Africa’s Battle for the Soul of its Development Bank

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President of the African Development Bank, Dr. Akinwunmi Adesina

Control of the African Development Bank (AfDB) is the motive behind US attempts to prevent the re-election of the bank’s president, despite producing stellar results, writes Demola Ojo

Already ratified as the sole candidate for a May 2020 election postponed till August due to the novel coronavirus, Akinwunmi Adesina’s bid for another five-year term as president of the African Development Bank has been met with strong resistance from the United States.

On the week commemorating five years as president, details of an investigation into his conduct, and subsequent exoneration of all charges brought against him, went public.

In a petition sent to the bank’s committee on January 19, 2020, whistleblowers within the bank accused Adesina of 16 breaches of the bank’s code of conduct, including “unethical conduct, private gain, and impediment to efficiency, preferential treatment, and involvement in political activities.”

After six meetings between February 4 and April 9 to review documents in the allegations against Adesina, as well as a confidential memo detailing his defence, the ethics committee and its board of directors on May 5, described all allegations against Adesina as spurious and unfounded.

In responding to the petitioners, Adesina noted the political undertones, and accused the petitioners of violating the bank’s whistleblower policy by breaching the confidentiality of the proceedings.

According to him, the petitioners were manipulated by a group of non-regional executive directors, not for the good governance of the African Bank, but to discredit his candidacy.

The complaint cannot be considered to be in good faith, he continued, because it was not designed to expose fraud, corruption or other misconduct but rather had an ulterior motive.

But the US, through its Treasury Secretary Steven Mnuchin, expressed its reservations about the “integrity of the committee’s process” despite the fact that the committee was headed by Takuji Yano, the institution’s Japanese executive director.

In a letter dated May 22 to Yano, Mnuchin rejected the report which totally exonerated Adesina of all allegations, thus questioning the integrity of Yano’s committee and that of the bank in the process.

Mnuchin called for a “fresh in-depth investigation of the allegations using the services of an independent outside investigator of high professional standing.”

On its part, Nigeria made its stand known in a statement by its Minister of Finance, Budget and National Planning, Zainab Ahmed.

“The call for an independent investigation of the president is outside of the laid down rules, procedures and governing system of the bank and its articles as it relates to the code of conduct on ethics for the president,” Ahmed wrote May 26.

Nigeria’s ex-President, Olusegun Obasanjo, also weighed-in on the same day, by rallying his former colleagues. Obasanjo pointed out the need to speak against the introduction of alien practices being recommended by some parties.

“The US treasury secretary disparaged the bank and ridiculed the entire governance system of the bank which has been in place since 1964,” Obasanjo said.

“This is unprecedented in the annals of the African Development Bank Group. If we do not rise up and defend the African Development Bank, this might mean the end of the African Development Bank, as its governance will be hijacked away from Africa.”

Obasanjo further emphasised the need for the AfDB to remain an African-focused development bank rather than one which serves interests outside Africa.

Among those copied in his letter were John Kufour, Ellen Johnson Sirleaf and Thabo Mbeki, former presidents of Ghana, Liberia and South Africa respectively. Other former leaders include those of Benin, Malawi, Ethiopia and Tanzania.

Besieged by the different submissions, the chairwoman of the AfDB board of governors, Niale Kaba, who is also Ivory Coast’s Minister of Development, said “no decision has been taken” in response to press reports that the board had accepted Mnuchin’s request.

AfDB’s Mandate

The AfDB is a multilateral development finance institution founded in 1964 with a mission to fight poverty and improve living conditions on the continent. It does this through the investment of public and private capital in projects and programs that are likely to contribute to the economic and social development of the region.

Earlier in March this year, the lender issued a $3 billion social bond to help African countries deal with the fallout from the coronavirus pandemic. Bids for the securities on the London money market exceeded $4.6 billion. The bank also launched a $10 billion crisis-response facility for African nations.

On May 25, the bank approved a $500,000 emergency assistance grant to Egypt to provide food relief, and to contribute to restoring the livelihoods of vulnerable populations severely affected by COVID 19.

Three days before, it approved a $210 million loan for Mauritius to finance a national budget support programme in response to the pandemic.

