Outogoing African Development Bank (AfDB) president Donald Kaberuka said this week the bank’s governance structures and business model “were wrong”.
As the African Development Bank (AfDB) prepares to elect its new president this week the question of its governance structures and business model has been called into question.
The incumbent president Donald Kaberuka shocked delegates on Tuesday at the 50th annual AfDB meeting in Abidjan when he said the bank’s governance structures and business model “were wrong”. He said these were the reasons behind the bank’s inability to achieve some of its mandates and goals, including those of poverty alleviation and the lowering of inequality and unemployment.
The AfDB was founded in 1964 and has drawn criticism from some for its neoliberal stance that has left some African countries worse off.
During the Asian-African conference in Indonesia in April, leaders of emerging nations from the two continents pushed for the establishment of a development bank to rival the old Bretton Woods institutions.
Zimbabwe President Robert Mugabe, who spoke at the conference in his capacity as African Union president and Southern African Development Community (SADC) chairperson, said policies fostered by the Bretton Woods institutions had led to deindustrialisation and declining income in sub-Saharan Africa. Mugabe criticised the institutions for “failing to deliver solutions” to alleviate poverty, distribute wealth and close the inequality gap in developing countries.
In an interview with the Mail & Guardian in Abidjan on Tuesday, Finance Minister Nhlanhla Nene said he would agree with Kaberuka that perhaps the Bretton Woods institutions needed to adapt to the needs of the countries they serve.
He said although Africa’s needs had changed over the last 50 years, the bank had not repositioned itself to deal with African challenges.
“That is one of the things you will see in the recommendations. We need to talk directly to how the bank needs to reposition itself and to account to the changing needs of each country. This means we have to move from the traditional focus on ways that the banks and the multilateral development banks used to operate,” said Nene.
He said the establishment of the Asia Infrastructure Investment Bank was a wake-up call for the AfDB. He said the emergence of new institutions posed a challenge and have forced them to change their business model as there is now increased competition. He added that the infrastructure gap in Africa was big enough to accommodate the existence of all multilateral development banks.
On Wednesday the board of governors of AfDB held their first sitting to discuss and speak with the eight candidates running to take over from Kaberuka on September 1. Nene told the M&G that South Africa had taken the SADC decision to back one candidate, Zimbabwean Thomas Sakala, a former AfDB vice president of country and regional programmes.
“We could have gone as a country and put forward a candidate but we went as a regional bloc. In this instance SADC took a decision that we are not putting a country candidate. The SADC candidates were picked and put through the same process that they will be put through now during the presidential selection,” said Nene.
He said he believed Sakala was the best candidate for the position, but this should not be seen as Zimbabwe or SADC trying to consolidate its power over the continent.
If Sakala is elected president, Zimbabwean nationals would lead the African Union, SADC and AfDB.
‘It is our time’
Ahead of his interview with the board of governors, Sakala told the M&G that his election should not be seen as a geopolitical power play on the continent but rather that every region had a right to elect a candidate.
“The only group of countries that will vote for me is SADC; as for the rest I don’t want to speculate. SADC believes that it is our time,” he said.
When asked about whether he would have to answer to Mugabe as chairperson of SADC and the AU president, his response was: “I don’t want to answer questions about my president [Mugabe], the AU or the AU structure. I am happy that he is the AU president [and the SADC chair],” he said.
He also refused to directly comment on Kaberuka’s comments about the board of governors and the bank’s business model. He did however say it was important to revisit the structure of multilateral development banks that were formed after World War II. He said the route the bank would take would be determined by the demands of its member states and its programmes would be aligned to pro-infrastructure, development and pro-poor policies.