Vice – Chairman of the Board of Trustees, Kantinka Sir Dr. K. Donkoh Fordwor, FGA, delivers his Inaugural Lecture
The Vice – Chairman of the CUCG Board of Trustees, Kantinka Sir Dr. K. Donkoh Fordwor on Thursday 31st January, 2013, gave his inaugural lecture at a function organized by the Ghana Academy of Arts and Sciences.
The topic for the Lecture was ‘‘POLITICS IN THE AFRICAN DEVELOPMENT BANK – A STUDY ON THE ROLE AND LIMITS OF THE POLITICS IN THE INTERGOVERNMENTAL INSTITUTION.’’ He addressed some of the challenges that the African Development Bank as an institution owned by different states encounters in the execution of its duties. He shared his experience, as a past President or Chief Executive of the Bank, from 1976 - 1979.
The Lecture was attended by the Vice – Chancellor, Prof James Hawkins Ephraim, FGA, who is also a fellow of the Ghana Academy of Arts and Sciences, Mr. Frank K. Yeboah, the Registrar and some academic staff –Dr. Kofi Barimah, Mr. George Compah Keyeke, Mr. Frank Sackey, Mr. Alfred Kuranchie and Mr. Francis Sarfo.
BELOW IS THE SUMMARY OF THE LECTURE
I had the privilege to serve the African Development Bank (AfDB), as its third President or Chief Executive, from September 1976 to July 1979.Due to differences that arose between the Board of Directors of the Bank and me, I was obliged to leave the institution 25 months before the end of my term. Problems between the Board and its Presidents are not new to the AfDB because of conflicts and and mutual distrust. The first President of the Bank was forced to resign a few months after the commencement of his second term because of differences between him and the Board; and the second President declined to seek a renewal of his term because of difficulties with the Board of Directors. In 1993, fourteen years after my departure, a crisis situation engulfed the President and the Board, and it persisted during the last two years of the term of the fifth President. It reached a low point when the President and the Board were not on speaking terms. Fortunately, because of the amendment in the statute in 1979, the Board could not show a red flag to the President. But the attempts of the Board to micro-manage the institution also failed because a Board of 18 people could not manage the day-to-day affairs of the Bank.
Since leaving the Bank, I have reflected on some of the problems which might have contributed to the near-crisis in the Bank at the time, a crisis which the Board of Governors, managed to avoid virtually at the last minute. I have come to the conclusion that, unless these problems are adequately resolved, they could thwart the worthwhile objectives for which the Bank was established.
The Bank has been over-politicized. The over-politicization of the procedures and decision-making in the AfDB has had significant impacts on the record and achievements of the Bank. These impacts had largely been undesirable. There have been many such situations and decision, but I believe that a few examples will serve to stress the point I wish to make.
First, a vocal minority of the shareholders of the Bank always held the view that only members who were also members of the OAU were free to become members of the Bank. They believe that admitting non-African States into the Bank would be an admission that Africa was unable on its own to give concrete expression, in economic terms, to their emancipation from colonial rule. Second, the North African Arab States, using their political, special ethnic and linguistic savvy persuaded their sub Saharan partners that electing an Arab as the first president of the bank would encourage Saudi Arabia and Kuwait to lend to the Bank. This was an unfulfilled promise. Third, instead of using the contributions paid in by the members to select the host country for the Bank, they resorted to “African Solidarity” principle to use “one country” ‘‘one vote” to select the host country. Fourth, the two reserve currencies of the IMF were the dollar and the pound and so, one or the other of these currencies would have appeared to be the practical choice for the Bank’s valuation and accounting purposes. The shareholders chose a numeraire as their unit of account. The choice was a reflection of the overriding passion at the time to give what was seen as a distinctively ‘African’ coloration to any solution adopted for any African problem. Fifth, the solidarity principle was also used to give 625 free shares to all the shareholders.This concession greatly increased the influence of the 16 French – speaking states in the Bank, since they had an increased voting power without paying price for it. Sixth, the shareholders of the Bank were usually ready to disregard provisions of the Charter where politically convenient. This was usually justified by the argument that “consultation” was a peculiarly African concept which enabled problems to be resolved while preserving unity, solidarity and fraternal respect for the views of the majority and the minority alike. However, it was also the case that consensus might not be appropriate or useful in certain situations where clear decisions were absolutely necessary. This was particularly so in a banking institution such the AfDB.
In the end hard economic facts and political realities combined to show that the case for opening up of the Bank to non-regional States was compelling. By early 1978 the idea of “opening up of the Bank appeared to have been generally accepted. At the Annual Meeting of the Board of Governors in Abidjan in May 1979, the Governors approved the Agreement for the entry of non – regionals into the Bank Group. Following the ratification of the opening-up Agreement by various African countries, the admission of the non-regional Members came into force in 1982. As a result, by 1990-94, the lending programme of the Bank had grown from an average of $34.4 million in the ten years of its operations to an average of $1.8 billion. Unfortunately, the Bank could not keep this pace because from 1993 to 1995, it faced severe difficulties in the form of management and governance problems that plunged it into a state of financial crisis. It took slightly more than 10 years before the Bank could shrug off the crisis and reestablish its presence in Africa.
In 2009, the Bank overtook the World Bank as the primary lender to the continent of Africa. In 2010, the Bank eclipsed the World Bank to become – for the first time – the leading source of multilateral funding for new African infrastructure. During 2010, on the basis of a sixth general increase, the Bank gained a substantial increase in its capital base. This was indeed a watershed moment for the Bank which has as expected signaled new confidence in the Bank. The institution’s shareholders tripled its capital in May 2010, taking it to USD 100 billion. The significance of this became obvious, when it is recalled that the time of the opening up of the capital in 1979, the Bank’s capital was expected to rise from USD 200,000,000.00 to USD 6.3 billion.