16th replenishment of the African Development Fund (AfDF) Core Contribution 2023-2025

The African Development Fund (AfDF) is the concessional window of the African Development Bank (AfDB). Since its establishment in 1972, the AfDF provides advice and long-term financing to 37 low income countries in the form of concessional loans, grants and technical assistance. Special support is provided to fragile and conflict affected states, to boost private sector development and to address climate change. The AfDF has gained a strong comparative advantage in infrastructure financing (energy, transport, water and sanitation), private sector operations, regional integration and addressing fragility.

During the pandemic, the AfDF responded swiftly by launching the Covid-19 Response Facility and to the food crisis as a result of the Russian military aggression against Ukraine by establishing the African Emergency Food Production Facility. It addresses the development challenges of the fragile and conflict-affected countries through the Transition Support Facility (TSF). Through the Private Sector Credit Enhancement Facility, the AfDF scales up private sector operations in AfDF eligible countries. As part of the AfDF-16 replenishment, a Climate Action Window (CAW) was established, a dedicated window within the AfDF to scale up the AfDF’s response to climate change. 

The AfDB (including AfDF) is one of 23 priority multilateral organizations according to Switzerland’s Strategy for International Cooperation 2021-2024. Switzerland’s membership of the AfDB corresponds to its international cooperation, foreign and economic foreign policy interests.

The overarching objectives of the AfDB Group’s Ten-Year Strategy (2023-2032) are consistent with Switzerland’s international cooperation strategy. The AfDB’s seeks to contribute to inclusive growth and the transition to green growth through five operational priorities (the socalled “High 5s”): Light up and power Africa, Integrate Africa, Feed Africa, Industrialize Africa, and Improve the Quality of Life of Africans. The strategic directions and operational priorities of AfDF-16 are well aligned with Switzerland’s international cooperation strategy. 

The AfDB Group plays an important role in a priority region for Switzerland’s international cooperation that offers economic opportunities, but is also affected by fragility and migratory flows. A sustainable development in Africa is, ultimately, in Switzerland's own best interest. The membership in the AfDB Group offers the opportunity to contribute to economic development and poverty reduction also in countries where Switzerland is not bilaterally active. Moreover, operations in Switzerland’s countries of engagement offer opportunities for synergies between bilateral and multilateral approaches.
The AfDB’s initiatives (climate action window, market borrowing) are well aligned with the Evolving MDBs reform agenda.

Under the AfDF-15, the performance of the AfDF was overall satisfactory. 86 policy commitments have been delivered out of the 92. Of the 6 remaining ones only the review of the Whistleblowing Policy has been delayed (expected to be approved in Q1 2023). The remaining five policy commitments are expected to be delivered by end of the ADF-15 cycle in mid-2023 (new electricity connections, recruitment of additional fragility experts, risk participation in transition countries, projects managed from regional hubs and field offices, projects to boost decent job creation and skills development).

The AfDF played an important role to help address multiple crises, namely climate change, the recovery from Covid-19, rising debt and inflation and the food and energy crisis as a result of the Russian invasion of Ukraine. It has a coherent strategic framework and clear business model. While its internal structures, processes and procedures generally support a reasonably efficient and effective delivery in line with the organisation’s mandate, the Group is undertaking a number of organizational reforms to address staffing constraints, improve quality of delivery and strengthen monitoring of compliance with environmental and social safeguards. 

Swiss achievements have largely been satisfactory, thanks to a continued use of well informed Board interventions and targeted support to AfDB initiatives. During the AfDF-16 replenishment negotiations, the majority of Switzerland's priorities were taken into account. 

• Climate Change: Switzerland made substantive contributions to the new climate change & green growth strategy. Switzerland increased its contribution to the ADRiFi TF (disaster risk management), operationalized a parallel financing to support net metering in Ghana, and scaled up its contribution to the Urban and Municipal Development Fund. 
• Private sector development: Switzerland contributed to the new Private sector development strategy and the revised framework of the Private Sector Credit Enhancement Facility (PSF). 
• Fragility, Conflict & Violence (FCV): Switzerland’s inputs were fully integrated in the new Strategy for Addressing Fragility and Building Resilience in Africa. The AfDB is clearly committed to make a difference in fragile situations and take into account competences and concerns from donors. The Agreement on fragility between Switzerland and the AfDB was extended until end 2022. 
• Quality and sustainability: Switzerland consistently highlighted the need to strengthen institutional governance, operational quality, maximize development impact and compliance with environmental and social safeguards in relevant Board discussions.
• Gender: Switzerland contributed to the new gender strategy approved in 2020. The Bank is seeking certification by EDGE (Economic Dividends for Gender Equality).

