Draft African Development Bank (Eleventh Replenishment of the African Development Fund) Order 2008

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Gillian Merron: I thank the Committee for this brief but nevertheless interesting debate on an important matter. Hon. Members have raised a considerable number of issues that I will respond to. In the event that I miss anything, I am happy to write to hon. Members because it will have been accidental rather than intentional.
I shall start with the issue of Zimbabwe and deal with some of the comments made by the hon. Member for North-East Milton Keynes. First, the position he described is historic and I expect and anticipate that it will be reviewed. The fact about Zimbabwe is that it has arrears, and one cannot do business with the bank when one has arrears. I can perhaps therefore reassure the hon. Gentleman that money is not being used in the way in which he is concerned it is, as we made clear when we discussed the issue previously.
Mr. Lancaster: If countries cannot do business with the bank because they are in arrears, why has a country office just been opened in Sudan?
Gillian Merron: Perhaps the hon. Gentleman will allow me to come to that.
Mr. Lancaster: It is a slight contradiction.
Gillian Merron: I understand the hon. Gentleman’s point, but perhaps he will allow me to deal with that in due course.
The hon. Gentleman raised some important points about governance and corruption. Let me give the Committee the assurance that the ADB has produced a robust governance strategy, which talks about its future contribution to the transparent and accountable management of public resources. It is important that the Committee and the House recognise the great progress that has been made. The bank now has an AAA rating, and that is due in no small measure to the efforts of President Kaberuka. When I visit the bank and attend its annual meetings in my role as alternate governor, I am in no doubt about the fact that we should support that leadership. As a member of the International Development Committee, my hon. Friend the Member for Bradford, West, will agree with that, because his Committee was very satisfied with and very complimentary about the leadership that is being provided.
On UK money, the ADB and DFID strategic partnership for governance programme aims to enhance the bank’s ability to strengthen governance in African countries. I assure hon. Members that the bank is serious about corruption and key steps have been put in place, a matter that I am sure the hon. Gentleman will have discussed during his own visit. As I said, the bank works with African countries to tackle corruption. It has strong internal systems and policies and it has taken action, including dismissing staff who have been found guilty of fraud and corruption. There have been just a few cases of corruption of late, but they have all been investigated or are subject to ongoing investigations. The president has given high-profile support to the auditor general and insisted that recommendations in internal audit reports are followed up.
What matters to me, however, are results and effectiveness. We need to think about how we assess the effectiveness of an institution such as the ADB, and that is a crucial issue for DFID—acting on behalf of UK taxpayers—and for the international community. That is why we have developed our own means—the multilateral development effectiveness summary, the details of which I would be happy to provide to the hon. Gentleman or any other colleagues—of presenting the latest available information on the effectiveness of the main multilaterals. I hope that I can reassure hon. Members on a number of points when I say that it looks at four main areas: results, managing resources, building for the future and managing partnerships.
At the risk of going into great detail—I am happy to do so if colleagues want me to—let me say that there is a range of supportive measures. Those include the common performance assessment system and the multilateral organisations performance assessment network. Those systems have locked in a concentration on results and on ensuring that we get the money to where it should be.
The hon. Gentleman asked about regional offices. Let me make it clear for the benefit of the Committee that the bank is working to increase capacity in country offices. The office in Khartoum is necessary to improve country dialogue with Sudan; it is not working on a regional base, and nor is the bank working on regional offices.
The administration budget was a big concern for me during the investigations that I undertook on my visit. Members of the Committee would want to be assured that we would not commit extra money to administration if we were not sure that the existing amounts were being used properly. The bank might well need an increase, but I have been clear with DFID officials that until we are satisfied that the current amounts spent on administration are being used to maximum effect, I do not wish to commit more UK money to administration. I am interested in results. Capacity has improved, vacancy rates have declined, and a staff skills survey is being undertaken. The important thing is having the right people in the right place, which is what the in-country offices are about.
Mr. Simon Burns (West Chelmsford) (Con): I appreciate the Minister’s concern about administrative costs and monitoring those. What proportion of the budget is spent on administration?
Gillian Merron: I shall be happy to write to the hon. Gentleman and other Committee members to confirm that.
The hon. Member for North-East Milton Keynes asked for clarification in respect of allocation to regional integration projects. Twenty-five per cent. of the overall ADF-11 replenishment resources will be allocated to regional projects, and 17.5 per cent. of that will come from a central pot. That may be where the misunderstanding has come from. The rest will come from contributions from recipient countries out of their own allocations.
