2012 ANNUAL REPORT ANNUAL 2012 ANNUAL REPORT REGIONAL AND NON-reGIONAL MemBer COUNtrIES ALGERIA ARGENTINA ANGOLA AUSTRIA BENIN BELGIUM BOTSWANA BRAZIL BURKINA FASO CANADA BURUNDI CHINA CAMEROON DENMARK CAPE VERDE FINLAND CENTRAL AFRICAN REPUBLIC FRANCE CHAD GERMANY COMOROS INDIA CONGO ITALY CONGO, DEMOCRATIC REPUPLIC OF JAPAN COTE D’IVOIRE KUWAIT DJIBOUTI NETHERLANDS, The EGYPT NORWAY EQUATORIAL GUINEA PORTUGAL ERITREA SAUDI ARABIA ETHIOPIA SOUTH KOREA GABON SPAIN GAMBIA, The SWEDEN GHANA SWITZERLAND GUINEA UNITED ARAB EMIRATES (member of the ADF only) GUINEA BISSAU UNITED KINGDOM KENYA UNITED STATES OF AMERICA LESOTHO LIBERIA LIBYA MADAGASCAR MALAWI MALI MAURITANIA MAURITIUS MOROCCO MOZAMBIQUE NAMIBIA NIGER NIGERIA RWANDA SAO TOME and PRINCIPE SENEGAL SEYCHELLES SIERRA LEONE SOMALIA SOUTH AFRICA SUDAN SWAZILAND TANZANIA TOGO TUNISIA UGANDA ZAMBIA ZIMBABWE AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND BOARDS OF GOVERNORS ADB ADF Forty-Eighth Thirty-Ninth Annual Meeting Annual Meeting Marrakech, Morocco May 27-31, 2013 REPORT by the Boards of Directors of the African Development Bank and the African Development Fund Covering the period January 1 to December 31, 2012 ADB-ADF/BG/AR/2012 Acknowledgments This Annual Report was prepared by the Department of Development Research of the Chief Economist Complex, under the overall guidance of the Boards of Directors, and the direct supervision of the Board Committee, comprising: F. Kruger, Chairperson; S. Yahaya, Vice Chairperson; Members W.C. Jones; E.M. Khalid; M. Mahroug; and M.C. Muduuli. Annual Report Team: M. Ncube, Chief Economist and Vice President; S. Kayizzi-Mugerwa, Director; B. Barungi, J. Anyanwu, R. Bangurah, J. Kone, Development Research Department; B. Kokil, Manager, Economic and Social Statistics Division; F. Lawson; P. Lartey and L. Kouakou, Statistics Department; F. Ndukwe (Consultant); A.Portella (Consultant); R. Wicks (Consultant/ English Editor); P. de Castelnau (Consultant). French Translation and Editing Team: J. Edjangue, Manager, French Translation Division; M. Ndagijimana and C. Djocgoué, Language Services Department. Finance Team: A. Odukomaiya, Director, Financial Control Department; N. Ngwenya, Manager, Accounts and Special Funds Division; M. Derbel, S. Oppong and Y. Soga, Financial Control Department. The Annual Report Team acknowledges the contribution and support from the Senior Management Coordinating Committee during the Report’s preparation. It also acknowledges comments and contributions from Departments and Organizational Units in the various Complexes of the Bank. Design Cover and Photographs: External Relations and Communications Unit. Designations in this publication neither suggest nor imply any opinion on the part of the African Development Bank Group concerning the legal status of any country or territory, or the delimitation of its frontiers. Department of Development Research African Development Bank Temporary Relocation Agency (TRA) BP 323, 1002 Tunis Belvédère Tunis, TUNISIA Tel: (216) 71 10 21 75 Fax: (216) 71 83 24 09 Website: http://www.afdb.org Cover illustration: Key Drivers of Economic Transformation Design/Layout and Printing by PhoenixDesignAid ISO 14001 certified and EMAS-approved ii Annual Report 2012 Contents Fast Facts v Letter of vi Transmittal The President and the Executive Directors vii Composition of viii the Boards of Directors Message from ix the