57.The ICAI review welcomed some significant recent improvements in the efficiency of the ADB’s operations.
The Bank has improved its business processes in recent years, including through decentralisation of its operations … the Bank is recognised as one of the most effective multilateral banks. It is also one of the most cost effective … The cost-to-income ratio of the Bank in 2017 was 41.9% and compares favourably with the Asian Development Bank (79.7%) and is only marginally above the Inter-American Development Bank (37.1%).
58.ICAI judged that “The UK is well regarded at the Bank, particularly for its inputs at technical level. There is no doubt that the UK is abreast of key issues at the Bank and, through its position on the boards of the Bank and the ADF, as well as through operational exchanges, engages purposefully and energetically.” The role of the UK Executive Director on the Board of the Bank was emphasised by Phil Stevens, FCDO, who told us that the Director “represents our point of view on every project and country strategy that is discussed at the Bank. We use particular moments where we have particular leverage over the Bank, for example the replenishment of its concessional fund or conversations around additional capital, to try to influence the Bank and align it with our objectives as well.”
59.The Bank Director, Simon Mizrahi, welcomed the role of the UK in engaging with the Bank. The UK, he told us, “has been one of our toughest customers, in the sense that it has been extremely demanding, extremely engaged with the activities of the Bank, critical when it needed to be critical and supportive when it needed to be supportive.”
60.However, UK engagement with the Bank was not always as welcome or constructive. ICAI drew attention to the problems arising from the UK’s unilateral move in 2017 to impose a Performance Improvement Plan (PIP) on the Bank. ICAI said that this plan, known as the Accelerated Delivery Plan within the Bank, was seen by senior management at the Bank as “problematic”.
First, they [senior management at the Bank] felt it was not clear how the Bank had underperformed. Senior management were under the impression that DFID’s judgement was based on calculations that were not transparent. Second, the Bank had hoped to have a more strategic conversation with DFID, rather than what was perceived as the overly detailed scrutiny contained in the PIP.
61.Dr Barton told us that the plan had created “a lot of unhappiness” at the Bank, and there had been a “fall-off in senior engagement” from the UK around that time. However, she acknowledged that things had changed in the years since 2017 and the concerns created among ADB management by the Plan had diminished.
62.We were concerned to read, in the ICAI review, of problems caused by the unilateral introduction by the UK in 2017 of a Performance Improvement Plan for the African Development Bank. It is clear that there was a failure to balance the need to keep the Bank accountable for its performance with the need to respect the independence of the Bank. This was an unfortunate deviation from what appears to have been a generally positive and sensitively-conducted relationship between the UK and the Bank. We welcome the evidence that the issue was soon addressed and harmony quickly restored.
63.Minister Duddridge accepted that in previous years there had not been “integrated engagement” between the UK’s Departments and the Bank, but he said that the more integrated Department of FCDO was “working better” in that respect. He described the ways in which the UK Government was now keeping key players informed of its thinking, outlining a recent series of formal and informal meetings, at ministerial and official level, both with officials of the Bank but also with relevant senior figures in African countries, such as the Finance Minister of Senegal.
64.Simon Mizrahi said that he had noticed “a lot of continuity in the level of engagement from the UK” since the merger of FCO and DFID. Dr Barton believed that the merger “offers the opportunity to ensure that there are more human resources. You have heard that there is more interest at country level. From the heads of mission we met, there clearly was interest in doing more. In Abidjan [where the ADB has its headquarters] itself, they were recruiting a counsellor to help the ambassador there. The opportunities are clearly there.”
65.Our evidence suggests that UK engagement with the African Development Bank has been beneficial over many years, and that, partly as a result, the Bank’s performance compares well with that of other development institutions, both in Africa and beyond. According to our evidence, the first months of the new FCDO have seen good engagement between HMG and the Bank. We hope that this will continue to be the case.
48 ICAI, , July 2020, p.33
49 Q3 [Phil Stevens]
50 Q33 [Simon Mizrahi]
51 ICAI, , July 2020, p.37
52 Q6 [James Duddridge]
53 Q2 [James Duddridge]
54 Q34 [Simon Mizrahi]
55 Q20 [Dr Tamsyn Barton]