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AfricaJune 5 2005

Deadlock drama

The impasse in elections for the presidency of the African Development Bank has far-reaching implications, reports Patrick Smith.It was the outcome nobody wanted: a deadlock in the elections for the new president of the African Development Bank (AfDB) after five rounds of voting on May 18 at the annual meetings in Abuja, Nigeria.
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The deadlock – between Nigeria’s Olabisi Ogunjobi and Rwanda’s Donald Kaberuka – freezes prospects for the bank.

If the impasse can be resolved amicably, the bank is due to be the focus of the big push for Africa this year as Britain lobbies for 100% debt relief for the region’s poorest states and a doubling of aid to $25bn a year to the continent. But if the dispute rumbles on, it could presage a return to the bad old days of political infighting between the bank’s African and non-regional shareholders.

As long as it stays on track, “the African Development Bank will play a hugely important role in mobilising and disbursing resources to support African economies,” UK secretary for international development Hilary Benn told The Banker. He added that it was ready to play a “leading role” in the management of a proposed $10bn a year fund to improve Africa’s creaking infrastructure. Poor transport, communications and power supplies in Africa hold back its exports as much as protectionist regimes in Asia, America and Europe.

UK prime minister Tony Blair’s Africa Commission said the AfDB combined regional credibility with much improved financial management. Under the presidency of Morocco’s Omar Kabbaj, the AfDB has secured a triple A rating from Fitch, Moody’s and S&P. Last December, the AfDB’s soft-loan affiliate, the African Development Fund, secured a record replenishment for operations between 2005-2007 of about $5.4bn. That is still less than half what the World Bank’s soft loan window is due to spend in Africa in that period, but is still a 43% increase.

Political post

With a presidential handover due in August, the big question facing the AfDB is what the new president will do with the solid financial platform that Mr Kabbaj and his team have built and whether he will be able to take advantage of the new funds at Africa’s disposal. Much will depend on who wins and how the succession is handled. The decision on the presidency has been deferred until July 22, when an extraordinary meeting of the bank’s governors will take place at its temporary headquarters in Tunis. Until then, there will be horse-trading and deal-making but the bank group will be treading water.

Realists know that the presidency is primarily a political post; the technical skills and experience of the candidate come second. The best candidates have to combine political nous with solid financial experience. Tactics during the elections were all about manoeuvring between the voting blocs that make up the AfDB shareholders.

Among the African or regional shareholders who hold 60.1% of the bank’s equity, the votes were initially split between the southern, western, eastern and Francophone blocs. A candidate’s best chance is to make the strongest showing on the first round as Mr Kaberuka did. Then as candidates drop out and the voting blocs break up, delegates favour the frontrunners. The vote was complicated by the wide field: seven contesting until Egypt’s candidate dropped out a week before the election.

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Donald Kaberuka: understands development issues

Non-regional shareholders who hold 39.9% of the equity backed at least four candidates: the US backed Rwanda’s Mr Kaberuka; the UK backed Ghana’s KY Amoako (who is executive secretary of the Economic Commission for Africa); France backed the leading francophone, Gabon’s minister of state for finance, Casimir Oye Mba; and China and India backed Nigeria’s Mr Ogunjobi.

For Nigeria’s president, Olusegun Obasanjo, the deadlock is hugely frustrating after his government had lavishly hosted the bank’s annual meetings, topped up the Nigeria Trust Fund window of the AfDB and financed a new technical assistance facility in the bank. Mr Ogunjobi, a personal friend of Mr Obasanjo, seemed to have the inside track as a serving vice-president at the AfDB for West Africa operations. The non-regionals’ refusal to back Nigeria’s candidate was seen as a snub for Africa’s biggest state as it campaigns for a cancellation and buy-back of its $35bn foreign debt and a permanent African seat on the UN Security Council.

High-level lobbying

Nigeria’s formidable lobbyists won strong African support for their candidate, picking up most of its own region of West Africa and big shareholders, such as Libya and Morocco. But they made little headway with the Americans and Europeans. On the AfDB election day, Mr Benn turned up for breakfast with Mr Obasanjo to ask support for the UK’s African agenda at the G8 summit in Gleneagles, Scotland.

With the UK committing itself to backing Mr Amoako and then Mr Kaberuka, conversation over breakfast may have been stilted. Mr Benn announced a £19m fund to back Nigeria’s civil service reforms and reiterate London’s backing for heavy debt relief for Nigeria. But he flew off to visit a project in the northern city of Kano as the AfDB vote got under way – perhaps a diplomatic absence.

Much as Nigeria’s lively newspapers lauded Mr Ogunjobi as the pro-Africa nationalist candidate and Mr Kaberuka as the Western stooge, the two differed little on policy. Mr Kaberuka might be more radical than Mr Ogunjobi and was certainly more demonstrative. In an interview with The Banker, Mr Ogunjobi said he wanted to seize the opportunity of a stronger partnership with non-regional shareholders to “leverage activities with the planned investment in infrastructure proposed by Britain’s Africa Commission”.

And Mr Ogunjobi insisted there would be no change to the AfDB’s credit policy if he won the presidency, although Mr Kaberuka thought there should be room for flexibility. A decade ago the bank was split between non-regional and regional members over which countries could borrow from the higher interest AfDB resources and which countries could borrow only from the concessional low-interest African Development Fund resources.

The non-regionals won the argument in 1995 and restricted eligibility for AfDB loans to South Africa and the more prosperous north African states that make up the bulk of the AfDB’s loan portfolio. Nigeria and then Zimbabwe were classified as ‘blend’ countries which could borrow from both the bank and the concessional fund.

The candidates

Mr Ogunjobi ran the better-financed and slicker campaign, complete with full colour election manifestos in the bank’s four languages of Arabic, French, English and Portuguese. Leaving aside the state-backed razzmatazz, he is a banker rather than a politician and certainly not a compelling orator.

Some saw the bank election in biblical terms – as a battle between the Nigeria’s Goliath and Rwanda’s David – which may have had some resonance among the more devout delegates. Others may just worry about an overbearing Nigeria.

Mr Kaberuka is more politician than banker but with a practical grasp of development issues. As Rwanda’s finance minister since 1998, he has presided over much of his country’s reconstruction since the 1994 genocide. More recently, he was charged with improving relations between Rwanda and France, which had been accused of complicity in the genocide. He succeeded, judging by France’s increased development aid to Rwanda, although Paris cannot resist the odd swipe against his boss, president Paul Kagame.

Mr Kaberuka ran a high-energy campaign, basing his credibility on Rwanda’s impressive economic revival in the past decade. During Mr Kagame’s visit to Washington, Mr Kaberuka was introduced to US president George W Bush, which led opponents to label him the “Washington consensus” candidate. That has not stopped him from winning support from some big African shareholders, such as South Africa and Egypt, however.

He argues that the African identity of the bank is its strongest card: “Development succeeds if it’s nationally owned and the bank has to have the closest relations with its client countries. The bank must reinforce its position as leader in terms of knowledge of Africa’s development challenges.”

Now the election campaign is over. The final decision on the AfDB’s presidency in July will be decided on the diplomatic agility of Africa’s power brokers, rather than the merits of the candidates they support.

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