Evaluation of the AfDB’s Role in Increasing Access to Finance in Africa - Project Cluster Evaluation

In line with the African Development Bank’s (“AfDB” or “the Bank”) overarching objective of promoting inclusive growth, increasing access to finance is one of the three objectives of the Bank’s Financial Sector Development Policy and Strategy (FSDPS) for 2014 – 2019. As part of its 2018 - 2019 work program, Independent Development Evaluation undertook a thematic evaluation of the Bank’s role in increasing access to finance in Africa. The thematic evaluation is supported by a cluster evaluation of 32 Bank financial sector development (FSD) operations extended to financial institutions and governments in seven countries selected from the five African regions. It aimed to distill learning from the implementation of the FSDPS in order to draw lessons to inform the design and implementation of the new Bank FSD strategy currently under development. 

The project cluster evaluation purposefully focused on countries where the Bank had multiple operations during the period under consideration (2011-2018), including Burkina Faso, Nigeria, Cameroon, Namibia, Kenya, Egypt and Tunisia. The 32 operations examined in these countries had an approved value of UA 2,364 million, and were organized in clusters by financial instrument. Quantitative and qualitative information were collected in response to the evaluation questions using individual and focus group interviews, desk reviews, statistical data analysis, and direct observation.

The evaluation found that access to finance remains a key constraint to private sector development and the economic inclusion of low-income populations. It also found that the high priority given to access to finance in the FSDPS and partner countries was not reflected in the Bank’s Country Strategy Papers (CSPs) for the selected countries. Also, the evaluation team found no evidence that the operations in the countries in which the Bank had multiple financial sector operations, were part of a coherent Bank strategy toward FSD in these countries. The efficiency of the operations was deemed partially satisfactory: more than half of the evaluated operations were efficiently prepared and implemented, but others faced time overruns which, in some cases, led to additional costs for clients or missed lending opportunities Target groups were not sufficiently defined, and the broad intended development outcomes limited the Bank’s role in advancing access to finance for the underserved. Although the AfDB’s operations were in line with FSDPS and relevant to their respective country contexts, the evaluation found that its operations tend to provide temporary solutions to financial sector development barriers rather than addressing the root causes.

To further strengthen the AfDB’s role in increasing access to finance in Africa, a number of suggestions for consideration were outlined. These can be summarized as follows:

1. Strategic considerations

• Conduct sector diagnostics that identify barriers to access to finance;
• Define intended financial sector development outcomes at the country and regional levels;
• Provide more explicit information on how operations should contribute to address financial sector development constraints in the long run.

1. Improve the benefits for intended target groups

• Better define and measure the project development outcomes and the benefits for target groups;
• Clearly define what constitutes a small and medium-sized enterprise, so as to include this in project appraisal reports and in CSPs;
• Take a more deliberate approach to narrow the gender gap in access to finance;

1. Range of instruments and their use in FSD

• The AfDB should increase awareness and usage of its partial credit guarantees among investees;
• Technical assistance should be used to strengthen institutions that drive sector development;
• Lending in local currencies should be considered.

1. AfDB’s positioning as a key player in FSD

• Improve outreach and deepen relationships with sector stakeholders, including clients ;
• Leverage the AfDB’s policy influence and expertise to facilitate policy dialogue;
• Consider increasing the resources for regional integration operations aimed at fostering regional integration around access to finance.

Task Manager: Albert Eneas Gakusi, Chief Evaluation Officer