Login

Register




Building capacity to help Africa trade better

Annual Development Effectiveness Review 2018: “Made in Africa” – Industrialising the Continent

News

Annual Development Effectiveness Review 2018: “Made in Africa” – Industrialising the Continent

Annual Development Effectiveness Review 2018: “Made in Africa” – Industrialising the Continent
Photo credit: AfDB | Nour El Refai

The African Development Bank is delivering on its goals and making good progress towards achieving its development and operational targets according to the 2018 Annual Development Effectiveness Review (ADER), which was released at the Bank’s Annual Meetings in Busan, Republic of Korea.

Every year, ADER scrutinizes the Bank’s operational effectiveness and its organizational efficiency, using the Bank’s results measurement framework for 2016-2025. It brings together evidence of strengths and weaknesses to provide management with a clear understanding of what has worked well and what the Bank must do better to achieve its High 5 development goals.

“The report shows that the African Development Bank is delivering on its commitment to help Africa achieve the Bank’s High 5 priorities,” said Charles Boamah, Senior Vice-President. “The Bank continues to strengthen its effectiveness as an organization, while scaling up its operations.”

This year’s ADER has a special focus on industrializing Africa. “There are good reasons to be optimistic that industrialization is achievable in the coming years. Africa is open for business, with stable economies and supportive business environments,” said Bank President, Akinwumi Adesina. “It has a young and growing workforce that is increasingly global in outlook. Urbanization and the rise of the African middle class are opening up new consumer markets, which act as a magnet for investors.”

In 2017, companies had improved access to transport, energy, and skills, which expanded their ability to do business across the continent. The Bank contributed to these improvement: it provided 14 million people with access to transport – well above its target – while building or rehabilitating 2,500 km of roads in 2017 and also helped 210,000 small and micro businesses access finance, which benefitted 2.6 million people.

“This level of performance is promising, but we must continue driving operational delivery and impact,” said Simon Mizrahi, Bank Director for Delivery, Performance Management and Results.

The Bank is scaling up its efforts to accelerate the pace of industrialization, supported by its presence in 38 countries and by timely and quality operations. This backbone and experience position the Bank well to mobilize more resources from institutional investors around the world for industrial development.


Executive Summary

This is an important period for both Africa and the Bank. For Africa, the coming few years are a window of opportunity to accelerate progress towards the Sustainable Development Goals (SDGs). Building on nearly two decades of strong economic growth and rapid urbanisation, Africa needs to achieve industrial development and structural economic change to create jobs at scale and promote prosperity across the continent. For the Bank, our contribution to Africa’s economic transformation is through our High 5 strategies, which we began implementing in 2016: Feed Africa, Light up and power Africa, Industrialise Africa, Integrate Africa and Improve the quality of life for the people of Africa. We have also been implementing an ambitious programme of organisational reforms, to help us maximise our development results and achieve greater value for money.

The theme of this year’s ADER is industrialisation. African governments and their international partners now recognise that industrial development is a precondition for meeting many of the SDGs. It is, however, a complex objective with many components. Building on the findings of our 2017 report Industrialise Africa: Strategies, Policies, Institutions and Financing, we look first at the progress Africa has made in recent years on industrial development, and at how the Bank’s operations are contributing to that progress. We then review progress on the other High 5 areas, and on our cross-cutting priorities of governance, fragility, gender and climate change – in each case, exploring how they link to the goal of industrialising Africa. We then present the third and fourth levels of our Results Measurement Framework, assessing our progress on improving the management of our portfolio and strengthening our own capacity as an organisation to deliver results for our clients and shareholders. In the final section, we look forward to what we expect to contribute to Africa's development in the coming years.

Industrialise Africa

Africa’s youthful labour force and rapidly expanding towns and cities are opening up new opportunities for industries that can supply growing consumer markets and participate in global value chains. Foreign direct investment has risen rapidly and is increasingly directed towards manufacturing and services. Some key indicators of industrial development – including industrial output, global competitiveness and economic diversification – are not yet moving forward across Africa as a whole. At the national level, however, there are positive developments: South Africa, Algeria and Mauritius are all industrialising rapidly, and Ethiopia and Morocco are building nationwide networks of industrial parks.

