The African Development Bank (AfDB)

Updated February 2006

1. Facts

The AfDB provides loans and technical assistance on a grant basis to qualifying member countries from the following two institutions:

• The AfDB obtains resources in world capital markets through bond issues. The size of its capital base, to which the member countries have contributed, enables the AfDB to borrow on good terms. The AfDB provides loans on nearly the same low terms, which are much better than what African countries would be able to obtain in the capital markets. The fifth and latest General Capital Increase (GCI-V) was authorized in May 1998. The distribution of votes between regional and non-regional board members is 60/40 and a two-thirds majority is normally required for approval by the Board.
  Loans, grants, etc. approved in 2004: NOK 15,2 billion
  Biggest borrowers in 2004: Morocco, Tunisia, Gabon
  Norwegian share of capital base: 1.151 per cent
• The African Development Fund (AfDF) created by the AfDB in 1972 provides loans to low-income regional member countries (RMCs), which are unable to meet the terms of ordinary loans. The AfDF is financed chiefly by contributions from the non-borrowing countries, but also by payments from debtors on existing loans. Contributions to the AfDF are given through replenishments, usually on a three-year basis. AfDF loans are given on terms similar to the IDA. No interest is charged; project loans have a 40 to 50-year repayment period, including a 10-year grace period. Under the last replenishment (AfDF-X) about 44 % of the funds will be in the form of grants. The AfDF Board of Directors has 12 members, six of whom represent non-regional member countries. The distribution of votes is 50-50, and a three-quarters majority is required for board approval.
  Loans, grants, etc. approved in 2004: NOK 12,5 billion
  Biggest borrowers in 2004: Multinational, Tanzania, Ethiopia
  Norwegian share of latest AfDF replenishment: 3.54 per cent of contributed capital
  Lending profile: The major sector approvals were in transport, multisector, and agriculture and rural development, with more than 70 per cent altogether.

2. Ways and means

Involvement on the Executive Board

The Board of Directors is the AfDB’s executive authority and is responsible for conducting Bank operations. Just as in the other regional development banks and the World Bank, the Nordic countries in the AfDB are in the same constituency and work closely together, holding weekly telephone conferences and sending joint instructions to the constituency office. The active collaboration of the Nordic countries gives Norway a greater opportunity to be heard and to gain acceptance for its views. This opportunity to draw on the country and sector expertise of others and to offer our own expertise is of great benefit, as is the information and expertise of the embassies and country offices of all the other Nordic countries, which are thus made available.

Following the constituency office’s rotation scheme, Norway assumed the Executive Directorship in July 2004.

Consultations

Replenishment consultations are not just a matter of financial contributions. They are also important arenas for forging policy, they set many conditions for the further activities of the Bank, and they lay down specific guidelines for the bank’s work in the poorest countries. Experience has shown that the replenishment consultations which take place in the various development banks exert a mutual influence on each other, giving a substantial degree of consistency in the respective banks’ policies towards the borrowing countries.

Consultations on the Tenth Replenishment of the AfDF (ADF-X) were completed in December 2004 and resulted in a replenishment of about USD 5,4 billion for the period 2005-2007 - an increase of 43 per cent from AfDF-IX. The AfDB’s capital increase negotiations tend to be exhaustive, covering the full range of bank policy. The last round of negotiations on the Fifth General Capital Increase (GCI-V) was concluded in 1998.

Co-financing

Our co-financing involvement in the international development banks is a channel by which we seek to influence these institutions according to Norwegian foreign and development policy. Through the difficult period in the mid-1990s, co-financing with the African Development Bank Group was kept to a minimum. More recently, however, we have been slowly developing cooperation in central areas such as gender equality and the environment. And it would be appropriate in coming years to consider restructuring and expanding our co-financing portfolio with the AfDB in more innovative ways such as by shifting our co-financing emphasis towards thematic multilateral funds. Norway today supports two larger programmes; the African Water Facility and the Nordic Trust Fund for Governance.

3. Norwegian priorities

Through our engagement in the AfDB – our work under the Executive Board, negotiations, co-financing and in other ways – we will promote central Norwegian development policy objectives as they are formulated in the Action Plan for Combating Poverty. Our contribution towards meeting the Millennium Goals, including their implementation at national and regional levels, is a fundamental aspect of our international development policy, and our AfDB involvement must reflect this. Coordination on all levels is an important element, with the national development strategies and poverty-reduction strategy papers (PRSPs) given a central place. Coordination of efforts, standardization of procedures and consolidation of resources are therefore essential in our efforts vis-à-vis the bank, and will be given priority. The AfDB is becoming increasingly result-oriented, and we wish to support the heightened focus on development impact which is now asserting itself.

NEPAD is looking to the AfDB for follow-up. Norway takes a positive view of NEPAD as a genuine African political initiative, and we stand behind the AfDB’s efforts in this direction.

The AfDB’s strength lies in the fact that it is the largest development institution based in Africa. The fact of it’s being African is an advantage when politically sensitive issues such as good governance are on the agenda. Moreover, the current leadership has carried out a much-needed cleanup effort and laid the groundwork for developments in a positive direction, an effort we expect the new president to continue. The AfDB enjoys the confidence of all groups of member countries.

The AfDB’s weakness lies chiefly in its secretariat being rather bureaucratic and relatively inefficient; local representation is weak and donor coordination likewise. Compared to the World Bank, the AfDB is fairly small, with about a third of the volume. Living conditions in the host country make it difficult for the AfDB to obtain qualified staff in stiff competition with the World Bank and other international institutions.

Our priorities in our work with the AfDB will be to:

• Integrate the AfDB’s recently-adopted, overarching goal of poverty reduction into all phases of its operative efforts (policies, programmes, technical assistance and other activities).
• Promote collaboration with the World Bank based on the institutions’ comparative advantages and the cooperation agreement between the two institutions. It should be noted that AfDB access to the World Bank’s resources in the field is important.
• Promote the further development of sector-oriented support, the delegation of responsibility and the opening of additional local offices in accordance with the new organizational structure.
• Strengthen the AfDB’s performance-based follow-up with an emphasis on what is done in the Committee of Operations and Development Effectiveness (CODE).
• Promote more systematic integration of cross-cutting issues such as gender equality, good governance and environmental sustainability.
• Encourage the AfDB to step up its work on good governance in particular.
• Promote the development of more targeted policies and concrete operational instruments for the purpose of advancing regional cooperation and integration.
• Urge the AfDB to proactively target the HIV/AIDS pandemic in its dialogue with borrowing countries, and to include HIV/AIDS components in its lending and technical assistance portfolio, particularly in the health and education sector.
• Enhance the development effectiveness of the AfDB’s private sector effort and its work on operating parameters for industrial development, export and investment.