Cape Verde’s candidate to the African Development Bank presidency has been promoting institutional reform as key to addressing the continent’s myriad development challenges. And she seems keen on starting with the multilateral institution.
In her vision for the bank, Cristina Duarte acknowledged the different challenges and opportunities confronting AfDB today. The institution has boosted its infrastructure lending, and grown its private sector operations — both are part of the bank’s strategic focus and are included in almost all candidates’ priorities.
But having sat at AfDB’s board of governors, she was made aware of how bank processes have slowed project delivery on the ground, or how revenue has stagnated amid rising costs brought about by the bank’s decentralization process.
These have trickle down effects on the continent’s “transformation,” which she said inspired her candidacy for the bank. The lag between project approval and funding disbursement, for example, risks the assistance “becoming ineffective” given the changing circumstances on the ground.
That’s why she has set her eyes on implementing reforms on some important bank functions and processes.
Paid advisory service
While the bank has successfully secured a general capital increase in 2010, replenished the African Development Fund or its concessionary arm for low-income regional member countries, lengthened the life of the Nigeria Trust Fund, and consistently maintained its triple-A rating since 2006, having predictable funding remains a challenge. The bank, like other multilaterals, is largely reliant on shareholder contributions as opposed to repayments for its income. The ADF meanwhile has a very long period of repayment — 50 years with a 10-year grace period.
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Duarte says it’s becoming difficult to sustain this approach to mobilizing bank resources, and that it is “crucial” that new sources of funding be explored.
And one idea she put forward is to enhance the bank’s knowledge, making its advisory services attractive enough that potential clients would be encouraged and “willing” to pay for the services.
“The aim is to transform what the bank is already doing so far but in a [haphazard] way and pro bono into genuine product/service for its clients,” she said.
Some areas where the bank can boost its knowledge capacity are in helping countries transition from aid-based to market-based financing, or in helping countries negotiate better deals, especially in terms of natural resources.
Duarte, who has been Cape Verde’s finance minister for nearly a decade, has also suggested the bank be “more selective” in where it places its money. Given limited resources, the bank, she argues, has to “focus on where it has [a] competitive advantage.” She agrees that the bank should maintain its focus on infrastructure development, regional economic integration, private sector development and institution building, but should provide special attention to fragile and insular states.
And perhaps to further cut down costs, she aims to transfer more responsibility to national systems for project implementation.
“The principle would be to ensure that project implementation units are set up only when necessary,” she explained. “The day-to-day technical implementation of the project will be the responsibility of the relevant administration.”
But she insists that the bank should boost its “supervision missions.” At present, the bank deploys two supervision missions in the life of a project, but this is not always the case; in 2012, supervision missions were deployed to 64 percent of total bank projects that year.
Fine-tune the decentralization process
Duarte also wants to simplify some of the bank’s procedures. As in the case of funds disbursement, “greater emphasis” would be placed on project design, taking into account the readiness of the money to be disbursed well before a project is submitted to the board for approval.
She also suggests the adoption of an electronic procurement tracking system that would provide monthly reports by project, department and country. This way, clients would have full knowledge of procurement needs, requirements and delivery status for a given project.
Cape Verde’s finance minister is looking to fine-tune the bank’s decentralization process as well.
AfDB began the process in 2000, with the goal of becoming more responsive to member countries’ needs and improving portfolio management. More than a decade since and the bank has made great strides toward this goal, opening 31 country offices during the period, according to most recent data available.
“The bank cannot be everything to everyone. It has limited resources and has to focus on where it has competitive advantage.”— Cristina Duarte, Cape Verde's bet for the presidency, on her vision for AfDB.
But Duarte said that while the process has yet to produce significant efficiencies in the bank’s work, it has increased bank costs, although she did not cite figures.
The bank therefore needs to be more selective about where it opens additional field offices, or where it deploys and recruits personnel. She also wants to make sure that chosen staff would have the “suitable” profile to address the challenges associated with the country where they will be designated, and that the selection of resident representatives will be standardized and based on their abilities to engage on an operational and policy dialogue level. While the bank has a system to determine resident representatives, it is currently not always followed.
Duarte wants to make clear distinctions on roles and responsibilities as well, an area the bank aimed to achieve in its 2011-2015 decentralization road map.
And she wants to attract “only the best” talent, thereby proposing measures such as putting in place rewards and incentives — and “disincentives” — to motivate staff and hopefully performance.
Her goal: Make the bank “a place where the best want to work.”
AfDB presidential candidates are facing some tough competition from the only woman contender in the race. Will she get the chance to implement her proposed reforms for the bank? Let us know by leaving a comment below.
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