President Executive Summary x Part I Structural Transformation of Africa’s Economies 1 Chapter 1 Africa’s Socio-Economic Performance 3 1.1 Africa’s Recent Performance 4 1.2 Africa’s Economic Prospects 6 1.3 Africa’s Progress Towards Achieving Millennium Development Goals 7 Chapter 2 Towards the Structural Transformation of Africa’s Economies 9 2.1 Challenges and Opportunities 10 2.2 Africa’s Economic Transformation: Three Key Principles 10 2.3 Key Drivers of Economic Transformation 11 2.4 Strategies for Africa’s Economic Transformation 14 Chapter 3 The Bank’s Response to the Challenges of Economic Transformation 15 3.1 The Bank’s Ten-Year Strategy 16 3.2 Specific Initiatives Targeted at Enabling Economic Transformation 17 3.3 The Bank as a Knowledge Broker 17 Part II Bank Operations, Effectiveness and Governance 19 Chapter 4 Bank Group Operations 21 4.1 Overview of Bank Group Operations 22 4.2 Bank Group Operations by Window 24 4.3 Bank Group Operations by Sub-region 27 4.4 Bank Group Operations by Priority and Areas of Special Emphasis 29 Chapter 5 Institutional Reforms and Corporate Management 37 5.1 Policies and Strategies 38 5.2 Development Effectiveness and Quality Assurance 39 5.3 ADF-12 Mid-term Review 43 5.4 Operations Evaluation 44 5.5 Institutional Reforms 44 5.6 Audit, Ethics and Integrity Functions 45 5.7 Deployment of Human Resources 46 Chapter 6 Oversight Functions and Activities of the Board 49 6.1 Boards of Governors 50 6.2 Boards of Directors 50 Annual Report 2012 iii Part III Financial Management and Financial Statements 53 Chapter 7 ADB, ADF, and NTF Financial Management and Financial Statements 55 African Development 59 Bank African Development 151 Fund Nigeria Trust 185 Fund Annexes 215 Appendices 229 Index 242 iv Annual Report 2012 Fast Facts African Development Bank Group Constituent Institutions The African Development Bank (ADB) The African Development Fund (ADF) The Nigeria Trust Fund (NTF) Shareholders 53 African countries (regional member countries) 24 non-African countries (non-regional member countries) Mission To promote sustainable economic growth and reduce poverty in Africa Authorized Capital UA 66.98 billion as of December 31, 2012 (ADB) Subscribed Capital UA 65.22 billion as of December 31, 2012 (ADB) Paid-up Capital UA 4.96 billion as of December 31, 2012 (ADB) Callable capital UA 60.25 billion as of December 31, 2012 (ADB) Total reserves UA 2.67 billion as of December 31, 2012 (ADB) Approved Operations, 2012 199 operations totalling UA 4.25 billion, financed as follows: ADB: UA 2.08 billion ADF: UA 1.89 billion NTF: UA 14.1 million Special Funds*: UA 269.0 million Of which: Loans UA 2.98 billion (55 operations) Grants UA 623.0 million (80 operations) HIPC UA 248.0 million (5 operations) Equity Participation UA 133.9 million (9 operations) Special Funds* UA 269.0 million (50 operations) Sector Approvals, 2012 Infrastructure: UA 1.76 billion (48.9 percent of total loans and grants) Social: UA 525.3 million (14.6 percent) Multisector: UA 505.4 million (14.0 percent ) Finance: UA 402.8 million (11.2 percent) Agriculture and Rural Development: UA 308.1 million (8.6 percent) Industry, Mining and Quarrying: UA 97.7 million (2.7 percent) Total Cumulative Loan and 3,796 loans and grants totalling UA 63.66 billion Grant Approvals, 1967–2012 * Special Funds: These are the approvals for the operations of the African Water Facility, the Rural