Fostering Infrastructure Development in Africa. Annual Report DRAFT.0

Transcription

1 Fostering Infrastructure Development in Africa Annual Report 2010 DRAFT.0 AU NEPAD AFDB CIDA DENMARK NORWAY DFID GERMANY i

2 TABLE OF CONTENTS ABBREVIATIONS.IV EXECUTIVE SUMMARY..VII 1 THE NEPAD-IPPF AT A GLANCE BACKGROUND THE VISION STATEMENT OBJECTIVES STRATEGIC PRIORITIES OF THE FUND GUIDING PRINCIPLES ACTIVITIES OF THE OVERSIGHT COMMITTEE (OC) OVERSIGHT COMMITTEE MEETINGS KEY RECOMMENDATIONS OF THE OVERSIGHT COMMITTEE ACHIEVEMENTS IN STRATEGIC FIT THE OVERALL SECTOR IN 2010, THE FUND FIELDED CONSULTATIVE MISSIONS TO COMESA, SADC, AUC, EAC AND NPCA TO DISCUSS AND IDENTIFY KEY PRIORITY PROJECTS FOR SUPPORT BY NEPAD-IPPF CLIMATE CHANGE ADAPTATION AND MITIGATION CO-FINANCING GRANT APPROVALS DISTRIBUTION BY SECTOR DISTRIBUTION BY REGION CUMULATIVE APPROVALS CUMULATIVE COMMITMENTS AID COORDINATION AND OUTREACH ACTIVITIES PORTFOLIO MANAGEMENT GRANT SIGNATURE AND EFFECTIVENESS ii

3 4.2 DISBURSEMENT PROFILE COMPLETED STUDIES SUPERVISION AGE OF PROJECTS AND DELAYS OUTCOMES AND STATUS OF SELECTED ACTIVITIES FINANCED IN FINANCE AND RESOURCE MOBILIZATION FUNDING AND EXPENDITURE STRUCTURE FINANCIAL MANAGEMENT AND FINANCIAL STATEMENTS STATUS OF NEW INITIATIVES PROPOSED INITIATIVES NEPAD-IPPF SIX YEARS REVIEW REPORT NEPAD-IPPF STRATEGIC BUSINESS PLAN STRATEGIC COMMUNICATION AND MARKETING USE OF SAP HUMAN RESOURCES OUTLOOK FOR CRITERIA FOR PROJECT PRIORITIZATION ROLLING WORK PROGRAM CONCLUSION FIGURES FIGURE 1 COMMITMENTS BY SECTOR FIGURE 2 APPROVALS BY SECTOR FIGURE 3 APPROVALS BY REC... ERREUR! SIGNET NON DEFINI. FIGURE 4 COMMITMENTS BY REC... ERREUR! SIGNET NON DEFINI. FIGURE 5 TREND BY REC FIGURE 6 TREND BY SECTOR FIGURE 7 COMMITMENTS TREND BY REC FIGURE 8 COMMITMENTS TREND BY SECTOR FIGURE 9 AVERAGE TIME BETWEEN GRANT APPROVALS iii

4 FIGURE 10 DISBURSEMENT INDICATORS FIGURE 11 AGE OF PROJECTS FIGURE 12 WORK PROGRAMME BY SECTOR FIGURE 13 WORK PROGRAMME BY REC TABLES TABLE 1 OC ON DECEMBER 31ST TABLE 2 REJECTED REQUESTS... 7 TABLE 3 NEPAD IPPF GRANT APPROVALS TABLE 4 DONOR PLEDGES AND DISBURSMENTS TABLE 5 UTILISATION OF FUNDS (2010 ) ANNEXES ANNEX 1: SUMMARY OF THE REVIEW REPORT AND MANAGEMENT RESPONSE TO THE RECOMMENDATIONS ANNEX 2: NEPAD-IPPF ACTIVE PORTFOLIO AS OF DECEMBER 2010 ANNEX 3: LIST OF COMPLETED PROJECTS AS OF DECEMBER 2010 ANNEX 4: 2011 INDICATIVE WORK PROGRAM ANNEX 5: JOINT FINANCIERS WITH OTHER PPPs ANNEX 6: FINANCIAL LEVERAGE ACHIEVED ANNEX 7: NEPAD-IPPF FINANCIAL STATEMENTS AS OF DECEMBER 2010 ANNEX 8: NEPAD-IPPF RESULTS-BASED LOG-FRAME iv

5 ABBREVIATIONS ADB ADF AFD APCP AWF CAD CDM CB CENSAD CIDA COMESA COMTEL DBSA DFID DKK EAC EAPP EASSy EBID EMCCA ECCAS ECOWAN ECOWAS EGL EPC ESIA EUC EUR FAPA G8 GBP GIS HSGIC HSGOC GTZ GWh ICA ICB ICT IFC IFIs IPPF IsDB KfW MW NEPAD NOK NTCF OMVG PIDA PIM PMAESA PPIAF PPF PPP African Development Bank African Development Fund Agence Française de Développement Association panafricaine pour la coopération des ports African Water Facility Canadian Dollar Clean Development Mechanism Capacity Building Community of Sahel -Saharan States Canadian International Development Agency Common Market for Eastern and Southern Africa COMESA Telecommunications Development Bank of Southern Africa Department for International Development (UK) Danish Krone East African Community East African Power Pool East African Submarine Cable System ECOWAS Bank for Investment and Development Economic and Monetary community for Central Africa Economic Community of Central Africa States ECOWAS Wide Area Network Economic Community of West African States Energie des Pays des Grands Lacs (Great Lakes Countries Energy) Engineering, Procurement, Construction Environmental and Social Impact Assessment European Union Commission Euro Fund for African Private Sector Assistance Group of Eight Countries British Pound Global Information System NEPAD Heads of States and Implementation Committee NEPAD Heads of State and Government Orientation Committee German Technical Co-operation Agency Giga Watt Hour Infrastructure Consortium for Africa International Competitive Bidding Information and Communications Technology International Finance Corporation (World Bank) International Financing Institutions Infrastructure Project Preparation Facility Islamic Development Bank German Government s Development Bank Mega Watt New Partnership for Africa s Development Norwegian Kroner Nigeria technical Cooperation Fund Gambia River Basin Organisation Program for Infrastructure Development in Africa Project Information Memorandum Ports management association for Eastern and Southern Africa Public Private Infrastructure Advisory Facility Project Preparation Facility Public-Private Partnership v

6 RBM REC SADC SAPP SATA SME SONABEL SPV TA UA UEMOA UNECA UK UMA USAID USD USTDA WADB WAEMU WAPP WP WRM Results-Based Management Regional Economic Community Southern African Development Community Southern African Power Pool Southern Africa Telecommunications Association Small and Medium Entreprise Société Nationale Burkinabe d Electricité Special Purpose Vehicle Technical Assistance Unit of Account Union économique et monétaire ouest africaine United Nations Economic Commission for Africa United Kingdom Union du Maghreb Arabe United States Agency for International Development United States Dollar United States trade development agency West African development bank West African economic and monetary union West African Power Pool Work Program Water Resources Management iii

7 EXECUTIVE SUMMARY (i) (ii) Since the start of its activities in 2004, the Facility has financed 44 operations in its area of intervention. The entire portfolio comprises 16 energy sector projects, 8 ICT projects, 12 transport projects, 5 capacity building projects, one trans-boundary water resources sector project, one (1) multi-sector project (PIDA) and one (1) Facility management-related activity (Facility Review Report). In terms of volume, portfolio commitments stand at USD million distributed as follows: energy sector: 28.7%, ICTs: 12.75%, transport: 30%, capacity building: 15.8%, trans-boundary water resources: 5.6%, multi-sector: 6.6%, and other activities: 0.55%. Sixteen of the 44 activities have been completed, seven of which culminated in the financing of physical projects for USD billion. (iii) In 2010, the Facility financed 10 activities concerning 2 energy sector projects, 2 transport projects, 3 capacity building projects, one (1) trans-boundary water resource project, one (1) multi-sector project and one (1) Facility management-related activity. Total commitments for these activities stand at USD 9,241,155. (iv) (v) (vi) The disbursement rose by over 20% since 31 December 2009 to almost 50.42% of the committed amounts. Donor disbursements increased significantly to over 93% of donor commitments. Consequently, ONRI has initiated discussions with the donors with a view to replenishing Facility resources. These discussions have made considerable progress with two donors and should lead to the signing of contracts in early These are Germany, through KfW and Spain, a new contributor. Action has been taken to encourage other potential donors to join the Facility, in particular the Islamic Development Bank, etc. Concerning Facility governance, the Oversight Committee recommendations were implemented in Thus, the Review of Facility activities after six years of existence was carried out by an independent consultant, who made a number of recommendations to ensure its efficient management. Bank Management endorsed most of the recommendations. However, some were not fully taken into consideration, in particular, the Facility s structure within ONRI, its intervention in the area of capacity building, etc. One of the key recommendations of the Review concerned the preparation of a Strategic Business Plan (SBP) for Facility activities over the period. This Plan is under preparation and will be implemented starting end of (vii) With regard to aid coordination, the Facility carried out missions to other project preparation facilities, in particular the EIB s ITF, which led to the co-financing of projects and preparation of a consultative framework and common procedures for the review of financing requests, as well as for project management. Other facilities such as those hosted by DBSA (AFD-DBSA, EIB/DBSA, SADC PPPF Facility, DBSA/DFID, Tripartite Alliance) will be invited to participate in this consultative framework. iv

