ADF-14 Second

Replenishment MeetingJune – July, 2016

Abidjan, Côte d’Ivoire

ADF-14 Resource Allocation

Framework

Allocated Resources under ADF-13

2

Central

663East

1,695North

25South

309West

1,634

Allocation by Regions (in UA million)*

Central15%

East39%

North1%

South7%

West38%

Share, by Regions*

* Resources allocated through the PBA, the Pillar I of the TSF, and approved regional operations

3

ADF-13 Resource Utilization Rate

165

393

591

1,046

2 976

71%

84%

64%

PSF

TSF Pillar II

TSF Pillar I

RO

PBA

As at May 17, 2016

UA 2,017 MillionBalance available for

commitment

Fully Prioritized

UA Million

CPIA/PBA – Adjustments under ADF-13

4

Performance

Addition of a New Cluster E

to the CPIA Questionnaire

Infrastructure Development

Regional Integration

Country

Performance

Assessment

Greater

weight

(Larger

Exponent)

Needs

Minimum

Allocation

5

15

AIDI in the PBA Formula

No CPIA Distortion because of Cluster E

5

3.35

3.48

3.513.52

3.54

3.50

3.54

3.51

3.53 3.53

3.473.48 3.48

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Avg. Cluster A to D

Avg. Cluster A to E

Country PBAs under ADF-13

6

19.4

21.8

13.0

16.9

28.9

FirstQuintile

SecondQuintile

ThirdQuintile

FourthQuintile

FifthQuintile

Country PBAs by AIDI QuintilesAvg. 2011–13 AIDI Quintiles

Impact of the AIDI under ADF-13

50.2

16.512.6

15.1

5.6

FirstQuintile

SecondQuintile

ThirdQuintile

FourthQuintile

FifthQuintile

Country PBAs by CPIA QuintilesAvg. 2013–15 CPIA (A – E) Quintiles

Performance Remains the Bedrock

Move to a Biennial CPIA

7

Help Streamline the CPIA Process

… give the Bank and RMCs a clearer picture of the CPIA

CPIA scores DO NOT change a lot in one year

3.47 3.48 3.48

3

4

CPIA Avg. A to E

Africa

2013 2014 2015

3.40 3.41 3.39

3

4

CPIA Avg. A to E

ADF Countries

Addressing Fragility in the PBA Formula

8

Input Data Same as ADF-13

Envelopes PBA PBA plus TSF

Scenario 1: Exp. (+0.5)

Scenario 2: Exp. (+1.0)

Scenario 3: Exp. (+1.5)

Scenario 1: Exp. (–0.5).

Scenario 2: Exp. (–1.0)

Scenario 3: Exp. (–1.5)

Fragility

Indices

State

Fragility

Index (SFI)

ND-GAIN

Option 1: SFI Only

Option 2: ND-GAIN Only

Option 3: ND-GAIN and SFI

Explored

Options

Keeping the PBA formula Unchanged

1.481.57 1.53

1.63

0.98

1.091.05

1.17

Baseline Option 1SFI Only

Option 2ND-GAIN Only

Option 3SFI & ND-GAIN

9

TSF e

nvelo

pe

TSF e

nvelo

pe

TSF e

nvelo

pe

TSF e

nvelo

pe

PBA + TSF envelopesPBA envelope

Keep the current formula

… adding a fragility component to the PBA formula would not scale-up resources to countries

experiencing fragility

UA Billion

Tradeoff between Set-Asides and CDLs

1000

1100

1200

1300

1400

1500

1600

2 200 2 300 2 400 2 500 2 600 2 700 2 800 2 900 3 000

CD

Ls (U

A m

illio

n)

Set-Asides (UA million)

10

Proposed Eligibility to TSF

11

Eligible for TSF

Pillar I (15)

Burundi

Central African Rep.

Chad

Comoros

Congo Democratic Rep.

Guinea-Bissau

Liberia

Madagascar

Mali

Sierra Leone

Somalia

South Sudan

Sudan

Togo

Zimbabwe

Eligible for TSF

Pillar III (17)

Eritrea Gambia

Qualitative

Assessments (3)

Guinea

Malawi

Niger

Exit (1) Côte d’Ivoire

The TSF Envelopes

12

572

3060

534

10% 15% 2060

Pillar I Pillar II Pillar III

Pillars’ Envelopes(Baseline Scenario – UA Million)

ADF-13 ADF-14 Proposal

1,384

1,786

PBA + TSF Pillar I

Côte d’Ivoire

Guinea

Resources to TSF Countries (Baseline Scenario – UA Million)

TSF Pillar I Calculation

25

15

10

60

60

13

35

60

60

15

11

22

60

40

45

41

Burundi

Central African Rep.

Chad

Comoros

Congo Democratic Rep.

Cote d'Ivoire

Guinea

Guinea-Bissau

Liberia

Madagascar

Mali

Sierra Leone

Somalia

South Sudan

Sudan

Togo

Zimbabwe

Unallocated Reserve

13UA Million

Country allocations as agreed

under ADF-13 discussions

15 Countries = UA 572 million

26

10

60

10

60

10

17

60

60

12

10

19

60

16

24

80

Proposed country allocations

for ADF-14

15 Countries = UA 534 million

RO – Proposal for ADF-14

14

• Maintain the RO Envelope at 21% of Resources

Available UA 1,388 million expected under the baseline scenario

(UA 1,046 million under ADF-13)

• Reduce the RO Contribution Leveraging Ceiling Eligible to TSF: From 1:2 To 1:1.5

Not Eligible to TSF: From 1:1.5 To 1:1

Reduce the number of postponed regional operations

ADF-14

PBA

1

RO

1.5

PBA

1

RO

1

Eligible

for the TSF

Not Eligible

for the TSF

Scaling UP the PSF for ADF-14

15

ADF-13

40%PSF’s exposure

capacity allocated

15ADB private sector

transactions approved

Higherrisk return operation in

fragile situations

Reachingunder-served sectors

through private sector

UA 200 million

Excepted Envelopes for ADF-14Under the Baseline Scenario of UA 7 Billion

16

3,109

1,046

662

165

4,408

1,388

614

200

PBA RO TSF PSF

UA Million

ADF-13 ADF-14 (Baseline)

Excepted Allocations for ADF-14Under the Baseline Scenario of UA 7 Billion

17

2,187

1,046

1,384

165

3,091

1,388

1,786

200

PBA (Excl. NonFragile Situations)

RO TSF Pillar I + PBA(Fragile Situations)

PSF

UA Million

ADF-13 ADF-14 (Baseline)

18

Recommendations

• Undertake the CPIA exercise every two years

• Keep the current PBA formula unchanged

• Increase the unused reserve of the TSF Pillar I from 10% to 15%

• UA 20 million to Pillar II of the TSF

• RO envelope at 21%

• Reduce the RO contribution leveraging ceiling

• UA 200 million to PSF

19Thank You