Business

The African Development Bank Guidelines for Financial Management and Financial Analysis of Projects

© African Development Bank Group, 2006 This operational policy document is a revised version of The African Development Bank Group Guidelines for Financial Management and Financial Analysis of Projects that were approved by the Boards of Directors of the African Development Bank Group on 27November 2000. It is intended primarily to guide Bank staff and other personnel of the Bank Group in their identification, preparation, implementation, monitoring and evaluation of Bank Group programs and projects in the Regional Member Countries. It was prepared by the Operations Policies and Review Department, C.K. Muthuthi (Task Manager), O. Fajana (Manager of POPR.3 until July 2005) and G. Negatu(Acting Manager of POPR.3 after July 2005), under the overall guidance of P. Afrika (Director of the Department). As per Bank procedures, it was first reviewed internally by a Bank-wide taskforce, followed by an Inter-Departmental Working Group and subsequently by a Senior Management Committee, whose observations were incorporated into the guidelines submitted to the Board of Directors of theBank Group. The information and data contained in this document (including principles, analyses, strategic objectives, and modalities shared in common with other development agencies in the spirit of harmonization and collaboration) together constitute intellectual property of the African Development Bank Group held in trust for its 77 Member States and made available to the general public under thecurrent terms of the Bank Group Policy on Disclosure of Information. The African Development Bank Group, its shareholders, Management and staff are not accountable for any application or misapplication whatsoever of the information / data provided herein. Please acknowledge the African Development Bank (AfDB) Group when use is made of information and/or data contained in this document. AfricanDevelopment Bank Board Document Code: ADB/BD/WP/2002/49/Rev.2 African Development Fund Board Document Code: ADF/BD/WP/2002/55/Rev.2 ISBN: To be Assigned Library of Congress Cataloguing: To be Assigned

Foreword
As the premier financial development institution in Africa, the African Development Bank (the Bank) has, since its establishment in 1964, dedicated to financing the highest qualityprojects and programmes that maximize its development impact. To enable it to achieve this objective the Bank has mainstreamed good governance into its operations, in a manner consistent with its charter, mandate, and development priorities. To this regards, the Bank Group issued in 1999 its Policy on Good Governance that reflects the growing consensus that good governance is an essential element ofsound and sustainable development. As part of the implementation process for its good governance practices, the Bank’s Board approved in 2000, The African Development Bank Group Guidelines for Financial Management and Financial Analysis of Projects. As a requirement, borrowers are asked to confirm that sound financial management will be a primary objective of investment operations by the efficientemployment of appropriate modern financial management systems and techniques in the design, implementation and operation of investments to be supported by Bank loans. The support by borrowers for efficient financial management is to be further evidenced by the provision and regular use of effective financial and performance measurement and reporting systems acceptable to the Bank. In 2004, the Banklaunched a Bank-wide program to promote project quality from inception to completion. Within this context the Bank has undertaken a major review of the 2000 Guidelines to ensure that they mainstream operations excellence and reflect current developments in financial management and analysis practices. In December 2004, a Bank-wide taskforce was appointed, under the leadership of the Governance...