1. Center for Comparative and International Studies (CIS) The African Development Bank: Ready to Face the Challenges of a Changing Africa? EBA Seminar Stockholm 23 March 2015

2. Center for Comparative and International Studies (CIS) Overview of Presentation 1.Context: Africa Rising? 2.AfDB Overview 3.Key Challenge: Non-Concessional Lending a.Business Practices b.Financial Policies 4.Conclusions

3. Africa Rising? GDP Per Capita (PPP) (SSA) Real GDP Growth

4. Africa Stagnating? Human Development Index 2013

5. Africa Changing Growth is accelerating – how will it play out? Population boom – how will it be channeled? New External Finance Players New Attitudes

6. AfDB vs. Other MDBs 2013 Lending Commitments

7. AfDB vs. Other MDBs in Africa 2013 Lending Commitments

8. Non-Concessional Lending: Falling Short 2010 (Proj) 20102011 (Proj) 20112012 (Proj) 20122013 (Proj) 2013 Sovereign1.882.403.824.393.572.243.441.22 Non- Sovereign 1.861.571.701.261.970.952.041.60 Total3.743.975.535.675.533.205.472.82 Project vs. Actual Lending Commitments, 2010-2013

9. ADB Capital is Not Being Put to Use Equity as % of Outstanding Loan Portfolio

10. Why Does Non-Concessional Window Matter? Not serving its members – Some can borrow but don’t want to – Others want to, but can’t Link between ADB and ADF – Finance – Knowledge Future of AfDB and Africa – Financial strength of MDB model – Decline in concessional donations

11. Business Practices: Bureaucracy Average Sovereign Loan Approval Times

12. Business Practices: Instruments and Knowledge Public sector loan mentality; minimal financial innovation Knowledge value-added is insufficient

13. Financial Policies: Credit Policy CountryIssue Year Yield (%)US$ AmountMaturity Zambia20125.625750 mln10 yr Ghana20137.875750 mln10 yr Nigeria20136.625500 mln10 yr Rwanda20136.875400 mln10 yr Tanzania20136.46600 mln7 yr Kenya20146.875/5.8751.5 bln/500 mln10 yr/5 yr Ghana20148.251 bln12 yr Senegal20146.25500 mln10 yr Ivory Coast20145.625750 mln10 yr Zambia20148.6251 bln10 yr Recent Sovereign Bond Issues, Concessional Countries

14. Financial Policies: Credit Rating Is AAA necessary? Limits flexibility – Portfolio and Country Risk – Opening to ADF borrowers – Private sector lending Consider 1 or 2 step downgrade as part of strategy to expand operational relevance – Would increase spread, but not huge – CAF: AA-, and business is booming in LatAm

15. Adapt for the Future To have an impact on Africa’s future, AfDB needs to develop a culture of: – Risk-taking – Financial innovation – Demand-driven Underneath everything: GOVERNANCE

16. Center for Comparative and International Studies (CIS) Thank You! Chris Humphrey christopher.humphrey@pw.uzh.ch