Jaloul Ayed, president of MED Confederation and former Tunisian minister of finance. Photo by: Simone D. McCourtie / World Bank / CC BY-NC-ND

The African Development Bank should expect at least a couple of reviews on its policies and operational efficiency.

That’s what Jaloul Ayed, Tunisia’s bet to replace outgoing AfDB President Donald Kaberuka, has set out to do if he wins the presidency at the multilateral institution. Among the reviews Ayed aims to implement have to do with the bank’s existing policies and procedures on risk management as well as those relating to treasury operations.

The experienced banker is also looking to design an impact evaluation mechanism that would allow the bank to choose which projects and initiatives to prioritize, looking at how closely those projects align with the bank’s objectives, and which ones will produce the most value for money. Ayed said a “fit for purpose” test will be applied on all bank initiatives, and that in evaluating projects, three aspects will be taken into account: expected financial returns, as well as social and environmental impact.

If necessary, he would initiate an in-house metrics framework to implement the process.

“Doing better for less must be our motto if the bank were to manage its resources mindfully, and keep costs under control,” he said in his vision for the institution.

A banker’s perspective

Ayed has spent decades working in the financial industry — 18 years with Citibank where he’s been largely credited for boosting the bank’s portfolio in the Middle East and North Africa region, and afterward at BCME Bank of Morocco, which he was able to turn into a successful private bank with a huge presence on the continent.

And these are just some of his career’s milestones. Over the years, he has overseen banks with nonperforming loan portfolios and overcome challenges in pulling up those that had suffered successive losses.

“Doing better for less must be our motto if the bank were to manage its resources mindfully, and keep costs under control.”

— Ayed on his vision for AfDB.

Perhaps that’s why his vision largely focuses on ensuring efficiencies in the bank’s lending as well as in keeping it afloat.

Ayed aims to strengthen the bank’s capability to provide financing in the local currency, an aspect he understands is vital to keep or at least reduce borrowing regional member countries’ exposure to foreign exchange fluctuations, which could put them in further financial and economic constraints.

In 2006, the bank’s board of directors adopted a framework that allowed the bank to lend in local currencies, when certain criteria are met: There must be sufficient demand for it, and the bank must be able to “efficiently fund itself.”

At present, only nine African currencies are allowed under the framework: Egyptian pound, West African and Central African CFA franc, Ghanaian cedi, Nigerian naira, South African rand, Zambian kwacha, and Kenyan, Tanzanian and Ugandan shilling. The AfDB is currently considering Botswana’s pula for inclusion in the list.

He also plans to initiate regular “stress testing” to prepare the bank for any “unforeseen external shocks,” and have contingency plans and preventive remedial actions in place when it happens. So-called management triggers will also be established to detect problems early.

He is determined to maintain the bank’s triple-A rating during his tenure, if elected.

An emphasis on jobs

But ensuring the health of the bank’s finances is not Ayed’s only concern. He also wants the bank to help regional member countries further unlock investments by creating an enabling environment for the private sector, and provide assistance in addressing the issues surrounding the growth of micro, small and midsize enterprises.

“If democracy does not translate itself very quickly into well-being, and economic development into providing jobs to people, then it could lose its meaning.”

— Ayed at the Islamic World Forum in 2011.

In this regard, he proposes the bank consider to create a set of guidelines to govern engagement with small businesses in Africa. The guidelines — he calls them the “Small Business Act for Africa” — would set a comprehensive and standard framework for regulatory, legal, fiscal, administrative, commercial and financial measures that would create an enabling environment allowing MSMEs to carry out and expand their businesses, as well as assist member states in setting up “funds-of-funds” that would attract foreign and local investors, which could then help build countries’ equity markets.

And he is also eyeing bank support for reforms in African countries’ educational systems, as well as tailoring vocational training to demands of the labor market.

All of these efforts are expected to lead to more jobs for the continent’s unemployed, a pressing concern for a number of African countries, including his own. In Tunisia, where he briefly took the job of finance minister following the “Jasmine Revolution” in 2011 — the movement that sparked the Arab Spring uprisings and ousted strongman Zine El Abidine Ben Ali — unemployment remains a big source of frustration, with an estimated 700,000 people still without work.

And it’s also crucial for the continent’s stability.

The caveat on good governance

Ayed also highlights good governance and accountability as among the key policy actions the bank needs to focus on to achieve its objectives, and proposes the creation of a “repository” containing “best African governance practices and lessons.”

He believes Africa’s transformation will largely depend on strong governance and public institutions that have the capacity to serve and deliver. However, he noted how there seems to be little focus at present on building these “soft capabilities” or those skills necessary for leaders to be effective decision-makers.

The other key policy actions he identified are in the areas of infrastructure, particularly projects related to energy, transport, water and urbanization, as well as regional integration.

Ayed also highlighted financial inclusion, the promotion of culture, and the need for the bank to continue focusing on fragile states and addressing the issue of climate change and gender disparities in the continent, although he did not elaborate on how he intends to boost bank efforts in these areas.

The banker also acknowledges the importance of people in achieving the bank’s goals, noting “an organization is only as good as its people.”

He aims to promote a collaborative environment at the institution, where people would be encouraged to be innovative, creative and take initiative.

However, he stressed that he will be “uncompromising in terms of good governance and ethical standards.”

Ayed’s decades of experience in banking and finance could be an asset for the AfDB, which could improve with the adoption of best private sector practices. Could he be what the development bank needs?

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About the author

  • Jenny Lei Ravelo

    Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.