Highlights of Year 2006

1
(No Transcript)
2
Highlights of Year 2006

• Africa
• Real GDP growth exceeds 5 for the third
  consecutive year propelled by prudent
  macroeconomic policies, improved terms of trade,
  a supportive global environment and increased
  benefit from debt relief
• Bank Group
• Excellent operational and financial results
• Year of transformation and institutional reforms
  to enhance development effectiveness
• Establishment of High Level Panel to advise on
  strategic vision
• Increased successes in local currency operations
  with issuance of bonds linked to Tanzanian
  Shilling, Ghanaian Cedi and Nigerian Naira

3
Bank Groups Activities
1
Bank Financial Profile
2
Capital Market Activities
3
Appendices
4
4
Bank Groups Activities
1
5
The Bank Group embodies an effective partnership
across continents for the development of Africa
Europe
Africa
Libya Madagascar Malawi Mali Mauritania Mauritius
Morocco Mozambique Namibia Niger Nigeria Rwanda S.
Tome Principe Senegal Seychelles Sierra
Leone Somalia South Africa Sudan Swaziland Tanzani
a Togo Tunisia Uganda Zambia Zimbabwe
Algeria Angola Benin Botswana Burkina
Faso Burundi Cameroon Cape Verde Central African
Rep. Chad Comoros Congo Côte dIvoire D. R.
Congo Djibouti Egypt Equatorial
Guinea Eritrea Ethiopia Gabon Gambia Ghana Guinea
Guinea Bissau Kenya Lesotho Liberia
Austria Belgium Denmark Finland France Germany It
aly
Netherlands Norway Portugal Spain Sweden Switzerla
nd UK

• African Development Bank (AfDB)
• Established in 1964
• Subscribed capital - US 33 billion
• 53 African and 24 non-African countries
• Raises funds in the capital markets
• Provides assistance at market interest rates
• African Development Fund (AfDF)
• Established in 1972
• Subscriptions - US 23 billion
• Financed by donor countries
• Provides assistance on concessional terms

North and South America
Argentina Brazil
Canada USA
Middle East
Kuwait Saudi Arabia
Asia
China Korea
India Japan
6
Approvals reflect customized assistance

• The Bank
• Approvals increased by 20.3 in 2006
• Rise in policy based lending by 178 and private
  sector operations by 55
• Major sectors finance (53.0), infrastructure
  (23.9) and multisector operations (7.8)
• The Fund
• Approvals increased by 8.6 in 2006
• 80 operations in 32 countries and 20
  multinational projects in 2006
• UA 2.22 billion committed under AfDF-X by
  end-2006
• AfDF-XI replenishment discussions with donors
  commenced in March 2007

In UA million
US 4.3 billion
US 3.9 billion
US 3.3 billion
US 2.8 billion
US 2.6 billion
Bank Group approvals (excluding HIPC) on a
growing trend
7
diversified across all regions and critical
sectors
By Region
By Sector
Total Approvals since inception US 59 billion
8
Through co-financing and partnership, the Bank
Group amplifies the impact of its own resources
Sector Distribution in 2006

• 34 projects for UA 11.7 billion co-financed in
  2006
• Development assistance from the Bank Group was
  leveraged more than 4.2 times through assistance
  from donors
• Enhanced emphasis on multisector operations
  indicates the importance of public sector
  management and institutional support in Banks
  operations
• Standardization and reform program for technical
  cooperation fund adopted in 2006

9
The 2006 Multilateral Debt Relief Initiative
(MDRI) has contributed to a reduction in the
continents debt burden
MDRI
External Debt to GDP ()

• MDRI became effective for AfDF on 1 September
  2006
• MDRI complements HIPC initiative by providing
  100 irrevocable cancellation of eligible AfDF
  debt for countries that reach completion point
• Bank Group has mobilized US 8.54 billion for
  MDRI related relief over a 50 year period
• 17 of the 33 HIPC eligible countries in Africa
  have reached completion point at end-2006

Debt Service ( of Exports)
10
The ongoing institutional reforms will enable the
Bank Group to better deliver on its development
mandate
Operational Priorities
New Organizational Structure

• Shifts resources to operations (lending
  departments)
• Builds organizational capacity in line with
  greater decentralization with 21 offices
  established as at end 2006
• Reinforces the Banks knowledge leadership

• Focus on infrastructure sector (Water sector
  initiatives, Infrastructure Consortium for
  Africa, NEPAD etc.)
• Promote regional integration and good governance
• Strengthen private sector development and
  competitiveness
• Increased selectivity and improved client-focus
  through decentralization

