The African Development Bank (AfDB) 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 is 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 are having trouble meeting conditions for loans and are encountering delayed disbursements, he said.
But Kaberuka said that as the bank increases its presence in the field — it is now in 22 countries, out of a goal of 25 — and steps 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 African Development Bank’s cumbersome decision-making structure. ”We have been doing more talking than actual action,” he said.
Several governors also criticised of the bank, pointing out that its disbursements are 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.”
Results culture
British representative Amanda Rowlatt said the lender should ”resist the temptation to micromanage” and focus instead on broader strategic issues. United States 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.
Kaberuka said the bank is already changing the way it is doing business. Changes include 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.”
He said the bank is playing its part in developing African bond markets and has issued bonds in five African currencies — Botswana pula, Ghana cedi, Kenyan shilling, Nigerian naira and Tanzanian shilling. It intends to look at more currencies and increase the maturity of the bonds.
”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.” — Reuters