The African Development Bank Group is progressing with financial reforms that have helped it become stronger, more resilient, and better equipped in the wake of the Covid-19 crisis, the institution’s Senior Vice President Bajabulile Swazi Tshabalala said on Thursday.
Addressing the Bank Group’s shareholders, Executive
Directors, and partner agencies at the organization’s 2022 Annual Meetings in
Accra, Tshabalala said the institution strengthened its long-term financial
sustainability framework over the last three years, ensuring that it built more
resilience against future shocks.
“We updated our financial and risk policy; we undertook a
review of our cost structure and are currently developing the Bank’s new cost
containment framework to optimize the resources available for fulfilling our
mandate,” Tshabalala told the audience, which included the Bank Group’s
President, Dr. Akinwumi Adesina, and senior management.
The Senior Vice President said the Bank has also updated its
strategies and policies to enhance private sector development in low-income and
transition states on climate change and green growth, governance, and debt
management.
Thursday’s presentation featured a Davos-style panel of the
Bank Group’s vice presidents, who provided insight into the institution’s
performance in meeting its financial and development mandates. Simon Mizrahi,
Director of the Development Impact and Results Department, moderated the
session.
Commenting on the Bank’s financial health, Hassatou N’sele,
Acting Vice President for Finance and Chief Financial Officer, said the Bank
Group achieved “very strong” financial results for 2021, achieving the
third-highest amount of distributable income in the last 10 years.
She said the Bank generated a cumulative profit of $2.5
billion over the last 10 years, close to the $3.6 billion paid by shareholders
for the 6th General Capital Increase in 2010. “More than half of this benefit
has been allocated to development on the continent. We are balancing
development — development effectiveness — with the financial sustainability of
the institution.”
Eighty percent of the Bank’s business is sovereign lending,
which is charged at zero profit margin, N’sele said. The Bank’s financial
performance is anchored on loans to the private sector and the performance of
its treasury portfolios.
Other panelists were Kevin Kariuki, Vice President for
Power, Energy, Climate & Green Growth; Yacine Fal, Acting Vice President,
Regional Development, Integration, and Business Delivery; Beth Dunford, Vice
President for Agriculture, Human and Social Development; and Solomon Quaynor,
Vice President for Private Sector, Infrastructure and Industrialization.
They took turns to shed light on their sectors’ responses to
the pandemic and plans to mitigate the harsh impact of the Russia-Ukraine war.
Overall, they were upbeat about the organization’s performance and its outlook.
Dunford highlighted the essence of the Bank’s $1.5 billion
Africa Emergency Food Production Facility (https://bit.ly/3915JmF) as a bold
response by the Bank to revolutionize food production within a short period and
mitigate a looming food crisis due to the Russia-Ukraine war.
“This crisis is different because we are better prepared to
meet the challenge. It is also because we’ve been investing in agriculture. In
particular, we’ve invested in new technologies that help farmers increase their
productivity, even in climate change,” she said.
Kariuki said since the 26th UN Climate Change Conference of
the Parties (COP 26) in Glasgow last November, the Bank has mobilized over $1
billion for its Desert to Power initiative. By COP 27 in November this year,
the Bank also expects to establish an innovative mechanism to mobilize more
than $40 billion for South Africa’s just energy transition, with minimal impact
on the country’s fiscals.
The Bank Group unveiled its financial results in Accra, on
the sidelines of its Annual Meetings. At the same event, it also launched its
2022 Annual Development Effectiveness Review. The report, which analyses the
Bank's role in Africa's development, found that the Bank Group was pivotal in
delivering timely investments that are helping millions of Africans overcome
the unprecedented challenges caused by the Covid-19 pandemic.
The African Development Bank is the only Africa-based
multilateral finance institution with a triple-A rating. Last year, the
US-based Global Finance magazine, specializing in financial markets and
investment banking, named it the “Best Multilateral Financial Institution in
the world for 2021”.