8 (viii) Despite these results, which require consolidation, the Facility still faces a number of challenges, in particular increased demand for the preparation of regional infrastructure projects from RECs, member countries and specialised institutions; and the Facility s structure within ONRI and the attendant human resources to be allocated to it. Furthermore, Facility resources are dwindling and their replenishment constitutes a major challenge for Preparation of the SBP, which was strongly recommended by the Review Report, should be a catalysing factor for donors. (ix) Therefore, activities in 2011 will focus on replenishment of Facility resources with priority on mobilising potential donors. Furthermore, the Facility will continue to implement the 2010 Work Programme (which was not fully completed), consolidated by requests retained during In addition, it will pursue the preparation of project completion reports to draw all lessons concerning project implementation and outcomes in terms of wrapping up financing for physical projects. v

9 1 THE NEPAD-IPPF AT A GLANCE 1.1 BACKGROUND In 2005, the NEPAD-IPPF was enlarged into a multi-donor trust fund with an additional contribution from the Government of Denmark. Since then, other donors have also contributed to the Fund, including the Governments of Norway, the UK (DFID), Germany, and the financial contribution of the ADB in addition to its in-kind contribution as a host and manager of the Fund. The Fund was created to assist African countries, Regional Economic Communities (RECs), and related institutions in (i) preparing viable regional infrastructure projects and programs; (ii) developing consensus and brokering partnership in project implementation; and (iii) facilitating sustainable regional economic development and integration through Public-Private Partnerships The Facility s governance-related activities fall within the remit of ONRI under the supervision of an Oversight Committee comprising representatives of donors, the African Union, the NEPAD Planning and Coordination Agency (NPCA) and the Bank.2010 activities were guided by the Facility s core strategic priorities: 1.2 THE VISION STATEMENT To be the lead project preparation facility in Africa, playing a catalytic role in mobilizing resources for the preparation of regional infrastructure projects and programs in support of NEPAD s goals for sustainable development and poverty reduction, through enhanced economic integration. 1.3 OBJECTIVES The long-term goal of NEPAD is to eradicate poverty in Africa and to place African countries, both individually and collectively, on a path of sustainable growth and development, thus halting the marginalization of Africa in the globalization process. A primary objective of the Fund therefore is to support the NEPAD vision for infrastructure development on the continent, by preparing viable regional/continental projects in the energy, transport, water, and ICT sectors to a full bankability stage where they will be ready to mobilize investment for implementation A secondary objective of the NEPAD-IPPF is to facilitate the creation of an enabling environment for private sector participation in infrastructure services provision, as well as to build the local capacity to respond to the continent s long-term infrastructure needs. 1.4 STRATEGIC PRIORITIES OF THE FUND The 2010 activities were guided by the Fund s core strategic priorities: Support the preparation of high quality and viable regional infrastructure projects. Support development of the institutional capacity of RMCs, RECs, and specialized infrastructure development agencies to prepare infrastructure projects/programs supported by the Fund and the Infrastructure Consortium for Africa (ICA). Provide technical advisory services aimed at improving the enabling environment for infrastructure projects/programs, and for private sector participation in infrastructure services delivery. Cultivate and leverage partnerships among Project Preparation Facilities (PPFs) to accelerate infrastructure development in Africa. In collaboration with ICA, disseminate information on investment opportunities for IPPF supported projects/programs, as well as Best Practices in infrastructure delivery. 1

10 Conduct a review of the Facility s performance after six years in existence to enhance its efficiency; and. Prepare a SBP for the period to replenish and further mobilise resources to meet the Facility s requirements. 1.5 GUIDING PRINCIPLES The following guiding principles were adopted in the delivery of the work program: Providing pro-active support and advisory services to clients. Being demand-driven in service delivery and utilizing strategic measures to enhance the sustainability of project and program outputs. Focusing on priority regional infrastructure projects and programs that have a high potential to attract private and public financing. Facilitating fund disbursements. Leveraging the human resources available within the Bank s NEPAD Division and other departments towards preparation and supervision of IPPF funded activities. Fostering collaboration with ICA and other external parties in supporting infrastructure development and financing. Ensuring organizational flexibility and adapting the IPPF to the evolving needs of RMCs. Adopting Results-based Management tools for monitoring the effectiveness of the Fund. 2 ACTIVITIES OF the oversight committee (oc) 2.1 OVERSIGHT COMMITTEE MEETINGS As a reminder, in accordance with the instruments establishing the nepad-ippf, an OC provides strategic guidance and ensures consistency with the facility s policy thrusts. it also reviews its operational activities to ensure their compliance with the facility s mandate. the OC is composed of seven members comprising three representatives of donor contributors, two representatives of the african union and the nepad planning and coordination agency (formerly the nepad secretariat), and two representatives of the bank. the OC is chaired in turn by donors representatives. Table 1 presents the list of OC members as at 30 November Table 1 OC on December 31st 2010 Mr. Brian Baxendale Mr. Peter Truelsen Senior Infrastructure Adviser, DFID s Africa Regional Department. Director, Special Adviser to the Minister of Foreign Affairs United Kingdom Denmark Mr. Kristian Løekke Principal Energy Adviser Norway Dr (Mrs.) Ibrahima El Mahmoud Infrastructure and Energy Commissioner African Union Dr Ibrahim Mayaki Director General NPCA (formerly NEPAD Secretariat) Mr. Bobby Pittman Vice-President, Infrastructure, Regional Integration and Private Sector Mr. Alex RUGAMBA Director, NEPAD, Regional Integration and Trade ADB ADB 2

11 The OC meets twice a year in June and December. In 2010, members of the Oversight Committee met twice, first on 29 and 30 June in Tunis, Tunisia, for their twelfth meeting and then on 2 and 3 December in Cotonou, in Benin for the 13th meeting. The meetings were chaired by the Representatives of DFID (the Chair of the OC until June 2010, whose term was unanimously extended at the June 2010 meeting until December 2010). Consequently, the June 2010 meeting was chaired by Dr. Yusuf Sumuillah, DFID Representative and the December 2010 meeting by Mr. Brian BAXENDALE who replaced Dr. Yusuf SUMUILLAH in the OC. All OC members participated in the June 2010 OC meeting. In the December, 2010 meeting all members, except the Representative of Norway, participated as well as representatives of RECs and specialized institutions (e.g. as the energy pools). At the close of the December 2010 meeting, the term of the Chair was extended until a Video Conference to be held early in KEY RECOMMENDATIONS OF THE OVERSIGHT COMMITTEE At the Ninth Oversight Committee meeting in Addis Ababa in December 2008, one of the recommendations concerned the need to undertake an independent assessment of NEPAD-IPPF activities by end of The aim of this assessment was to determine the Facility s strengths, weaknesses and opportunities. This exercise will allow the identification of structural, operational or other changes that could help to enhance the Facility s effectiveness and efficiency An independent consultant was recruited in November 2009 to carry out this assessment. The consultant s work consisted of a questionnaire-based survey of stakeholders to provide a structured framework for comparing opinions and judgements as well as analyses of IPPF documentation. He also visited the Bank in Tunis, some RECs and other stakeholders. The conclusions and recommendations of his report were submitted to the OC at its 12 th meeting in June 2010 in Tunis Since the IPPF s relevance was re-confirmed, the consultant made a series of 15 recommendations in his report to enhance the Facility s effectiveness, efficiency and accountability. At OC s request, the Bank gave an official reply to these recommendations that was attached to the Consultant s report. 3

