AfDB: Heavy on Infrastructure

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In 2010, the African Developmnet Bank became the leading source of multilateral funding for new African infrastructure, beating out the World Bank for the first time. The majority of the Bank’s approved projects for 2010 were focused in the infrastructure sector, specifically transportation and power, totaling $3.9 billion (see chart). While AfDB’s internal 2011 Annual Development Effectiveness Review stresses sector diversification in areas such as private sector development, regional integration, higher education, and science and technology, there is little doubt that infrastructure will remain the Bank’s core sector for years to come. In this sense, the AfDB is following the path of the Asian Development Bank which was primarily an infrastructure-focused institution in its early years, but has persistently ventured into other key development areas.

AfDB’s infrastructure concentration has played out nicely for the Chinese who have already proven masterful dealing with African countries on a bilateral basis by negotiating through innovative project financing and implementation packages. It now appears that AfDB is harnessing China’s commitment to Africa and using it as a tool to promote regional integration. Indeed, China has been able to penetrate the AfDB and secure an astounding number of high-value contracts largely on the basis of cost. Chinese companies are the top recipients of AfDB contracts and the trend is not expected to end anytime soon (see table below).

Other major contract winners are firms from the French-speaking countries of France and Tunisia, the latter of which is the temporary home of the Bank. The success of French firms is not altogether surprising considering the francophone European tradition and influence at the Bank. Indian firms round out the top four and appear to be following the Chinese model of focusing on infrastructure development and competing on cost alone.

The United States ranked 16th in terms of total AfDB funds awarded in 2010 highlighting the fact that U.S. construction and infrastructure firms remain somewhat on the AfDB sidelines and have not yet committed themselves to working with the Bank. Despite comparatively little activity from American firms, AfDB is scheduled to open a Washington D.C. office in 2012 in an effort to facilitate and accelerate American engagement with the Bank. 

 

About the author

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    Louie-An Pilapil

    Louie-An is a former senior development analyst at Devex Manila. She has held consulting and editorial positions at the Asian Development Bank in Manila and a business-to-business media company in Hong Kong and mainland China.