as a continent will be much more done. And it will require continuing support
integrated. Goods, services and people will from the international community to reinforce
move across countries and regions—creating Africa’s efforts and resources and build capa-
larger markets, increasing companies’ com- ble states with robust public administrations.
petitiveness and expanding intra-African trade A critical element in the continent’s growth
opportunities. Fostering cooperation within will be boosting agricultural productivity on a
trans-boundary basins will support growth, sustainable platform of water security. Africa is
peace and stability. Such regional approaches the only continent where per capita food pro-
will also make resource use more efficient. duction has declined over the past 30 years.
This vision reflects what the Bank heard And unemployment must be significantly
during its widespread consultations with reduced. In 2009 the unemployment rate
6Africa's Transformation
Box 1 Drivers of change
Core drivers of change, internal and external, are chang- Climate. Climate variability and climate change are
ing the development landscape for Africa, with profound straining economic and social infrastructure and land
implications for the continent. productivity and threatening rural livelihoods, with ad-
verse implications for water, food and energy security.
Demography. Africa’s population is young and growing,
and a rapidly expanding number of job-seekers must be Development finance. The aid landscape has changed
incorporated into labor markets (see figure below). The with new partners and the entry of the emerging econo-
number of graduate students tripled in Sub-Saharan Af- mies, not only as trading partners and investors but also
rica between 1999 and 2009, yet young people account as development partners. Private investment is grow-
for about 60% of the region’s unemployed. Population ing relative to aid, with greater reliance on market-based
growth rates are even higher in cities, where an esti- financing. More countries are financing their develop-
mated 40% of Africa’s population lives. By 2030 urban ment with their own resources, including taxes, remit-
populations will increase by an additional 300 million tances and royalties from extractive industries.
people.
Shifting trade and investment patterns. Major shifts in
Governance. Governments, along with regional and trade and capital flows to and from Africa are game-
continental institutions, have taken responsibility for changing, and emerging economies, such as the
resolving conflicts and strengthening institutions of BRICs, are influencing Africa’s growth.
accountability and the rule of law, thus fostering eco-
nomic stability. Many African countries are also im- Science, technology and innovation. The new broadband
plementing policy reforms to improve the business infrastructure and the proliferation of mobile banking and
environment. other wireless applications can be harnessed to “leap-
frog” older ones and accelerate growth and job creation.
Water security. Africa’s water resources are abundant
but unevenly distributed in time and space—only 5% of Global demand for resources. Continuing strong global
Africa’s available water resources are developed. Mas- demand for water, energy, minerals and agricultural
sive investments in integrated water development and commodities will offer new opportunities for growth
management are central to sustainable water, food and and pose significant policy and resource management
energy security for green and inclusive growth. challenges.
The economically active population is growing
2000 37% of total population
2010 39% of total population
2020 42% of total population
Central East North Southern West 51% of total population
2030
Africa Africa Africa Africa Africa
0 100 200 300 400 500 600 700 800
Millions of people
Source: Africa Progress Panel, Jobs, Justice and Equity: Seizing Opportunities in Times of Global Change, 2012, using AfDB data.
7At the Center of Africa’s Transformation Strategy for 2013–2022
Figure 2 Downside—Fragility is a concern . . . and the majority of African countries score below 5
(out of 10) in Transparency International’s 2011 Corruption Perception Index
10
Corruption Perceptions Index
Tunisia
9
Egypt
Libya
8
Strengthening Mali
Sudan
regional economic Guinea-Bissau
Chad
Djibouti
7
Guinea Botswana
communities and other 6
Sierra Leone Côte d’Ivoire Togo
Liberia
Central African Republic
South Sudan
Cape Verde
Somalia
Mauritius Rwanda
regional partnerships Congo 5
will facilitate regional
Burundi
Democratic Republic of Congo
4
Fragile states
Recent instability
planning and Other
Comoros
3
economic integration Zimbabwe
2
1
0
Source: UN and AfDB 2012 (left); Transparency International 2011 (right).
was 23.4% in North Africa and 12.1% in Sub- education systems to labor markets. And it
Saharan Africa.2 Efforts to support productive has to strengthen regulatory, institutional and
safety nets and to increase the participation financial frameworks, leading to more effec-
of women, young people and disadvantaged tive rule of law and reduced corruption. Only
or marginalized groups must be strong and politically stable states can promote greater
sustained. Africa must make growth more inclusion, as their citizens have more voice in
inclusive. decision-making.