12 2.2.4 The Bank agreed with most of the recommendations. However, some were only partially endorsed. These were, in particular, the Facility s capacity building mandate (Recommendation 1), the Facility s role in project prioritisation (Recommendation 2), the structure and position of the Facility in ONRI s organization chart (Recommendations 8 and 11). A summary of the consultant s report, the recommendations and the Bank s response are attached as annex One of the Review Report s strong recommendations concerns the preparation of a Strategic Business Plan (SBP) for IPPF for the period. A consultant was recruited to assist IPPF with preparing the Plan. The draft Plan was submitted at the December 2010 OC meeting. The OC s comments have been taken into consideration. At the OC s request, the Plan period was extended to It constitutes a guide for the Facility s operations for the period under consideration. It contains a logical framework, human resource requirements, planning of activities as well as objectives to be achieved for the next five years. This Plan will permit an annual results-based assessment of the Facility s interventions. To ensure its efficient implementation, a Facility Procedures Handbook will be prepared in Some donors are already conditioning their participation in the replenishment of the Facility s resources on implementation of the Plan. The Plan will also be used to lobby potential donors The SBP has provided an opportunity to meet some of the expectations raised at the 11 th OC Meeting, namely: (i) Prioritization of projects with RECs from the outset; pending the findings of the PIDA study, the NPCA and RECs will be used to prioritise those projects to be retained in the annual work programmes; (ii) Assessment of project quality at entry; for a given project, the review recommended envisaging the grant in two stages: (a) fairly small interventions (e.g. less than USD 250,000) aimed at establishing a project s potential viability and bankability; and (b) the other interventions for which the likelihood of bankability would be a specific eligibility criterion; (iii) Discussion on the value of funds committed (value for money); this is one of the criteria retained in the logical framework to assess the performance of the Facility s interventions ; (iv) The IPPF must be more proactive than reactive in its objectives; project identification missions to recipients and project prioritisation will enable the Facility to play this role; 4

13 (v) Establish an Action Plan and operationalize the Tunnel of Funds, using the ICA as a cooperation hub; the consultative framework established with the other facilities (ITF, DBSA, AWF, etc.) will foster project co-financing; (vi) Consider the agreements for the Framework Contracts proposed by DFID to facilitate delivery of consultancy services in favour of Facility projects; the Framework Contracts are a component of the use of human resources developed in the SBP The OC s other recommendations at the 11th and 12th meetings were: (i) (ii) (iii) (iv) (v) (vi) Submit to OC the capacity building strategy and strategic framework: at the June 2010 meeting; a presentation of the capacity building operational framework was made to OC; this presentation was discussed in light of the Review s related recommendations. The Bank s position is contained in its response to the Review recommendations. Seek synergy through partnerships with other facilities; to this end, share the pipeline and work programmes with other project preparation facilities. Consultative missions have been fielded to EIB-ITF and the Islamic Development Bank (ISDB) to share the Facility s work programme and pipeline. Expand the Facility s reach in those RECs that benefit least from it; an identification mission was carried out in 2010 to ECOWAS. Such missions will continue in 2011 to other RECs and specialized institutions. Keep the OC members permanently informed of the progress of the PIDA study: PIDA study status reports are posted on the PIDA website and a presentation of PIDA s status was made at the June and December 2010 meetings. Request disbursement of the remaining instalments from donors: DFID disbursed its instalments in Two equal instalments of GBP 500,000 remain and are the subject of a disbursement request in early November The disbursement conditions for Norway s and Germany s (KfW) contributions relating to approval by the Bank s Board of the 2008 and 2009 annual reports were only fulfilled in October In fact, the Board did approve the 2008 report. This led to the submission of requests in early November to Norway for disbursement of its last instalment of NOK 8 million and to GTZ for disbursement of its third instalment of EUR 500,000.The Norway remaining instalment was paid before the end of year The fourth and final GTZ tranche will be requested upon approval of the 2009 Annual Report planned in January The 2009 report was submitted to the Board in September 2010 along with the 2008 report for approval on lapse-of-time basis with a cut-off date of 21 October 2010, prior to which an Executive Director requested a formal or informal Board meeting to consider the 2009 report. In view of the Board s end-of-year workload, consideration of this report is now envisaged in early Prepare completion reports for completed projects: preparation of the PCRs has been initiated for 13 transport and energy sectors projects. These reports were available by end 2010 for the three transport projects and will be available in the first quarter 2011 for the ten energy projects. 5

14 . 3 ACHIEVEMENTS IN STRATEGIC FIT The 2010 Work Programme adopted at the OC s 11th meeting in December 2009 concerned about 20 projects. In accordance with the Facility s operational strategy, this Programme has been distributed among the regions as broadly and as fairly as possible. Thus, six out of the eight Regional Economic Communities (RECs) and the entire Continent, through the African Union Commission, benefited from these projects. Similarly, the strategic priorities focused on the key sectors of energy and transport. Capacity building comes third, to address the REC s programming, financing and infrastructure implementation gaps. Finally, the water sector was the fourth sector to have benefited from Facility resources in Pursuing its sensitisation policy for under- or non-represented RECs, the Facility carried out missions to ECOWAS. Similarly, it undertook or promoted private sector sensitisation activities to interest this sector in financing projects under a PPP (these projects have been the subject of studies financed by Facility resources). To this end, the Facility financed a road show in Tunis to present the San Pedro Port Extension Study to international port operators. About twenty operators and representatives of multilateral or bilateral donors (WB, AFD, WADB. EBID etc.) Participated in the road show. Furthermore, the Bank participated in the Africa Investor Infrastructure Projects Summit held in Johannesburg, South Africa, in October At the Summit, projects whose studies have been completed and which still require financing, in particular those in the energy sector, were the subject of presentations to the participants. A special presentation was made by the Port of San Pedro on its extension project With a view to obtaining financing for projects stemming from studies financed by it, the Facility participated in the Business Opportunities Seminar organized by the Kuwait Fund in April This Forum that brought together Kuwaiti businessmen and companies operating in the infrastructure sector provided an opportunity for exchange on the Facility s products. Energy sector projects, in particular, drew investor attention, with special interest in the projects in Ethiopia and DRC. 6

15 3.1.4 Nine (9) regional projects in the 2010 Work Programme were approved in the energy, transport, capacity building and trans-boundary water resource sectors. Two projects were postponed on grounds of institutional immaturity (Baro-Akobo-Sobat Water Resource Development) or failure to finalise financing for the initial phase (AfricaRail West African Interconnection Project). Indeed, the Governments of Sudan, Eritrea and Egypt were not ready in 2010 to receive the Baro-Akobo-Sobat Project Preparation Mission. However, financing of the first phase of the AfricaRail project concerning feasibility studies has been finalized. This phase is financed by the European Union, the United States Trade Development Agency (USTDA), Chinese Cooperation, WAEMU and the countries concerned (Benin, Burkina, Côte d Ivoire, Mali, Niger and Togo). The feasibility study of Cameroun-Chad Power Interconnection project has been already done, and detail design and procurement documents are in progress. The funding was provided by EU, Cameroon and Chad. Therefore the project was removed from the 2010 Work Programme. Finally, one project (the Kafue Gorge Energy Project in Zambia, for which procurements had already been made on behalf of cofinanciers) could not be implemented after grant approval due to procurement-related problems. These procurements were deemed non-compliant with the relevant Bank procedures. Consequently, the Facility was unable to participate in co-financing the project. (See Active portfolio as of December 2010 in Annex 2) During 2010, the Facility received fifteen new project financing requests from beneficiaries. Five of these requests were rejected because the related projects did not meet the selection criteria or because the recipients were unable to find supplementary sources of finance. The projects that met the eligibility criteria have been added to the pipeline of projects. The list of projects whose financing requests were rejected is given in Table 2 below. Table 2 Rejected Requests Name of Project Walvis bay Corridor Description Reason for rejection Originator Develop baseline indicators for transport costs and efficiency along the corridor (Shipping, Port, Freight forwarding, Road, Rail, Other) Not a project preparation activity Walvis Bay Corridor Group Amount (USD) Trans-Saharan Libya Niger road project LAMU Railway Corridor Study for the development of two major Tran Saharan road corridors between Libya-Niger and Niger-Tchad feasibility and engineering design of the Lamu port - Southern Sudan - Ethiopia railway line, referred as Lamu Railway Project Funding for the study was available from alternative sources Costs of study are too high. Also the project is unlikely to raise the required funding for its implementation Republic of Tchad Republic of Kenya TBD

16 Dar Es Salaam Corridor PMAESA- PAPC Capacity Building Projects Physical investments for increase capacity and removal of bottlenecks along the corridor Financing capacity building/ performance enhancement of the Port Management Association of Eastern and Southern Africa Financing of the Study on Constraints and Opportunities in the Restructuring of African Ports No need for studies, the request was for funding the physical investments Does not qualify for those projects eligible for financing from the Facility s resources Dar Es Salaam Corridor Committee PMAESA and PAPC NA In terms of performance for 2010, the results obtained were: 9 projects approved for a total USD million, bringing total commitments up to USD million ; million disbursed, bringing total disbursements up to USD million, i.e % of commitments; 3 Capacity Building (CB) projects were approved, bringing the number of CB projects approved to date to 6; The remaining projects approved in 2010 are broken down as follows : - 1 project, all sectors combined; - 2 energy projects; - 1 transport project; - 1 transport and energy project ; and - 1 trans-boundary water project 6 physical projects have been financed in partnership with the private sector since 2004 for USD billion; 1 project reached financing closure in 2010 (Ghana-Burkina power interconnection project for an amount of USD183 million) 2 projects were co-financed with other facilities that mobilised USD 9.4 million for the said projects, with a USD 2.9 million contribution from the Facility ; Launching of 5 projects (Dakar-Djibouti Transport Corridor; ECCAS Framework for Water Resource Management; PIDA; Djibouti-Libreville Transport Corridor; ECOWAS- FODETE); Identification of a CB Programme in the SADC and EAC Region. 6 field project supervision missions; 1 audit report and two project completion reports have been completed Independent assessment of the NEPAD-IPPF Facility and preparation of the NEPAD- IPPF Business Plan for

