The PPF was established in 2000 with an initial amount of UA 19.2 million drawn from the ADF-8 replenishment.
The PPF has been replenished once during the ADF-15 cycle (2020-2022) for UA 75 million.
PPF was structured in order to, inter-alia:
- Promote the quality at entry of projects and programmes by supporting the preparatory phase;
- Provide specific support to RMC Governments for preparatory activities of priority projects and programmes with a high probability of implementation by the recipient Government;
- Promote Government ownership and engagement in project preparation, important for strengthening the quality of projects at entry; and
- Create a quick access, self-sustaining revolving facility which will respond in a timely manner to changing investment programmes and demands of RMC.
Scope of activities
The Facility, through reimbursable advances, finances the following activities to improve the quality at entry of projects:
- Feasibility studies and detailed designs, including technical studies;
- Environmental impact assessments, gender studies and studies on cross-cutting issues;
- Pre-contract services including revision of designs and tender documents;
- Purchase of goods necessary to study and carry out other activities related to the preparation of viable projects;
- Institutional support, capacity development and human resource development during the preparatory phase;
- Climate proofing of projects, including resilience to climate change;
- Financial and legal structuring of Public-Private Partnerships (PPPs) and concessions;
- Other related project preparation works and activities.
The PPF is accessible only to countries in categories A (ADF resources only) and B (ADF and AfDB resources, blend countries) in conformity with the Bank’s credit policy. Accordingly, countries in category C (AfDB resources only) are excluded from funding by the PPF.
Proposals promoted solely by private sector entities are currently not eligible for the PPF. However, projects proposed by private sector entities that have been endorsed by public sector entities, such as the case of PPPs, in category A and B countries, are eligible for PPF support.
Financing: reimbursable Grant
Given the nature of the PPF as a revolving and self-sustaining fund, it provides financing in the form of advances that need to be repaid or reimbursed in a timely manner. All PPF advances are subject to reimbursement, regardless of the recipient country’s financing terms related to its debt sustainability status (loan/grant). There are two scenarios for repaying PPF advances:
- Where the preparatory activities lead to project appraisal and subsequently to approval of an investment operation, repayment of the PPF is due on the date of the operation’s effectiveness, when the advance is repaid using the proceeds of the loan/grant financing the operation. Repayment of PPF advances should thus be included in the financing plan of the operation.
- Where the preparatory activities do not result in an approved operation or are unrelated to operations, the Government that has requested the funding reimburses the PPF, i.e. repays the advance plus the service charge in three instalments within one calendar year.
Floor and ceiling for PPF advances
A floor of UA 200,000 and a ceiling of UA 1,000,000 is applied to each advance provided by the PPF for financing the preparatory activities.
In order to enable PPF to support preparatory phase of large-scale operations that have a strong development impact and requiring detailed feasibility and design studies, the ceiling will be UA 5,000,000.
ADF-PPF: implementation status
PPF resources have benefitted ADF countries in design of transformative projects across sectors, including, agriculture and rural development, social development, agriculture value chains, market development and youth enabling projects.
Since its inception, 46 projects have been approved by the PPF at an average of 2.9 per year in 23 RMCs out of which 13 (74%) are currently classified as Transition States with Madagascar, Côte d’Ivoire, Mozambique, DRC and Guinea being the main beneficiary countries.
- 48 projects approved, approx. three operations per year on average.
- Total approvals stand at UA 29.2 million, of which UA 5.4 million has been cancelled and, UA 18.04 million disbursed and UA 7.9 million repaid.
- Agriculture, rural development and social development were the main recipients of PPF approvals.