Moving back to Cote d’Ivoire may be on the agenda for the African Development Bank (www.afdb.org), according to an interesting story on the website www.devex.com (you may have to sign in to read it?). The bank fled from Abidjan in a rush in 2003, as rebels advanced on Abidjan in the brutal and all-encompassing civil war. Now the new Cote d’Ivoire President Alessane Ouattara wants it back. and it was on the agenda at the bank’s AGM in June in Lisbon, although it may take up to 3 years before this happens.
The article also notes that the bank is increasingly important and playing a bigger role as an African institution in channeling funding to African projects.
In January 2011, the bank lived through Tunisia’s jasmine revolution, although one bank staff member told me that it did not much affect the area around their building, as street action was mostly concentrated in other parts of town. They did miss a few days work, before bosses had them back in action.
According to the article, AfDB president Donald Kaberuka said uncertainty over the permanent location of the bank had a “significant effect” on morale, frustrated “horizon planning” and was difficult for the human resources department. Some bank staff may be happy to leave Tunis, others not.
Ouattara, who got into power in April 2010 after being blocked by his predecessor, Laurent Gbagbo who disputed the election result, is moving fast to re-establish Abidjan as the financial hub for West Africa and has been lobbying hard for the bank. It is not sure what the criteria for the move are, but it is possible they will need to see at least another successful multi-party election and a period of stable government.
The AfDB attended Ouattara’s inauguration and was a leader in an accelerated package of loans to help the new administration and initial renovation has started for the bank’s headquarters in Plateau district, according to the article.
New confidence, bigger role going forward
Then bank also led multilateral lenders to sign of $1 billion in loans to Tunisia’s new administration. Kaberuka, a former finance minister from Rwanda, reportedly says that after the political shocks, swift intervention can limit collateral damage. The African Development Bank is credited for its role after the 2008 global financial crisis in encouraging African states to apply fiscal restraint but to ease potential economic disruption through investment in infrastructure, and many countries are praised for successful countercyclical interventions.
The article also argues that the bank is increasingly the biggest and best bet for Western donors who are its principal shareholders. Experienced author Mark Ashurst writes: “As the bank’s loan book grows bigger and more diverse, donors, including the United States, Germany and the United Kingdom, are keen to devolve the task of managing their African exposure to an African institution.” He adds that the bank has done a skilful job of developing a terminology that avoids words such as “conditionalities” and uses “policy-based lending” and success in developing the skilful balancing acts required to work with nations. It also reflects aspirations for greater African voices in international development policy and it is likely that more international financial institutions could devolve administrative work to the AfDB.
In 2010 the African Development Bank passed the World Bank and became the leading source of multilateral financing for new African infrastructure. The same year, the bank’s sixth general capital increase included pledges to treble the bank’s reserves to $100 trillion by 2021, signalling new confidence. The bank’s loan book is stsill less than the sum of China’s resources-for-infrastructure swaps but the AfDB is much more closely involved than other lenders in African institutions such as the African Union and the Economic Commission for Africa and has a unique standing in the regard with which it is seen in Africa.
The article goes on to argue about the bank’s changing role as growth of 5% a year or more becomes the norm in Africa for coming years. This includes work to support bond and capital markets and leveraging private capital (20%), infrastructure (40%), budget support (20%), industries, including mining and manufacturing (20%). It is well worth reading Mark’s article in full here.