17 3.2 THE OVERALL SECTOR Africa lacks behind other continents particularly in terms of infrastructures. This deficiency requires a yearly investment of US$22 billion to attain the Millennium Development Goals on severe poverty reduction on the continent, of which 40% is in the Transport sector, 25% in Energy, 20% in Water and the balance in Telecommunications. Aware that this area is lagging behind, the NEPAD-IPPF has, since its establishment in 2004, favoured good regional infrastructure development by funding 43 bankable projects. The amount of support to regional infrastructure projects and programmes went from USD 1,954, 433 in 2004 to USD million, representing an increase of 1462%. During the year, Fund has supported the program of infrastructure development for Africa (PIDA) which is a continent wide programme to develop a vision, policies, strategies and a programme with projects for the development of priority regional and continental infrastructures in transport, energy, trans-boundary water and ICT, looking up to the year PIDA comprises four main components: (i) sector studies; (ii) panel of experts assistance; (iii) database development; (iv) audit. It requires a total amount of USD 11,391,527. The sector studies component alone requires an amount of USD 7,552,343, 26.5%, USD 2,000,000 of which is funded by the. NEPAD-IPPF. The other co-financiers are: EUC, IsDB, ADF, NTCF and AWF Energy Africa, as a region, is rich in energy resources, but since these resources are unevenly distributed, trade in energy is considerably imbalanced. This could be further developed. Indeed, greater regional and sub regional cooperation could create a broad energy market that would make the region selfsufficient. Governments are individually seeking and taking measures to ensure a steady supply of energy resource to sustain their economic growth. In the era of globalization, a collective cooperation framework based on cooperation rather than competition could supplement national efforts and lead to win-win solution for all. In addressing the energy security of the African region, the AU Commission noted that the region had considerable potential for improving energy cooperation and creating region-wide energy infrastructure. It also noted the interest in an integrated trans-african energy system and requested that the NPCA takes the necessary measures, including carry out preliminary studies, through NEPAD-IPPF, with a view to facilitating the formation and implementation of such a system. A trans-african energy system could be defined as Africa-wide integrated energy system linking and synergizing sub regional energy system. This would aim to achieve greater cooperation, coordination and integration-allowing countries to share information and expertise, leading to a system of transboundary energy trade and exchange. An integrated region-wide energy system will allow countries to balance supply and demand within the region in an efficient manner- opening up the potential for energy trade between countries that do not share borders or belong to the same sub region. This would benefit both supplying and consuming countries as well as countries of transit. 9

18 In 2010 the Fund approved two energy projects, Kigali-Bujumbura Oil Products Pipeline and Ethiopia-Kenya Power Interconnection. The Fund has also supported a consultative mission to COMESA/IGAD to prepare Uganda-Sudan and Sudan-Eritrea Power Interconnection projects. The projects are expected to be approved by the Fund early in Furthermore the Fund, in collaboration with KfW and DBSA, undertook a preparation mission for a Grant for a transaction advisor service for EGL concerning Ruzizi III Hydopower Plant Project Transport In Africa, the transport network is particularly defective and, consequently, prevents countries from being competitive in the world market. 28% of the countries on the continent are landlocked and the transport cost represents 77% of the value of their exports. The continent s roads are highly dangerous; road accidents represent the second leading cause of mortality for the young age groups. The rail network, with an average density of 2.9 km per square kilometres, is one of the lowest in the world. Sixteen African countries have no railway or portions of international railway lines. In terms of Ports, maritime infrastructure and waterways, International container transport is in full boom but the development of this mode of transport is currently hampered in Africa due to lack of port infrastructures. The Air transport is meant to link major cities of the continent. Therefore, there is a compelling need to improve the regional transport links. Thus, during the year emphasis has been put on the development of transport corridors, the insurance of transport safety, the creation of special management institutions and the insurance of interface between different modes of transport. Four major grants amounting USD 4,418,000 were approved to support: (i) the feasibility study of the establishment of ECOWAS Infrastructure Fund (USD 900,000); (ii) the geotechnical engineering surveys for the Kazangula Bridge (USD 420,000); (iii) ECCAS to follow up on the Central Africa Transport Master Plan (PDCT-AC USD 1,098,000); (iv) The PIDA sector studies (USD 2,000,000) Capacity building Another important element of the Fund s activities is the Fund s continuous implication in capacity building activities. The Strategic Framework for capacity Building of Regional Integration Institutions was finalized in 2009 and a Strategic Approach for NEPAD-IPPF Capacity Building was presented at the OC Meeting in June The overarching objective of the NEPAD-IPPF Capacity Building is to assist African countries and Regional economic Communities (RECs) to prepare high quality, viable NEPAD infrastructure project proposals in energy, transport, ICT and trans-boundary water that would be ready to solicit financing from public and private sources within a conducive environment that would attract investment for regional infrastructure projects. More specifically, NEPAD-IPPF will endeavour to enhance the capacity of the RECs and other regional integration institutions to: Design and prepare bankable infrastructure projects, coordinate plans and implementation of regional operations; Formulate good project proposals for donors support Better coordinate infrastructure programs of RECs and Specialized Agencies Develop better systems and processes to support efficient and effective delivery of infrastructure projects 10

19 Create an enabling environment to support effective delivery of infrastructure and PPP investments. 3.3 In 2010, the Fund fielded consultative missions to COMESA, SADC, AUC, EAC and NPCA to discuss and identify key priority projects for support by NEPAD-IPPF. 3.4 Climate Change Adaptation and Mitigation The Fund requires the inclusion of Environmental Impact Assessment and Climate change Adaptation and Mitigation Plan as a component of the feasibility study for the projects seeking its assistance. In addition, the Fund is looking forward to financing regional projects with technologies capable of delivering zero to low level of CO2 emissions. 3.5 Co-financing During this fiscal year, a total of US$ 2.9 million has been mobilized in co-financing from partners towards following projects: Programme for Infrastructures Development in Africa (PIDA) and Fonds de Development et de financement des Secteurs des Transports et de l'energie de la CEDEAO (FODETE-CEDEAO). See annex for details. These projects were jointly financed with ADF, DFID, the African Water Facility (AWF), the Islamic Development Bank (IsDB), the ECOWAS Bank of Investment and Development (EBID), the African Union Commission (AUC) and the Regional Economic Communities (RECs). Outreach missions were additionally undertaken to the Arab Funds and to private equity funds (Annex 3). This cooperation was further enhanced by the Tunnel of Funds initiative developed and piloted by the NEPAD-IPPF and EIB-AITF. In 2010, the tunnelling of funds is used on the San Pedro Port extension project with AITF which has been solicited to finance the detail design of the project after the NEPAD-IPPF feasibility study financing. 3.6 Grant approvals The 2010 work programme approved by the 11 th OC comprised a total of 19 projects, worth approximately USD 21 million. At the end of December 2010, 9 of these projects were approved for an amount of USD million and 4 other are at advance stage of approval for USD 5.7 million. Table 3 below summarizes the 2010 approvals. The average commitment per project has increase from USD 0.7 million in 2009 to USD 1.01 million in 2010 reflecting the larger size of projects being submitted to the Fund as well as to the Fund s assertive project identification efforts. 11

20 Table 3 NEPAD IPPF Grant Approvals N Project Name Sector 1 REC/AUC Date of IPPF Approval Amount approved USD 1 Nacala Road Corridor TR SADC Feb ,620 2 Programme for Infrastructure development in Africa (PIDA) All AUC Apr.-10 2,000,000 3 Songwe River Basin Development Programme WA SADC April-10 1,652,935 4 Kampala-Kigali-Bujumbura Oil Pipeline EN EAC May ,000 5 Ethiopia-Kenya Power interconnection EN IGAD May -10 1,000,000 6 Kazangula Bridge: Geotech Surveys TR SADC May ,000 7 Support to ECCAS for follow up PDCT-AC CB ECCAS May-10 1,098,000 8 FODETE-CEDEAO TR/EN ECOWAS Jul , Central corridor capacity building project CB SADC Dec ,765 Total 9,056,290 The Fund witnessed a relatively well distributed upward trend in project approvals as depicted in the following graphs. 3.7 Distribution by sector In line with its guiding principles, the Fund has continued its efforts to ensure sector balance in approvals by streamlining its operations with regional priorities. A graphical depiction of the approvals by sector in 2010 is presented in Figures 2 and 3 below. Energy and Transport together accounted for 55%, of approvals share (22% for each and 11% for a hybrid project involving both sectors), followed by Capacity Building (Support to ECCAS) with 23 %, and followed by Water and Multi sector (PIDA study) with 11 % each. This represented in terms of commitments, 22% for multi sector, followed by Energy (20%), Water (18%), Capacity Building (18%), Transport (12%), and Energy and Transport combined (10%). Figure 1 Commitments by Sector Figure 2 Approvals by Sector 1 TR Transport ; EN Energy ; CB Capacity Building ; WA Transboundary Water Resources; 12

