The African Development Bank has rebutted some comments made by the President of the World Bank, David Malpass, on Africa’s debt profile.
Mr Malpass was recently quoted as saying some multilateral development banks, including the African Development Bank, have a tendency to lend too quickly and, in the process, add to the continent’s debt problems.
The AfDB, however, said the Bretton Wood institution’s President’s comment was inaccurate and not fact-based, adding: “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. The very notion goes against the spirit of multilateralism and our collaborative work.”
“For the record, the African Development Bank maintains a very high global standard of transparency. In the 2018 Publish What You Fund report, our institution was ranked the 4th most transparent institution, globally”, AfDB emphasised.
"The African Development Bank provides a strong governance programme for its regional member countries that focuses on public financial management, better and transparent natural resources management, sustainable and transparent debt management and domestic resource mobilisation.
“We have spearheaded the issuance of local currency financing to several countries to mitigate the impacts of foreign exchange risks, while supporting countries to improve tax collection and tax administration, and leveraging pension funds and sovereign wealth funds to direct more monies into financing development programs, especially infrastructure."
The bank explained that its Africa Legal Support Facility (ALSF) supports countries to negotiate terms of their royalties and taxes to international companies, and terms of their non-concessional loans to some bilateral financiers, and “we have been highly successful in doing so.”
It outlined further that the World Bank, with a more substantial balance sheet, has significantly larger operations in Africa than the African Development Bank. The World Bank’s operations approved for Africa in the 2018 fiscal year amounted to US$20.2 billion, compared to US$10.1 billion by the African Development Bank.
With regard to Nigeria and South Africa, the World Bank’s outstanding loans for the 2018 fiscal year to both countries stood at US$8.3 billion and US$2.4 billion, respectively. In contrast, the outstanding amounts for the African Development Bank Group to Nigeria and South Africa were US $2.1 billion and US $2.0 billion, respectively, for the same fiscal year.
With reference to the countries described as “heavily-indebted,” the AfDB recognises and closely monitors the upward debt trend. However, there is no systemic risk of debt distress, it noted.