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

2Relevance: How well aligned is the Bank with the UK’s aid priorities in Africa?

12.On relevance, ICAI gives UK support for the ADB a green score. ICAI judges that the Bank’s overarching objectives are well aligned with UK development goals, including key cross-cutting priorities such as fragile states and gender. ICAI says that “The Bank’s standing as the premier African development institution increases the UK’s development impact in Africa due to its position as a board member and contributor”. According to ICAI, the Bank’s strategy and tools for engaging in “transition states” fit well with the UK’s focus on stability and development in fragile states.8

13.More specifically, ICAI traces the similarities between the Bank’s key “High Five” priorities and the former DFID’s sector priorities. The High Five are: “Light Up and Power Africa”; “Industrialise Africa”; “Integrate Africa”; “Feed Africa”; and “Improve the quality of life for the people of Africa”. ICAI notes that “The High Five priorities support DFID’s sector priorities, and focus on stability, governance and sustainability, as set out in DFID’s 2017 Economic Development Strategy—the department’s overarching strategy for advancing economic development in the poorest countries.”9

14.ICAI is also clear that the work of the ADB in supporting the development of Africa’s infrastructure effectively complements the UK’s own bilateral programmes:

Africa faces critical infrastructure gaps … Capital markets in developing countries remain incomplete and generally unable to tackle the risks and high transaction costs associated with large-scale infrastructure at the scale required. Most bilateral donors, including DFID, are not able to provide the substantial financing that is required for infrastructure projects … In this context, multilateral development banks (MDBs), such as the Bank, which have the capacity to lend large amounts repayable over long periods of time, are well placed to help fill a critical gap in the market for infrastructure finance. Just under half (47%) of Bank loan approvals during 2014–19 were in transport and power … During our visit to Nigeria, we found that the Bank clearly has the skills to prepare projects and provide early-stage financing in the infrastructure sector, and hence demonstrate to private investors that such investments are feasible.10

15.The Bank, ICAI says, is also well placed to support regional integration in Africa, another DFID priority. Regional integration is a core aspiration of the African Union whose vision includes “an integrated continent, politically united and based on the ideals of Pan Africanism and vision of Africa’s Renaissance”.11 Again, the integrating role of the Bank was seen by ICAI as complementing the role of the former DFID, providing something that neither DFID nor most other development partners possess. Regional integration is the specific focus of a separate department in the Bank with responsibility for incorporating regional integration across sectors and ensuring that there are synergies and lesson learning.

16.In oral evidence Minister Duddridge listed some of the advantages of the ADB in promoting development through a number of means, being focused on the longer term and infrastructure. It was, he said, “a good way forward, partnering with Governments and private sector and having a differential offering between the fund offering concessional loans to 37 countries and the flexibility of the Bank offering non-concessional loans at both a sovereign level and a private sector level”.12

17.Dr Barton of ICAI identified several other ways in which the Bank’s strengths complemented those of the UK. During the review, she told us, “We were particularly struck that it is African-owned, which is a distinctive feature that allows it to work in a much more effective way in some cases, with African Governments, in particular, as its shareholders.”13 Dr Barton was impressed by the progress made on decentralising the operations of the Bank, something that had been encouraged by the UK, and by recent improvements in the Bank’s policy capacity.

18.We heard a range of evidence which bears out ICAI’s generally positive assessment of the alignment of the African Development Bank with the UK’s priorities. It is clear that, over the years, the UK has often used its formal and informal influence with the Bank in ways which have furthered the UK’s development objectives. The Bank’s ability to invest in large infrastructure projects, some of them crossing national borders and promoting regional integration neatly complements the strengths of the UK’s bilateral engagement.

Reflecting a new set of UK priorities

19.Since the ICAI review of the African Development Bank was published in July 2020, the merger of DFID with the Foreign and Commonwealth Office to form the new Foreign, Commonwealth and Development Office has changed the institutional context for the UK’s development work. Due to the Coronavirus pandemic there have been significant reductions to the aid budget as announced in the Spending Review of November 2020, meaning that, for the first time since 2013, the UK will not meet the UN recommended target of spending 0.7% of Gross National Income on Official Development Assistance. There have also been a number of policy statements on international issues from the Government, and Global Britain in a Competitive Age: The Integrated Review of Security, Defence, Development and Foreign Policy, was published in March 2021. We asked our witnesses whether they thought these developments had yet affected UK support for the Bank, and what impact they might have in the future.

