The UK’s support to the African Development Bank Group
The UK’s work with Africa’s leading development institution is good value for money, allowing the UK taxpayer to influence development across Africa, but more could be done to strengthen strategic engagement between the UK and the Bank, and cooperation on the ground.
Relevant Sustainable Development Goals
The African Development Bank Group (the Bank) is a multilateral development bank that aims to promote sustainable economic development and poverty reduction in Africa. It has regional (African countries) and non-regional (non-African countries) members and is made up of three entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund. It promotes development in Africa by mobilising and allocating financial resources for investment in its regional member countries and providing policy advice and technical assistance in support of development efforts.
The UK joined the ADF, a part of the Bank Group that lends to the poorest countries in Africa, in 1973 and is its largest contributor. It became a member of the AfDB in 1983 and is ranked 14th in terms of shareholding. The UK’s total annual contributions to the Bank amount to approximately £181 million. The UK’s engagement in the Bank comprises:
- a shareholding in the AfDB representing approximately 1.72% of the AfDB’s capital
- contributions to the ADF through replenishments that take place every three years
- several projects that are managed by the Bank and co-financed by DFID through trust funds, such as the Transition Support Facility and the Sustainable Energy Fund for Africa.
This review assesses how the Department for International Development (DFID) manages its contribution to the African Development Bank Group. The review questions assess the relevance, effectiveness and efficiency of the Bank, including alignment with the UK’s priorities and DFID’s oversight of its financial contribution, to ensure it represents value for money for the UK.
Whilst finalising this review, the government announced that DFID and the Foreign Office (FCO) will be merged. While DFID, as the lead department during the review period, is the department referred to throughout most of this review, the recommendations are addressed to the new Foreign, Commonwealth and Development Office (FCDO).
Relevance: How well aligned is the Bank’s work with the UK’s aid priorities in Africa?
- The Bank’s overarching objectives are well aligned with UK development goals, and the Bank’s standing as the premier African development institution increases the UK’s development impact in Africa.
- Although the UK has only a small shareholding in the Bank, its position on the board of the African Development Fund gives it a central role in strategic decision-making.
- The Bank’s focus on infrastructure (including large, complex cross-regional projects) complements UK aid well, while its focus on fragile and conflict-affected states in particular fits well with the UK’s emphasis on stability and development in fragile states.
- There is a tension between the Bank’s ambition to offer a comprehensive menu of development interventions and the need to focus on its core strengths.
- The Bank treads a fine line between maintaining close relations with its regional members and ensuring objective selection and supervision of projects.
- The African Development Fund is highly rated overall for its transparency, although the Bank provides less information in relation to non-sovereign operations.
Effectiveness: How effective is the Bank at delivering UK aid priorities?
- Several independent comparative assessments find that the Bank performs better than most other development organisations.
- The Bank has made satisfactory progress towards many of its High 5 priority objectives, but like others, it has struggled to have an impact in fragile and conflict-affected environments.
- There is scope to improve the quality of project management both during preparation and implementation of projects. Despite some progress, the Bank has struggled to instil a culture of quality and results.
- The Bank’s investments support the ‘leave no one behind’ agenda, though more could be done through engagement with civil society organisations, which is currently limited. The Bank has moved to mainstream gender although it has faced challenges in the early delivery of its strategy.
- The Bank’s environmental and social safeguard policies are broadly fit for purpose, but delivery is hampered by a lack of human resources.
- The Bank has increased its engagement in private sector development (PSD), including targeting key sectors for inclusive economic growth. However, financial additionality is questionable in some PSD projects and there is a need for greater scrutiny as part of deal preparation.
- The Bank has not mobilised as much private finance for development across the institution as many peers, although they have led some excellent demonstration transactions. Trust funds are a potential growth area for the Bank, but this will require stronger fiduciary and results management.
- The Bank has deep expertise in the African development context and is generating data and insights that are of value to the broader development community.
Efficiency: How well does DFID ensure the value for money of its contributions to the Bank?
- The Bank has improved its business processes in recent years, including through decentralisation of its operations.
- Some projects take longer to prepare than they should, often because of complex land rights issues, although overall the Bank is not significantly slower than its peers.
- Although the UK has only a small shareholding in the Bank, its position on the board of the ADF gives it a central role in strategic decision-making.
- The UK is generally well-regarded as a technical partner at the Bank. However, the Accelerated Delivery Plan crossed a line between strategic direction in a multilateral context and unilateral micromanagement.
- DFID has not always engaged with AfDB at sufficiently senior level. DFID headquarters depends in part on feedback from DFID country offices about the Bank at country level. Yet DFID’s engagement with the Bank at country level is limited.
- A planned uplift in resources could help strengthen the government’s engagement beyond DFID.
- DFID’s contributions to the Bank are based on evidence, although this is limited by minimal engagement between DFID and Bank offices on the ground.
- FCDO should minimise unilateral reform interventions – such as the 2017 Performance Improvement Plan (PIP) – that could undermine the multilateral nature of the Bank’s governance structure as well as the UK’s reputation as an honest broker.
- FCDO should take a broader view of value for money than cost-to-income ratios, and focus on ensuring that key areas of understaffing, such as fragile and conflict affected states (FCAS) and safeguards, are addressed.
- FCDO should pay particular attention to ensuring that the Bank’s environmental and social safeguards are implemented on the ground.
- If FCDO is to channel more resources to the Bank via Bank-managed trust funds, it should help to build the Bank’s capacity to manage such funds, including technical assistance to strengthen fiduciary and results management.
- Government country teams could do more to identify synergies with Bank investments, thus encouraging closer working, better information flows and better-informed oversight.
The government publishes a response to all ICAI reviews. This will be available in due course.
International Development Committee
We expect there to be an International Development Committee hearing into this review in due course.