Appointment of an independent High Level Panel to
advise the Bank on its strategic vision at a time
of new opportunities for Africa
11
Infrastructure development and regional
integration are key drivers for sustainable
growth in Africa
Rural Water Supply and Sanitation Initiative aims
to provide safe water and basic sanitation to 80
of rural population by 2015. 13 programs and
funding of US 536 million approved by end
2006. African Water Facility is an initiative to
improve water sector management and attract
investments in water sector. Donor commitment of
UA 52.5 million achieved and 14 operational
activities approved in 2006.
Water Sector Initiatives
The Bank hosts the Secretariat of ICA, a
tripartite body comprising G8 bilateral donors,
major multilaterals and African institutions. US
7.7 billion committed by ICA members to the
infrastructure sector in Africa in 2006 (2005
US 7.0 billion).
Infrastructure Consortium for Africa (ICA)
13 regional projects approved with Bank financing
of US 460 million as at 31 December 2006.
Preparation of 8 regional infrastructure
projects funded by the Bank Group.
NEPAD
12
Private sector is key to economic growth leading
to poverty reduction in the continent
Private Sector Portfolio - Approvals by Sector
and Instrument

• Approved 7 private sector operations and a
  guarantee for UA 278.5 million (US 418.97
  million) in 2006 (2005 UA 180.1 million)
• Establishment of Enhanced Private Sector
  Assistance for Africa Initiative in
  collaboration with Government of Japan. First
  loan signed in 2007 for an amount of JPY 11.5
  billion

13
Decentralization brings the Bank closer to its
clients
Offices Established

• Field offices are intended to be the operative
  arm of the Bank Group in member countries with
  mandates for
• Project and program implementation
• Country dialogue
• Aid coordination and liaison with other
  institution
• 21 Country Offices out of 25 planned have been
  established at end of 2006
• Internal processes being streamlined to empower
  field offices with appropriate delegation of
  authority

Mali Morocco Mozambique Nigeria Rwanda Senegal Sie
rra Leone Tanzania Uganda Zambia
Burkina Faso Cameroon Chad DRC Egypt Ethiopia Ghan
a Gabon Kenya Madagascar Malawi
14
Bank Financial Profile
2
15
The Bank enjoys strong support from its
shareholders
Callable capital is the commitment by each
shareholder to make additional capital available
to the institution in case of financial
distress There has never been a call on the
capital of the Bank
As at 31 December 2006
16
The Banks strong financial condition protects
its bondholders
Leverage

• Not restated. The Bank defines usable capital
  as the sum of paid-in capital, reserves,
• and callable capital of countries rated
  double-A and above

17
The Banks risk bearing capacity allows room to
expand operations
Equity (Risk Capital)
Uses of Risk Capital

• 2006 Risk capital
• Paid-in capital US 3,230 million
• Reserves US 3,468 million

As at 31 December 2006

• Based on the effects of the revised IFRS,
  effective 1 January 2005, the nature of loan loss
  provisions has changed from general to
  specific accordingly, loan loss provisions
  represent a reduction in the exposure to the
  relevant country, not a source of risk capital.
  Therefore, the main components of the Total Risk
  Capital are Paid-in Capital and Reserves
• The Banks capital adequacy policy has graduated
  capital requirements with the most risky assets
  requiring 75 capital backing against 25 capital
  requirement for the least risky assets

18
The Bank is allocating increasing amounts of
income to development initiatives
Income Allocation ()
2005 and 2006 Income Allocation (UA million)

• Subject to approval by Board of Governors

19
Financial ratios anchor the Bank among the
healthiest members of its peer group

• Source Fitch
• Source Standard Poors
• Source Moodys

All data is as at 31 December 2005, except for
IBRD, which is as at 30 June 2006
20
Capital Market Activities
3
21
The Banks borrowing strategy provides African
countries with cost effective resources

• Diversified currency strategy to raise resources
  and active use of the swap market to meet client
  requirements

22
Established track record in several capital
market segments

• Outstanding borrowings of UA 5.87 billion (US
  8.83 billion) as at 31 December 2006

23
The Bank continuously endeavours to widen its
investor base in various segments of the capital
market

• US 500 million 4.875 global bond in November
  2006 achieved broad investor distribution
• Asia (ex-Japan) 37 North America 24 Japan
  20 and Europe 19

US Global

• Strategically important as the Bank can issue in
  benchmark size
• Maiden Kangaroo bond issue of AUD 300 million in
  Australian domestic market in 2006
• Australia 60 Japan 34 and Europe 6

Domestic Markets

• Arbitrage driven market
• Strong investor recognition established over the
  years through demonstrated responsiveness and
  flexibility

Private Placements

• Transactions targeted at retail Japanese
  investors
• The Bank is working closely with Japanese
  securities houses to increase flow of such
  transactions

Uridashis
24
Initiative to issue bonds denominated in African
currencies is attracting support from countries