To take advantage of this window of opportunity, Africa needs to double its industrial output over the next decade, while enhancing economic diversification and improving competitiveness. This will require stable macroeconomic conditions, a better business climate, effective legal frameworks, healthy financial institutions, cheaper and more reliable infrastructure services and supportive trade policies.

Under its pdf Industrialise Africa strategy (5.68 MB) , the Bank is supporting African business in international value chains, helping governments develop industrial policies and strengthen their business environments, and investing in infrastructure with high economic returns. In 2017, we provided 14 million people with access to transport – well above our target – while building or rehabilitating 2500 km of roads. We helped 210 000 small and micro businesses to access finance, benefiting 2.6 million people. Examples of effective programming have included the Africa Capital Works Fund, which provides companies with extra liquidity to scale up their operations, and support for Ethiopia’s Derba Medroc Cement Plant, which has led to a 70% reduction in the price of cement.

The Bank is scaling up its efforts to support industrialisation, including through some innovative partnerships. In 2018 we will launch the Africa Investment Forum, which will help to mobilise resources from institutional investors around the world for priority infrastructure investments. In Ethiopia, Côte d’Ivoire, Tanzania and Madagascar, we have launched new projects to support public-private partnerships for infrastructure development, and we are partnering with the United Nations Industrial Development Organization to help a number of pilot countries establish industrial parks and special economic zones.

Integrate Africa

Industrial development depends on economic integration to create economies of scale across Africa’s national markets. With Africa’s combined population of 1.2 billion and GDP of $3.4 trillion, the potential gains from integrating the continent are huge. At present, however, intra-African trade is just 14.2% of total goods trade, partly because of the high costs of trading across borders. Africa’s regional economic communities continue to promote integration, but more progress is needed in areas such as visa liberalisation.

The Bank is one of the champions of economic integration. We are a major investor in cross-border infrastructure: in 2017, we built or rehabilitated 414 km of cross-border roads and built one-stop border crossings to facilitate trade. Our major transport corridor projects – for example, between Tanzania and Kenya, and linking Zambia, Malawi and Mozambique – are unlocking regional trade and creating economic opportunities for communities along the route.

Our strategic framework for economic integration focuses on three pillars: infrastructure connections, trade and investment promotion, and financial integration. Besides investing our own resources, we are helping to mobilise private and public finance into strategic projects. In the past year, we approved a $100 million loan to the Emerging Africa Infrastructure Fund – a public-private partnership that has invested $1.2 billion in 70 infrastructure projects in 49 countries. We have helped to design complex financial transactions to crowd in commercial finance, using risk guarantee instruments – for example, for the development of air transport in Côte d’Ivoire. We are also investing in regional power projects.

Cross-cutting and strategic areas

Africa’s economic growth slowed to 2.2% in 2016 because of lower commodity prices, but remained at a solid 4.5% in lowincome countries. There has been an increase in public debt since the 2008 global financial crisis, and a number of countries are now participating in IMF programmes. There has been a slight increase in the overall quality of governance, as measured on the Mo Ibrahim Index, with particular improvements in economic governance, but corruption remains a challenge. Africa’s fragile states still present the most severe governance challenges, although there has been strong progress in the Central African Republic since the end of the civil war.

Improving domestic resource mobilisation is essential to funding the recurrent and capital spending needs associated with industrial development. In 2017, the Bank helped a number of countries to improve their public financial management and procurement systems and to build transparency and accountability in the public sector. While revenue mobilisation across the continent is generally improving, this trend will need to accelerate in the coming period.

Women are central to the African economy, performing the majority of agricultural activities, owning a third of firms and, in some countries, accounting for 70% of employees. Yet continued gender equality imposes a significant barrier to women’s economic opportunities. The gender equality index showed a slight improvement in 2017, but with a long way to go. Under its pdf Gender Strategy (2.41 MB) , the Bank is supporting African women with electricity connections and by improving access to clean water, and enhancing agricultural opportunities. We are supporting the Affirmative Finance Action for Women in Africa and other financial inclusion programmes.

Contact

Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010