Recommendations
Infrastructure
1. We
welcome the priority given to infrastructure in ADF 11, especially
the focus on regional integration, a crucial factor in boosting
economic growth in Africa. The AfDB is in a good position to co-ordinate
international efforts in infrastructure due to its hosting of
the Infrastructure Consortium for Africa and the African Water
Facility, and its mandate to lead the New Partnership for Africa's
Development (NEPAD) agenda for regional integration. We recommend
that DFID do all it can to support the AfDB in using the current
replenishment to secure real progress in building both 'hard'
and 'soft' infrastructure that opens up markets within and between
African countries. (Paragraph 16)
2. We reiterate our
recommendation from our 2007 Sanitation and Water report that
consultation and capacity-building of local communities should
form a vital part of AfDB-supported infrastructure projects, especially
within the water sector where local operation and maintenance
knowledge are crucial to sustainable usage of facilities. DFID
should engage with the AfDB to ensure that current major investments
of its funds—notably the Rural Water Supply and Sanitation
Initiative—adhere to principles of consultation and inclusivity,
so that their outcomes benefit poor communities. (Paragraph 18)
3. We believe that
procuring goods and services to support infrastructure locally
creates more sustainable outcomes and helps generate skills, income
and employment. The use of foreign contractors is no guarantee
of quality and militates against the development of local construction
and operation industries. We recommend that the Bank should look
again at its systems for procurement and ensure it is doing all
it can to promote the use of local producers and suppliers for
infrastructure projects in African countries, whilst continuing
to harmonise its procurement processes with other donors in line
with the Paris Declaration on Aid Effectiveness. (Paragraph 21)
4. We agree that,
in a climate of growing international concern over rising food
prices, it is vital that multilateral agencies play to their individual
strengths and co-ordinate carefully—especially in rural
Africa where price rises are likely to hit the hardest. Accordingly
we recommend that the AfDB should continue to centre its efforts
on infrastructure to support agriculture such as irrigation, crop
storage and rural road-building. At the same time it should liaise
closely with other multilateral agencies working on agriculture
in Africa to ensure issues such as crop yields are addressed through
appropriate technical assistance and implementation of research
findings. (Paragraph 22)
Governance and transparency
5. We
believe that DFID deserves credit for its leading role in securing
the creation of the Fragile States Facility. The initiative presents
the opportunity for the AfDB to offer rapid, comprehensive assistance
to the large number of fragile states in Africa. We look forward
to following the progress of the initiative and recommend DFID
monitor its implementation closely. (Paragraph 24)
6. We believe that
DFID deserves credit for helping build commitment within the AfDB
to the Extractive Industries Transparency Initiative (EITI). However
we were surprised that DFID was vague about the need for EITI
compliance to be a pre-requisite for AfDB financing for extractive
projects. It would be highly unsatisfactory for AfDB funds to
which DFID has contributed so generously to undermine a transparency
initiative spearheaded by the UK. We believe that DFID should
push for the AfDB to implement the High Level Panel's suggestion
that adhering to EITI principles should be a pre-requisite for
any Bank private sector financing. The Department should encourage
the AfDB actively to support the 13 African countries which have
endorsed the EITI principles to implement it, and to advocate
for all regional member countries to endorse the Initiative.
(Paragraph 27)
7. We recommend that
the AfDB should help improve transparency by empowering parliaments
and citizens to hold governments and development institutions,
including the Bank itself, to account. Supporting good public
financial management of natural resource and other revenue sources
is directly linked to boosting growth rates in African countries
and should remain a major priority for the Bank. (Paragraph 28)
Private sector development
8. The
AfDB is an important lender to the private sector, but it must
ensure that its lending always 'adds value'—whether in the
form of technical assistance, social and environmental safeguards
or mitigating risks that the private sector itself may not be
able to take on single-handedly—compared to the lending
which standard private sector lenders can offer. (Paragraph 30)
9. We welcome the
fact that gender will be one of three cross-cutting objectives
for ADF 11. We were pleased to see that the objectives set out
in the ADF 11 'Deputies' Report include provision to employ more
gender specialists within the AfDB. We urge DFID to monitor the
achievement of this objective to ensure that the Bank is properly
equipped to mainstream gender issues across its projects and investments.