The African Development Bank does recognise that it is highly centralised, with an insufficient presence in-country and too many operational decisions taken at headquarters. By the end of 2007, 24 offices had been opened. Those need to be fully staffed and we need to see delegation of authority agreed. The bank has committed—I think that this is happening at about the right pace—to increasing the percentage of professional staff based in field offices from 5 to 15 per cent. by 2009. That is quite a big shift. The hon. Gentleman asked about progress, and progress does need to be made, but I want it to be made in the right way, so that people have the right ability to make decisions.
The hon. Gentleman suggested that regional integration was somehow a low priority for bilateral donors. I do not share that view. It is more a case of that being more difficult bilaterally than it is multilaterally. Certainly the UK has committed itself on projects such as the one that I saw at Chirundu on the Zimbabwe-Zambia border to establish a one-stop border post to get people through the border more quickly and to increase trade, which of course has great implications for the whole region.
Mr. Lancaster: They were not my words; they come from the ADF 11 deputies’ report, of which the Minister will of course be aware. Paragraph 4.10 is quite clear in saying that regional integration has been a low priority for bilateral donors.
Gillian Merron: I accept that clarification. The reason why we are so supportive of the African Development Bank is that, as an African institution and a multilateral institution, it has a far greater capacity to reach across the regions than a bilateral one ever could have.
Results are what matter. That is really all we should be talking about, and President Kaberuka has said that he is clear that he will be judged by results. That is why a new framework has been developed that will track progress on internal reforms. There will be increased monitoring of projects. It will ensure baselines and ensure that lessons are learned. I was asked for examples of the work. I shall give a few and if hon. Members would like more, I shall be happy to provide them.
I mentioned in my opening comments that in Eritrea an ADF livestock development project has led to farmers’ incomes increasing by 65 per cent. The ADF has supported projects to enhance environmental sustainability, including in Niger, which has meant that forest land productivity has increased significantly while the transition has been taking place to more sustainable management. In Uganda, the health sector strategic plan project has sought to strengthen health services in rural areas, with a focus on mental disorders. That project has rehabilitated and equipped 32 primary health centres and six mental health units, while also providing clean water and latrines and trained village health teams. Yes, more needs to be done. It is probably worth mentioning that one of the most recent approvals has been of a national water programme for Malawi, which will bring clean water and sanitation across the country. Therefore we very much see results.
Regarding the Paris commitments, the targets are in the African Development Fund results framework. They were agreed in December 2007 under the replenishment, and I can confirm that we will track progress. The hon. Member for West Aberdeenshire and Kincardine asked about UK representation at the African Development Bank. First, let me state that that is of course an African institution and shareholders must—I believe—operate in constituencies. It is true that we share a constituency with Germany, the Netherlands and Portugal, and we alternate an executive director slot with Germany. Through discussions with our team, I have been convinced that we have a constituency—hon. Members will be pleased to know—that is like-minded and collaborative. I am confident that that will continue under the new executive director, who is the German representative. Historically, constituencies have been determined by the size of shareholdings in the African Development Bank, not by financial contributions to the African Development Fund. It is true that the current arrangements are not set in stone, and we discussed that on the International Development Committee. We are very open to considering a wide range of options with other shareholders, and are happy to have a discussion. However, it is important to remind the Committee that we are talking about an African institution, and that is our main concern.
This Government’s efforts to find international solutions to the debt burden of the poorest countries have received great support in this House and among the British public, and we have already delivered significant results, leading to real benefits. The African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order will enable us to go further. It is clear that the African Development Bank has the potential, as the International Development Committee put it, to be
“the driver of African development.”
I thank my hon. Friend the Member for Bradford, West for his supportive comments, which are important to get on record. The African Development Bank (Eleventh Replenishment of the African Development Fund) Order will enable that potential to become a reality.
In 2005, the Government promised to help the world’s poorest and to help us to get back on track towards meeting the millennium development goals. We are halfway to the 2015 deadline, and we still have a mountain to climb. We must stick to our word and not waver in our efforts. This Government will strive to ensure that we see our commitments through and we will do everything that we can to make global poverty a thing of the past. These orders are a small but important step. I thank members of the Committee for their support, and I ask that the Committee approve the orders.
Question put and agreed to.
That the Committee has considered the draft African Development Bank (Eleventh Replenishment of the African Development Fund) Order 2008.

draft African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2008

That the Committee has considered the draft African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2008.—[Gillian Merron.]
Committee rose at nineteen minutes past Five o’clock.
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