Independent Development Evaluation (IDEV) at the African Development Bank Group (AfDB or “the Bank”) undertook an evaluation of Loan Syndication at the Bank over the period 2008-2019.
As part of the evaluation of partnerships at the Bank, this evaluation assessed the Bank's performance in mobilizing resources from the private sector through loan syndication. Its findings give an overview of the performance over the past decade, while highlighting recent improvements and persisting challenges. They are presented under the three criteria of relevance, effectiveness, and efficiency.
IDEV’s evaluation found the Bank’s syndication approach satisfactory and aligned with the Bank’s key policies and strategies. It is considered a useful and adequate instrument that fits the needs of the Bank’s clients, regional member countries and potential investors. However, the effectiveness and efficiency of the Bank in syndicating loans were rated unsatisfactory. With only five syndications over 2008–2019, the Bank’s performance has been modest and can be improved significantly. The evaluation also found multiple implementation challenges, among which weaknesses in internal coordination and the inadequacy of the incentives in place, notably the Key Performance Indicators and the staffing.
Some of the main lessons to come out from this report are as follows:
1. Deals are likely to be more successful and closed relatively faster when processes are efficient.
2. Reducing the average size of syndicated deals could increase the Bank’s activity.
3. Coordination and cooperation between Investment Officers and Syndication Experts are essential factors for success.
Recommendations
IDEV made the following recommendations for the Bank:
1. Develop a five-year strategic framework to establish syndication as a cost-covering and revenue-generating business function, with a sharper focus on business development.
2. Strengthen the syndication processes and delegation of authority in line with the One Bank Approach.
3. Provide additional incentives to promote syndication.
4. Build a team of industry specialists to support the syndication and business development capacity.
5. Improve innovation, reporting, and learning of co-financing and syndication.
Evaluation Task Manager: Mirianaud Oswald Agbadome, Principal Evaluation Officer