African Development Bank

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The African Development Bank (ADB) is a development bank established in 1964 with the intention of promoting economic and social development in Africa. It is a conglomeration of the African Development Bank (ADB), the African Development Fund (ADF), and the Nigeria Trust Fund (NTF). Forty years to date, the ADB Group has financed 2,885 operations, for a total of $47.5 billion. It concluded 2003 with a AAA rating from major financial agencies and with a capital of $32.043 billion. Moreover, it has placed an emphasis over the years on the role of women, education and structural reforms, and lent its support to key initiatives such as debt alleviation for Heavily Indebted Poor Countries (HIPC's) and the New Partnership for Africa's Development (NEPAD). It currently has 78 members: 53 countries in Africa and 25 American, European, and Asian countries.

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[edit] History

In 1961, the Monrovian Conference took place in Monrovia, Liberia. Two draft charters were at the centre of discussion: the OAU (now the African Union) and the African Development Bank. A committee chaired by A. Romeo Horton (at the time President of the Central Bank of Liberia) visited with many African presidents as well as with Western leaders to present the idea of the African Development Bank. Another key figure in this step in the development of the ADB was Mamoun Beheiry, at the time Governor of the Central Bank of Sudan and later the first President of the African Development Bank.

Although established officially in 1964 under the auspices of the Economic Commission for Africa, the ADB began operation in 1966 with its headquarters in Abidjan, Côte d'Ivoire. With the statute of a regional multilateral development bank, the African Development Bank engaged in promoting the economic development and social progress of its Regional Member Countries (RMCs) in Africa.

In 2005, the amount of approved loans by ADB totalled 2.29 billions of UA - note indeed that ADB financial statements are expressed in UA, or Units of Account, whose value is defined as about 0.8887 grams of fine gold. As of 2001, 1 UA equals approximately US$ 1.28.

[edit] Function

The ADB has four principal functions. The first is to make loans and equity investments for the economic and social advancement of the RMCs. Second, it is to provide technical assistance for the preparation and execution of development projects and programs. Third, the ADB is to promote investment of public and private capital for development purposes. Lastly, the ADB is to assist in coordinating development policies and plans of RMCs. The ADB is also required to give special attention to national and multinational projects and programs which promote regional integration.[1]

[edit] Group Entities

The African Development Bank Group has two other entities: the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).

Established in 1972, the African Development Fund started operations in 1974.[2] It provides development finance on concessional terms to low-income RMCs which are unable to borrow on the non-concessional terms of the ADB. In harmony with its lending strategy, poverty reduction is the main aim of ADF activities. Twenty-four non-African countries along with the ADB constitute its current membership. The ADF’s general operations are decided by a Board of Directors, six of which are appointed by the non-African member states and six designated by the ADB from among the bank's regional Executive Directors.

The ADF’s sources are mainly contributions and periodic replacements by non-African member states. The fund is usually replenished every three years, unless member states decide otherwise. The total donations, at the end of 1996, amounted to $12.58 billion. The ADF lends at no interest rate, with a service charge of 0.75% per annum, a commitment fee of 0.5%, and a 50-year repayment period including a 10-year grace period. The Tenth United Kingdom replenishment of the ADF was in 2006.[3]

Concerning the Nigeria Trust Fund, the NTF was established in 1976 by the Nigerian Government with an initial capital of $80 million. The NTF function is to assist in the development efforts of the poorest ADB members.

The NTF uses its resources to provide financing for projects of national or regional importance which further the economic and social development of the low-income RMCs whose economic and social conditions require financing on non-conventional terms. In 1996, the NTF had a total resource base of $432 million. It lends at a 4% interest rate with a 25-year repayment period, including a five year grace period.[4]

ADB Beneficiary Countries:

ADF Beneficiary Countries:

ADB and ADF Beneficiary Countries:

N.B. All countries in the African Union including Mauritania but excluding the SADR are eligible for NTF benefits. Morocco is also eligible though not a part of the African Union.

[edit] AIDS

One of the areas of concentration of the ADB’s support of RMCs is the fight against HIV/AIDS. The ADB has five policies towards securing Africa's future through health funding:

    • Institutional capacity building through assistance of policy/strategy formulation and implementation
    • Human capital development to create an environment for the operation of national AIDS strategies through training and technical assistance support
    • HIV/AIDS multi-sectoral responses with emphasis on prevention and control interventions that include IEC (Information, Education and Communication), STI (Sexually Transmitted Infections) control, VCT (Voluntary Counselling and Testing), infrastructure support for the establishment of laboratories and blood transfusion facilities, and provision of equipment and supplies, including antiretroviral drugs
    • Advocacy through participation in international and regional fora to raise political commitment and leadership towards a collaborative effort in the fight against the pandemic among RMCs and development partners
    • Partnership development with a view of forging new alliances and revitalizing existing collaboration to cover critical development concerns such as HIV/AIDS and to bringing partnership activities within the framework of the bank's vision[5]

To date, the bank's contribution in the fight against HIV/AIDS is estimated at over UA 500 million. The bank is also among the initiating partners of AIDS in Africa – Scenarios for the future, a project whose outcome will enable governments and development partners alike to make strategic choices of current and future development paths and define their activities accordingly in order to face the challenges posed by HIV/AIDS.

[edit] Non-African Members

[edit] Presidency

Mr. Donald Kaberuka is the 7th elected President of the African Development Bank Group. He took the oath of office on September 1, 2005 in a ceremony at the institution’s Temporary Relocation Agency in Tunis. The occasion was witnessed by the Chair and members of the Bank’s Board of Governors, the Board of Directors, members of the diplomatic corps in Tunis and staff of the institution.

"I solemnly declare and undertake...that I will abide by the provisions of the Agreement establishing the African Development Bank...and that I will discharge my duties and functions...with loyalty, discretion and conscience." With those words, Mr. Kaberuka became the seventh elected President of the Bank for the next five years.

As President of the Bank Group, Mr. Kaberuka is chairing the Boards of the African Development Bank and the African Development Fund, the soft loan arm of the Group.

Kaberuka leads an institution whose financial standing has been restored from the near collapse of 1995, but whose operational credibility remains a work-in-progress. A working group convened by the Center for Global Development, an independent Washington think tank, release a report in September 2006 that offered six recommendations for Kaberuka and the Bank’s board of directors on broad principles to guide the Bank’s renewal. The report contains six recommendations for management and shareholders as they address the urgent task of reforming Africa’s development bank. Prominent among the recommendations is a strong focus on infrastructure.

[edit] References

  1. ^ Bank Information Centre, USA, (2005, July 27), African Development Bank Retrieved on 2005 from, July 27, from http://www.bicusa.org/bicusa/issues/african_development_bank/index.php
  2. ^ "The African Development Fund" United Nations Convention to Combat Desertification (UNCCD) 2004, no longer available (2006)
  3. ^ "The African Development Bank: Tenth Replenishment of the African Development Fund, Order 2006" Statutory Instrument 2006 No. 2327, Government of the United Kingdom ISBN 0-11-075060-8 ;
  4. ^ African Development Bank Group,(2005), about us, Group entities Retrieved on 2005 from http://www.afdb.org/portal/page_pageid=313,165673&_dad=portal&_schema=PORTAL
  5. ^ African Development Bank Group,(2006), Topics, HIV/AIDS from http://www.afdb.org/portal/page?_pageid=473,970125&_dad=portal&_schema=PORTAL

[edit] External links

Sustainable development Portal