21 3.8 Distribution by REGION The Fund strived for geographical balance and equity in approvals despite imbalances in the capacities of the different sub-regions to generate programs and projects. The breakdown of approvals in 2010 by sub-region shows a fair distribution across regions, with an imbalance between the RECs (see figures 3to 6 below). It is worth noting the absence in 2010 of UMA which had for the first time in 2009 benefited from the Fund s support and CEN-SAD which did not submit any request. Also we note the growing share of SADC (36%) and AUC (22%). Figure 3 Approvals by REC Figure 4 Commitments by REC 13

22 3.9 Cumulative Approvals Figure 5 Trend by REC Figure 6 Trend by Sector 3.10 Cumulative Commitments Figure 7 Commitments Trend by REC Figure 8 Commitments Trend by Sector 14

23 3.11 Aid coordination and outreach activities Aid coordination with other facilities and donors is used to promote efficiency and leverage in the use of IPPF funds. In 2010, the Fund participated in a number of donor consultations and coordination meetings with other development partners. Cameroon International Energy & Water Conference Investment Conference The main objective of the mission was to gather information on regional infrastructure projects for further preparation, exchange of experiences as well as establish networks with infrastructure project providers. This conference brought together collectively Government Representatives, Multilateral Financial Institutions, Development Financial Institutions, Commercial Banks, Developers, Concessionaires, Special Project Vehicles, and Technology Leaders EU-Africa Infrastructure Trust Fund (ITF): The Fund met fourth with the EU-ITF to discuss during a workshop on projects preparation and on the follow up of the outcomes of the workshop. A workshop was held in March, 2010 in Tunis and the Fund met third EU-ITF to follow up the implementation of the outcomes of the workshop. The first meeting was in May on the fringes of the ICA Annual meeting, the second was during a follow up mission of IPPF and ICA in Luxemburg in September 2010 and the third was during a PPF meeting in margin of the ICA Members meeting in November, WORKSHOP ICA / IPPF / ITF / AfDB and EIB held in Tunis in March, 2010 : The objective of the workshop was to facilitate closer cooperation that could accelerate regional project preparation and enhance the flow of bankable regional projects. This focused meeting helped highlight some key regional project preparation issues at both facility level, as well as interactions between promoters and financiers more generally. Key process points going forward are: establishing mechanisms for pipeline information exchanges and planning (including better application of Tunnel of Funds); agreeing early stage project review process, definition of preparation needs; checklists of project metrics for facilitating regular monitoring reviews. A follow up mission was undertaken in September, 2010 in Luxemburg: The mission was a practical follow up to the 16 March 2010 workshop on regional project preparation between IPPF, ITF and ICA held in Tunis. The mission team met with key staff from the EU Infrastructure Trust Fund and EIB s loan and technical assistance teams. Key objectives: Identify common priority regional projects for closer collaboration; Refine project data sheet and regional project preparation checklist for use as a supporting tool; 15

24 Discuss development of GIS platform to support regional project preparation and brokering; Discuss EIB experiences on using framework consultancy to support delivery and learn lessons for IPPF s future use; Identify areas for possible use of EIB funds for ICA work. PPF meeting in margin of the ICA Members meeting in November, 2010: This meeting was the opportunities for IPPF and EU ITF to share with other trusties and donors their experience in term of collaboration in projects preparation. Discussions were undertaken after presentations on: Short presentation on history, steps undertaken to date by IPPF Project data and status sheet template and examples of use (Ruzizi III & Port of San Pedro project) by IPPF with EIB respondent; EU A ITF perspectives on enhancing collaboration; Objectives and progress to date on EIB/ITF study on GIS; etc. West African Power Pool (WAPP): NEPAD IPPF represented the Bank to the seventeenth West African power pool (WAPP) donor coordination meeting in Cotonou, Benin, on 4th and 5th may Union of Producers, Transporters, and Distributors of Electric Power in Africa (UPDEA): A mission was undertaken to the Union of producers, transporters, and distributors of electric power in Africa (UPDEA), based in Abidjan, Côte d Ivoire, in March, 2010 AU Summit: the Fund participated in the African Union Summit held in January, 2010 in Addis Ababa, Ethiopia and presented its activities in support of key continental initiatives such as STAP ICA Annual Meeting: A NEPAD-IPPF delegation attended the ICA annual meeting in Tunis, Tunisia in May ICA members urged the ICA and the IPPF to continue working together for the development of infrastructure in Africa. The Fund also furthered discussions with donors who are considering contributing financial resources to the Fund (e.g. KfW). Outreach Mission Arab Funds: the Fund, in partnership with the cooperation unit and Bank s other infrastructure departments, visited Islamic Development Bank and Saudi Development Fund in Saudi Arabia to mobilize additional resources. The mission was successful in term of projects cofinancing and the involvement of IsDB in IPPF projects financing (by co-financing or direct 16

25 contribution to the Fund). In December, 2010, a letter of invitation was sent to IsDB for its contribution into the NEPAD-IPPF. Business Development: The Fund also participated in business opportunities seminars in Kuwait organized by the cooperation unit, and Kuwait economic development fund in April Relevant infrastructure departments of the Bank also participated to this seminar. During this BOS, a number of infrastructure projects were presented to foreign private investors as well as to contractors and consultants. Partnership forum of ORRU in March, 2010 in Tunis: The main objective of the Forum was to: Update the cooperation partners on the Bank s key achievements and priorities for Discuss the proposed new direction of the Partnerships and Cooperation Strategy Discuss the recent progress and results, resources gaps related to Trust Funds and Co-financing and cooperation opportunities in ; and Enhance the dialogue with the partners and deepen the overall partnerships and cooperation. The participants to forum came from 40 organizations, countries, development institutions, private sector etc. The Fund made a presentation on its projects and specific needs in term of resources mobilization. UBIFRANCE Economic Mission of June 2010 in Tunis: During this mission the Fund made a presentation on its ongoing portfolio and completed projects. The participants, coming mainly from France were contractors, consultants and private investors. SSATP annual meeting in Kampala and Africainvestor infrastructure Summit in Johannesburg in October, 2010 The main purpose of the SSATP annual meeting is for a core group of professionals to discuss implementation of the SSATP Second Development Plan (DP2) and plans for future SSATP activities. The theme for this year was: Moving Africa Forward: Transport Policies for Growth and Integration. During the Africainvestor Infrastructure Summit, as a speaker invited to intervene in the panel of regional projects, the Fund had to submit the projects which studies are funded by the NEPAD-IPPF, including those that are completed and where there is a gap in the closure of the corresponding projects. As well as previously agreed, the Port of San Pedro made a complete presentation of the port extension project which studies are financed by the NEPAD-IPPF. Energy projects are those that attracted the most the attention of the audience. Monitoring will be required for an eventual realization of these intentions. Finally, the EASSy 17

26 project, co-financed by the AfDB (IPPF and FAPA), AFD, DBSA, KFW and EIB received the reward for the year 2010 in the category ICT/ Telecom deal of the year. African Water Facility (AWF): The Fund convenes to let the lead of water projects to AWF. The two facilities have cofinanced in 2010 two projects which were in process since These projects are : PIDA and Songwe River project. Infrastructure Consortium for Africa (ICA): The Fund took part in the ICA annual meeting of May 2010 and donors meeting in November 2010, both in Tunis. The Fund undertook join coordination mission and workshop with the consortium. 4 PORTFOLIO MANAGEMENT In 2010, the IPPF portfolio recorded improved performance on its average time between grant approvals and effectiveness, the average age of projects, and the resources disbursement ratio. The key performance indicators are presented below. 4.1 GRANT SIGNATURE AND EFFECTIVENESS In 2010, the average time between grant approval and signature has improved to only 0.9 month from 1.2 month last year, 1.8 in 2008, 3 months in 2007 and 4 months in This performance is for three years consecutive below the 2 months target set by the Fund Vision and Work Program. Figure 9 Average Time between Grant Approvals 4.2 DISBURSEMENT PROFILE Total disbursements as of December 2010 stood at amounted USD million. Cumulative disbursements reached USD million as of December 31, 2010 which represents a disbursement ratio of 49.35% on committed funds. To date, 16 projects have fully disbursed for a total amount of USD million. (Figure 10). 18

