The UK’s support to the African Development Bank Group: report from the Sub-Committee on the Work of ICAI Contents

1Introduction

1.The Independent Commission for Aid Impact (ICAI)1 published its review The UK’s support to the African Development Bank Group in July 2020.2 The Government’s response to the review was published in September 2020.3

2.The role of the International Development Committee’s Sub-Committee on the Work of ICAI is to scrutinise the work of ICAI by examining its reviews and assessing Government Departments’ responses to these reviews. What follows is the Sub-Committee’s third Report outlining the evidence, conclusions and recommendations drawn by the Sub-Committee regarding ICAI’s review and the Government response to it, as agreed by the main Committee.

Conduct of scrutiny

3.During the oral evidence session held via videoconferencing on 14 December 2020, the Sub-Committee took evidence from, firstly, James Duddridge MP, Minister for Africa, Debbie Palmer, Africa Director, and Phil Stevens, Deputy Director, International Financial Institutions Department, Foreign, Commonwealth and Development Office (FCDO). Secondly, we heard from Dr Tamsyn Barton, Chief Commissioner, and Marc Stephens, Team Lead, Review of UK support to the African Development Bank Group, ICAI. Finally, we took evidence from Simon Mizrahi, Director, African Development Bank Group, Colin Buckley, General Counsel, CDC Group, and Professor Stephany Griffith-Jones, Financial Markets Program Director, Initiative for Policy Dialogue, Columbia University.

4.We are very grateful for the evidence provided by all the witnesses.

Background

5.The African Development Bank (ADB) was founded in 1963 by 23 African nations with an initial authorised capital of $250 million. Over time, it has evolved to include shareholders from 80 countries and capital of $208 billion. In 1972, the ADB and 13 non-regional countries established the African Development Fund (ADF), which lends primarily to low-income countries on terms that are considerably more concessional (favourable) than market rates. In 1976, the government of Nigeria and the ADB established the Nigeria Trust Fund, which also provides funding on below-market terms. Together, the ADB, the ADF and the Nigeria Trust Fund are known as the African Development Bank Group (“the Bank Group” or “the Bank”).4

6.The overarching objective of the Bank is to spur sustainable economic development and social progress in its regional member countries, thus contributing to poverty reduction. It aims to achieve this objective by mobilising and allocating resources for investment in regional member countries, and by providing policy advice and technical assistance to support development efforts. It is also committed to the pursuit of the UN Sustainable Development Goals set out in 2015.

7.The UK joined the ADF (the concessional lending and grants arm of the Bank) in 1973 and became a member of the ADB in 1983. The UK currently has the smallest shareholding in the Bank itself of all G7 countries at 1.72% of total shares and is the 14th largest shareholder overall. ICAI observe that “This small shareholding means that the UK’s vote on all ADB issues carries less weight than many other shareholders.”5 It also means that the UK is required to share its representation on the board of executive directors with two other small shareholders (Italy and the Netherlands) on a rotating basis. This contrasts with the UK’s contribution to the ADF where it is the largest donor, representing (on average over recent replenishments) 12.37% of total donor contributions.

ICAI’s Findings

8.Using its scoring system, ICAI gave the UK’s support for the African Development Bank Group an overall Green/Amber score, indicating “satisfactory achievement in most areas, but partial achievement in others.”6

Figure 1: ICAI’s four-tier traffic light system for rating the findings from its reviews

Source: ICAI, The UK’s support to the African Development Bank Group, July 2020

9.ICAI’s findings were made against three tests:

ICAI Recommendations

10.ICAI made five recommendations:

Government response

11.In its response to ICAI’s review published in September 2020, the Government partially accepted recommendation 1 (minimising unilateral reform interventions) and accepted the other recommendations.7

1 The Independent Commission for Aid Impact (ICAI) is an independent advisory non departmental public body created by the Government in 2011 to independently evaluate the impact and value for money of all Official Development Assistance (ODA) spent by the UK Government. See also the International Development (Official Development Assistance Target) Act 2015 section 5.




Published: 5 May 2021 Site information    Accessibility statement