New Bank President Akinwumi Adesina takes over as his predecessor warns that its funding strategy needs radical change
Bow-tied and beaming, Akinwumi Adesina seemed to sum up the spirit of Nigeria's revival. His election as President of the African Development Bank in Abidjan on 28 May was a clear victory based on a determined campaign and it was helped by the view that his country now has a government that will use its economic muscle constructively. On the following day, many African presidents and Asian and Western foreign ministers flew to Abuja for the inauguration of President Muhammadu Buhari.
Adesina is the first Nigerian to win the AfDB presidency. He won the first round of voting and stayed ahead in all the subsequent rounds, evidence of his presentational skills and of the backroom lobbying. He is the first AfDB President not to have held office as a finance minister or central bank governor, and the first to come from the 'big three' of Egypt, Nigeria and South Africa (AC Vol 55 No 11, Politics intrudes on the economic successes). Among Francophone states, there was a feeling that it was time for an AfDB President who spoke the language of Molière.
Ici on parle français
Adesina had an answer for that too. He spoke mostly in French in his first speech after the election, referring to the five years during which he had worked in Abidjan in the 1990s. Beyond his bilingualism, his courting of France with multiple trips to Paris surely helped. He spoke warmly of the rival candidates and he is not expected to rock the boat. 'Africa's best days are ahead,' he told the meeting. 'I will be a responsible, focused, hard-working president.'
He thanked Nigerian ex-President Goodluck Jonathan for having proposed him and Ghana's Finance Minister Seth Terkper for seconding him, thanked Uganda and then embraced Ngozi Okonjo-Iweala, Nigeria's outgoing Finance Minister. Okonjo-Iweala, a former Managing Director of the World Bank, had given heavyweight support to Adesina's candidacy. Immediately his speech ended, she rushed on to the stage to propose a vote of thanks to outgoing AfDB President Donald Kaberuka.
'Un discours rassembleur' (a rallying speech), observed one delegate. Yet other Francophone delegates were less pleased. In fact, Adesina is more international technocrat than Nigerian politician, although he served as Agriculture Minister under President Jonathan. Initially, Jonathan had been planning to appoint a northern candidate to that portfolio but the then Central Bank of Nigeria Governor Sanusi Lamido Sanusi insisted that Adesina, a Yoruba from the south-west, had the knowledge and experience to kick start Nigeria's 'green revolution'.
When asked why a candidate from a small country had not won, Kaberuka responded quickly: 'We choose candidates not countries, unlike other multilateral development banks.' Trained in the United States as an agronomist, Adesina ran the Alliance for a Green Revolution in Africa (Agra), funded by the Rockefeller and Gates Foundations and highly rated by the United Nations. That helped to sway the non-regional vote. Regarded as one of the few surviving technocrats in Jonathan's cabinet, he is credited with reforming Nigeria's notoriously corrupt fertiliser distribution system to the benefit of small farmers, a fitting achievement for a man who grew up in rural poverty.
There will be plenty of continuity with the Kaberuka era. Adesina wants to do more to build rural infrastructure, and his argument that farming is a business not an aid project fits with two other main pillars of Kaberuka's strategy: loans and backing for the private sector, and economic growth that reaches the poorest people.
Also at the AfDB will be newly appointed Executive Director Bright Okogu, a former International Monetary Fund economist and a Nigerian Budget Director who, a decade ago, helped Okonjo-Iweala to arrange their country's debt write-off by Paris Club creditors.
Eight candidates – from Cape Verde, Chad, Ethiopia, Mali, Nigeria, Sierra Leone, Tunisia and Zimbabwe – were all vying for the bank presidency, so some delegates feared a drawn out and acrimonious election. Yet Adesina won a good share of regional votes – that is, from African countries, which own 60% of the Bank. The non-regional voters (the mainly Western and Asian countries which own the other 40%) wanted a quick and decisive outcome. They wanted to make sure they could work with the new president on replenishing the soft-loan African Development Fund, which is due in October.
When the non-regionals' favoured candidate, Cape Verde Finance Minister Cristina Duarte, who was bidding to be the first woman in the job, won less than 3% of the regional vote, they switched to Adesina. When Ethiopia's Sufian Ahmed failed to win support from the Francophone bloc, his regional supporters, including Rwanda, also switched to Adesina (AC Vol 56 No 7, Easy on the landslide). A meeting between Adesina and Augustin Matata Ponyo Mapon, Prime Minister of Congo-Kinshasa, at the Abidjan Sofitel probably helped, too. Like Kaberuka, Adesina wants Congo to build the Inga Dam, which would be one of the world's biggest hydro-electricity projects (AC Vol 56 No 2, Planning puts power first).
