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Presentation Outline The Present Procurement Policy

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0 Procurement & Fiduciary Services Department (ORPF)
Comprehensive Review of the Bank’s Procurement Policy Procurement & Fiduciary Services Department (ORPF)

1 Presentation Outline The Present Procurement Policy
Evolution of the AfDB’s Procurement Policy Triggers for the current Review Challenges Addressing the challenges – what is required? Bank’s Vision Review Approach – How?

2 Present Procurement Policy
1- The Present Procurement Policy 4 Procurement Principles Central Feature ICB Universal Procurement ADF Developed in Bank Early Years Present Procurement Policy Among the loan products there is: Standard Loans whetehr SG or NSG Synthetic Local Currency Loans thta replicate a loan in local currency Syndicated Loans where part of the loan is shared with other institutions/banks We are goiing into details for each product Articles of Establishment Open to bidders from all member countries

3 What has changed over the years
2- Evolution of AfDB Procurement Policy More Methods What has changed over the years Harmonization Fraud & Corruption Modified ICB The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) 3 3

4 3- Triggers for the Current Review
Perceived Impact of Bank Procurement Change in RMCs Situation Advances in Public Procurement Change in Bank Requirements The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) 4 4

5 Change in RMCs Situation Advances in Public Procurement
Triggers for the Current Review – Cont. Delays Perceived Impact of Bank Procurement Change in RMCs Situation Advances in Public Procurement Change in Bank Requirements Complex Limited impact on effectiveness of CS The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) Challenging for Fragile States 5 5

6 Perceived Impact of Bank Procurement Change in RMCs Situation
Triggers for the Current Review – Cont. Improved governance leading to expectations of high ethical standards Perceived Impact of Bank Procurement Change in RMCs Situation Advances in Public Procurement Change in Bank Requirements Change in perception - from bureaucratic rules to a strategic government function The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) Expectations from Bank assistance 6 6

7 Perceived Impact of Bank Procurement Change in RMCs Situation
Triggers for the Current Review – Cont. New International Instruments e.g. GPA, UNICITRAL Globalization & Integration Perceived Impact of Bank Procurement Change in RMCs Situation Advances in Public Procurement Change in Bank Requirements The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) Emerging concepts e.g. e-procurement, complex procurement 7 7

8 Advances in Public Procurement Perceived Impact of Bank Procurement
Triggers for the Current Review – Cont. Development Effectiveness / Harmonization Advances in Public Procurement Perceived Impact of Bank Procurement Change in RMCs Situation Change in Bank Requirements Lack of Strategic Alignment The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) Reduction of cost of Bank’s oversight 8 8

9 Procurement Policy 4- Challenges With the Current Procurement Policy
Remains challenging for post conflict countries One size fits all approach Too Prescriptive Lacks sufficient recognition to sustainability issues Past Revisions made the policy quite complex The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) 9 9

10 Impact of Current Challenges
Complexity Less No. More Risk More Impact Large No. Less risk Less Impact The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) Value 10 10

11 No Reduction in Fiduciary Standards
5- Addressing the Challenges – What is Required? Greater Flexibility & More Fit for Purpose Need For Capacity Development Greater Use of Country Systems Increase Risk Management & Better Engagement on Anti-Corruption Need For Increased Efficiency & Value Added More Innovation The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) No Reduction in Fiduciary Standards 11 11

12 Operations Procurement Manual
6- Bank’s Vision Policy Methodology First Tier Operations Procurement Manual SecondTier Toolkit Third Tier

13 Methodology Bank’s Vision Contd. – Focus on the Methodology Diagnosis
Gap Assessment Capacity Building The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) 13 13

14 7- Review Approach – How? Stage 1: Preparatory Work CODE/AUFI Approval of Framework Paper Stage 2: Drafting of the New Policy Documents CODE/AUFI Approval of New Policy March 2014 May 2014 May 2014 June 2014 The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) Methodology, Manual, Tool Kit (December 2014) 14 14

15 Stage 1 RMCs Capacity Bank Track Record Procurement Frameworks
Global Practices Extensive Research Work Ongoing Borrowers Bank/ MDBs NGOs Consultation with all stakeholders Bidders The Bank’s standard loans are categorised either as Sovereign Guaranteed Loans (SGL) or Non-Sovereign Guaranteed Loans (NSGL). The Bank defines an SGL as a loan made to a regional member country (RMC) or a public sector enterprise from an RMC supported by the full faith and credit of the RMC in whose territory the borrower is domiciled. Multinational institutions are eligible to SGLs if they are guaranteed by an RMC or by RMCs in whose territory or territories they will execute the project. NSGLs are loans made either to public sector enterprises, without the requirement of a sovereign guarantee, or to private sector enterprises. The Bank’s standard loan product has evolved through time; the terms are more accommodating and responsive to client needs. Sovereign Guaranteed loans with maturity up to 20 years including up to 5-year grace period Non-Sovereign Guaranteed loans with maturity up to 15 years including up to 5-year grace period SGL can be denominated in USD, EUR, JPY and ZAR ADB is currently seeking to expand its capacity to lend in other African Currencies Disbursement profile - Disbursement currency is selected in the loan agreement - Fund are disbursed based on project need and under conditions set in the loan agreement - The Bank offers currency purchase facility to borrowers Repayment terms - Loans are repaid in equal installments - Other options are permitted ( Equals installments, Annuities, Bullet repayments, Step-up or Step-down amortization) Ongoing Drafting of the Policy Framework Currently Ongoing Will benefit from the OPEV/IEG Evaluations 15 15

16 Thank You

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