These are the latest of interventions in May, with others including a $97 million loan approved as emergency budget support for Senegal to tackle Covid-19, $33m loan approved to tackle Covid-19 in Cape Verde and a $13.7m grant approved to improve the health sector in Zimbabwe.

Others in May are $45m allocated for a bridge to link Cameroon and Chad and $1.67m given for study on building dams in Eswatini (Swaziland).

Nigeria’s Influence

Nigeria’s influence in the AfDB cannot be overemphasised. It is the largest shareholder with more than nine per cent of contributions, and has played a leadership role right from inception.

The inaugural meeting of the bank’s board of governors was held in Lagos in 1964. The board of governors comprised of the ministers of finance (or equivalent portfolios) of the member countries.

These countries in turn present candidates to serve as executive directors. Although originally, only African countries were able to join the bank, it has allowed the entry of non-African countries since 1982.

According to another former Nigerian President, the late Shehu Shagari, in his autobiography Beckoned to Serve, the industrialised Western countries lobbied for years to become members of the AfDB.

When a majority of African countries acquiesced to plans by these nations to provide more funds and take control of the bank, Nigeria, Algeria and Libya stood firm, arguing that this would defeat the very objective for the bank’s creation in the first place.

In his autobiography, Shagari expressed surprised when the bank later turned around to seek the approval of the board of governors to accept non-African funding. All other countries apart from Nigeria were in support because no other African country was willing to help the bank financially.

Nigeria had in 1976 set up a Nigeria Trust Fund (NTF) within the AfDB to assist in the development of the poorest AfDB members. The NTF provides financing for projects of national or regional importance, lending at a four per cent rate with a 25-year repayment period.

But due to growing demand for investments from African countries and because of the Bank’s limited financial resources, membership was opened to non-regional countries.

The AfDB is Africa’s biggest multilateral lender and has an AAA rating from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.

However, it maintains an African character with projects exclusively for Africa. It is headquartered in Abidjan, and its president is always African. However, despite its leadership role in the formation and the funding of the bank, Adesina is the first president of Nigerian extraction.

Infrastructure, including power supply, water and sanitation, transport and communications, has traditionally received the largest share of AfDB lending.

The bank aims to be a body for regional integration that will make Africa more competitive in the global market, while transport and power interconnections between smaller African economies will help create larger markets in the continent.

Non-regional members

At the last count, the AfDB has 81 members, comprising all 54 African countries and 27 from Europe, America and Asia. Some of these non-regional countries include, Brazii, Argentina and Canada; Portugal, Italy, Spain and Germany; India, Turkey and Saudi Arabia.

The Republic of Ireland became the bank’s 81st shareholder, following a declaration issued by Adesina on April 24.

It is not out of place to wonder what the non-regional members get to benefit. According to the Irish Minister for Finance, Public Expenditure and Reform, Paschal Donohoe, on the occasion of Ireland joining the bank, “The African Development Bank and its sister, the African Development Fund, play an important role in fostering sustainable and inclusive social and economic growth and prosperity, helping the African continent to realize its potential to be the continent of promise and opportunity.

“I see our membership of the Bank and Fund as an investment in this potential. Ireland’s partnership with these important regional multilateral institutions will both advance our shared development priorities and will open future opportunities for Irish businesses in the region.”

It can be deduced then, that the non-regional members have an eye on African markets, a major reason why they contribute to the AFDB.

Adesina’s Exploits

In October 2019, the AfDB raised $115 billion in fresh capital, an operation deemed a personal success for Adesina. A former minister of agriculture in Nigeria from 2010 to 2015, he was named Forbes African Man of the Year in 2013 for his reform of Nigerian agriculture.

In his time as president of the AfDB, he has led the Bank to achieve a historic a capital increase, from $93 billion to $208 billion within five years.

The bank is ranked 4th globally in terms of transparency among 45 multilateral and bilateral institutions by Publish What You Fund, an outfit that consists of 19 developed economies.

Over the past five years under the stewardship of Adesina, the AfDB has provided access to electricity for an estimated 15 million and helped another 141 million gain access to improved agricultural technologies for food security.

Thirteen million have benefited from access to finance from private sector investment projects, 101 million people benefitted from access to better transport and 60 million from improved access to water and sanitation.

