Detailed Information on the
African Development Fund Assessment

Monitor the Fund's effectiveness in achieving its development objectives, including its progress in measuring and meeting development objectives across-the-board. Closely monitor the Bank's progress in implementing the results measurement and results-based management systems, particularly the development of short-term performance measures, targets, and baselines ' and long-term targets and timeframes.

Continue to press AfDF and other donors to increase the amount of grants that the AfDF provides.

Work with Congress to secure $156.055 million annually for the period FY2009 to FY2011 to fund the US commitment to the recently concluded African Development Fund replenishment (AfDF11).

Monitor the implementation of the newly established fragile states facility and the scaling up of regional operations, both of which were agreed to in the AfDF11 replenishment.

Measure: Primary education enrollment rates (baseline and targets under development)

Explanation:

Measure: Extreme poverty and malnutrition rates (baseline and targets under development)

Explanation:

Is the program purpose clear?

Explanation: Articles I and II of the Articles of Agreement of the African Development Bank Group clearly state the purpose of the institution. "The purpose of the Bank shall be to contribute to the economic development and social progress of its members - individually and jointly." Articled II provides specifics on the modality of the Fund's operations. The Bank Group also adopted a Vision Statement in 1999 that focuses operations around agriculture and rural development, social development, private sector development good governance and environmental and gender concerns.

Evidence: www.afdb.org

Does the program address a specific and existing problem, interest, or need?

Explanation: The African Development Fund mobilizes resources from regional and non-regional members to provide concessional financing and grants for the development objectives of the poorest African countries.

Evidence: Over one billion people in the world live on less than $1 per day; over 3 billion live on less than $2 per day. In sub-Saharan Africa, 46% of people exist on less than $1 per day.

Is the program designed so that it is not redundant or duplicative of any Federal, state, local or private effort?

Explanation: The African Bank Group has entered into Memoranda of Understanding (MOUs) with the other major Multilateral Development Banks (MDBs) and works closely with other aid agencies to coordinate activities and to avoid redundancies. During the recent Ninth Replenishment of the African Development Fund, donors sharpened the focus to the African Bank Group on core activities in which the African Bank has an appropriate niche. Core priorities identified in the AfDF-IX negotiations include: agriculture and rural development, human capital development, private sector development, good governance, gender equality, and environmental management.

Evidence: The International Development Association (IDA) is the other principal multilateral development bank in Africa. The AfDB and IDA have concluded an MOU to ensue that efforts are complementary, that resources and knowledge gained are shared and that efforts are effective without unnecessary overlap. Coordination with other aid agencies is achieved through the donor coordination process when designing the individual country strategies.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: Although its financing is both long-term and zero-interest, AfDF loans to the poorest countries still add to their debt burden and make it difficult for countries to stay on the path of sustainable development. A higher proportion of grants would be more effective. The recently-concluded agreement to replenish the resources of the African Development Fund (the AfDF-IX agreement) increases the proportion of grants in AfDF operations to 18-21%. The U.S. would like a higher proportion of grants. Nevertheless, the AfDF is an effective mechanism for leveraging U.S. resources with substantial development financing from other donors. In addition, the AfDF is now implementing an allocation mechanism which will strongly link financial assistance to country performance, including in the areas of governance, health and education and economic opportunity. Thus AfDF financing is more effective than other programs that have weaker links between aid flows and commitment to economic reforms

Evidence: On July 17, 2001, President Bush proposed "that up to 50 percent of the funds provided by the development banks to the poorest countries be provided as grants for education, health, nutrition, water supply, sanitation and other human needs, which will be a major step forward." The Department of the Treasury will continue to encourage the other donors to adopt this benchmark.

Is the program effectively targeted, so program resources reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: The country allocations result from a performance-based allocation system (PBA) that accumulates scores for a county's poverty level, an assessment of its policies and institutions, and portfolio performance. For the AfDF-IX allocations, the Fund revised the PBA to give governance a greater weighting in a country's overall rating and direct a correspondingly larger share of concessional AfDF resources to better performers.

