African Development Bank
This section draws from the Bank Information Center (BIC) website and from the website of the African Development Bank. See as well „Examining the African Development Bank: a primer for NGOs“ (May 2007).
Background
The African Development Bank (AfDB) was established in 1964. Its mandate is to promote economic and social development in Africa. The AfDB consists of the African Development Bank, the African Development Fund and the Nigeria Trust Fund.
It is being criticised for being opaque in its operations and its emphasis on major regional infrastructure projects.
AfDB works in close co-operation with other international financial institutions, often providing complementary funding for joint projects and initiatives.
The Bank Information Center writes: “The inaccessibility of Bank officials and documents has been a cause for concern among civil society advocates, considering the growing importance of the AfDB on the continent particularly within the infrastructure sector. In 2002, the Bank teamed up with the New Partnership for Africa's Development (NEPAD), an initiative of the African Union, to develop and implement an Infrastructure Short Term Action Plan (I-STAP). This ambitious program has drawn sharp criticism for its overemphasis on the construction of massive hydroelectric projects and other costly and potentially destructive regional projects.“
The AfDB provides money (loans and grants) to governments and sometimes to private companies to support projects and policy reforms. Apart from loans and grants AfDB gives technical assistance, guarantees and equity investments, they all go into agriculture, health, education, water, power, transport, finance and other sectors. In terms of policy reforms, AfDB provides loans to governments to implement economic policy changes (revisions of laws or regulations). AfDB gives as well money to governments to help finance government budgets.
Structure
The official headquarters of AfDB are in Abidjan, Ivory Coast, but have been transferred to Tunisia due to conflict in Ivory Coast. AfDB has regional offices in Senegal, Gabon and Mosambique and 25 country offices.
AfDB has 77 member states, among which 53 are African and 24 non-African countries (Argentina, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, India, Italy, Japan, Korea, Kuweit, Netherlands, Norway, Portugal, Saudi Arabia, Spain, Sweden, Switzerland, United Kingdom, United States of America). Each member state has a representative on the Board of Governors. They meet annually and are responsible for the admission of new members, decisions on increases to the Bank's capital, and the election of the AfDB President. Regional member countries control 60% of the voting power on the Board, while non-regional members control the remaining 40%. The recent President is Donald Kaberuka, a former Rwandan Finance Minister. He took the oath of office in 2005. The Bank is divided into five vice presidencies:
- One is responsible for regional and country programs and policies;
- Another for sector operations;
- One for finance;
- One for corporate services;
- And the newest vice presidency, for infrastructure, private sector and regional integration.
18 Executive Directors collectively represent all member countries on the Board of Directors. They take the Day-to-day decisions regarding the projects and policies of the Bank. Twelve of the Bank’s 18 Executive Directors are elected by the governors of regional member countries, while six are elected by non-regional members. Executive Directors are elected for three-year terms, renewable once. Voting rights are allocated in proportion to the number of shares held by each of the regional or non-regional member countries represented by an Executive Director. African member countries have majority ownership of the Bank.
Lending
In 2006 AfDB lent a total of US$ 3,4 billion. By the end of 2005, the Bank Group had provided a cumulative $55 billion in loans and grants in the region.
Since 1967 when the Bank first began lending, North Africa has received approximately one-third of the Bank's portfolio (over $17 billion), a trend that continues today with Morocco and Tunisia being the largest borrowers. West Africa has received roughly a quarter of all loans, with Nigeria the largest recipient. East (15.2%), Southern (13.7%) and Central (12.3%) Africa are the next largest recipients of AfDB finance, with Ethiopia, Mozambique and the Democratic Republic of Congo representing the top recipients from the respective regions.
The infrastructure sector, including power supply, water and sanitation, transport and communications, has traditionally received the largest share of AfDB lending. Regional integration infrastructure projects will be a key part of the AfDB’s future business. The AfDB has been designated the lead agency to facilitate NEPAD infrastructure initiatives, which are regional integration projects led by African Regional Economic Communities (RECs). AfDB hosts as well the Infrastructure Consortium for Africa (ICA), established by G8 countries to coordinate and encourage infrastructure development in Africa.
Trends
To date the AfDB has not been a major source of financing for the oil, mining and gas sectors. It has been involved mainly via loans for private sector mining projects. However, some developments suggest that AfDB’s involvement in extractive industries will increase, especially in the mining sector. The AfDB is recently looking for reorientation. One possibility will be to get more active in the extractive industries sector. The AfDB endorsed the Extractive Industries Transparency Initiative (aiming to promote transparency in the payment and receipt of revenues from oil, gas and mining) in October 2006. Following this, the AfDB established a Task Force to come up with a strategy for its EI work: to put the EITI commitments into practice as well as to address issues beyond revenue transparency. Given the high commodity prices and the worldwide interest in Africa’s natural resources, BIC reports that the AfDB sees a role for itself in policy dialogue on the use of EI revenues and building the capacity of sector ministries and local governments. Meanwhile BIC is concerned whether the AfDB has enough capacity to design and supervise high-risk oil, gas and mining projects and ensure that African governments get a fair deal during contract negotiations. On the question of AfDB support for infrastructure and energy projects BIC wonders how much AfDB will prioritise energy projects for domestic consumption over projects for export, having financed both in the past.