Francophone countries were dismayed by France's refusal to back Chad's Kordjé Bedoumra, Finance Minister and former top AfDB official, Africa Confidential hears. When the voting reached the final three candidates, including Bedoumra, Duarte and Adesina, a French ambassador was overheard saying, 'all three would make good presidents'. In previous elections, Paris has assiduously backed the Francophone candidate (Morocco's Omar Kabbaj, 1995-2005, and Senegal's Babacar N'Diaye, 1985-95, and was initially concerned that Kaberuka, who grew up as a Rwandan refugee in Uganda but worked for many years in Côte d'Ivoire, was not Francophone enough. Such colonial considerations are gradually losing relevance.
Speeches at the annual meeting both paid tribute to Kaberuka's achievements and raised questions about the harsher economic conditions ahead. Africa has gained economic influence while riding boom-and-bust cycles in global commodity and financial markets.
At the opening ceremony, Kaberuka listed four priorities for the AfDB's next decade: to maintain its strong financial position, diversifying funding sources; to keep its business model continually under review through his decentralisation policy, with more staff in field offices ('Development isn't possible by remote control,' Kaberuka said); to champion the weak, promote gender equality and build a united African position for the climate change talks in Paris this year; and to ensure that funding for the sustainable development goals to be negotiated this year comes primarily from domestic sources, supplemented by official aid.
All that means a busy schedule for Adesina, who takes over on 1 September and will lead the Bank in talks at the UN that month, the World Bank and IMF meeting in Peru in October, and the Climate Change treaty meeting in December. Although the AfDB has a ten-year strategy running up to 2022, new presidents often revise such plans. He wants to direct more bank attention to getting money for farming and rural development for those countries that struggle to raise private funds.
Kaberuka's most telling comment was that the AfDB's funding model would have to change. Multilateral development banks are creatures of the Bretton Woods system established in 1945, he said. China's creation of the Asian Infrastructure Investment Bank, which has now brought in a bevy of Western country shareholders, has shaken things up. 'I've asked my staff to look into that and see what we can do differently,' he added.
External financial flows to Africa hit a record US$200 billion last year, four times their level of 2000, with foreign direct investment up 5% at $60.4 bn., just below the total for remittances, the AfDB reports. A third of all FDI went to just four countries and official development assistance, estimated at $55.2 bn. last year, has declined steadily since 2000. Aid remains the biggest source of external finance for Africa's poorest countries and assisting them is the Bank's priority.
'The development finance community needs to look at themselves as agents of development,' says Daniel Zelikow, a public finance specialist at JP Morgan. He argues that the AfDB and others should help governments to put funds to better use and mitigate risk, covering commodity price, interest rate and weather-related risk for Africa's agricultural market. If they act 'more like insurers than lenders', they will help to bring in private funds, he argues. Such ideas are to be mooted at the International Conference on Financing for Development in Addis Ababa in July.
Asia pulls the crowds
Asian economic experts drew big audiences at the meetings. They included former World Bank Chief Economist Justin Yifu Lin and Helen Hai, who opened the successful Huajian shoe factory in Ethiopia's new export processing zone. Their arguments chimed with more coherent policies for industrialisation and diversification. 'Think of Robert Walpole, the Prime Minister, who did so much for British manufacturing. Think of Alexander Hamilton in the United States' [who helped create the industry protection act in the 18th century], said Hippolyte Fofack of Afreximbank. 'Africa will need its own industrial activists.'
For Jaehoon Lee, President of SGI Consulting, who elegantly summed up South Korea's economic planning achievements to a packed hall, this doesn't mean just technology transfer but the embedding of that knowledge within African countries. 'That means serious investment in human capital, in particular engineers who can manipulate that technology, and strong vocational training.'
Yet some of the recent eurobond launches were highly questionable, Jaehoon told AC: 'Ethiopia has taken its $1 bn. eurobond and put it into the industrial zones – that's great,' he said, but he sounded alarms about countries such as Ghana and Zambia using sovereign loans to finance consumption, rather than on things that would generate returns over time. 'They need to invest that money to make more than the 8.5% rate that they got.'
Copyright © Africa Confidential 2019
Prepared for Free Article on 19/06/2019 at 21:50. Authorized users may download, save, and print articles for their own use, but may not further disseminate these articles in their electronic form without express written permission from Africa Confidential / Asempa Limited. Contact email@example.com.