No doubt President Alassane Ouattara has his hands full with the fragile aftermath of the revolution in Cote d’Ivoire. But the new leader has a jealous eye trained on Tunisia.
That interest is motivated by more than concern for another nascent African democracy in the aftermath of the Arab Spring. In 2003, the African Development Bank fled its longtime base in Abidjan to what then appeared a safe haven in Tunis. Eight years on, with the Ivorian civil war in check and former president Laurent Gbagbo facing trial for embezzlement, Ouattara wants the bank to come home.
For many of the 1,000-odd staff in Tunis, memories remain vivid of that hasty retreat as rebel soldiers advanced on Abidjan. Since then, the question of whether the bank should return to West Africa — and if so, when — has been a source of unending speculation and debate. At the bank’s annual meeting in Lisbon June 9-10, AfDB President Donald Kaberuka warned that uncertainty over a permanent location for the bank’s headquarters had a “significant effect” on morale, frustrated “horizon planning” and created a perpetual headache for human resources.
The official outcome from the Lisbon gathering was a statement that the AfDB will return to its “permanent” home in Abidjan in “the shortest possible time.” A cursory caveat — “when practical” — is explained by bank officials to mean that relocation of staff cannot begin before a fresh round of multiparty elections in Ivory Coast, followed by a period of stable government. No specified timings have been made public, although the Lisbon meeting quietly shelved a proposal from the executive board to postpone any decision for a definite period of three years — in response to forceful lobbying from Ouattara.
How temporary is ‘temporary’?
The Ivorian leader is determined to restore Abidjan to its former position as the financial hub of West Africa. Within days of taking office in April 2010, Ouattara reopened the Banque Centrale des États de l’Afrique de l’Ouest, the West African central bank. The following month, Kaberuka attended the presidential inauguration on May 21 in Yamoussoukro. In a subsequent meeting, Ouattara secured an accelerated package of new AfDB loans, ratified in record time to support his administration. Initial renovation work has begun on the AfDB building in Abidjan’s Plateau district, an area severely damaged by the war. Proposals for new AfDB offices in the city’s Cocody district are also under discussion.
Meanwhile, Tunis remains — officially — a “temporary” home. The safe haven promised by Tunisian authorities in 2003, when ministers made state offices available for rent by the bank, has proved more volatile than the refugee bankers could have anticipated. In January this year, the popular uprising against the 23-year rule of President Zine el-Abidine Ben Ali proved a catalyst for the revolutions of the Arab Spring. As in West Africa, the AfDB has led the pack of multilateral lenders, briskly signing off on $1 billion in emergency loans to prop up Tunisia’s new administration. After the political shocks, Kaberuka argues, swift intervention can reverse collateral damage through a program of swift liberalization of post-conflict economies.
Recovery would be jeopardized by a slowing global economy or a double-dip recession. Yet the brisk pace of new lending is a measure of the AfDB’s growing ambition. In his second five-year term as bank president, Kaberuka — a former Rwandan finance minister — is pursuing a bold reform agenda for the pan-African lender. In the aftermath of the 2008 financial crisis, the AfDB was widely credited for its influence in encouraging African states to combine fiscal restraint with counter-cyclical investment in infrastructure.
The West’s ‘best bet’?
For the western donors who are principal shareholders, the AfDB is becoming their biggest and probably their best bet in Africa. As the bank’s loan book grows bigger and more diverse, donors, including the United States, Germany and the United Kingdom, are keen to devolve the task of managing their African exposure to an African institution. In contrast to the prescriptions of “structural adjustment” drafted in Washington in the 1980s and ’90s, the AfDB strategy is couched in less didactic language. Instead of “conditionalities,” the bank’s new terminology of “policy-based lending” reflects the aspirations of many African technocrats for greater “voice” in shaping international development policy.
The AfDB formula of providing financial support for governments that follow prudent budgeting but protect capital investment is a delicate balancing act — of the kind many foreign donors have struggled to negotiate in Africa. Early indications are that the trend of devolving the administrative work from international financial institutions to the AfDB will continue. In 2010, the AfDB eclipsed the World Bank to become — for the first time — the leading source of multilateral funding for new African infrastructure. A sixth general capital increase in 2010 pledged to treble AfDB reserves to $100 billion by 2021 — a watershed moment signaling new confidence in the bank.
Kaberuka’s strategy spans disparate sectors: infrastructure (40 percent), financial institutions and leveraging private finance (20 percent), budget support (20 percent) and industries, including mining and manufacturing (20 percent). All are competitive. The bank’s loan book remains smaller by value, for example, than the sum of China’s resources-for-infrastructure swaps in Africa. Yet the AfDB is more closely involved than other lenders with African institutions, and tasked by the African Union to lead on infrastructure policy. One consequence is that Chinese companies have become the largest recipients, by nationality, of AfDB contracts for infrastructure. Where Beijing has dealt almost exclusively bilaterally with African governments, the AfDB is deploying Chinese know-how to build momentum for regional integration.