Switzerland has been critically and constructively engaged throughout the cycle as part of the German-led constituency group and during the Annual Meetings. The good collaboration and the like-mindedness of the Constituency members continued throughout the cycle. Between 2017 and 2020 it occupied the position of Executive Director. 

Switzerland will monitor the overall objectives of AfDF-16 to foster a resilient, greener, inclusive and integrated Africa” delivered through two pillars: 1) sustainable, climate-resilient and quality infrastructure, and 2) governance, capacity and sustainable debt management. 

• Inclusive Growth: demonstrate progress and comparative advantages in addressing development challenges, poverty and inclusive growth, in the 37 least developed African in a sustainable manner. 
• Climate change mitigation and adaptation: demonstrate progress towards achieving Paris Alignment, including by adopting a forward-leaning, restrictive energy policy. Scaling up climate finance, including through the implementation of the CAW. 
• Private sector development: reducing institutional and regulatory obstacles that continue to constrain private sector development and accelerate the generation of impactful, ESG-compliant non-sovereign operations in line with the new private sector development strategy. 
• Organizational effectiveness: demonstrate continued progress on governance and institutional reforms, in particular the completion of the holistic review of independent functions.
• Financial solidity and stability: demonstrate progress on strengthening the AfDB’s financial capacity, including by implementing the recommendations of the G20 review on Capital Adequacy Frameworks and agreeing on market borrowing for the AfDF.

Swiss engagement priorities at the Board or in regular interactions with staff are organized along the AfDF policy outcomes. At the strategic and institutional levels, a particular emphasis is put on selectivity, partnerships and coordination, results orientation, institutional governance, financial capacity and compliance with and harmonization of E&S standards. Thematically Switzerland will pay particular attention to climate mitigation and adaptation, private sector development, gender and joint fragility related activities. 

• Climate Change: Switzerland will contribute tothe review of energy policy in 2023. Switzerland will closely monitor theimplementation of the Climate Action Window. Switzerland will implement the ongoing multi-bi initiatives on renewable energy and urban development.
• Private sector development: Switzerland will monitor the implementation of the new private sector development strategy including the rebalancing the non-sovereign portfolio, and continue to implement of the Boost Africa project.
• Fragility, Conflict & Violence (FCV): Switzerland will monitor the implementation of the programmatic approach under the TSF (Transition Support Facility). Switzerland will seek to enhance bilateral cooperation with the AfDB. Switzerland encourage Swiss Country Offices (SCO) to explore opportunities for joint fragility related activities in the Sahel, Lake Chad Basin, and Horn of Africa regions.
• Quality and sustainability: Switzerland underscores the importance of strengthened results- and performance orientation and sufficient resourcing for the monitoring of compliance with environmental, social and governance standards
• Gender: Switzerland will continue to support the new gender strategy approved in 2020. The Bank is seeking certification by EDGE (Economic Dividends for Gender Equality). 

Development outcomes of the AfDF will be measured through the AfDF Results Tracking System (RTS). The RTS is an integral part of the AfDB Group’s Results Measurement Framework (RMF). The RTS will track development results during ADF-16 at the level of countries and operations, as well as at the level of organizational efficiency and effectiveness. 

Switzerland remains the 11th largest donor. With this contribution, Switzerland maintains its quota at nearly 3% (it marginally loses 0,09% of its burden share).

The main donors are: GER (488 M UA, 9.6%), FR (446 M UA, 8.7%), US (414 M UA, 8.2%), UK (403 M UA, 7.5%), JP (234 M UA, 7.3%). Morocco and Algeria contributed for the first time, and joined Angola, Egypt and South Africa as regional donors to the AfDF.

Switzerland coordinated closely with other donors, notably in the EU++ group. Switzerland’s distinct priorities on partnerships, institutional governance and results orientation were supported by many like-minded. Coordination in the Executive Board will remain key during implementation.