We were concerned that the objectives in the Deputies Report omit
any measures addressing the need to empower women to participate
in private sector development. Women are the driving force of
many aspects of local markets yet remain economically disempowered
in many African countries. We recommend that DFID support the
Bank to acknowledge and promote the close links between women's
empowerment and private sector development in the updated AfDB
Gender Plan of Action. (Paragraph 33)
Climate change
10. We
welcome DFID's Technical Cooperation Arrangement with the AfDB
under which support on climate change work will be provided over
the next four years. However, we are concerned that DFID and the
AfDB have divergent conceptions of the role the AfDB should play
in international climate change efforts. DFID needs to be clear
on whether it expects the Bank to play a leadership or partnership
role, given the large amount of funds it is channelling through
the institution. If DFID does envisage the AfDB becoming a leader
for the African continent on climate change, additional funds
need to be identified so that additional human and other resources
can be deployed. We reiterate the recommendation we made in our
report on DFID and the World Bank that the overriding objective
of multilateral development banks must be poverty reduction, and
that climate change should be integrated into this objective,
rather than risking compromising it by spreading existing resources
too thinly. (Paragraph 38)
Debt
11. We
commend the AfDB's participation in two recent debt relief initiatives,
the Heavily Indebted Poor Countries (HIPC) initiative and the
Multilateral Debt Relief Initiative (MDRI). These initiatives
have released much-needed funds that African governments can now
direct towards the achievement of the Millennium Development Goals.
We believe that DFID deserves credit for its contributions so
far towards reimbursing the AfDB and other multilateral banks
involved in these initiatives. We agree that the AfDB has an important
role to play in helping countries avoid future debt problems and
urge DFID to support the Bank in this role. (Paragraph 42)
Lending to low-income countries
12. It
is reassuring that three-quarters of ADF 11 will be targeted at
the 40 African countries with the lowest income. However, given
DFID's commitment to spending just 10% of its budget in middle-income
countries, we believe the 25% allocated to the 13 middle-income
African counties under ADF 11 is too high. Widening the eligibility
criteria for concessional lending beyond the measure of per capita
income to encompass human development indicators, as recommended
by the High Level Panel, might help ensure that countries which
are currently restricted to non-concessional lending—for
instance, Equatorial Guinea and Botswana, which have relatively
high incomes but also high levels of inequality and considerable
development needs—could also access concessional lending.
(Paragraph 45)
Partnerships with the World Bank, other donors
and development partners in Africa
13. We
welcome the strengthening relationship between the AfDB and the
World Bank and the growing harmonisation of procedures. We encourage
the Banks, together with the UK Government and other donors, to
continue to look for new opportunities for joint working in line
with the Paris Declaration on Aid Effectiveness. (Paragraph 49)
14. We believe that
the AfDB has a potentially crucial role to play in mediating partnerships
between African countries and emerging donors such as China. The
Bank, with DFID's support, should do all it can to increase Chinese
engagement in AfDB activities. Securing Chinese membership of
the Infrastructure Consortium for Africa would be a particularly
good starting point given China's huge investments in African
infrastructure. We urge the UK Government and DFID to continue
to advocate for greater transparency on behalf of China in its
engagement in Africa so that development partnerships are easier
to form and manage. (Paragraph 51)
The Boards
15. The
fact that the UK's constituency provides one-third of ADF 11 resources
but is one of six non-regional representatives at the Board table—all
of them lower contributors—is unsatisfactory. We believe
the AfDB needs to re-visit and reconfigure the process by which
non-regional members are represented at the Board so that contributions
to the AfDB are taken into account. We recommend that the UK formally
raises the configuration of non-regional chairs at the Board as
soon as possible, preferably at the 2008 Annual Meetings in Maputo
from 14-16 May. (Paragraph
55)
16. We
were surprised and concerned to learn that the UK, as the AfDB's
largest bilateral donor, will rotate its Executive Director (ED)
to Germany in July 2008 and will not be directly represented on
the Board for the next six years. We believe it is crucial that
the UK's leverage regarding the Bank's strategic direction is
commensurate with its increasing contributions to the institution.
