The Board of Directors of the Africa Development Bank Group (AfDB) on Wednesday, October 28, 2015 approved combined funding amounting to US $284.97 million in support of road infrastructure projects in Tunisia, an SMEs development project in Kenya, and a youth employability and integration in growth sectors project in Togo.
Tunisia's Road Infrastructure Modernization Project (PMIR)
Tunisia's Road Infrastructure Modernization Project (PMIR) seeks to rehabilitate 719 kilometres of classified roads, mainly in the country's inland (West, Centre-West and North-West) governorates.
The Bank's support comprises €144-million ADB loan, €46.12 million loan from the Africa Growing Together Fund and US $1.68 million Middle Income Countries Technical Assistance Fund grant.
The project will also undertake periodic maintenance of 2,500 kilometres of classified roads that were upgraded under previous road projects funded by the Bank, the Tunisian Government and other donors over the past decades.
In line with Tunisia's road network upgrading priority programme, PMIR, it is expected to improve user mobility on the classified road network by reducing transport constraints resulting from the narrowness and structure of carriageways. It will also help to protect the existing road network, while fostering intra- and inter-regional trade and reducing regional social disparities. Finally, it will reduce accidents and improve road infrastructure resilience to the effects of climate change.
Kenya Chase Bank Limited US $50-million Line of Credit
The Kenya Chase Bank Limited line of credit will support the growth of Chase Bank's multi-sector SME loan portfolio in Kenya.
Chase Bank's focus on SMEs is expected to produce significant development outcomes for the proposed line of credit, given the importance of SMEs to Kenya's economic growth. This includes the creation of an estimated 500 jobs for sub-projects funded as a result of the loan, as well as additional government revenues from taxes paid by SMEs.
The line of credit will also support efforts by the Bank to improve Kenya's SMEs access to financing and complement support extended to Kenya's SMEs by both the AfDB and other development partners.
Chase Bank is a Tier 2 Kenyan bank established in 1996 with a specific focus on SME financing. It has experienced significant growth over the past eight years with the number of branches growing from 13 in 2010 to 38 in 2014. It has a strong SME banking product portfolio, which includes SME-focused overdraft facilities, term loans and asset financing products. Approximately 70% of its loan book is advanced to SMEs.
Chase Bank intends to generate more than KES 90 billion (USD 960 million) in new loans, of which KES 63 billion (USD 675 million) will be new SME loans. The growth will be funded through a combination of new customer deposits, funds mobilized from equity and debt investors, including DFIs, as well as a bond issuance. The approved AfDB LOC will complement these sources.
Togo's Support Project for Youth Employability and Integration in Growth Sectors
The funding approved for Togo comprises of US $9.38-million African Development Fund grant, US $1.87 million Transition Support Facility grant and US $9.12-million Nigeria Trust fund loan.
The project aims to create the conditions for more inclusive economic growth by improving youth employability and promoting entrepreneurship in growth sectors.
As an integrated project which has involved the participation of several Bank departments (human development, agriculture, fragile states, inclusive financing and research), it aims to provide a contextual response to youth integration needs. This will be achieved through support to entrepreneurship in the agricultural value chain. It will also provide solutions to youth underemployment by developing prospecting tools that will adapt the vocational training system to labour market requirements.
The project will specifically target 12 key established SMEs, 1,200 young entrepreneurs (30% of whom are women), 14,200 producers/stockbreeders (40% of whom are women) and 200 women from vulnerable rural villages, 1,000 young people trained in vocational training (VT) centres supported by the project, 40% of whom are women. The other project targets are four microfinance institutions, one financial institution (FI) and five training centres in the same regions in order to train young people in trades with good prospects.
It is expected to reduce the incidence of poverty from 58.7% (2011) to 49% (2025) as well as reduce the combined unemployment and underemployment rate for young men from 22% (2011) to 16% (2025) and young women from 31.9% (2011) to 26% (2025). In the medium term, about 19,600 direct jobs (40% of which will be for women) will be created. The beneficiaries' incomes are expected to rise by 25% by 2020.
The project incorporates an impact analysis of entrepreneurship support which consists in supporting all the agricultural value chain actors who will be empirically evaluated in order to assess the chain's impact in terms of job and income creation. This would help to guide public action in widely disseminating the approach.