Africa must also seize the many opportu- With the support of the African Union and
nities in its gradual transition to green growth, regional economic communities, Africa needs
responding to the challenges of climate change to integrate—to draw on its human resources
and reducing the ecological footprint on its more effectively, to consolidate its internal
natural capital, as a springboard for develop- markets and to make resource use more effi-
ment. The green agenda reinforces the conti- cient through regional approaches. Building
nent’s development path and the efforts of indi- transport and communications infrastructure
vidual countries. First-movers such as Ethiopia, will improve physical and virtual connectivity.
Rwanda and South Africa—aware that green- Strengthening regional economic communi-
ing their economies creates opportunities for ties and other regional partnerships will facili-
growth and job creation—are already showing tate regional planning and economic integra-
the way. tion, making it easier for goods and people to
Africa must, in addition, redouble efforts to cross borders, creating larger, more attractive
build efficient, resilient and capable states— regional markets and boosting intra-African
founded on functioning institutions—which have trade. Only capable regional economic com-
key roles in private sector–led growth. It has munities can truly accommodate Africa’s
to improve the investment climate, measured diverse populations.
by the ease of doing business for all types of To drive sustainable growth, Africa
enterprise, domestic and foreign, formal and must develop and manage its vast natu-
informal. It has to link skills development and ral resources sustainably, with water central
8Africa's Transformation
to agriculture, energy, industry and mining. substantial benefits go to local populations
Whether endowed with water, oil, land or and national economies through safeguard-
minerals, African countries must put in place ing the environment and providing basic social
frameworks to attract the necessary invest- services.
ment and expertise and to install the right gov- If Africa does all these things, it can be the
ernance structures. They should ensure that next global emerging market.
9The Bank’s
Strategic Approach
two
part
this Strategy will The Bank will build on its achievements and were mainstreaming gender into all activities,
position the Bank as comparative advantages as a resilient and scaling up interventions in fragile states and
the partner of choice, trusted continental institution with a unique Afri- helping Africa deal with climate change and
can character and high franchise value. Over food insecurity.
as a catalyst, adviser
the next decade it will respond to the many These operational priorities and focus areas
and knowledge
changes in Africa’s development landscape. remain the main elements of this Strategy.
broker—and as With a new strategic orientation, this Strategy What is new, after a year of consulting with cli-
Africa’s premier will position the Bank as the partner of choice, ents, donors and beneficiaries, is the explicit
development as a catalyst, adviser and knowledge broker— adoption of inclusive growth and the transition
institution and as Africa’s premier development institution. to green growth as the Strategy’s two objec-
tives. Also new is pursuing new and creative
The guidance of the High Level ways of mobilizing resources to support Africa’s
Panel and lessons from the Medium transformation—and the many ways the Bank
Term Strategy will work differently to streamline its business
In 2007 the High Level Panel set out the funda- processes for greater efficiency and flexibility in
mentals for the Bank’s Medium Term Strategy responding to the needs of individual countries.
for 2008–2012. It also provided a compelling
framework for the Bank’s operations in the con- Two objectives—inclusive growth
tinent over the longer term.3 and the transition to green growth
To support Africa’s development, the Bank The Strategy will pursue two objectives aimed
would become a voice for Africa in international at improving the quality of growth in Africa.
discourse, engaging in strategic partnerships, The first and overarching objective is to make
with greater capacity to disseminate knowledge growth inclusive by broadening access to eco-
and lead new policy initiatives. Selectivity would nomic opportunities for more people, countries
be a cornerstone for effective development and regions, while protecting the vulnerable.
assistance, with an ambitious agenda focusing The second is to make growth sustainable
on growth and economic integration. by helping the continent to transition gradu-
The 2011 review of the Medium Term Strat- ally to green growth. Improving the quality of
egy showed that the Bank’s selectivity and growth can put Africa on the path to structural
focus on core areas of comparative advantage transformation—to moving from primary prod-
had served clients well, but that it needed a lon- ucts to value-added manufacturing and ser-
ger planning horizon and a long-term strategy. vices. In supporting this quest, the Bank will
Core operational priorities highlighted for con- maintain its strategic focus while responding to
tinuing support included private sector devel- the many new challenges.
