A Boost to Aid Partnership: Record Level of Support for the African Development Fund

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The recent meeting of Africa’s development partners in London is set to become yet another significant event in the history of aid relations between Africa and its partners. At the talks, representatives of donor countries, meeting with officials from Africa and some international development institutions, agreed to a record level of support for the African Development Fund (ADF) – the principal source of African Development Bank Group funding of development programs in Africa’s poorer countries.

The history of this partnership goes back to the 1970s and the promises made by member countries of the Organization for Economic Cooperation and Development (OECD) to commit 0.7 % of their gross national incomes (GNI) as development aid.  In the nearly four decades since, aid relations have been the focus of a variety of high-level international gatherings: the 1992 Earth Summit in Rio de Janeiro which codified existing aid commitments at the time; the 2000 UN Summit that adopted the Millennium Development Goals (MDGs) and provided the partnership of donors and aid recipients measurable development targets; the 2002 Monterrey Compact by developed nations to significantly increase aid levels and write off the debts of the world’s poorest nations; and the 2005 Gleneagles summit of the world richest nations which agreed to write off all multilateral debt of countries eligible for debt-relief under the Heavily Indebted Poor Countries (HIPC) Initiative while providing additional aid to the multilateral institutions involved.  The G8 leaders also agreed to double their aid budgets by 2010 as a part of the same agreement.

Within this context, the December 2007 meeting in London marks  a further highpoint in the development aid partnership.  The donors agreed to make available US$ 8.9 billion in resources to the ADF in a decision that was significant in many ways.  First, the resource package represented a new record in contributions to the Fund.  In 1975, when the first replenishment was approved, the Fund’s three-year allocation was under US$ 500 million.  It then took nearly a decade and a half for contributions to hit the US$ 3 billion mark and a similar period to reach US$ 5 billion during the 10th replenishment in December 2004.  Secondly, it was a demonstration of the will of donor countries to make progress toward commitments made.  During their recent summit in Heiligendamn, Germany, G8 leaders had reiterated their desire to meet the levels of aid laid out at Gleneagles improve both its quantity and quality. The London agreement is now proof of this commitment.

Year  US$ Billion
ADF I1976-780.33
ADF II1979-810.71
ADF III1982-841.00
ADF IV1985-871.50
ADF V1988-902.80
ADF VI1991-933.42
ADF VII1996-983.20
ADF VIII1999-20013.38
ADF IX2002-20043.50
ADF X2005-20075.40
ADF XI2008-20108.90

Beyond the G8 commitment, the momentous increase in resources must be seen as a testimony to what has happened in Africa and the AfDB in the years since the last replenishment meeting.  "Perhaps for the first time," said Britain’s International Development Minister Shriti Vadera, as she opened the meeting in London, "we have a sense of optimism in Africa with many, if not all, countries growing at better rates than ever before.  An average growth rate of 5% is the highest since the 1970s."  Indeed, thirty-one countries in the region have recorded an improvement in real GDP per capita, with at least nine of these registering real growth levels above 7 percent.  Five of the most highly populated countries, accounting for almost half of Africa’s population, are poised to register economic growth rates of 6.5% or more in 2007, raising hopes for a noticeable decline in the number of persons living in absolute poverty. Furthermore, peace is taking hold in the region as countries coming out of conflict regain their balance, adopt pro-reform policies, and set the stage for greater integration of regional economies.  All of this translates into greater confidence in Africa and a willingness by its partners to invest in the region.

The same is true of the AfDB.  "We have the continent’s bank finally able to be effective," Mrs. Vadera told delegates in London.  "We have a bank president leading from the front and demanding results."  The Bank has stayed in lock step with the new dynamic on the continent, initiating reforms that have enabled it to raise its institutional and knowledge capacities, sharpen its response to development priorities, and enhance a decentralization effort that brings it closer to the ground in regional member countries.  The increase in ADF resources is the strongest endorsement yet of the reform action that the Bank has undertaken since July 2006.  The donors in London expressed strong support for Bank President Donald Kaberuka, making the link between his reform efforts and the generous contributions to the Fund.  Dr. Kaberuka, in turn, made clear his personal commitment to ensure that the Bank delivers on its mandate.  The reforms and a stronger focus on results will enable the ADF to do its work more effectively and make a greater contribution to growth, development and poverty reduction in Africa.

State donors to the African Development Fund are Argentina, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, India, Italy, Japan, Korea, Kuwait, the Netherlands, Norway, Portugal, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom, and the United States of America.

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