Evidence: The PBA has been consistently revised to strike a balance between providing resources to the best-performing African countries and the neediest of the African countries. The balance has tipped more towards the best-performing in recent reviews and modifications.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The African Bank Group has implicitly adopted the eight Millennium Development Goals, which serve as very ambitious, long-term performance goals (involving significant progress by 2015). In addition, The African Bank also sets long-term country-specific goals in its Country Strategy Papers (CSP). However, the AfDF does not yet have long-term measures in support of that goal. The African Development Fund agreed in the AfDF-IX negotiations to plan and implement a comprehensive results measurement and result-based management system.

Evidence: The Millennium Challenge goals include: (1) Eradicate extreme poverty and hunger; (2) Achieve universal primary education; (3) Promote gender equality and empower women; (4) Reduce child mortality; (5) Improve maternal health; (6) Combat HIV/AIDS, malaria, and other diseases; (7) Ensure environmental sustainability; and (8) Develop a global partnership for development. Long-term performance measures are under development. This is a work in progress owing in part to delays related to the relocation of the Headquarters and staff to Tunis in February.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The African Development Fund agreed in the AfDF-IX negotiations to plan and implement a comprehensive results measurement and result-based management system.

Evidence: Targets and timeframes are under development. This is a work in progress owing in part to delays related to the relocation of the Headquarters and staff to Tunis in February.

Does the program have a limited number of specific annual performance measures that demonstrate progress toward achieving the program's long-term measures?

Explanation: Prior to the AfDF-IX Replenishment, Fund performance was measured primarily on the basis of financial commitments. The Replenishment negotiations included agreement that the Fund would implement a systematic mechanism for defining and measuring outcomes. At the project level, performance criteria and timetables are the norm.

Evidence: Annual performance measures are under development. This is a work in progress owing in part to delays related to the relocation of the Headquarters and staff to Tunis in February.

Does the program have baselines and ambitious targets and timeframes for its annual measures?

Explanation: Establishing baselines and targets are an integral part of the outcome measurement system mentioned above. Specific projects do have annual targets and outcome measurement in some cases, but the has not been integrated at the institutional level yet.

Evidence: Baselines and targets are under development. This is a work in progress owing in part to delays related to the relocation of the Headquarters and staff to Tunis in February.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, etc.) commit to and work toward the annual and/or long-term goals of the program?

Explanation: All partners have committed to the Millennium Development Goals implicitly, but the AfDB has not published an official collection of quantifiable long-term goals in the manner of the MDGs. In addition all AfDF members have agreed to the targets elaborated in the Bank Group's Vision Statement.

Evidence: The AfDF Board, which represents both donors and borrowers, adopted the AfDF-IX goals (the Challenge Goals) and objectives in its lending policy.

Are independent and quality evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: The independent AfDB Audit Unit, which reports directly to the President, conducts regular evaluations of individual projects, country portfolios and cross-country sectoral lending programs. The results of these evaluations are incorporated into the design of follow-on lending to ensure best practices. In addition, the African Bank Group has an Operations and Evaluation Unit to review AfDB policies and recommend improvements and a will have a Policy Compliance Unit to ensure that activities are fully compliant. Perhaps most important is the regular and frequent assessment of effectiveness conducted by the Executive Board and their host governments as loans and policies are submitted to the Executive Board by Bank management.

Evidence: The Audit Unit's Annual Report reviews the activities of the previous year and the forward-looking Work Program which previews scheduled activities. Evaluations for the coming year are reviewed by the Committee on Development Effectiveness and the full Board of the AfDF. These are provided in addition to the individual evaluations conducted during the year on an ad hoc basis.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: AfDF requests for donor resources are subject to close scrutiny at the Replenishment exercises which occur every three years and through the annual budget which is submitted for approval by the Executive Board of the AfDF. Annual appropriation requests to Congress are based on commitments negotiated at the replenishment agreements.