27 Figure 10 Disbursement indicators 4.3 COMPLETED STUDIES Annex 4 provides an overview of completed projects financed by the NEPAD-IPPF Special Fund. A total of 16 studies have been completed so far out of the 43 projects, 37% completion ratio. This achievement is borne out of the Fund s ability to target high profile projects with high probability of being funded for physical implementation. Of this number, 6 are being implemented by various donors and DFIs, 1 reached the financing closure, 6 are mobilizing gap funding for implementation while 3 are in detail design studies stage SUPERVISION A total of 6 supervision missions and 44 desk supervisions have been carried by the Fund. On the basis of the 30 effective projects in the portfolio, this represents a combined supervision ratio of 1.7 from 1.5 last year. It should be noted that the number of field supervision missions was restricted to critical and/or non-performing projects. 4.5 AGE OF PROJECTS AND DELAYS The Fund sought to maintain a healthy portfolio by monitoring the average age of projects, which is currently at 2 years. The trend of average age of projects is increasing (Fig. 9). That means a need of improvement in the management of projects. For this, a number actions will be taken to impact the overall age of projects, including (i) improved readiness of the Executing Agency for implementation; (ii) fewer delays in signing grant agreements; (iii) reduced time for procurement; and (iv) fewer delays stemming from unrealistic project design. Appropriate measures to build the capacity of Executing Agencies will therefore be built into the design of IPPF grant proposals, with adequate support provided by the NEPAD-IPPF team. In addition, older projects will be removed to improve overall average age of projects. 19

28 Figure 11 Age of Projects Project Audit and project completion reports About half of the completed projects are subjected to Audit Reports as per the Bank s rules. The IPPF team has been engaging the beneficiaries to comply to such requirements. This has led to the commissioning of four audit reports for: Benin-Togo-Ghana, EASSy, Kenya-Uganda Oil Pipeline and Multinational Burundi-Rwanda road projects fully completed. Other completed projects during the year will be subjected to Audit of the use of funds for the projects. Particular attention will be paid to timing to avoid backlogs in the submission of Audit Reports as well as on the implementation of the ensuing recommendations. Three project completion Reports (PCRs) have been completed (OMVG bridge, Multinational Burundi-Rwanda road and Isaka-Kigali railway project) and two others are on-going. In addition the Bank will carry out in the 1srt quarter 2011 remaining nine (9) PCRs in the energy sector Two main recommendations have been made through the completed PCRs : (i) IPPF should pay more attention on : the project closing dates; the grant resources utilization in respect to funded activities; the project supervision; the stability of the parity between the grant currency and disbursements currency; and (ii) IPPF should improve the coordination with the other donors, and should take a Tunnel of Funds Life Cycle approach to project funding. However, an External Audit of the NEPAD-IPPF Special Fund Accounts will be commissioned by the Bank as Trustee and carried out by KPMG for Final copies of the 2010 Audit report will be shared with donors of the Fund in due course. 4.6 OUTCOMES AND STATUS OF SELECTED ACTIVITIES FINANCED IN Completed projects and leveraging of resources The following is a summary of completed preparation activities supported by the Fund, which highlights the additional leveraging achieved through joint-financing with other PPFs and development partners (Annex 5). 20

29 Ghana-Burkina power interconnection project A donors roundtable took place in June Total cost of project is $183,742,016. The funding commitments are by EIB, WB, AFD, SONABEL, GRIDCo. The AfDB is not involved in the implementation. OMVG Bridge project The Project: Updating of studies on the construction of a bridge across the River Gambia to ensure the continuity of ground transportation between the Senegal and the Gambia (West Africa). Objectives: To undertake in one stage comprising a review of the technical feasibility, determining the economic viability of the bridge and carrying out the environmental and social impact assessment, including impact on poverty, health and gender issues, the verification of the engineering designs, revision of bill of quantities, preparation of the costs estimates and tender documents. Outcomes of IPPF Support: The updating studies have been successfully completed and the following reports have been finalized: Updated Feasibility Study (including an assessment of the technical, financial, economic, and environmental viability). The Gambia River Basin Development Organization which is the recipient of the grant has decided to move to the construction stage. A donor roundtable is scheduled at a date to be determined. Achievements/Status of implementation: The physical implementation of the project will materialize after the successful completion of the transport facilitation study between the OMVG member states and in particular the countries of The Gambia and Senegal. This on-going study is funded through the EU - Africa partnership on infrastructure, and will be completed at the beginning of The Total investment cost for the physical works is estimated at 60.2 million. Expected Project Development Impact: Regional Integration: Reduction of missing links of (i) the Dakar-Gambia-Bissau-Conakry Trans West African Highway retained in the ECOWAS transport program, and (ii) the Trans-African Highway Cairo-Dakar-Lagos. Socio-Economic: (i) Access to affordable efficient transport system for passengers, businesses, mining companies, and small scale industries; (ii) Improved access to social service (health and education) delivery; (iii) poverty alleviation in The Gambia and Senegal and support the Senegalese Government s Programme de Relance des Activités Économiques de la Casamance (PRAEC). Funding Leverage Achieved EU has pledged funding all the physical project implementation costs (100%). Extension of Port San Pedro & upgrade of connecting roads (Côte d Ivoire). 21

30 The Project: Extension of the Port of San Pedro through the construction of new terminals and the upgrade of the main connecting roads to the neighbouring countries of Mali, Guinea and Liberia to concrete asphalt. Objectives: To undertake a feasibility study in order to attract the required funding from public sector, private sector and IFIs for its implementation. The study will develop an optimal investment option from technical, financial, economic and environmental points of view, in order to ensure value for money. The project is expected to foster the regional economies through increased international trade, as well as benefiting the local populations along the port main access roads. Outcomes of IPPF Support: The Feasibility studies have been successfully conducted. The draft final reports were received in December 2010, but are pending review and validation by the steering committee.. An optimal extension option of the port as well as of upgrade of the connecting roads have been designed. The feasibility study has enabled the organization of a successful road show in Tunis in July 2010 that informed potential investors on the project and collected their views on best way forward in its implementation. Achievements/Status of implementation: The feasibility study has confirmed the importance of the project to Côte d Ivoire and the region as a whole, and has optimized the level of investment required. Consequently, to take the project to the next stage, the Detailed Designs will be needed, and resources are being sought from various facilities available for an amount of USD 3 m. As for the project implementation, the financial feasibility study has concluded that best value for money could be reached through the concessioning to private operator of the terminal operation and maintenance, including the provision operation facilities (superstructures), whilst capital investments (construction of the terminal and dredging of the waterway) should be procured publicly. The estimated investment cost is 244 Euros million. Expected Project Development Impact: the project is expected to stimulate economic growth, socio-economic development and contribute to building efficient regional transport system to facilitate access to reliable services to the landlocked country of Mali and Eastern parts of Guinea and Liberia; The project will support import and export-oriented SMEs by facilitating intra and extra African trade and contributing towards regional integration. More specifically the project will extend the capacity of the Port to enable it play its role as regional Port as well as promoting multi-modal transport (road-rail) for a free flow of people and goods. 22

31 5 FINANCE AND RESOURCE MOBILIZATION 5.1 FUNDING AND EXPENDITURE STRUCTURE Donor Contributions The total funds pledged and received from Donors amount to about USD million 2 as shown in Table 4 below. Table 4 Donor Pledges and Disbursements Donor Amount Pledged Amount Disbursed Percentage Canada CAD 10,000,000 CAD 10,000, % Denmark DKK 22,700,000 DKK 22,700, % Germany EUR EUR 1,000,000 50% Norway NOK 45,000,000 NOK 45,000, % UK (DFID) GBP 6,000,000 GBP 6,000, % Spain EUR 2,000,000 EUR 2,000, % ADB UA 6,300,000 UA 6,300, % Total Request Letters for the payment of last instalments were sent in November, 2010 to the Donors (DFID, Norway and Germany) for the remaining pledges amount. Norway disbursed its last instalment on December, Utilization of Funds Utilization of the Fund s resources in 2010 is shown in the table below (status on 31 December 2010). Table 5 Utilisation of Funds (2010 ) Contributions Amounts (USD 000) Donors : Canada (CAD 10,000) 8,782 Denmark (DKK 22,700) 4,287 Norway (NOK 37,500) 7,375 DFID (GBP 5000) 7,960 Germany 1,284 Total Donor Contributions 29,688 AfDB Contribution (UA 6,300) 10,268 USAID cofinancing project 1,000 Total Contributions 40,956 Add : Net Interest Received 0,622, Exchange Gain Using the CAD/USD, DKK/USD, Eur/USD, NOK/USD, GBP/USD and UA/USD exchange rates prevailing at the time of the pledges. 23

