Back to the Basics of AfDB

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Guest Columnist: ISSA AREMU

GUEST COLUMNIST BY ISSA AREMU 

Africa Development Bank Group (AfDB) or Banque Africaine de Développement , (the financial provider to African government development projects in the regional member countries (RMC), is in the news for everything but it’s primary mandate of financing development and eradicating poverty.
What with a bagful of accountability, due process and human resource allegations against the management of the Bank under its current President Nigeria’s Mr. Akinwunmi Adeshina?

Aspiration 4 of the goals and priority areas of the first ten years of Africa Union’s AGENDA 2063 envisions strengthening governance, accountability and transparency as a foundation for a peaceful Africa’.
We must therefore insist that corporate institutions such as AfDB must be accountable to its shareholders. Certainly those who manage the affairs of the pan African Institution must uphold the best corporate governance culture of probity, incorruptibility and impartiality. Founded in 1964, AfDB, remains a successful pan- African multilateral development finance institution. After centuries of slavery and colonialism, the founding fathers ( few mothers!) of the newly independent (23) twenty-three African nations initiated two draft charters.

One sanctions the establishment of Organization of Africa Unity (OAU) in 1963 and the other regional development bank African Development Bank (AfDB), formed a year later, precisely in August 1964, in Khartoum, Sudan. Headquartered in Abidjan, Cote d’ Ivoire it has financed 2,885 operations, for a total of $47.5 billion. It consistently receives an AAA rating from the major financial rating agencies.

Nigeria is the AfDB’s largest shareholder, with a little over 9% of its total capital. The objective of the African Development Bank (AfDB) Group is to spur sustainable economic development and social progress in its regional member countries (RMCs), thus contributing to poverty reduction. It is encouraging that the Bank through its internal Office of Integrity and Anti-Corruption (PIAC) and the Ethics Committee and Audit and Finance Committee promptly looked into the long list of the grievances of whistle blowers at the Bank.

After five meetings “between 27 February and 9 April, Ethics Committee Chairman Takuji Yano, a Japanese national, produced an eight-page report on 26 April which concludes that the complaint against the Bank management received on 19 January “was not based on any objective and solid fact”. Indeed the Bank management under Adeshina got a clean report of exoneration. The Ethics Committee reportedly went ahead and criticized the whistle-blowers for not having provided any supporting evidence for their claims deemed “baseless”, “unsubstantiated” or “unproven”. It is therefore surprising that while the bank’s African shareholders are satisfied with the findings of the Ethics Committee, the United States, a non-African with 6.5 per cent of the shares is insisting on a further probe despite the clean bill of health given to Mr Adesina by the board of directors of the bank. Coming on the eve of the re-election bid of Mr Adeshina it is self evident that America wanted him out of the Bank, not on substance but mere subterfuge even when notable African shareholders “made up of all the heads of state and governments of ECOWAS region had endorsed him for second term”.

In 2015, Adeshina was elected as the President of the Bank, the first Nigerian to hold the post. He had a remarkable carrier like other successful Africans. During his tenure as Minister of Agriculture, he reformed the agricultural system by introducing more transparency into the fertilizer supply chain and bringing up innovative ideas such as giving farmers mobile phones. As a result, 14.5 million farmers benefited with in the first years of its implementation.

He also attracted $5.6 billion in private sector investment commitments in Nigerian commercial farming. Certainly Africa still suffers from huge financial deficits to meet its enormous development challenges. However there is no doubt that under the current activist Bank leadership, the Bank has been mobilizing and allocating resources for investment and offering policy advice and technical assistance to support development efforts.
Through the Africa Investment Forum, the AfDB in 2018 and 2019 attracted more than $80 billion in infrastructure investment interests.
This has rightly refocused the African perspective from Aid dependency to domestic investment.

