Friday, June 19, 2009


SEYCHELLES REVIEW: Mr. Executive Director, what comparative advantage does the African Development Bank have compared to other Financial Institutions in operating in Africa?

MR PETER A.G. SINON: As you are well aware, the African Development Bank focuses its operations solely on the African Continent (53 African member states) when it comes to its interventions and operations. The Bank is however made up of 77 shareholders, 24 of which are non African partners. The Bank has been in existence with its singular focus on Africa for over 40 years. As its name suggests – it is indeed the “African Development Bank” where the 53 Regional African member shareholders hold the majority shares of 60% and Non-Regionals 40%. Its Board of Directors is made up of 12 African of Regional Chairs and 6 Non Regional Chairs.

The Bank’s main comparative advantage is surely encapsulated in the fact that it is the only Development Bank that focuses solely on the continent with a continent-wide agenda. It is a pan-African Bank that has clocked extensive experience operating on the continent.

Thus although not necessarily in terms of the amount of resources but in terms of international financial integrity, viability and management our Bank has a formidable ability to leverage and mobilize substantial financing as it partners and stand shoulder to shoulder with its relative sister financial institutions such as the World Bank, the Asian Development Bank and the Inter American Development Bank our any Development Financial Institution or Bank of international repute.
Our ‘African Development Bank,’ is a ‘triple A’ rated financial institution that enjoys unprecedented political and financial support of its shareholders. It employs some of the continent’s best African brains in development matters and its physical presence and visibility is increasingly being felt throughout the continent via its decentralization policy. This only serves to strengthen its ‘comparative advantages’ particularly, in terms of the level and depth of interaction, understanding, support and devotion towards the continent – whose development is the sole purpose of the African Development Bank!

The 24 Non-Regional or Non-African member states shareholders of the Bank bring in not only resources but invaluable experience to the Bank’s operations on the continent. The ‘Paris Declaration’ on ‘Harmonization, Alignment and Development for Results’ agenda is urging all development agencies to be more selective in search for a higher return for every dollar invested on the continent through greater results and impact!

For ADB, infrastructure development is invariably singled out as one of the Bank’s distinctive comparative advantage intervention on the continent. The provision of transport infrastructure, energy, safe potable water and sanitation as well as other infrastructure is proving to have significant impact on the socio-economic activities and standard of living of both the poorest of the poor and the realization and achievement of the Millennium Development Goals (MDGs).

S.R.: Since the Bank started operations, to what extend has its portfolio grown in Africa? Could you shed some light on Bank’s portfolio in Eastern Africa in particular - Seychelles?

MR P.S.: The East African Region comprising of the following countries, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Seychelles, Somalia, Tanzania and Uganda accounted for 7% of the continent’s GDP, the second lowest contribution after Central Africa. The lingering conflicts in the horn of Africa continued to affect economic activities in the sub-region whilst the 4 largest economies – Kenya, Tanzania and Uganda, members of EAC and Ethiopia benefited from higher coffee prices that boosted their GDPs by 5.4% on average.

Only 2 out of 11 Regional Member Countries in the East Africa sub-region – Mauritius and Seychelles – are eligible for ADB resources. The remaining 9 are eligible for ADF resources only with restricted access to ADB resources for private sector enclave projects only. Overall the sub-region received UA 522.4 million in Bank Group Loan and grant approvals in 2006. It financed projects and programs in 7countries, equivalent to 22.6 percent.

On average, the Bank has consistently increased its interventions on the continent via its principal financing windows most notable the African Development Bank (ADB) window (accessed mainly by the continent’s middle income countries) and the African Development Fund (ADF) concessional window by the least developed countries. From 1967 to 2006, East Africa received UA5.93 billion or 15.2 percent of cumulative Bank Group Loan and Grant approvals. Within the sub region, Ethiopia received the highest cumulative approvals (28.6%), followed by Tanzania (18%), Uganda (16.8%) Kenya (13.2%), Madagascar (10.3%) and Mauritius (4.3%).

The clearance of longstanding arrears by the Seychelles with the ADB Group in November 2006 paved the way for the normalization of relations that was placed on ice due to sanctions that precluded any operations. The re-engagement efforts is in full swing as numerous missions have visited the country and a ‘Water Master plan 2008-2030 grant for Euro 955,000 signed between the Bank and the Republic of Seychelles from the Bank’s ‘Africa Water Facility’. The preparations and necessary ground work for the establishment of the Seychelles University will benefit from a grant from the Middle Income Country (MIC) Trust Fund soon. Going forward, extensive consultations are being held jointly between World Bank and ADB Group and the Government to produce a Joint Country Strategy Paper so that there are clear directions and no overlaps to optimalize the efforts to reform the economy and bring it back to equilibrium and further progress and prosperity.

