Africa Development Bank must reform itself

SHANGHAI – The African Development Bank must undertake significant internal reforms to become more responsive to the continent’s needs and more effective as a tool for development, the bank’s president and governors said on Wednesday.

Donald Kaberuka told the opening of the bank’s annual meeting that the lender was financially strong but bogged down by in-house bureaucracy. “I would be less than candid if I did not point to the enduring challenges in terms of disbursements, …project portfolio quality and, broadly, development effectiveness,” Kaberuka told delegates in Shanghai, the venue of this year’s two-day meeting.Member countries were having trouble meeting conditions for loans and were encountering delayed disbursements, he said.But Kaberuka said that as the AfDB increased its presence in the field – it is now in 22 countries, out of a goal of 25 – and stepped up staffing, it should be able to be more “agile and responsible”.In an interview with the newspaper Emerging Markets, Zambian central bank governor Caleb Fundanga faulted the AfDB’s cumbersome decision-making structure.”We have been doing more talking than actual action,” he said.Several governors also had criticisms of the bank, pointing out that its disbursements were dropping and its institutional capacity weak.”It cannot be claimed that the AfDB group is utilising the funds in its possession effectively and efficiently,” said Japan representative Shigeyuki Tomito.”The AfDB group must proactively make efforts so that the funds which it has on hand are utilised in an effective manner.”British representative Amanda Rowlatt said the lender should “resist the temptation to micromanage” and focus instead on broader strategic issues.US governor Kenneth Peel urged it to shift from “an approval culture to a results culture”.Representatives added that the bank must play a proactive role in ensuring that debts among African countries are not once more allowed to accumulate to unsustainable levels.”In cooperation with the International Monetary Fund and the World Bank, the AfDB should play a leading role so as to ensure that every donor engages in responsible lending,” said Tomito.RESULTS CULTURE Kaberuka said the bank was already changing the way it was doing business.Changes included looking to expand private sector activities despite the higher risk that entails on the world’s poorest continent.”We believe our strong financial position allows for some increased lending without overstretching the bank’s risk-bearing capacity,” Kaberuka said.”We remain fully conscious of the need for extreme management in terms of project selection, credit review, processing procedures, choice of partners (and) internal capacity.”Kaberuka said the bank was playing its part in developing African bond markets and had issued bonds in five African currencies – Botswana pula, Ghana cedi, Kenyan shilling, Nigerian naira and Tanzanian shilling.It intended to look at more currencies and increase the maturity of the bonds, Kaberuka said.”The future for Africa’s economies, like Asia before it, will be private-sector-driven,” he said.”That is where wealth is created and poverty ultimately eradicated.”Nampa-Reuters”I would be less than candid if I did not point to the enduring challenges in terms of disbursements, …project portfolio quality and, broadly, development effectiveness,” Kaberuka told delegates in Shanghai, the venue of this year’s two-day meeting.Member countries were having trouble meeting conditions for loans and were encountering delayed disbursements, he said.But Kaberuka said that as the AfDB increased its presence in the field – it is now in 22 countries, out of a goal of 25 – and stepped up staffing, it should be able to be more “agile and responsible”.In an interview with the newspaper Emerging Markets, Zambian central bank governor Caleb Fundanga faulted the AfDB’s cumbersome decision-making structure.”We have been doing more talking than actual action,” he said.Several governors also had criticisms of the bank, pointing out that its disbursements were dropping and its institutional capacity weak.”It cannot be claimed that the AfDB group is utilising the funds in its possession effectively and efficiently,” said Japan representative Shigeyuki Tomito.”The AfDB group must proactively make efforts so that the funds which it has on hand are utilised in an effective manner.”British representative Amanda Rowlatt said the lender should “resist the temptation to micromanage” and focus instead on broader strategic issues.US governor Kenneth Peel urged it to shift from “an approval culture to a results culture”.Representatives added that the bank must play a proactive role in ensuring that debts among African countries are not once more allowed to accumulate to unsustainable levels.”In cooperation with the International Monetary Fund and the World Bank, the AfDB should play a leading role so as to ensure that every donor engages in responsible lending,” said Tomito.RESULTS CULTURE Kaberuka said the bank was already changing the way it was doing business.Changes included looking to expand private sector activities despite the higher risk that entails on the world’s poorest continent.”We believe our strong financial position allows for some increased lending without overstretching the bank’s risk-bearing capacity,” Kaberuka said.”We remain fully conscious of the need for extreme management in terms of project selection, credit review, processing procedures, choice of partners (and) internal capacity.”Kaberuka said the bank was playing its part in developing African bond markets and had issued bonds in five African currencies – Botswana pula, Ghana cedi, Kenyan shilling, Nigerian naira and Tanzanian shilling.It intended to look at more currencies and increase the maturity of the bonds, Kaberuka said.”The future for Africa’s economies, like Asia before it, will be private-sector-driven,” he said.”That is where wealth is created and poverty ultimately eradicated.”Nampa-Reuters