Notwithstanding the resistance from abroad especially the United States, the Bank spearheads an increase of the Bank’s shareholder general capital from $93 billion to $208 billion. Many bear witnesses that Adeshina is passionate about value addition and beneficiation to the abundant Africa’s agricultural raw materials in particular. Last year, for the first time in its 56 years of formation, Industrial Global Union of which am the Vice President engaged with the Bank on financing value addition in mining sector at the mining indaba in Cape Town South Africa. Certainly the multiple award winning President of the Bank is an asset to the Bank and Africa.

Underpinning Africa’s economic growth prospect is the importance of beneficiation and diversification. However mining companies still resist beneficiation and diversification saying they are “just in mining”.

National governments need to dispense with the false narrative that has encouraged a “from the ground to the market” rent seeking economic trade with the global north and begin a policy reorientation that focus on beneficiation and diversification. A focused regional financial provider like ADB is better positioned to push for this agenda of value addition that would create decent jobs for African youths.

The overriding objective of the AfDB is to improve living conditions on the continent through various initiatives. AfDB needs stability and continuity to make its vision a reality. It is commendable that some African leaders such as President Muhammadu Buhari and former President Obasanjo rallied timely support for AfDB’s independence and integrity.
However there is the urgent need for a categorical position by Africa Union (AU) on the unfolding development within the African Development Bank AfDB.

It is an open knowledge that United States of America cynically still insists on a further probe despite the clean bill of health given to Mr Adesina by the board of directors of the bank. The U.S.Treasury Secretary, Steven Mnuchin audaciously did an open letter disagreeing with the conclusions of the ethics committee of the board of directors of AfDB.

An external attack on AfDB should be seen as an assault on AU, (which marks the 57th anniversary this year).
The open subversion of the internal governance structures of the Bank is clearly unacceptable.
United States would certainly not allow an African country subscriber to the shares of North American Development Bank ( NADB), a North American regional financial institution not to talk of an African country questioning the outcomes of its internal rules and regulations.
What is good for NADB, is even better for AFDB.

Originally, only African countries were able to join the bank. However in 1982 the Bank allowed for the entry of non-African countries, such as United States. At 57, AU should revisit the unthinking wholesale financial liberalization which allowed for non-African countries to join the bank and even dictate the terms of discipline.

Africans should ensure the sanctity of the tested rules, laws, procedures and governance systems of the bank against the provocative attack of the U.S. Treasury Secretary. Importantly AU should reaffirm the objective of the Bank which is to finance Africa’s Development.
The American ridicule and disparage of the Bank is unacceptably brazen and provocative. According to the World Bank President David Malpass, who is an American nominee of Trump administration, AfDB “lends too quickly”, thus aggravating the countries’ debt problems, the allegation the Bank had dismissed as “Untrue and unfounded,”.

If AfDB truly “lends too quickly“, who is complaining? The American criticism of the AfDB is directed against the Bank’s exposure in two leading economies, (namely Nigeria and South Africa) which raises the legitimate fears about, same specter of neo-colonial agenda of divide and in year 2020. Unilateralism, being the regular trade mark of Donald Trump administration should not be allowed in a multilateral Bank.

The pan-African institution should maintain an African character as it is derived from African geography and ownership structure. The capacity of the Bank should be strengthened not weak at this critical times of direct threats to lives and livelihoods in Africa due to the pandemic.

Three African countries have been negatively impacted. Nigeria: 10,162 cases/ 287 deaths, South Africa: 32,683 cases/ 683 deaths and Ghana: 8,070 cases/ 36 deaths

With the disruptions of global supply chain, AFDB must rise to promote agricultural and industrial revolution in the continent. Global resources must be allocated for real economy rather than bailing out financial institutions. All financial institutions including AFDB must place employment and decent work at the centre of macro-economic policies alongside emergency debt relief to enable developing countries to combat the COVID-19 pandemic and facilitate a sustainable recovery from the crisis.

Financial institutions must immediately cancel or suspend debt payments by the least developed countries.
This must constitute the immediate tasks of the Bank within the context of AU Vision 2063 and UN sustainable Development Goals of 2030.

•Aremu is a Member of the National Institute, Kuru, Jos.