opment, regional integration, governance, and
skills development, with infrastructure identi- Inclusive growth
fied as a strong area of the Bank’s compara- Inclusive growth has four elements: economic
tive advantage and a good sectoral entry point inclusion, social inclusion, spatial inclusion and
for delivering results. Also identified as priorities political inclusion. Despite increases in GDP
10The Bank’s Strategic Approach
over the past decade, African growth has been more than 200 million people, face a daunt-
narrowly concentrated in a few sectors and ing array of challenges, with as much as
geographic areas. It has not been inclusive 80% of their population surviving on sub-
enough, nor has it led to deep reductions in sistence agriculture and more than 50%
poverty and inequality. That is why the Bank’s living on less than USD1.25 a day. Poor
Strategy emphasizes wider access to economic infrastructure depresses their productivity
opportunities for Africans across age, gender by an estimated 40%. Their limited social The Bank will assist
and geographic divides.4 It will help countries cohesion, weak governance institutions African member
address the constraints that limit the participa- and processes, and high unemployment, countries in building
tion of women and youth in the economy and poverty and inequality can also be sources
safety net programs to
help fragile states acquire finance and knowl- of insecurity and instability in neighboring
reduce vulnerability
edge to build capable institutions. The Bank countries. All this makes close attention to
will assist African member countries in build- fragile states imperative. and increase the
ing safety net programs to reduce vulnerability • Supporting countries as they build safety integration of
and increase the integration of disadvantaged net programs. Safety nets are inextricably disadvantaged and
and marginalized groups. Safety net programs, linked with inclusion and poverty reduc- marginalized groups
as part of a broader social protection agenda, tion in the most vulnerable and disadvan-
would address the risks, vulnerability and social taged groups. They cushion economic and
exclusion that these groups normally face. social shocks, thus helping to include the
• Broadening the economic opportunities for excluded and vulnerable in the benefits of
women. This is important in its own right broad economic opportunities.
and as a driver of economic competitive- To improve transparency, accountability
ness, because economies that harness the and reporting, the Bank will develop an index
energy and talent of women will outperform to measure and track progress on inclusive
those that do not. Studies show that a level growth in Africa.
playing field for women can boost produc-
tivity, particularly in agriculture, and reduce The transition to green growth
inequality.5 Providing basic services will The ecological footprint of Africa increased
ease the burden of women and free their 240% between 1961 and 2008—a result of
time for more productive activities. Giving growing populations and rising per capita con-
women more voice is also associated with sumption. Some of the resulting environmental
better outcomes for children. degradation is visible (Figure 3). Looking ahead,
• Broadening the economic opportunities for and assuming that resource constraints do
youth. A large majority of young people in not limit growth, Africa’s ecological footprint
Africa are out of work, accounting for up to is projected to double by 2040. In July 2011 in
60% of unemployment in the region.6 Even if Malabo, Equatorial Guinea, the African Union
working, most young people engage in low- Heads of State and Government urged mem-
productivity and poor-quality jobs, mostly in ber states to ensure that Africa’s interests on
the informal economy. According to Interna- green economy issues within the context of
tional Labor Organization estimates, roughly sustainable development, poverty eradication
90% of the region’s jobs are in the informal and institutional frameworks for sustainable
economy. Hampering the productivity of development would be defined and taken into
young workers is their lack of technical and account at the 2012 United Nations Confer-
entrepreneurial skills—and of information ence on Sustainable Development (Rio+20).
about jobs and market needs. They further called on the Bank, and other part-
• Broadening the economic opportunities for ners, to support this position. Rio+20 affirmed
fragile states. Africa’s fragile states, home to the different paths available to each country, in
11At the Center of Africa’s Transformation Strategy for 2013–2022
Figure 3 The drying up of Lake Chad
1963 2001
By improving food Chad Chad
Niger Niger
security and reducing
water stress, greener
growth can improve
the livelihoods of
millions of Africans Nigeria Nigeria
Cameroon Cameroon
Water Former shoreline Vegetation
Source: Philippe Rekacewicz, UNEP/GRID-Arendal.
