#Africa101 is an ongoing series of explainer articles for topics that are essential for understanding the current landscape and trends on the continent.
Photo: AfDB headquarters in Abidjan, Côte d'Ivoire (Citizen69/ Wiki Commons)
Background
The African Development Bank (AfDB) has been a fixture of the African continent since it was founded in 1960s, providing financial and technical assistance to projects across Africa. It is one of the five major development banks that provides assistance to its regional member countries in order to spur development, supporting projects as diverse as water and transport infrastructure to the Pan African University (also an initiative of the African Union).
The multilateral development finance institution that was established in 1964 by the Organization of African Unity (or OAU, the predecessor to the African Union) to promote economic and social development across the continent. It is a partnership of 54 African member countries and 27 non-African member countries (complete member list below), and is headquartered in Abidjan, Côte d'Ivoire.
The AfDB mandate
The AfDB's mandate is to spur sustainable economic development and social progress in Africa, with a focus on poverty reduction and the promotion of inclusive growth. To achieve this goal, the AfDB provides financial and technical assistance to member countries, including loans, grants, and technical assistance.
The AfDB plays a critical role in supporting the mandate of the African Union (AU), which is to promote peace, security, and economic development across the continent. The Bank works closely with the AU to support regional integration and development initiatives, and is a key partner in implementing the African Union's Agenda 2063, which is a long-term vision for the continent's development.
AfDB members
As mentioned above, AfDB membership is composed of 54 African countries and 27 non-African countries. The Bank classifies them as “regional” and “non regional” members, and the complete list includes:
Regional (African) members
Non-regional members
How AfDB contributes to continental development
One of the ways in which the AfDB contributes to the development of the African continent is through high-profile projects that have a significant impact on local communities.
Here, we’ve highlight three projects that the Bank has contributed to or executed in recent years:
This initiative aims to develop 10,000 GW of solar power in the Sahel region of Africa and connect 250 million people to electricity. The project region stretches from coast to coast, from Senegal, Mauritania, Mali, and Burkina Faso in the west to Sudan, Eritrea, Djibouti, and Ethiopia in the east.
Launched in collaboration with the Green Climate Fund, a global financial initiative funded by the 194 countries who are party to the UN Framework Convention on Climate Change (UNFCCC), Desert to Power is expected to provide clean energy to at least 90 million people for the first time as well as create job opportunities and spur economic growth.
COVID-19 Response Facility (CRF)
In response to the COVID-19 pandemic, the AfDB established a COVID-19 Response Facility in March 2020 to provide emergency support to African countries. The facility announced USD 10 billion in funding for governments and the private sector to support health systems, protect jobs and livelihoods, and mitigate the economic impacts of the pandemic across the continent.
Africa Adaptation Acceleration Program (AAAP)
As a joint initiative between the AfDB and the Global Center on Adaptation and the African Union, AAAP was launched in 2021 to mobilize USD 25 billion “to accelerate and scale climate adaptation action across the continent.”
The program’s key pillars include: digital solutions to support agriculture and promote food security, an infrastructure resilience fund, youth empowerment (to promote entrepreneurship and job creation), and a technical assistance program to help African governments and private sector close the climate adaptation finance gap.
These are just a few examples of the many projects that the AfDB is involved in across the African continent. In addition to its project-based work, the Bank also plays a key role in providing policy advice and technical assistance to member countries, as well as promoting private sector investment and supporting regional integration and trade.
Criticism of the institution
Like any large organization, the AfDB has faced several criticisms in recent years. Here we have highlighted three key ones:
Allegations of corruption: The Bank has been accused of corruption and mismanagement in the past. In 2020, an independent panel cleared AfDB President Akinwumi Adesina of allegations of corruption, but some critics argue that the investigation was not transparent enough.
Too quick to lend: In 2020, David Malpass, the President of the World Bank, made the suggestion that the AfDB contributes to the debt burden of African nations by being “too quick to lend,” citing specific loans to Nigeria and South Africa (more on this below).
Lack of results on poverty reduction: The Bank's focus on infrastructure and large-scale projects may not benefit the poorest segments of society, and its own 2015 assessment acknowledged the difficulties in poverty and inequality reduction, noting that they appeared less responsive to the substantial growth the continent was experiencing.
AfDB’s responses to criticism
The AfDB has taken steps to address these criticisms and improve its operations. Here are some ways the bank has countered these criticisms:
Anti-corruption measures: The AfDB has implemented anti-corruption measures to prevent and detect fraud and other forms of financial misconduct. These measures include enhanced due diligence, stronger risk management frameworks, and the establishment of an independent office of integrity and anti-corruption.
AfDB lends at a lower rate than other Banks: The AfDB vehemently denied Malpass’s assertion in 2020, asserting that it “impugns the integrity of the African Development Bank, undermines our governance systems, and incorrectly insinuates that we operate under different standards from the World Bank.” It noted that in 2018, the World Bank’s African operations stood at USD 20 billion, whereas the AfDB’s were USD 10 billion, and has in recent years focused on mobilizing partners to make larger pools of funds available.
Increased focus on poverty reduction: In recent years, the AfDB has increased its focus on poverty reduction in Africa. It has launched initiatives to support small and medium-sized enterprises including access to finance, has promoted inclusive growth, and improved access to basic services such as healthcare and education.
Final note
The AfDB has become an important institution in the development landscape of Africa. It remains extremely active across the continent and provides the foundation and economic support for major projects across Africa.
Like any major organization, it has faced its share of criticism, but as discussed above, it has taken a proactive stance and worked to address these issues in a reasonably transparent manner. The same cannot be said for many national governments on the continent, and in this regard, the AfDB stands above.
The Bank’s partnerships with other institutions and governments also help to strengthen the continent's position in the global economy. Through its various initiatives and projects, the AfDB is helping to build a more sustainable and prosperous future for the people of Africa.
If you or your business are looking to make moves on the continent, we recommend keeping close tabs on the AfDB and its projects. And if you’re interested in a specific sector or market, get in touch with us today to help you create a strategy tailored to your business or organization.
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