20.In answer to a question about the impact on aid to Africa of the large increase in defence and security spending, coupled with a fall in development spending, Minister Duddridge said:

The Government have made an announcement in relation to the tough financial position we are in, with the worst recession in 300 years and a setback in GDP of double digits. That is clearly going to have an impact, which is what drives the 0.5%. We are going to have to be a lot more forensic in where we spend money. Traditionally, with a growing economy and a growing percentage GNI cut, we have been in a completely different environment.

We will be having to look carefully not only at the efficacy of new programmes and deciding those that perhaps are poor, but also looking at pulling back on some of those that are good and spending the money on ones that are excellent. That is not peculiar to the ADB or any particular geography. That is what we are doing, quite rightly, across the board. That is what taxpayers would expect us to do.14

21.Minister Duddridge continued, saying that the Government was “keen to work, whether you call it as a force for good or multilaterally, with organisations such as the ADB to leverage our brilliant development experience, but to do that across a wider array of participants, with a wider array of projects and a wider array of money.”

22.Dr Barton was asked about Government statements suggesting that UK aid would in future focus on countries where UK development, security and economic interests aligned. She observed that a pronouncement had already been made about the UK remaining the top donor to the World Bank’s International Development Association (IDA), which is the facility equivalent to the African Development Fund. She continued “It would certainly be unfortunate if there were very asymmetric decisions between multilaterals, based on certainly what we have seen in our review of the African Development Bank and the opportunities offered.”15

23.Asked about the suggestions that the Integrated Review would herald a “tilt” towards the Indo-Pacific and away from Africa, Minister Duddridge said: “By 2030, 90% of the world’s poor will be in Africa. Africa is growing but growing less fast than Asia, so the bottom billion are becoming more African and will require greater support.”16 Emphasising the importance of multilateral work to tackle poverty, he said that “organisations like ADB allow us to get across the continent, rather than just specific areas. The same would be true in relation to countries where we have relied on EU offices in the past.”

24.On a related topic, we asked Minister Duddridge about working with China, a fellow governor of the African Development Bank. He said that in some instances China made development interventions “in ways that would not be legal in the UK system”. However, the Chinese:

bring significant amounts of money to the table, some of which is positive in terms of development. Working with them as partners in some forum, whether that is the African Development Bank, on the fund or as aid providers, is absolutely essential. I will maintain a more nuanced role with the Chinese, whether it is in the African Development Bank or slightly more widely. That is the responsible thing to do. That is one thing the merged Department forces you to do. One cannot be purist about these things. One has to take a step back and look at the overall position across a number of equities.17

25.Debbie Palmer, of the FCDO, set out the case for making full use of UK engagement with the ADB when the budget for ODA is constrained:

It is a multilateral organisation. We can leverage other funds through our support there. We can reach places that we otherwise may not be able to reach with our bilateral funds. We can support regional investments in the large, cross-country infrastructure projects that Africa desperately needs and that the African Development Bank is investing in. It all stacks up. As the Minister says, in a world where we are moving towards 0.5%, every penny must count. The more we can leverage others and work multilaterally, the better.18

26.There are early signs that recent changes to the institutional and policy context of UK’s approach to development, including the FCO/DFID merger, have not reduced the Government’s commitment to Africa and to fruitful working with the African Development Bank. We welcome these suggestions of continuity, including clear ministerial statements about the priority to be given to the poorest in Africa and elsewhere.

27.The Integrated Review, Global Britain in a Competitive Age, has now been published, but announcements on the reduced aid budget have yet to be made. The jury is still out on whether the Government can successfully combine its new approach to diplomatic, defence, trade and security matters, and necessary budgetary discipline, with delivery of its commitments to the poorest. Africa will be the acid test of the effectiveness of the Government’s new approach, and we will be monitoring its performance there closely.

12 Q7 [James Duddridge]

13 Q17 [Dr Tamsyn Barton]

14 Q5 [James Duddridge]

15 Q22 [Dr Tamsyn Barton]

16 Q7 [James Duddridge]; on “tilt” see for instance https://www.gov.uk/government/news/uk-commits-to-deeper-defence-and-security-cooperation-with-japan. Accessed 12 February 2021

17 Q12 [James Duddridge]

18 Q8 [Debbie Palmer]




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