accord with national circumstances and pri- gradual transition, tailored to national circum-
orities, to achieve sustainable development. stances, supporting national development
It defined green growth not as an end in itself strategies and providing policy options without
but as an important path for sustainable devel- becoming a barrier to investment.
opment and wealth creation in the context of The Africa Consensus Statement notes
inclusive growth. that the transition to green growth will require
Africa’s interest in transitioning to a green greater investments, greater access to green
economy is clear from the support its leaders technologies and considerable capacity build-
gave to participating in that conference. And ing. The Bank will therefore be proactive in
in July 2012 in Addis Ababa the African Union mobilizing additional resources from the inter-
Summit of Heads of State and Government national community to supplement national
asked the Bank and other partners to con- resources and ensure that investments in green
tinue working with countries implementing the growth do not lead to new conditionality.
Rio+20 outcomes. Green growth in Africa means promoting
African leaders have acknowledged the and maximizing opportunities from economic
efforts of several African countries in identify- growth through:
ing opportunities and challenges in the grad- • Building resilience. Africa’s people and econ-
ual transition to a green economy. By improv- omies must become more resilient in the
ing food security and reducing water stress, face of shocks, whether triggered by envi-
greener growth can improve the livelihoods ronmental or socioeconomic events. This
of millions of Africans. Indeed, transitioning to requires identifying adaptation and mitiga-
a green economy is about creating jobs, not tion measures to reduce climatic, economic
limiting them. It can also ease the pressure and social risks and avoid the loss of lives,
on natural assets by managing environmental incomes and productive assets. Options
and social and economic risks. It is thus about include climate-proofing infrastructure,
sustaining natural capital, not just managing developing stronger insurance schemes,
the use of water, gas, oil and coal. But it will establishing productive safety nets and
be achieved on the continent only through a managing risk to counter price volatility.
12The Bank’s Strategic Approach
• Managing natural assets efficiently and sus- Infrastructure development has the great-
tainably. Africa can use its abundant water, est benefits for fragile states, and it impacts
forest and mineral resources for growth upon the chances of young people and
while maintaining its biodiversity and eco- women.
systems. Innovation in green technologies • Regional integration. The Bank will lever-
offers new opportunities for growth and for age its financial support by using its knowl-
productive employment. edge and convening power to help coun- In supporting the
• Promoting sustainable infrastructure. Africa tries mobilize additional resources, either transition to green
can develop transport systems compatible domestic or foreign, and through public- growth the Bank will
with environmental concerns. It also needs private partnerships where possible. Afri-
tailor its work to the
to build integrated water infrastructure to ca’s trans-boundary water basins provide
specific circumstances
support agriculture, energy, transport and a unique opportunity to facilitate regional
industry and to promote health and hygiene. integration. The Bank will support trans- of African countries
And in the face of rising urbanization, it can boundary basins and basin organizations to
reduce pollution, improve the provision of foster cooperation and improve integration
basic services and build sustainable cit- across Africa.
ies to minimize disaster risk. It can also • Private sector development. The Bank
do more to improve its water and energy will increase support to micro, small and
security through harnessing wind, solar and medium enterprises and social businesses7
hydro energy. as engines for job creation and inclusion.
In supporting the transition to green growth, • Governance and accountability. The Bank
the Bank will tailor its work to the specific cir- will support the development of capable
cumstances of African countries and seize states founded on effective institutions,
opportunities to help countries ease the pres- good governance and regulation for eco-
sure on their natural capital. Minimizing the neg- nomic growth—specifically, property rights,
ative environmental and social consequences equal access to effective justice and greater
of operations consistent with its safeguard poli- participation in decision-making.
cies, it will also seek opportunities consistent • Skills and technology. The Bank will invest
with national priorities and inclusive growth. But in skills for competitiveness and ensure that
again, it will not impose green conditionality in those skills better match the opportunities
its portfolio. and requirements of local job markets.
The Bank will engage only in sectors where
Core operational priorities it has a demonstrated comparative advantage.