We therefore recommend that the UK discusses with Germany and
with the Board a revised approach to rotating EDs within non-regional
constituencies that takes into account contribution as well as
shareholding. Whilst we appreciate Germany's larger shareholding
and do not doubt its strong contribution to the Constituency,
we hope a more equitable rotation of the ED role between the UK
and Germany can be agreed. (Paragraph 59)
17. We
welcome the moves that are under way to re-configure the ADF Board
to ensure that all African Executive Directors are represented
on it and are able to exercise their individual voting rights
rather than acting on behalf of the Bank. We encourage DFID to
continue to press this issue and to ensure that a concrete proposal
is put to the Board at the earliest opportunity.
(Paragraph 61)
Decentralisation and staffing issues
18. We
welcome the AfDB's decentralisation process and believe it can
only enhance the Bank's ability to work in close partnership with
its regional member countries and with other donors. However,
decentralised offices will operate most efficiently when a system
of meaningful delegation from headquarters is in place. We believe
that sufficient autonomy and the responsibility to exercise the
appropriate decision-making powers in relation to policy, operations
and finance should be conferred upon the AfDB field offices as
soon as possible. (Paragraph
62)
19. The
implementation of the AfDB's new Human Resources Strategy appears
to be going well and we welcome the boost to staff numbers. We
encourage the Bank to continue to recruit high quality staff to
fill all vacancies, and to do this with urgency so that ADF 11
has the optimal staffing complement from the outset.
(Paragraph 63)
Location
20. Clearly
the decision on when to return to the Bank's permanent headquarters
in Abidjan will be dependent on the security situation there.
But uncertainty is helpful to no-one and having a plan in place
for what will happen when conditions have improved is important.
We encourage DFID to push for a clear plan of action regarding
location at the Bank's Annual Meetings in Maputo on 14-16 May
so that all staff are aware of current thinking on the Bank's
location. (Paragraph 64)
Monitoring and evaluation
21. We
believe that DFID deserves credit for influencing the strong results
focus of ADF 11. Rigorous monitoring and evaluation of AfDB projects
and operations will be central to the implementation of a more
output-focused approach. We welcome the measures the Bank has
put in place to improve monitoring and evaluation but urge the
institution to press ahead with their practical implementation
during ADF 11. We strongly encourage DFID to maintain its engagement
in the results agenda and to assess progress in implementing new
monitoring and evaluation measures.
(Paragraph 67)
22. We
recommend that DFID continue to monitor its own objectives for
the AfDB rigorously. We were encouraged to see that this year's
constituency report reveals satisfactory progress against the
four objectives set out in the UK's joint constituency strategy
paper. We welcome the development of Key Performance Indicators
under the new results framework for ADF 11 and the fact that progress
against these is included in the UK's constituency joint annual
report. (Paragraph 68)
Ensuring common objectives
23. We
recommend that the Bank look carefully at whether its capital
reserves could be used for additional projects supporting the
achievement of the MDGs. We encourage the Bank to draw on the
advice issued in the recent reviews of the Bank's capital undertaken
by Goldman Sachs and Citibank.
(Paragraph 70)
24. The
AfDB's central focus on building and improving infrastructure
in African countries makes it a significant contributor towards
achieving all eight MDGs. Infrastructure provides the development
'hardware'—roads,
schools, clinics, water and sanitation—that
acts as the foundation for progress across health, education,
conflict prevention and poverty reduction. But as we heard repeatedly
during this inquiry, the AfDB's capacity to implement projects
and deploy financial resources are just two of its assets: its
status as a Bank for Africa is another, possibly more significant,
force. The
institution's majority African ownership, its leverage with African
governments and its ability to be the African "voice"
on development all contribute to the Bank's potentially central
role in achieving the MDGs. (Paragraph 72)
25. We
welcome the trend of moving away from the attachment of conditions
to AfDB funding under the Bank's reform process. However we believe
the avoidance of using tied aid should be incorporated into general
Bank practice. We recommend that a review of Bank conditionality
policy is carried out sooner rather than later to explore the
options for this. (Paragraph 74)
Conclusion
26. We
welcome the increasing DFID contributions to the AfDB and believe
this trend should continue. We urge DFID to keep a watchful eye
on the progress of the Bank's reform process. AfDB support to
infrastructure, governance and transparency and climate change
has the capability to make a real difference to poor people's
lives. A potentially transformatory set of reforms has been put
together by President Kaberuka and Bank staff, together with the
support of influential donors such as DFID. It is crucial that
the momentum to implement them is maintained and that the Bank
realises its full potential as the driver of African development.
(Paragraph 76)
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