Government representatives, heads and senior officials of financial and multilateral development banks (MDBs), civil society organizations, private sector and academics are meeting in Arusha, Tanzania, from 28 May to 1 June 2012 for the African Development Bank Group's Annual Meetings.
The theme this year is 'Africa and the Emerging Global Landscape: Challenges and Opportunities.'
The convergence of crises - financial, economic and socio-political - have made the African Development Bank's (AfDB) operating environment more challenging since the sixth general capital increase (GCI-VI), which was approved at the AfDB Governors' Consultative Committee in Washington in April 2010, and which resulted in the tripling of the Group's capital.
The crises have triggered major developments, including socio-political unrest in some African regions and the Eurozone sovereign debt crisis. While African economies have continued to grow despite these factors, the global financial and economic crisis did have some spillover effect in Africa.
"These developments also pose significant challenges to the Bank as well as all other MDBs and will continue to impact its activities over a medium term horizon," says Kodeidja Diallo, the AfDB's finance and risk management director.
She was speaking at a meeting with rating agencies and explained the AfDB's financial profile, saying: "Notwithstanding these developments and challenges, the Bank's financial profile is strong, underpinned by prudent risk management, and financial policies, conservative liquidity management and adequate ALM monitoring and good risk oversight." to capital markets is more difficult.
She continued: "The dynamic of the operating environment highlights the need, more than ever before, to build further resilience and ensure longer term financial sustainability."
In this respect, the Boards of Directors and Management remain "resolutely committed to the highest standards of risk management."
Consistent with the pledge made by the AfDB during the GCI-VI negotiations, several measures have been taken. She summed these measures up.
The Bank's risk appetite has been clearly defined, thereby ensuring a common institution-wide understanding and monitoring of the Bank risk-taking activities, particularly for private sector operations.
The Income Model has been approved by the Boards. It provides a framework for balancing the desire to maximize the volume of the Bank's development assistance activities with the need to assure its financial integrity and long-term sustainability.
A Credit Risk Committee (CRC) has been established, composed of management/senior staff and risk experts. The CRC is fully operational and is responsible for end-to-end credit risk governance, credit assessment, portfolio monitoring and rating change approval.
Following the adoption by the Boards of Directors of an Operational Risk Management Framework proposed by management, the AfDB is currently developing detailed operational risk management guidelines as part of the package of measures.
Mrs Diallo also noted that "complementary initiatives are ongoing with a view to building resilience and to preparing the Bank for continued growth in non-sovereign operations, as well as to optimizing the utilization of its scarce resources".
Key actions include implementing an Enterprise Wide Risk Management framework, including a corporate risk dashboard and an integrated risk platform, the revised Asset and Liability Management framework with associated EC capital adequacy framework; and the final determination of the organizational positioning of the risk management function.
Together, these measures are expected to better prepare the Bank for a strong and sound growth path, protect its "triple A" rating and ensure its relevance to all shareholders, she concluded.
Contacts
Aristide Ahouassou