The Bank’s interventions will support the two
objectives of inclusive growth and the transition Infrastructure development
to green growth to deliver on Africa’s vision as
a stable, integrated and prosperous continent. The Bank will continue to narrow the gap in Afri-
It will improve the quality of growth in the con- ca’s huge infrastructure needs. Inadequate water
tinent by limiting its engagement to five core and sanitation infrastructure is costing Africa the
operational priorities. equivalent of 5% of GDP. High transport costs
• Infrastructure development. The Bank will add 75% to the price of African goods, and
invest in infrastructure that unlocks the about 30 countries have chronic power outages.
growth and development potential of the Bridging these gaps could add 2 percentage
private sector, encourages value addition points to Africa’s annual GDP growth.
and structural transformation, improves
agricultural productivity and food security Since 2008 the Bank has helped build and
and enhances community participation. rehabilitate 25,000 kilometers of main roads
13At the Center of Africa’s Transformation Strategy for 2013–2022
and feeder roads, linking rural areas to trans- enhance water resources development and
port corridors and markets, benefiting more expand broadband telecommunications. It will
than 10 million people. It has also helped help to manage urban growth and develop
increase power generation by 3,000 megawatts sustainable urban infrastructure systems, par-
and build, rehabilitate and install 15,000 kilo- ticularly urban transport and urban water, sani-
meters of transmission and distribution lines, tation and waste management. In addition to
The Bank will benefiting more than 13 million people. And it physical infrastructure, the Bank will support
allocate a significant has helped increase access to clean drinking policy, institutional and regulatory reforms to
proportion of its water with 24,000 wells, boreholes and sani- promote private participation and enhance the
tation facilities, benefiting more than 12 million efficiency and sustainability of infrastructure
new commitments
Africans. It has supported the development of investments. And to maintain its leadership role
to infrastructure
multi-purpose water storage infrastructure and in continental infrastructure initiatives, such as
development irrigation systems to enhance agricultural pro- the New Partnership for Africa’s Development
ductivity, produce energy and mitigate floods and the Infrastructure Consortium for Africa, it
and droughts. And it has promoted coopera- will expand its analytical and advisory capabili-
tion in trans-boundary basins. Such improve- ties in infrastructure.
ments cut across sectors by contributing to
regional integration, private sector development Regional integration
and better governance in fragile states—all
contributing directly to inclusive growth. Given the many small African economies,
Africa requires nearly USD100 billion to regional integration is essential for the continent
meet its annual infrastructure investment to realize its potential for sustainable and inclu-
needs, but the investments so far made cover sive growth, to participate in the global econ-
about half that amount. As the High Level Panel omy and to share the benefits of an increasingly
noted, “The Bank’s role in infrastructure must connected global marketplace.
be seen in its broadest sense, as an enabler of
productivity and growth, contributing directly to Since 2009 the Bank has financed more than
results in other sectors.” A road becomes the 70 multinational operations for a total of USD3.8
market space for rural populations to sell their billion, resulting in the construction of 467 kilo-
goods and earn income, boosting intra-regional meters of cross-border roads and the con-
trade and reducing spatial inequalities not only struction and rehabilitation of 776 kilometers
between countries but also within national of cross-border transmission lines. It has sup-
boundaries. Rural electrification creates jobs ported the reform and modernization of cus-
and increases energy security, reducing rural toms, the strengthening and development of
poverty. Infrastructure built to support agricul- one-stop border posts, the implementation of
tural value chains increases food security. trade facilitation agreements at the World Trade
This Strategy envisages scaling up infra- Organization and the development of logistics
structure investments substantially, with a view services. These interventions contributed to a
to increasing productivity and competitiveness, significant increase in intra-African trade, which
to deepening physical, economic and social more than doubled from USD47 billion in 2005
integration, to creating opportunities and pro- to USD108 billion in 2011. Similarly, Africa’s
moting inclusion and to contributing to sustain- share of global trade has risen from 2.5% in
able economic transformation. 2005 to 3.1% in 2011.
The Bank will allocate a significant propor- The Bank is well positioned to foster Africa’s
tion of its new commitments on infrastructure economic integration to create larger, more
development to improve transport and logis- attractive markets, link landlocked countries to
tics chains, meet the rising demand for energy, international markets and support intra-African
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