• The Bank requires the consent of member countries
  to issue debt denominated in their respective
  currencies
• Approvals are requested when the Bank foresees an
  issuance possibility and are currently awaited
  from
• Egypt
• Morocco
• Tunisia
• Uganda
• Zambia
• WAEMU countries (except Mali whose consent has
  been received)

Mali
Nigeria
Ghana
Kenya
Tanzania

• Approval received
• Approval requested

Botswana
Mauritius
South Africa
Approval to tap the Euro-ZAR market
25
Successes in the Local Currency project bring
increased investor attention to Africa

• Develop and bring visibility to African
  currencies and bond markets
• Address need for local currency loans that
  eliminate currency risk for borrowers
• Promote international best practices

Objectives

• Bond issues in Botswana Pula, Tanzanian Shilling,
  Ghanaian Cedi and Nigerian Naira
• BWP 300 million due January 2007
• US 10 million linked to TZS due Feb 07
• US 45 million linked to GHC due Oct 08
• US 100 million linked to NGN due Jan08

Achievements
GHC Transaction awarded The Banker Magazines
DEAL OF THE YEAR
26
The Bank enjoys the highest credit rating
Strong Membership Support Healthy Capital
Adequacy Preferred Creditor Status
Prudent Financial Management Excellent
Liquidity Franchise Value
Prudent Financial Management Excellent
Liquidity Franchise Value
27
Appendices
4
A
African Economic Outlook
28
Summary of macroeconomic performance and outlook

• Africa has registered its longest period of
  economic expansion in the past two decades with
  annual real GDP growth rate exceeding 5 during
  the last three years
• Economic growth is broad-based across sectors and
  supported by both domestic and external factors
• Domestic Prudent policy framework and improving
  business climate promote macroeconomic stability
  and resilience to external shocks
• External better terms of trade, supportive
  global economic environment, increased aid flows
  and rise in private capital inflows
• Continued benefit from debt relief measures under
  HIPC and MDRI initiative
• Economic outlook for 2007 is generally positive
  with expectations of another year of growth of
  over 5
• Significant challenges remain
• Increasing the pace of economic growth and
  ensuring that it is sustainable to reduce poverty
• Accelerating development of basic infrastructure
• Consolidating macroeconomic stability and
  promoting growth of private sector

29
Africas 2006 real GDP growth rate exceeded 5
for the third consecutive year with growth
becoming broad-based
Real GDP Growth
23 countries achieved GDP growth rate of above 5
in 2006 15 countries achieved GDP growth rate
between 3 to 5 in 2006

• Drivers
• Macroeconomic stability Debt relief
  Continued global expansion

30
High commodity prices lead to continued
favourable terms of trade and increased current
account surplus
Terms of Trade
Current Accounts as of GDP
31
Fiscal balance has improved due to increased
savings among oil exporters and increased aid
flows while inflationary pressures have remained
relatively contained
Fiscal Balance as of GDP
Inflation
32
Official Development Assistance flows to Africa
have risen from recent lows but only to the
levels seen in early nineties and well below the
0.7 GNP target for countries of the Development
Assistance Committee (DAC).
1990-2005 (US billion)
33.7
30
24.4
25.2
23.8
25
27.6
22.4
24.1
18.8
20
20.2
17.1
21.2
20.5
15.0
15
17.1
15.6
15.5
10
5
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
33
4
Appendices
Banks Financial Statements
B
34
AfDB Statement of income and expenses (UA
million)
2005 has been restated The information
presented above for 2004 and prior years have not
been restated and therefore are not comparable to
2005 and 2006
35
AfDB Balance sheet highlights (UA million)
The information presented above for 2004 and
prior years have not been restated and therefore
are not comparable to 2005 and 2006
36
Revised accounting treatment of transfers from
Net Income

• Prior to 2006, the Bank accounted for transfers
  of net income approved by Board of Governors as a
  direct reduction in equity
• Recent developments in financial reporting and
  auditing standards and MDB industry practice led
  the Bank to revise the treatment of transfers
  from net income in 2006
• Net income transfers are now reported as
  reductions in net income on the Income Statement
• Two main arguments against the previous treatment
  of distributions of net income as direct
  reduction to equity
• Distributions are not paid directly to member
  countries
• If a member country disagrees with a proposed
  distribution, the distribution would still be
  effected, if the majority of member countries
  support the proposal
• New accounting treatment of transfers from net
  income is consistent with emerging MDB industry
  practice

37
More information on the Bank Group is available
at www.afdb.org

• Financial and Operational Analysis
• Documentation for Debt Programs
• Rating Agencies Reports
• Financial Products for Borrowers
• Exchange Rates
• Annual Report

Financial Information in Japanese for investors
is available at www.afdb-org.jp