AFRICA-FINANCE: Upbeat Mood at African Development Bank

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Melvis Dzisah

ABIDJAN, May 21 1998 (IPS) - The mood at the African Development Bank (AfDB) headquarters here was upbeat as the pan-African financial institution prepared for its annual board of governors meeting, which will be held next week.

Not so long ago, the three-bank group had been teetering on the brink of collapse and reeling from a punitive funding freeze by the non-African nations that provide much of its financing. However, life has returned to normal at the AfDB following a tough restructuring exercise completed two years ago.

“The news here is that there is no news any longer here because all what we set out four years ago to achieve has been accomplished to the satisfaction of all parties concerned,” AfDB Secretary General Cheikh Ibrahim Fall said here this week.

“For the second year running our annual governors meeting … will be normal, the heated debates between African and non-African members over the institution’s policies, which characterised previous meetings, will be missing,” he said.

The AfDB Governors are even expected to agree to increase the bank group’s capital from the present 33 billion U.S. dollars.

One of the highlights of the May 27-29 meeting will be a symposium on ‘Regional Cooperation and Integration in Africa: Progress, Obstacles and Challenges’.

“As other continents move closer towards better cooperation and integration among their countries, it is time we re-examine what went wrong with Africa’s earlier attempts towards achieving similar objectives,” Fall said.

The AfDB is based in the Ivoirian capital, Abidjan. It was set up in 1963 by the Organisation of African Unity (OAU) to spur development in Africa.

From a start-up capital of 250 million U.S. dollars, the Bank has grown into a 33-billion-dollar institution comprising the African Development Bank proper and two other windows.

One is the African Development Fund (ADF), the institution’s soft-loan arm. The other, the Nigerian Trust Fund (NTF, finances projects in cooperation with other lending institutions.

The Group has 53 African and 24 non-regional members. Since its inception, it has approved loans, grants, investment and technical assistance totalling more than 30 billion U.S. dollars to various African nations.

However, the AfDB had been dogged by mismanagement and corruption to such an extent that by 1994, outstanding debts owed to it totalled 8.9 billion dollars, prompting non-regional members to freeze part of their contributions to the group.

A major shake-up carried out by AfDB President Omar Kabbaj since taking office in September 1995 has gone a long way towards advancing the reforms clamoured for by the bank’s non-regional members and started by Kabbaj’s precedessor in 1994.

Donors applauded the reforms, which included the sacking of more than 1,240 staffers seen as obstacles to progress, and the rationalisation of the bank group’s lending policies, by ending their funding freeze in 1996 and replenishing the ADF.

According to the bank group’s 1997 financial report, released on Tuesday, the AfDB’s net income stood at 135.6 million U.S. dollars as against 124.2 million in 1996, a 13-percent increase.

Outstanding loans stood at 7,384.79 million dollars in 1997, down from 8,408.64 million in 1996, while the bank group’s total reserves increased from 1,597.58 million to 1,650.08 million U.S. dollars in the same period.

However, it still has a hard time getting bad debtors to pay up: the Democratic Republic of Congo, Liberia, Sudan, Somalia and Angola together account for 91 percent of loan arrears to the bank group, which total just over 800 million dollars.