ACCRA, Ghana, May 30, 2022/ — 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”.
About the African Development Bank Group:
The African Development Bank Group is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).
On the ground in 41 African countries with an external office in Japan, the Bank contributes to the economic development and the social progress of its 54 regional member states. For more information: www.AfDB.org
