When Donald Kaberuka became president of the African Development Bank five years ago, he faced daunting tasks, including defining a mission for an institution that many dismissed as irrelevant.
My guest on this week’s show is Todd Moss, vice president and senior fellow at the Center for Global Development. Todd directed a working group that, in 2006, issued six recommendations, three each for bank management and the bank’s shareholder countries. Now, Todd has issued a report card that grades the bank and its shareholders on each of the recommendations.
Todd starts by explaining the basics of how the African Development Bank works. Like other multilateral development banks (notably the World Bank), it uses capital and promises of support by shareholder countries to raise and lend money for development projects, partly at concessional interest rates. During the 2008-09 financial crisis, the AfDB accelerated disbursements to African countries to cushion the impact of the crisis, at the request of the world’s leading donor countries.
“In the US we could have a fiscal stimulus,” says Todd. “Well, the African countries can’t do that. But the African [Development] Bank and the World Bank could accelerate their lending to those countries—they frontloaded it—to enable that fiscal stimulus.”
Now the bank is seeking a general capital increase that would raise its capital base three-fold, to $100 billion. Seems like a good time to assess the bank’s reform efforts.
The 2006 CGD working group report made three recommendations for the Bank’s management and three recommendations for its shareholding countries. In the podcast, Todd walks us through each of the recommendations and explains the grades he has awarded. (For a quick summary and the report card itself, go here. Hint: bank management fares much better than the member countries!
Have something to add to our discussion? Ideas for future interviews? Post a comment below, or send me an email. If you use iTunes, you can subscribe to get new episodes delivered straight to your computer every week.
My thanks to Wren Elhai for his very able production assistance on the Wonkcast recording and for a draft version of this blog post.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.