32 Total Funds Available 41,703 Less : Disbursements 15,420 Fund s balance in account 26,282 REPRESENTED BY : Cash in Bank 1,826 Investments 24,930 Net amount payable -0,473 Total funds available 41,703 Total funds committed 30,582 Funds available for commitment 11, Commitments and Disbursements NEPAD-IPPF expenditures fall into two main categories: program administration and program activities. The Bank covers all expenses related to program administration from its administrative budget. The IPPF committed a total of USD million for the 9 projects approved as at 31 of December, The cumulative commitments of the Fund stood at USD million representing 76.41% of total funds disbursed by all donors including the AfDB into the IPPF accounts. During the year, total disbursement reached USD million. Cumulative disbursements stood at USD million 3 representing about 50.42% of total funds committed. The IPPF Financial Statements as of Dec are presented in Annex Donors and Resource Mobilization In addition to its current contribution, Germany through KfW is considering further contribution of EUR 3 million in 2011 to the NEPAD-IPPF Special Fund. Negotiations were concluded during the year and the Contract between KfW and the Bank is to be signed soon. During the year, contributions have been received from Germany, Norway, and UK. 5.2 FINANCIAL MANAGEMENT AND FINANCIAL STATEMENTS The Bank s Finance Department fulfils the required financial management for the Fund, including internal controls over the management of its finances in compliance with the Bank s financial management principles and international standards. In addition, the Bank issues an annual report on the effectiveness of the internal controls over its external financial reporting. Finally, the NEPAD- IPPF s resources (as well as those of other Funds managed by the ADB) are kept separate and distinct from those of the Bank. The Fund s Financial Statements are audited independently by the external audit firm of KPMG, which also serves as external auditor of the ADB. The Fund s 2010 audited Financial Statements, as well as the auditor s independent opinion are available separately. They will be forwarded to donors in due course. 3 These are preliminary figures subjected to final confirmation by End Dec 2008 Financial Statements and Audit. 24

33 6 STATUS OF NEW INITIATIVES 6.1 PROPOSED INITIATIVES In 2010, the Facility hired a consultant to conduct the review that the Oversight Committee (OC) had recommended end The consultant s Review Report was submitted to the OC at its June 2010 meeting. The report s key recommendations were endorsed by the OC, which requested an official response from Bank Management. In particular, the OC requested the rapid implementation of the recommendation relating to the preparation of the Facility s Strategic Business Plan for the period. Furthermore, the Facility pursued implementation of certain initiatives launched in 2009, in particular the training of project task managers in the use of SAP for project management, These initiatives that have been completed somewhat successfully, could improve management of Facility resources and project preparation activities. Their implementation status is given below. 6.2 NEPAD-IPPF SIX YEARS REVIEW REPORT At the request of the OC, the Fund undertook in 2010 the assessment of the Facility on the past six years activities. An independent consultant was recruited to carry out the study. The ToRs describe the main objectives of the review as (a) to provide evidence of how effectively the IPPF is meeting the objectives that are set out in its programme log frame, and identify significant shortcomings; and (b) based on the review s findings and conclusions, make recommendations on how to best strengthen its future mode of operation and work programme." The main conclusions of the consultant are: IPPF has taken significant steps since its establishment in fulfilling its primary mandate to assist in the preparation of continental and regional infrastructure projects in Africa. Its primary constraints have been the level of staffing, and the lack of an agreed results framework. The number of staff has been substantially increased in the past year or two, but substantial organizational issues remain. Although the Oversight Committee has in the past identified the need to strengthen the results framework, it has not been effective to date in ensuring sufficient progress in this area». Therefore, the consultant made a set of recommendations for the relevance, effectiveness, efficiency and accountability of IPFF in the future. The review report was submitted to the OC at its June, 2010 meeting. The report recommendations were adopted by the OC members. They expressed Management to response to the report recommendations In his response to the recommendations, Management welcomed the Independent Assessment of the Fund and committed to take measures to address the shortcomings related to the areas outlined in the report. However, he disagrees or agrees partially with some recommendations. These recommendations are mainly related to the mandate of IPPF in Capacity building area, the prioritization of the projects to be financed, the staffing of IPPF and the position of IPPF in the ONRI department structure. Management issued an Action Plan which provides further details on actions envisaged by the Bank in response to the recommendations of the report. The Management response is attached in annex 1.

34 6.3 NEPAD-IPPF STRATEGIC BUSINESS PLAN As part of a Results framework establishment by IPPF, the report recommended a strategic business plan with a results based log-frame. The Management committed to issue a draft of this SBP before the December, 2010 meeting of the OC. A consultant was recruited to support IPPF in elaborating this SBP. The process comprised IPPF staffs two days workshop and a Video conference with the OC members to complete the work A working draft report on the SBP was submitted to the OC at its December, 2010 meeting in Cotonou, Benin. The SBP will be finalized early in 2011 and formally approved by the Bank. It will therefore constitute de reference in the process of funds rising for IPPF. 6.4 Strategic communication and marketing Lack of communication within IPPF and its stakeholders is one of the weaknesses highlighted in the review report. A draft strategic plan for IPPF s communications was prepared in 2008 by an external consultant, and presented to the OC meeting in June A number of the consultant s recommendations were approved by the OC for implementation, including the development of an IPPF website and newsletter and the issues of communication. These issues have been addressed in the SBP. An action plan for the recommendations related will be implemented in USE OF SAP Data management ONRI shared drive has been created and is up and running. A new structure for organising projects data and information has been developed in line with steps of the IPPF project life cycle. Project management system Training sessions were hold for Staff to use the SAP in portfolio management. IPPF as a source of funding has been created in the SAP system. Workflow testing has been completed and is awaiting roll out into the Production Environment by our IT department. A consultant has been recruited and is already in place to help organize IPPF Project data files, enter existing projects into SAP Project System and improve the quality of project information. SAP will enhance the processing of IPPF projects, such providing guidance to staff on Bank procedures and processes throughout the project cycle, making readily available projects data, and facilitating portfolio monitoring. 6.6 HUMAN RESOURCES From January to end of June 2010, seven professional staffs were appointed to IPPF for management of the portfolio and processing new projects, while two staff were managing the Fund. Since July, 2010 the technical staff has been transferred to ONRI.1 which is, from this date, in charge of managing the portfolio and processing new projects. As part of their contribution to the Fund, three donor countries have seconded staff to support its activities: 26

35 - Germany: The contract of the capacity Building expert who was seconded through GTZ to the IPPF as part of the contribution of Germany to the Fund for a period of two years, since 2008, ended in September, The expert in CB activities has worked alongside the Bank s staff to the implementation of the Fund s CB program. - UK (DfID): A transport Expert has been seconded since 2009 to the Department. As agreed with the Bank, he is sharing his time within the Department including the IPPF and the ICA. He worked on various transport corridor issues as well as broader infrastructure issues. - Denmark: An energy, power pools expert has been seconded to IPPF in April 2010 to help promote power trading between the power pools. He also has expertise in climate change and energy issues which will be a value addition to the Fund. 7 OUTLOOK FOR 2011 In 2011, the Fund s operations will be guided by its Strategic Business Plan, currently under finalization. The Business Plan includes a priority action plan for 2011, which will provide guidance on activities to be focused on. The key principal to guide the Fund s operations will be its aim to position itself as the facility of choice for clients and donors in order to prepare and facilitate delivery of viable regional infrastructure projects on the continent. This will be enhanced with greater emphasis on achieving outcomes and impact rather than grant processing volume. Selection criteria for grants will be tightened to meet the recommendations made in the IPPF Review Report. One of the recommendations to be considered is the allocation of part of the donor funding for small interventions requiring a rapid approval process to meet urgent needs (e.g. assessing project quality at entry and removing blockages during the project cycle, etc). The arrangements might involve obtaining waivers initially, but the intention will be to introduce a framework contract which should be more cost-effective by reducing fee rates and speeding up procurement. 7.1 CRITERIA FOR PROJECT PRIORITIZATION There is a strong demand for regional infrastructure and limited resources available. IPPF needs to prioritise requests carefully on the basis of objective criteria in order to ensure a focus on the quality of its interventions rather than quantity. The prioritization criteria have been fine-tuned in the SBP. IPPF processes grant requests in a two steps: 1 st Step: screening of eligibility for IPPF funding. This is a pass/fail test, based on a number of criteria derived from IPPF s Operational Guidelines, in order to ensure Strategic Alignment with Client, geographic and sector eligibility; Regional and continental objectives (NEPAD programs, and RECs and their Specialised Institutions specific Master Plans). 2 nd Step: detailed technical screening of eligible requests through a robust screening of development impacts and project readiness. Development impacts cover economic and financial viability, environmental and social impacts, regional integration impacts (increase in volume of trade, movement of people and reduction in cost of services), and transfer of technology & know-how. Project readiness is based on commercial and political 27

