The Determinants of Development Projects’ First Disbursement Delay: The Case of the African Development Bank

Abstract:     
International aid effectiveness has recently been significantly questioned in the development literature with regard to the large amount of aid received by developing countries to finance development projects and the mixed results achieved. However, assessment of development projects is not an easy task due to the lack of appropriate measurement tools. Several factors impact project implementation including the delay between the donors pledge to provide aid to a country and the effective first disbursement. This indicator is one of the key determinants of project performance. Nevertheless, the literature is almost silent on the evaluation of these delays, mainly due to lack of data. This paper is the first attempt to assess these delays for an international multilateral bank, the African Development Bank (AfDB). We use an exhaustive dataset of 2,195 AfDB-financed investment projects implemented between 1967 and 2008 and worth US$ 143.7 billion. Four main findings are drawn from the study. First, we find that every US$1 invested by the AfDB seems to attract US$2 more. Secondly, delay to the first disbursement is linked to the beneficiary country’s economic development. Third, large projects experience shorter delays than small projects, contrary to what is observed for private sector financed projects. Finally, pro-poor sectors seem to experience more delays and may explain the aid ineffectiveness observed in many countries. Operational recommendations are drawn from this analysis.

Number of Pages in PDF File: 37

Keywords: Aid effectiveness, development project, investment project, project delay, project performance, Project Analysis, African Development Bank

JEL Classification: H4, H8, I3, O2, O5

working papers series