S.R.: Following Bank’s experience in Africa, what areas of investment focus should development partners put their resources to enable sub-Saharan African countries break a vicious cycle of poverty?

MR P.S.: The Bank is busy defining its ‘comparative advantage’ and its strategic medium, term way forward in its interventions on the continent, In this regard the President of the Bank commissioned a ‘High Level Panel of Eminent personalities’ to brainstorm and advice on selectivity and focused way forward’. Subsequently, preliminary discussions do indicate that ‘infrastructure’, institutional building for good and effective governance, Agriculture and agro industries as well as the creation of a knowledge-based institution that can assist in the creation of knowledge-based African societies will emerge as prominent areas of focus. Of course cross-cutting elements such as Gender, Climate Change and Environmental issues as well as some social sectors cannot be totally disregarded by the Bank although the drive to be selective and effective holds much ground.

S.R.: Some analysts believe that support provided by the Development Partners is drop in the ocean. There is need for ADB as Africa’s premiere bank to spearhead ‘Marshal Plan’ to address the Africa’s problems? What is your view on this? Elaborate?

MR P.S.: My view is that they are probably right – the support provi-ded up to now is a ‘drop in the ocean’ and that is why ‘Overseas and development aid and assistance’ alone cannot and will never be enough. My personal view is that there needs to be a change in approach and there needs to be effective leadership, commitment to the cause of Africa being able to claim the 21st Century as its development century. This will not happen if there is no ownership in the development processes by the main stakeholders, it will not happen if there is no capacity and capability building as well as functioning, transparent and accountable institutions within which the running of the economy operates! A substantive part of the answer lies in ‘Trade’ enhancement within and from the continent to the global markets that gradually replaces ‘Aid delivery’ and all the implications and politics of Aid!

Regarding your idea of a Marshall Plan equivalent that ADB should implement – the reality is that ADB does not possess the required resources for such an equivalent effort on that scale. However, Africa has spoken and delivered its ‘African equivalent of its ‘Marshall Plan’ in terms of its major requirements – it is the “New Partnership for Africa’s Development’ (NEPAD) and its related “Africa’s Peer Review Mechanism” to address the much needed ‘good governance, peace, stability, issue’ that are critical for sustained economic growth and attraction of Foreign Direct Investment. The plan of Action that accompanies the NEPAD is there! The G8’s promise to double resources transfer to Africa is awaited to fulfill well articulated and publicized commitments but they are yet to be comprehensively and conclusively delivered.

There stage has been set – political commitment on the part of Africa to democratize, liberalize and create the enabling environment for private sector participation has been more or less realized in many economies and regions. However, Africa waits for firm action from its traditional donors.

On the other hand however there are new opportunities and alternative sources of resources from emerging economies. They are the natural resource hungry economies spearheaded by the China-India amazing growth and development that is driving up the prices of natural resources that abounds our continent. If there is any urgent need there cannot be one more important than to enable the Bank to assist member countries in provision of necessary infrastructure and impart the capacity and skills not only for the extraction and exploitation of the natural resources but more importantly to manage the windfall thereof and make a positive difference in the lives of the people of the blessed resource-rich countries. Too often the blessing is turned into a curse as conflict ends up being the result of natural resource rich countries.

The resource poor countries, such as Seychelles with high dependence on imports have great difficulties to cope. The current Financial, Food and Fuel crises are issues that call for greater diversification of the economy, intensification of reforms and much more effective and efficient management with greater accountability and transparency. Certain ‘entitlement mind-set’ that were tacitly promoted in better times – must radically and within a short period change. Identification of one’s niche market, one’s comparative as well as competitive advantages that will maximize one’s earnings has never been so pertinent than at this very juncture. There are new and very significant players emerging on the Development arena. This calls for building of new ties and relations as well as affirmation of old ties that remain critical and useful.

S.R.: Finally, Mr. Sinon, tell us how are you coping and enjoying your time working at the ‘African Development Bank’?

MR P.S.: I had no illusion that someday I would end up at the ADB Group. I was the Seychelles/ADB desk and liaison officer for a long time. Being at the Bank has been like going back to University where you somehow learn something new and interesting almost everyday – especially about Africa. I have developed a passion for the work that has to be done for the people and continent of Africa. Working for the Bank gives me the possibility not only to do that but to physically traverse the many diverse states of the continent and get familiar with its unparalleled history, cultures and traditions. I have so many to thank for this opportunity, most notably the Government of Seychelles for their confidence that they have instilled in me.