Member's Documents
Do Lines of Credit attain their Development Objectives? An Evaluation Synthesis 2010-2017
Published by: Independent Development Evaluation, African Development Bank
LOC represent 10 percent of the Bank’s total portfolio, which stayed almost constant over time. Until 2004, they represented 90% of the amount approved for the private sector. This percentage has drastically decreased given the increase of amount approved for equity funds and guarantees.
The synthesis found that:
- LOCs are relevant for International Financial Institutions (IFIs) and client Financial Intermediaries (FIs), but the relevance to the end beneficiaries is open to debate.
- The design of LOCs is often not underpinned by sufficient analytical work.
- The effectiveness of LOCs is often questionable because of the lack of reliable information at the end-beneficiary level for analyzing the development results.
- The efficiency of LOCs is satisfactory when measured in terms of their profitability for the IFIs and FIs, disbursement rates, and time.
- The sustainability of LOCs is not well investigated in the literature.
- The enforcement of environmental and social standards considerations is problematic.
The synthesis underscored that IFIs need to be more: i) accountable and transparent in their reporting on LOC effectiveness; and ii) proactive in holding FIs to account for reporting on LOC development objective obligations.