Evidence: AfDF budgets will increasing be measured against a few, measurable objectives that the Fund is now developing. These measurable outcomes will be specified in the Strategic Plan of the Bank Group

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: Development of a Strategic Plan was part of a major reorganization undertaken in 2000-2001 in order to address Fund weaknesses. While this has added focus to Fund activities, the measurable results are not as specific as the U.S. would like.

Evidence: The Strategic Plan and the Work program are on the ADB website. www.afdb.org

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Fund regularly collects financial and performance data at the project level (Portfolio reviews) in order to make adjustments as needed both for the individual project and at the country level. Portfolio reviews are intended to help assess country capacity and performance. The AfDB is also taking part in a wider process intended to identify a set of macro-economic and social indicators for African countries that would be available across countries to measure progress on a more aggregated level.

Evidence: The Performance Based Allocation System is intended to direct more resources to the better performers as measured against a set of indicators which includes governance, portfolio review and other macro-economic characteristics. As a country's performance changes, resources are augmented or reduced. The formula used to calculate annual allocations was modified under the AfDF-IX negotiations in 2002 to direct even more funds to the better performers than in the past.

Are Federal managers and program partners (grantees, subgrantees, contractors, cost-sharing partners, etc.) held accountable for cost, schedule and performance results?

Explanation: Any significant deviation from the original schedule or cost must be approved by the Executive Board as a waiver. At the project level, project managers hold contractors to predetermined standards of performance both on quality and with regard to timing. At the institutional level, every third year during the Fund replenishment negotiations, donors assess the Fund's development effectiveness to determine whether to make a contribution to the replenishment and at what level.

Evidence: Management contracts are a regular feature of Fund lending.

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: The Fund has streamlined internal processes in recent years and has thus shortened the lag between project conception and implementation (the intervals vary by project and country).

Evidence: Bank/Fund Staff travel to projects to conduct due diligence every 18 months, reduced form 24 months on average in the past. Project implementation units in the host country are responsible for day to day supervision of the project and project spending.

Does the program have procedures (e.g., competitive sourcing/cost comparisons, IT improvements, approporaite incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: International competitive bidding for major works is the norm, and guidelines are published by the Procurement Unit and repeated in the project documents that are approved by the Executive Board. Implementation of the System Application Product (SAP) Information Technology platform resulted in a major upgrade of the Fund's capacity to monitor project expenditures in a timely manner. The performance allocations system also ensures that better performers receive relatively more financing over time.

Evidence: The SAP system was rolled out in stages over the last 8 to 10 months and is now fully operational. International competitive bidding is a long-standing Fund policy.

Does the program collaborate and coordinate effectively with related programs?

Explanation: MOUs with other major MDBs, the donor coordination process, and the Poverty Reduction Strategy Paper program all reinforce effective coordination and collaboration. Numerous informal exchanges occur on specific topics to help ensure best practices, etc.

Evidence: MOUs can be viewed at: www.afdb.org

Does the program use strong financial management practices?

Explanation: Financial management at the Fund is fully integrated, incorporating international best standards. Financial statements are audited by an independent auditor annually, Internal controls are performed by the Bank Groups Audit Unit, the risk management unit, the procurement unit and in the reviews conducted by the Executive Board.

Evidence: AfDB has an AAA credit rating.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The Bank Group is currently attempting to implement a reorganization plan agreed on January 1, 2002 which included a major skills assessment exercise that identified institutional knowledge and skills gaps. The reorganization will make the Bank Group more flexible and more strategically-focused. The reorganization will establish an inspection mechanism and separate Inspection Unit, and Internal Fraud Unit and a Policy compliance Unit. However, the need to relocate the operational headquarters of the Bank Group to Tunis has had an adverse impact on recruitment for individuals to staff the new organizational structure, however.

