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Assessment of Additionality and Development Outcomes at the African Development Bank: An Update

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Assessment of Additionality and Development Outcomes at the African Development Bank: An Update

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    1. 1 Assessment of Additionality and Development Outcomes at the African Development Bank: An Update ECON Office of the Chief Economist EDRE Research Department African Development Bank Issa Faye Division Manager, EDRE.1 Nov 21, 2011

    2. Outline of the Presentation 2

    3. Part 1 - Overview of ADOA Background and ADOA Framework Additionality and Development Outcomes Quality assurance , cross-project calibration and core indicators ADOA value-added Monitoring and evaluation reporting system 3

    4. Institutional Background ADOA for Private Sector Operations (PSO) 4

    5. 5 Governance of ADOA at the AfDB

    6. 6 Additionality and Development Outcomes

    7. Assessment of Additionality 7

    8. 8 Assessment of Development Outcomes

    9. 9 ADOA Methods and Tools Participation over project Cycle Quality Control

    10. Core Indicators Generic and Sectoral 10

    11. ADOA Value-added(I) 11 e.g. New Africa Mining Fund II requested that the Fund, and its investee projects, comply voluntarily with the relevant sections of the EITI (Extractive Industries Transparency Initiative). Markala requested a better sharing of the economic benefits between sponsor, government and the local communitye.g. New Africa Mining Fund II requested that the Fund, and its investee projects, comply voluntarily with the relevant sections of the EITI (Extractive Industries Transparency Initiative). Markala requested a better sharing of the economic benefits between sponsor, government and the local community

    12. ADOA Value added (II) 12

    13. ADOA Value-added (III) 13

    14. Results Monitoring 14

    15. Lines of Credit 15

    16. Production Companies 16

    17. Infrastructure Projects 17

    18. Private Equity, Mezzanine, Debt Funds 18

    19. Equity Investment in FIs 19

    20. Part 2 New Developments ADOA Framework update Methodology for measurement of development indicators Inclusive growth ADOA-RO extension of the framework to the AfDBs Regional Operations 20

    21. Measurement of development indicators 21

    22. Inclusive Growth Concepts and Definitions 22 Equality of opportunity: access to markets, resources and a leveled playing field for businesses and individuals: for instance local procurement of labor, inputs and services Protect vulnerable groups: Protection from non trivial negative environmental and social impacts Good natural resource governance: Transparency and fairness of the deal for Governments Equality of opportunity: access to markets, resources and a leveled playing field for businesses and individuals: for instance local procurement of labor, inputs and services Protect vulnerable groups: Protection from non trivial negative environmental and social impacts Good natural resource governance: Transparency and fairness of the deal for Governments

    23. 23

    24. Inclusive Growth Operationalizing the Concept 24

    25. Achieving Inclusive Growth for PSOs 25

    26. Inclusive growth indicators 26

    27. Inclusive Growth for Private Equity Funds and Infrastructure Projects 27

    28. Regional Operations Prioritization 28

    29. 29 ADOA-RO in the Prioritization Framework

    30. ADOA-RO: Implementation Constraints and Challenges 30

    31. Assessment Challenges 31 Limited knowledge about project implementation unit difficult to assess implementation risks and appropriate mitigation. In PSO, ADOA looks at the sponsors track record and the c.v.s of the management team. For ROs, the project implementation unit is an unknown mix of persons from different ministries of several governments. Would make sense to develop this knowledge in house and to apply throughout project cycle to improve project design. Staffing constraint no extra staff. Use of consultants limits development of in-house capacity. Limited knowledge about project implementation unit difficult to assess implementation risks and appropriate mitigation. In PSO, ADOA looks at the sponsors track record and the c.v.s of the management team. For ROs, the project implementation unit is an unknown mix of persons from different ministries of several governments. Would make sense to develop this knowledge in house and to apply throughout project cycle to improve project design. Staffing constraint no extra staff. Use of consultants limits development of in-house capacity.

    32. Adaptation of the Framework: ADOA-RO departures from ADOA 32

    33. ADOA-RO Projects 2011 33

    34. ADOA-RO Projects 2012 34

    35. Next Steps in ADOA-RO 35

    36. 36 Thank You i.faye@afdb.org

    37. Household Benefits 37

    38. 38 Infrastructure

    39. Government 39

    40. 40 Macroeconomic Resilience Reduction of a countrys vulnerability to external macroeconomic shocks by diversifying GDP and exports, decreasing the dependence of the economy on a few commodities Generate foreign exchange for the economy Increase regional integration and improve risk sharing amongst regional economies

    41. 41 Environmental Effects PSOs effects on environmental quality and sustainability. Welfare of households is affected directly by the quality of the environment in which they live and work. Mitigation measures can alleviate some of these negative effects

    42. 42 Social and Gender Effects Effect on gender balance, human capital and equity. Gender equality is among the priorities of the AfDB Human capitals determines the range of accessible livelihood strategies. Human capital is positively affected by the provision of better education, professional training and improved health care.

    43. 43 Private Sector Development and Demonstration Effects Private sector development is a fundamental component of Africas development. Examples are: stimulation of further private business through upward and downward linkages introduction of new goods and services improving the business environment through increased competition fostering more transparent corporate governance Demonstration effect by showing that business is commercially viable in areas and sectors previously ignored by private entrepreneurs.

    44. 44 Business Success Likelihood of achieving expected development outcomes is a function of the operations success and profitability Measured by the difference between the projects financial rate of return and the sponsors cost of capital

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