Competition and Control

The AfDB’s rising profile and influence in supporting African development has not gone unnoticed. Like the World Bank, the AfDB is one of five multilateral development banks in the world. The others are the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (AsDB) and the Inter-American Development Bank (IAfDB).

In February this year, World Bank President David Malpass, an American nominated to the position by President Donald Trump last year, launched a rare attack on the AfDB’s lending to African governments.

Malpass said at a World Bank-International Monetary Fund debt forum in Washington that the Asian Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development were contributing to debt problems.

“We have a situation where other international financial institutions and to some extent development finance institutions as a whole, certainly the official export credit agencies, have a tendency to lend too quickly and to add to the debt problem of the countries,” Malpass said.

The AfDB reacted with dismay at the public criticism by Malpass. “It impugns the integrity of the African Development Bank, undermines our governance systems, and incorrectly insinuates that we operate under different standards from the World Bank. The very notion goes against the spirit of multilateralism and our collaborative work,” it replied in a statement.

The AfDB claimed that the World Bank is actually culpable in pushing African countries into more debt as it has pumped more than double the AfDB portfolio.

“The World Bank’s operations approved for Africa in the 2018 fiscal year amounted to $20.2 billion, compared to $10.1 billion by the African Development Bank.

“We are of the view that the World Bank could have explored other available platforms to discuss debt concerns among multilateral development banks. The general statement by the president of the World Bank Group insinuating that the African Development Bank contributes to Africa’s debt problem and that it has lower standards of lending is simply put: misleading and inaccurate.”

US Motives

On the face of it, an independent investigation as requested by the US through its treasury secretary should only help vindicate Adesina and solidify his position as an upstanding president who has done exceedingly well in fulfilling the bank’s mandate.

However, the fact that this call was made after an internal inquiry in line with the organisations code of ethics, casts aspersions on not just Adesina and the AfDB, but on the African continent as a whole.

The disregard the US-backed campaign has for the continent’s leaders can be inferred from one of the allegations: Adesina was accused of lobbying African leaders to endorse him as president.

He responded: “It is alleged that as president I basically bribed and corrupted the 16 African Heads of State and governments in the ECOWAS region to support my candidacy for re-election.

“The allegation essentially impugns the integrity, leadership and honesty of 16 African presidents and ECOWAS. This is a fanciful and baseless allegation,” he said.

There is a convergence in the American-led World Bank take on the AfDB, and attempts by the US to discredit its popular chief executive.

It is ironic that a man whose boss (Trump) appointed his daughter and son-in-law to prominent roles in the White House, is hiding behind “favouritism” and other unsubstantiated allegations to halt Adesina’s already endorsed re-election.

This is following a recent trend of US attempts to attack institutions that refuse to bend to its will. A recent example is its tiff (and subsequent withdrawal of funding) with the World Health Organisation over the handling of the coronavirus pandemic, as well as previous uncomplimentary remarks by its president about African countries.

The US’ recent foreign policy is a manifestation of its president’s “America First” mantra. The US has been especially unfriendly to Nigeria in recent times. A few months ago in February, President Trump issued a presidential proclamation banning Nigerians from migrating to the US.

Meanwhile, in its barefaced challenge of African interests in the AfDB, the US has reportedly garnered support from the Scandinavian bloc, with all of Denmark, Finland, Norway and Sweden backing it in seeking an independent investigation of Adesina.

France will most likely lend support, and one can expect the UK to align with its traditional ally.

With an increasingly unapologetic insular disposition in recent times, any attempt by the US to paint interventions in the AfDB as altruistic is futile. This call for another investigation reeks of a blatant attempt to discredit the AfDB. This should be seen for what it is and rebuffed, not just from Nigeria but across the continent, and by friendly non-regional members.

Re-alignment

Regarding the AfDB, Nigeria needs to assert its leadership role, mount a diplomatic offensive and recognise those who align with its interests within the region. Among non-regional members, China is already undergoing numerous infrastructural projects on the continent, while Japan is desirous of doing business.

If the US doesn’t find it comfortable to abide by the conventions setting up the bank, it may follow the same route taken in its dispute with the WHO and withdraw its funding from the AfDB.

The coronavirus pandemic has brought about discussions of a reset by African countries. This includes the way the continent brands itself, the way it is perceived, who it does business with and on what terms. The battle over control of the AfDB is an opportunity for Africa to affirm its independence