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The African Development Bank (AfDB) launched its golden jubilee celebrations on April 22 in Tunis in a colourful ceremony mingled with sober reflections on the Bank’s development journey and how to tackle Africa’s future challenges.
AfDB President Donald Kaberuka paid tribute to the Bank’s founding fathers and to the pioneers who worked so hard to kick-start the institution. He also reiterated the need for the Bank to continue to be dynamic and innovative in trying to tackle Africa’s development challenges.
Echoing Kaberuka, the Chairman of the Bank’s Board of Governors and Rwanda’s Finance Minister, Claver Gatete, noted that the institution has evolved tremendously to become Africa’s premier development finance organization and knowledge broker on African development issues. Gatete expects the Bank to even do better in the knowledge domain in the coming years.
Going down memory lane, November 4, 2014 marks 50 years since the inaugural meeting of the Bank’s Board of Governors held from November 4-7, 1964 in Lagos, Nigeria’s former capital.
The Bank did not begin operations until July 1966 after the opening of its headquarters the previous year in Abidjan, Côte d’Ivoire. Khartoum also features prominently in the annals of the institution because it was in the Sudanese capital that 23 newly independent African countries signed the agreement establishing the Bank on August 4, 1963.
The AfDB, a child of necessity, emerged in the tumultuous Africa of the 1960s. In those years, present-day Democratic Republic of Congo, the archetypal heart of Africa, was embroiled in conflict. In West Africa, there was the western Nigeria crisis which later sparked a civil war. Sudan was busy trying to quell its October 1964 revolution, while South Africa was engrossed in the anti-Apartheid campaign. Liberation movements had sprung up in several parts of the continent in the quest for independence.
Certainly, such an environment could not have been propitious times to focus on development-oriented issues. Therefore, AfDB had to start from a low base, with very modest resources – US $250 million in capital and 10 staff members.
Fifty years down the road, the institution has evolved to become Africa’s undisputed premier development finance institution, commanding the respect of much older peers like the World Bank and the International Monetary Fund.
The AfDB’s shareholder base has since expanded from 33 to 79, comprising 53 African and 26 non-African member countries. Its authorized capital has ballooned to US $103.53 billion while its staff complement peaked at 2,065 at the end of 2013.
In the operations domain, the figures speak for themselves. The Bank committed a cumulative 4,003 loans and grants valued at US $104 billion between 1967 and 2013 to the Regional Member Countries (RMCs).
The AfDB Group currently finances projects and programs as well as the production and dissemination of knowledge on development issues in all RMCs including fragile states and countries experiencing civil strife such as Somalia and South Sudan. Its sectoral coverage is strategically oriented and ranges from infrastructure – which accounts for over half of its aggregate funding, to multi-sector, agriculture and rural development – to the social, finance and environmental sectors.
Resource allocations are constantly aligned with the Bank’s and its member country strategies. For instance, the Ten Year Strategy 2013-2022, focuses on two pillars – inclusive growth and transition to green growth. Infrastructure, skills and technology, regional integration; private sector and governance and accountability are its operational priorities. It also considers gender, fragile states, and agriculture and food security as domains of special emphasis.
The AfDB owes its continued existence at least in part to the dire material and intellectual resources that came with the creation of the African Development Fund (ADF) in 1972. The ADF members from the developed world now numbering 26 countries are drawn from the OECD, Asia, the Americas and the Middle East. They provide concessionary resources for the financing of projects and programs in about 38 RMCs that are unable to borrow from the AfDB’s market window.
Thus, relying on strong sovereign backing, the ADF, the Nigeria Trust Fund (NTF) and other bilateral resources, the Bank is able to boost its capital base as well as mobilise resources form the international financial markets on preferential terms, thanks to its “AAA” ratings from the major international rating agencies.
Close observers cite the AfDB’s smart response to the 2008 financial crisis which rescued many African countries from the brink of disaster as one of the Bank’s finest moments. It has since added more feathers to its cap, becoming the first MDB to be recognised for two of its outstanding projects in the same year, when it received a Development Impact Honors from the US Treasury Department in 2013 for two projects financed by the Bank in Côte d’Ivoire and Uganda.
The Bank’s current President, Donald Kaberuka, was awarded Nigeria’s Daily Trust newspaper “2013 African of the Year” for championing the creation of the Africa50 Fund, among other achievements. Kaberuka won the award “in recognition of an innovative idea which led to the establishment of the ‘Africa50 Fund’ to speed-up the financing of infrastructure on the continent.”
The Bank has won many converts within the ranks of Afro-pessimists with the successful implementation of many initiatives, policies and programs that speak to the core of Africa’s dire development needs.
The decentralization of operations has enhanced country ownership of projects and programs and results delivery. This has enabled the AfDB to emerge as a trusted African institution connecting Africa with the world.
Development experts agree that Africa is rising with a potential to becoming the next development pole, driven by investments in natural resources, population growth, rapid urbanization, and an expanding middle class as well as rising consumer demand.
They argue that except Central African Republic and South Sudan, Africa is experiencing fewer wars as countries such as Ethiopia, Côte d’Ivoire Sierra Leone, Mozambique and Angola are joining high-performers like Botswana, Mauritius, Seychelles, and Cape Verde as mini economic powerhouses on the continent. In addition, the continent is among the richest places in the world, endowed with considerable natural resources.
Africa’s economy is projected to grow by 4.8% in 2013 and accelerate further to 5.3% in 2014. Although this is far below the average 7% growth rates required to surpass population growth rates and begin to turn things around, it does illustrate that Africa is rising and can achieve more given the right conditions.
One such condition is related to the development of infrastructure as a primary condition for economic integration, market expansion and the attainment of economies of scale required to create demand and wealth.
At the same time, there is a compelling view that pressing issues such as rapid urbanization and youthful population pressure; unemployment, environmental degradation and growing insecurity are critical emergency issues that need to be addressed.
Although good governance is key to engineering positive change, a smart and commercially viable mechanism for the financing of soft and hard infrastructure to spur growth such as the proposed Africa50 Fund can be the long-awaited Africa game changer.
In these halcyon times, one cannot but agree with Kaberuka when he said, “Fifty years after independence, it is time for that step change – a step change with Africa taking ownership, mobilizing its own energies and resources, putting those savings toward building Africa’s infrastructure and in the process getting a good return.”