Policies
The environmental and social policies of the AfDB apply to all of its operations, public and private sector projects and policy-based lending. According to BIC the implementation of the policies is weak but it can still be useful to take the AfDB by its words in its activities.
Poverty Reduction: Policy states that poverty reduction is the AfDB overall goal, takes into account experiences in poverty reduction and identifies key sectors for the Banks operations. The AfDB itself formulates: “Efforts are also underway to ensure that the impact on poverty reduction of programs and projects in sectors such as agriculture, education, health and infrastructure are specific, monitorable and significant. In this regard (…) the implementation of the Policy on Poverty Reduction is expected to enhance the effectiveness of Bank interventions on the welfare of the poor and the achievement of MDGs (Millenium development Goals) in its RMCs (regional member countries).”
Cooperation with Civil Society Organisations (CSOs): Affirms the importance of collaboration with civil society organisations and of a participatory approach in general. Outlines requirements for consulting CSOs at various stages of operations.
Environment: Describes Africa’s environmental challenges and confirms AfDB’s commitment to promoting sustainable development. The policy formulates among others the goal to help regional member countries “to build their environmental management capacity and sensitize policymakers on environmental issues and bring about institutional changes to achieve sustainable development;“ outlines AfDB’s internal mechanisms for ensuring policy compliance and mainstreaming environmental considerations in the Banks operations. There are two guidelines relevant to the environment policy, which are the Strategic Impact Assessment Guidelines (SIA) and the Integrated Environmental and Social Assessment Guidelines (IESA).
Involuntary Resettlement: Outlines the AfDB’s and the borrower’s responsibilities regarding the forced relocation of people for AfDB projects. Resettled people should receive assistance and share in the benefits of the project in order to have their livelihoods improved. The policy includes requirements for the preparation of a resettlement plan.
Population: Looks into population growth and implications for Africa’s economic development. Requires among other things, that the AfDB promotes improved access to reproductive health and family planning services and address the needs of refugees through its operations.
Gender: Aims to promote gender equity and gender mainstreaming throughout the Banks operations. Requires gender analysis to all its activities.
Disclosure: The policy acknowledges an increased demand for disclosure of AfDB documents and information of its activities and the need to bring its disclosure in line with increased transparency provisions by financial institutions. The policy says: “The Bank Group’s Disclosure of Information Policy is to disclose all information on its operations and its activities unless there are compelling reasons not to do so. (...) The rationale of the Bank Group’s Policy on Disclosure is that the effectiveness and sustainability of projects and programmes supported by the Bank Group will be strengthened to the extent that Bank Group staff and government officials share information with the populations affected by these operations. However, the choice of information for public disclosure is based on a criteria of selectivity in line with the guiding principles upon which this policy is anchored.”
The policy points out that internal financial information that may affect the AfDB’s activities in capital and financial markets and financial, business or proprietary information of private entities will remain confidential.
BIC’s assessment of the policy is: „While the text of the AfDB’s information disclosure policy is stronger in some respects than those of other international financial institutions, its policy implementation is extremely weak and access to information remains a serious problem.”
Corruption
The AfDB has adopted an anti-corruption strategy that includes:
- Preventing corruption in AfDB activities;
- Mainstreaming corruption issues in AfDB activities;
- Helping regional member countries that request assistance;
- Participation in regional and global anti-corruption initiatives.
The Bank doesn’t accept fraud, corruption and misconduct and investigates fraudulent and corrupt practices through its Office of the Auditor General’s Anti-Corruption and Fraud Investigation Division (ACFD).
In support of its anti-corruption strategy the AfDB has a “whistle-blowing and complaints handling policy” that encourages any person or party to come forward with information relating to fraud, corruption and any other misconduct. The policy says that those disclosing the information will be protected from retaliation. The policy promises further that the Auditor-General guarantees confidentiality of the identities of whistle-blowers to the extent possible.
Complaints
Civil society organisations and individuals can file a complaint with the AfDB Independent Review Mechanism (IRM). This mechanism has been set up “to provide people adversely affected by a project financed by the Bank Group with an independent mechanism through which they can request the Bank Group to comply with its own policies and procedures.” The mechanism can review compliance with all Bank Group operational policies and procedures, in the case of private sector financing the mechanism reviews only social and environment policies.
A Compliance Review and Mediation Unit (CRMU: a director assisted by a principal compliance officer and secretarial services) and a roster of experts (three external experts, appointed by the Board of Directors for a five-year non-renewable term) form the mechanism.
Civil society organisations working on the AfDB