AfDB’s changing business
The scale of ambition only makes the decision on permanent headquarters for the AfDB more salient. In a period of contraction, the question of whether the bank’s HQ was in Tunis or Abidjan mattered little to the bank’s core business — in effect, a process of nonstop shuttle diplomacy. Senior officials clocked up hundreds of thousands of air miles in a strenuous campaign to dissuade jittery ministers from attempting to spend their way out of trouble. In 2011, Africa’s economies are forecast — overall — to grow at more than 5 percent. In that context, the AfDB’s core business is changing.
New imperatives require a more sustained presence. The AfDB’s “Making Finance Work For Africa” program, for example, will underwrite rapid expansion of local capital and bond markets in African currencies. In the process, the AfDB this year will expand its network to 30 regional offices across the continent. Although significant, these are outposts in a far larger bureaucracy. Hence the fierce lobbying to settle the question of the bank’s permanent headquarters — and the mixed reaction from AfDB staff.
For seasoned expatriates in Tunis, the Friday night and Monday morning flights to and from Paris — a short haul of two hours, 25 minutes — are almost a routine “shuttle.” Metropolitan weekends are a perk of the job. Others who retain close contacts with institutions in Europe, Washington or Singapore may choose not to return to West Africa. Those families of AfDB staffers who left Abidjan with school-age children are naturally reluctant to set up new homes again. Yet Abidjan would be a welcome change for many professional Africans in Tunis who are dismayed by attitudes prevalent among Tunisians.
“Local authorities welcomed the AfDB, but ordinary Tunisians do not appreciate the contribution from staff and families to this city,” says a Zimbabwean lawyer who recently left Tunis.
Perhaps because of the lack of clarity about timing, nobody expects the return to Abidjan to be completed soon. The first steps would require a memorandum of understanding with the Ivorian government to include provisions for health care and education for AfDB families, followed by feasibility studies and decisions on new building work. The subsequent relocation would be phased, with smaller headquarters and senior personnel deployed in other regional offices. One adviser who attended the Lisbon meeting is confident a final agreement will take longer than the proposed three-year postponement of a decision, initially drafted then abandoned by the AfDB board.
An ‘unorthodox’ bank
In the interim, a more decentralized corporate structure is intended to foster the bank’s objective of promoting “inclusive growth.” That means detailed policy work to grasp at thorny problems in microfinance, farm productivity, price stability, social safety nets, energy bottlenecks and education.
Kaberuka has described the AfDB as an “unorthodox” bank — an implicit acknowledgement, perhaps, that too much orthodoxy is no way to win friends in Africa.
Unorthodox is an overstatement: Kaberuka is a graduate of British universities in Birmingham and Edinburgh, and plainly shares the governance-led development strategies of the British, German and U.S. governments. Even so, he has shrewdly abandoned some once-“sacred” principles in a bid for greater legitimacy among the bank’s clients. His principled support for subsidizing fertilizer and other agricultural inputs is an approach that runs against the grain of most bilateral donors.
For ambitious development professionals, especially in Africa, the AfDB’s widening remit begs many questions. In the corridors of other institutions, the habitual tone of career-minded gossip has tended to deprecate the bank: “We always thought, ‘If all else fails, I can always get a job at the ADB,’” recalls a former economist in the International Monetary Fund’s Africa department in Washington. The freshly recapitalized AfDB is less likely to be dismissed as an employer of last resort.
At the watercoolers in the AfDB offices, the mood is more confident. The bank has begun to attract midcareer professionals from larger institutions, many looking for greater responsibility in a less regimented policy environment. The AfDB has lobbied for a formal role in disbursing the post-Copenhagen summit Green Africa Fund to compensate for climate change. Its officials have been almost uniquely candid about “the burden” placed by international lenders and non-governmental organizations on new South Sudan. Many graduate recruits, lured by the bank’s campaign to attract young African professionals, style themselves as hardheaded Afro-realists, with a mission to find bankable solutions to once-intractable problems.
Newfound boldness is conspicuous in an institution still regarded by many in the French government as a bastion of la Francophonie, the realm and influence of French language and culture in the wider world. An unspoken compromise among the bank’s shareholders appears to be that the AfDB headquarters remain permanently in French-speaking territory.
The bank has not acquired the kind of strategic significance that could be a catalyst for other governments to challenge the long-standing claim of francophone Africa as the institution’s established home. A tentative rival bid from Ghana to host the refugee institution in 2003 has not been mooted again.
Whatever the understanding among AfDB shareholders, however, most seem comfortable to devolve the hard work of charting a path for African finance ministries. Kaberuka admitted as much after the sixth general capital increase was approved last year.
“I am the political heavyweight,” he told Africa Confidential, an influential newsletter.
Already in his second term as AfDB president, Kaberuka is mindful of his legacy. The promise exacted by Ouattara to return the AfDB to its former home in Abidjan will strengthen the hand of his successors — even if it means a longer weekend shuttle to Paris.