36 commitment, client s previous performance with IPPF, and evidence of financiers for downstream implementation ROLLING WORK PROGRAM Strategic fit As for the past year, the 2011 Rolling Work Program is guided by the following: (i) strict adherence to the strategic priorities of the Fund; (ii) complying with the guiding principles; (iii) alignment with the AU/NEPAD/RECs strategic priorities; (iv) IPPF Operational Guidelines; (v) prioritization criteria set above; (vi) the available and future resources and; (vii) the capacity of the beneficiaries. The Work Program is crafted around four major pillars, which include (i) The preparation of high quality and viable infrastructure projects; and (ii) mobilizing additional resources into the Fund The Work Program Figure 13 Work Programme by REC Figure 12 Work Programme by Sector A draft work programme has been issued for submission to the prioritization process. This process was carried out by ONRI Department and NPCA on the first day of the 13 th OC meeting in Cotonou. Thereafter the elected programme was submitted to the OC clearance. The indicative grants programme to be implemented in 2011 is given in annex 7. 28

37 8 CONCLUSION 8.1 The Fund has made good progress in implementing its Work Program during the year. Nine new grants have been approved, while pre-investment activities in support of key projects are advancing as planned. Disbursement rate was increased from 41% to 49.35%. By the same time, the review of the Fund was undertaken by an independent consultant. A strategic business plan (SBP) was issued for a better performance of the Fund. The Fund also participated in a number of outreach missions and BOS. In addition, the Fund achieved discussion with KfW for a pledge of additional resources. New donors expressed their interest to contribute to the Fund (Spain). Finally, while significant improvements have been made, there remains a lot to be done in terms of portfolio management, the timely delivery of outputs and Funds mobilization. 8.2 After six years in existence, the Facility is at a crossroads, and many challenges remain to be addressed. Seventy five per cent (75%) of Facility resources have been committed. This requires the initiation of discussions with present and future donors regarding their replenishment. In this respect, the Strategic Plan will be used to back negotiations with donors. ANNEXES ANNEX 1: SUMMARY OF THE REVIEW REPORT AND MANAGEMENT RESPONSE TO THE RECOMMENDATIONS ANNEX 2:NEPAD-IPPF ACTIVE PORTFOLIO AS OF DECEMBER 2010 ANNEX 3: LIST OF COMPLETED PROJECTS AS OF DECEMBER 2010 ANNEX 4: 2011 INDICATIVE WORK PROGRAM ANNEX 5: JOINT FINANCIERS WITH OTHER PPFs ANNEX 6: FINANCIAL LEVERAGE ACHIEVED ANNEX 7: NEPAD-IPPF FINANCIAL STATEMENTS AS OF DECEMBER 2010 ANNEX 8: NEPAD-IPPF RESULTS-BASED LOG-FRAME 29

38 ANNEX 1: SUMMARY OF THE REVIEW REPORT AND MANAGEMENT RESPONSE TO THE RECOMMENDATIONS Executive summary Overview of the review This review has been conducted over the period February to April It covers the six years since IPPF was established in November 2003, but focuses especially on the present situation (as at early April 2010), and lessons learned from past experience as the basis for making recommendations for the future. The findings of the review are based on a questionnaire-based survey of stakeholders to provide a structured framework for comparing views and judgements, and on reviews of IPPF documentation. In addition, visits were made to Tunis (twice), Lusaka and Abuja for face-to-face meetings with IPPF and other AfDB staff, COMESA, ECOWAS, and other stakeholders to the extent possible. All data collection took place in English or French as appropriate. We summarise below our conclusions and recommendations. In the interests of brevity these focus only on the issues where improvements can be made, and exclude any summary of IPPF s achievements. For more information, readers should read the main report and accompanying annexes. Conclusions IPPF has taken significant steps since its establishment in fulfilling its primary mandate to assist in the preparation of continental and regional infrastructure projects in Africa. Its primary constraints have been the level of staffing, and the lack of an agreed results framework. The number of staff has been substantially increased in the past year or two, but substantial organisational issues remain. Although the Oversight Committee has in the past identified the need to strengthen the results framework, it has not been effective to date in ensuring sufficient progress in this area. Relevance The IPPF remains highly relevant to Africa s regional development needs, but it was established to help implement the NEPAD programme and the current institutional and organisational arrangements do not ensure that this purpose is met. Since its establishment, the IPPF s mandate has become more diffuse. It now requires greater clarification and focus. The original mandate was primarily the preparation of viable and bankable projects, and secondarily capacity building. Its primary mandate is clear, but its precise role in the broad field of capacity building has not yet been defined. Effectiveness The context in which IPPF operates is very challenging. In this situation, IPPF must focus clearly on the bankability of projects that it supports. If the projects do not reach financial closure and implementation, IPPF s preparatory work is in vain. Coordination among the large number of project preparation facilities remains weak. The Tunnel of Funds initiative is not yet operational, and there is no form of clearing house for deciding which PPFs are most suited to which stages of which projects. IPPF could potentially play an important role in improving collaboration between PPFs and other parties involved in the project preparation process. In its first years of operation, IPPF has been largely reactive. With the recent increase in IPPF s staffing, IPPF has the opportunity to be more proactive in improving the quality at entry of projects. This could be achieved through tightening the eligibility criteria to ensure that the projects supported 30

39 are genuine regional priorities (in consultation with AU/NEPAD and the RECs), and the likelihood of bankability is good. The balance between the processing of new requests for IPPF funding and the supervision of on-going projects has been biased toward the former. The emphasis on supervision should be greatly increased so that IPPF can be proactive in resolving issues as they arise and speeding up the project preparation phase. Efficiency The rapid expansion in IPPF staff that has taken place over the past year or two poses many institution building challenges for IPPF management. IPPF is not yet an efficient operating unit. There was virtually no institution building in the first years of operation, and, at the time of our review, the position and status of IPPF within AfDB was unclear and confused. IPPF requires greater independence and autonomy including having its own core technical staff so that it can reach judgements independently of other AfDB staff. It should have sufficient budgetary freedom so that it can take its own decisions on, for example, the timing of supervision missions. IPPF also needs the systems to enable it to operate efficiently as a project preparation facility. The most important requirements are for an information management system and a project management system. Accountability IPPF has lacked an appropriate results framework both to enable assessments to be made of what IPPF has achieved and the likely impact, and to provide appropriate reporting information to stakeholders including donors. Internally, IPPF has lacked monitoring systems that would be required to improve performance. Since all IPPF s projects are regional, it follows that there should be a sense of ownership by a REC or other appropriate regional body (e.g. a power pool). There is a case for a more structured and institutionalized process for consulting RECs, including in taking forward the recommendations from this review. 31

40 A F R I C A N D E V E L O P M E N T B A N K G R O U P GROUPE DE LA BANQUE AFRICAINE DE DEVELOPPEMENT Management Response to Oxford Policy Management s (OPM) Independent Assessment of the NEPAD Infrastructure Project Preparation Facility (IPPF) Management welcomes Oxford Policy Management s (OPM) Independent Assessment of the NEPAD Infrastructure Project Preparation Facility (IPPF) conducted between December 2009 and June The assessment methodology has drawn on internet surveys, interviews with IPPF staff and key stakeholders, as well as selected field visits to follow up with Regional Economic Communities (RECs) and their specialized institutions. These have helped pull together constructive findings and actions going forward to improve the performance and effectiveness of the Facility. Since IPPF was established in 2003 it has become a facility of choice at the continental and regional level. By the end of May 2010, IPPF s active portfolio consisted of 41 projects totalling US$28m. IPPF has focused on developing key priority regional infrastructure in Energy, ICT and Transport sector over the last six years, including those listed in the NEPAD Short Term Action Plan (STAP) and the Africa Action Plan (AAP). IPPF has done a lot with relatively modest resources both staff and funding. IPPF has prepared regional infrastructure projects worth around USD4.7bn representing a huge leveraging potential. Projects under implementation are helping to close the infrastructure gap in Africa. This in turn is enhancing the competitiveness of African economies, supporting regional economic integration and trade Demand for IPPF s resources is growing. The potential pipeline between 2011 and 2013 is currently estimated at 53 projects and US$50mil. The majority of these projects are in energy and transport sectors. The review comes at an important time. The Programme for Infrastructure Development in Africa (PIDA) has just started. PIDA will play a key role in defining priority regional projects and programmes, and in turn NEPAD IPPF will have a critical role in helping take these priority projects to financial close in cooperation with other preparation facilities and financiers. IPPF remains relevant today. The shortage of bankable projects remains a key bottleneck for delivering infrastructure projects in Africa. Infrastructure projects have long gestation periods and often require complex feasibility studies involving multiple stakeholders, complex legal, financial and regulatory environments. Cross-border projects are inherently more complex given the scale of the investment required, dealing with multiple governments, financial, legal and regulatory environments. Future replenishment of IPPF will be critical to assist African countries, Regional Economic Communities (RECs) and their specialized institutions to prepare high quality and viable regional infrastructure projects in Energy, Transport, ICT and Water Resources,, develop consensus and broker partnerships for their implementation through public, private or other sources of finance. 32