Evidence: The skills management exercise was conducted by an independent consultant and has been partially implemented. Since assuming the Presidency, President Kabbaj had significantly improved management systems and the performance of the Fund's management team.

Does the program have oversight practices that provide sufficient knowledge of grantee activities?

Explanation: The African Development Bank Group has an internal portfolio monitoring and supervision system that tracks all ongoing projects and identifies projects at risk.

Evidence: Internal portfolio monitoring reports -- the Annual Portfolio Performance Review -- are submitted to the Board every year.

Does the program collect grantee performance data on an annual basis and make it available to the public in a transparent and meaningful manner?

Explanation: The Bank gathers a wide range of economic data on its member countries. This date is published in the AfDB annual Report and in the African Development Report. This data is generally timely and credible and provides a basis upon which the AfDF can better serve its clients.

Evidence: The "diagnostic" reports include AfDB Country Strategy Papers and World Bank Country Poverty Reduction Strategies and Economic and Social Work Diagnostics. The Bank also releases an annual report on AfDB allocations and Bank activities and also complies an Annual African Development Report that publishes statistics from across the continent. Most, but not all, of the reports completed are available on the Bank's website (www.afdb.org).

Has the program demonstrated adequate progress in achieving its long-term outcome performance goals?

Explanation: The AfDF-IX Replenishment negotiations were a significant step forward in tying Fund financing and activities to results-based management and establishment of tangible outcome goals. The Country Strategy Papers, which are just now coming to the Executive Board, are more focused and oriented to outcomes, albeit the MDGs in most instances. However, because outcome-based performance measurement is new to the Fund, it is difficult to assess progress on specific goals. However, The African Development Bank Group is committed to developing a more accurate and comprehensive means of measuring the attainment of quantifiable objectives.

Evidence: It is too soon to make a fair assessment of progress since much of what was agreed and planned has been delayed due to the relocation of the Bank to Tunis.

Does the program (including program partners) achieve its annual performance goals?

Explanation: Annual performance goals have not yet been established at the institutional level.

Evidence:  

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program performance goals each year?

Explanation: The African Fund employs a performance-based allocation system based on country performance across a range of economic and social indicators, including governance. This system has been a hallmark of IDA assistance for several years, and is being implemented in similar fashion at the African Bank Group. The AfDB has also invested heavily recently in IT technology and in its reorganization. the IT technology helps the Fund to monitor performance more closely on a timely basis.

Evidence: The Country Policy and Institutional Assessment (CPIA) assesses the quality of a country's present policy and institutional framework, with the ultimate goal of identifying how conducive that framework is to fostering poverty reduction, sustainable growth and the effective use of development assistance.

Does the performance of this program compare favorably to other programs, including government, private, etc., that have similar purpose and goals?

Explanation: The AfDB has adopted IDA's performance-based allocation system for the most part, adjusted to fit the specifics of the bank's mission and Africa itself. Comparisons to other regional development banks and other bilateral programs are difficult since common measurements of effectiveness do not exist upon which to rank the multilateral and bilateral donors.

Evidence: No common measurements of effectiveness across multilateral and bilateral donors exist. However, Treasury experience suggests that the African Bank outperforms the Asian Development Bank in this area and is on a par with the performance of IDA.

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: The large U.S. contribution to the AfDF-IX Replenishment signaled broad U.S. encouragement with the direction the Bank has been moving in recent years and in the significantly improved management team now at the controls. The independent Audit Unit will help to ensure that current trends towards results and outcomes does not waver. The three year cycle for replenishments also ensures that donors will closely follow Fund activities and will continue to press for efficiencies and concrete proof of development effectiveness. This said, specific objectives, aside for the implicit adherence to the MDGs, have not been adequately defined yet due in part to the delays associated with the relocation and related recruitment difficulties.

Evidence: The first evidence of the AfDB's commitment to outcomes is just now coming to light in the Country Strategy Papers.