Water Supply and Sanitation Initiative, the Global Environment Facility, the Global Agriculture and Food Security program, the Climate Investment Fund, the Congo Basin Forest Fund, the Fund for African Private Sector Assistance, the Microfinance Capacity Building Fund, and the Governance Trust Fund. Annual Report 2012 v African Development Bank Group TEMPORARY RELOCATION AGENCY 15, Avenue du Ghana Angle des rues Pierre de Coubertin et Hedi Nouira BP 323 1002 Tunis Belvédère TUNISIA Telephone: (216) 71 333 511 Fax: (216) 71 351 933 April 16, 2013 The Chairperson Boards of Governors African Development Bank African Development Fund Dear Mr. Chairperson: In accordance with Article 32 of the Agreement Establishing the African Development Bank and Articles 8, 11 and 12 of the General Regulations made thereunder, and pursuant to Article 26 of the Agreement Establishing the African Development Fund and Articles 8, 11 and 12 of the General Regulations made thereunder, I have the honor, on behalf of the Boards of Directors of the Bank and of the Fund, to submit the audited financial statements of the two institutions for the financial year ended December 31, 2012. This joint report includes the administrative budgets for the period commencing January 1, 2013 and ending December 31, 2013, as approved by the Boards of Directors, as well as a review of developments in the African economy and in the operational activities of the Bank Group during 2012. Please accept, Mr. Chairperson, the assurances of my highest consideration. Donald Kaberuka President of the African Development Bank Group and Chairperson of the Boards of Directors vi Annual Report 2012 The President and the Executive Directors African Development Bank Group © African Development Bank Development © African First row from left to right: Mr. Elfatih Mohamed KHALID (Sudan); Ms. Mary Consolate MUDUULI (Uganda); Mr. Mohit DHOORUNDHUR (Mauritius); Mr. Donald KABERUKA (President of the Bank Group and Chairperson of the Boards of Directors); Mr. Hau Sing TSE (Canada); Ms. Margit THOMSEN (Denmark); Mr. Amadou KONE (Côte d’Ivoire); Mr. Vincenzo ZEZZA (Italy). Second row from left to right: Mr. Abdelhak BENALLEGUE (Algeria); Mr. Mampuya F. Pedro TOMBWELE (Angola); Mr. Walter Crawford JONES (United States); Mr. Shehu YAHAYA (Nigeria); Mr. Moegamat Shahid KHAN (South Africa). Third row from left to right: Mr. Mamadou Abdoulaye SOW (Senegal); Mr. Mohamed Samy ZAGHLOUL (Egypt); Mr. Emmanuel NGOY-THA (Central African Republic); Mr. Masahiro KAN (Japan); Mr. François KRUGER (France); Mr. Abdul-Magid GADAD (Libya). Fourth row from left to right: Mr. Mohamed MAHROUG (Dean of Board Members—Morocco); Mr. Christoph KOHLMEYER (Germany). Annual Report 2012 vii Composition of the Boards of Directors as of December 31, 2012 The Board of Directors of the African Development Bank Chairperson: Donald KABERUKA Executive Directors Alternate Executive Directors Abdelhak BENALLEGUE (Algeria) Paulo Alfredo MENDES (Guinea Bissau) Mohit DHOORUNDHUR (Mauritius) Petronella M. N. MWANGALA (Zambia) Abdul-Magid GADAD (Libya) Mohamed O. H. KHATTAR (Mauritania) Walter Crawford JONES (USA) Vacant Masahiro KAN (Japan) Carlos R. BOLO BOLANO (Argentina) Elfatih M. KHALID (Sudan) Alieu Momoudou NGUM (The Gambia) Moegamat Shahid KHAN (South Africa) Motena Ernestine TSOLO (Lesotho) Christoph KOHLMEYER (Germany) Vacant Amadou KONE (Côte d’Ivoire) Bernardo ABAGA N.