BusinessDay
Nigeria's leading finance and market intelligence news report.
Qries

AfDB crisis: Adesina needs more than technocracy to run a multilateral body

When Akinwumi Adesina ran for the presidency of the AfDB in 2015, I wrote a piece in this column entitled “AfDB presidency: Adesina, best candidate for the job”. I wholeheartedly supported his candidacy because he was the best of the eight candidates vying for the AfDB top post, and I was delighted when he was elected the eight president of the bank in April 2015. So, it’s discomforting that he is now in the eye of the storm, facing intense internal and external attacks.

In January this year, anonymous whistle-blowers called “Group of Concerned Staff Members” brought a 20-point allegation of corruption against him. Adesina strongly denied the allegations and rebutted them in a 260-page document. The bank’s ethics committee investigated and totally exonerated him. But the US rejected what Steven Mnuchin, its Treasury Secretary, described as “the wholesale dismissal of all allegations without appropriate investigation” and demanded an independent probe.

This is unprecedented in the bank’s 56-year history. But also unparalleled is the controversy surrounding Adesina’s presidency. His immediate predecessor, Donald Kaberuka, a Rwandan, served two terms of ten years, from 2005 to 2015, without any public controversy. Adesina, who is running for a second term, is the sole candidate in the election scheduled for August. But the US said further investigation was necessary “to ensure that he has broad support, trust and clear shareholder mandate.” This has prompted concerns that the US might want to thwart Adesina’s second term chances.

But why is Adesina beleaguered? Well, we must start from 2015. Although Adesina won the election, it wasn’t a landslide. He secured about 60 percent of the votes. He was not the favoured candidate of most of the non-regional member countries of the AfDB, which control 40 percent of the bank’s shares. The US, which is the largest non-regional shareholder, with 6.5 percent, and second largest, overall, after Nigeria, which has 9.1 percent, did not back his candidacy!

Every student of economic history knows that the US has long been tough on external lending. This dates back to the creation of the IMF and the World Bank in the 1940s when the US insisted that the IMF must lend to countries with conditionality on economic reforms and financial discipline

Adesina is the first AfDB president who never previously held office as a finance minister or central bank governor. For some, this was an issue with his candidacy in 2015. But the main fears of those who didn’t support Adesina for the AfDB presidency were that a Nigerian president would unduly favour Nigerians with appointments and contract awards and lend too easily to Nigeria. It is interesting that these two issues – favouritisms towards Nigeria and Nigerians – are at the heart of Adesina’s current travails.

Let’s be clear. As the US’s first representative to the AfDB, Harold E Doley Jr, recently said, “Akinwumi Adesina is a global player of impeccable character.” He is clever and charismatic; a man who is confident of his own technical ability and convinced about the rightness of his policy approach. But, sadly, he does not seem to understand the world of realpolitik.

In the famous book, The Political Economy of Policy Reform, John Williamson, the renowned economist, said that technocrats must have two skills. First, they must have the technical ability to judge what institutions and policies are needed to achieve positive economic outcomes. Then, they must have the political skills to be able to persuade and win people to their side. So, technocracy is not enough!

Truth is, given some people’s concerns about his candidacy in 2015, Adesina should have done more to manage relationships better with the US and staff of the bank. After all, as the saying goes, “keep your friends close and your enemies closer.” Yet, he did not, it seems, pay sufficient attention to the sensitivities of the US, the bank’s second largest shareholder and the world’s economic superpower.

Several years ago, I had lunch in London with the Regional Director (Europe) of the AfDB, Nfor Susungi, a Cameroonian, and asked him about the influence exerted by the bank’s non-regional members. He replied: “It is true, but it’s also to be expected”, adding that “one would not normally expect that they should be shareholders without being able to exercise influence”! He also said they exercised influence beyond their share capital in the bank because they controlled the financial markets from which the AfDB raised funds, such as its recent oversubscribed $3 billion Fight COVID-19 social bond on the London Stock Exchange.

Of course, the influence of non-regional members is also due to Africa’s economic decline. In his memoirs Beckoned to serve, former President Shehu Shagari said that, in 1981, he wanted to veto a proposal to allow non-Africans to have equity in the AfDB but changed his mind. Why? Well, he said because other African countries “were not able or willing to pay their annual contributions”, adding: “Unfortunately, Nigeria could not single-handedly rescue the bank from its acute financial dilemma.”

So, think of it. African countries cannot wholly fund the AfDB themselves and need the non-African members, who own 40 percent of the bank and from whose financial markets the bank mobilises additional resources. Yet when the non-African members raise concerns about how the bank’s funds are used, Africans cry “colonialism”. Where is the logic?

Every student of economic history knows that the US has long been tough on external lending. This dates back to the creation of the IMF and the World Bank in the 1940s when the US insisted that the IMF must lend to countries with conditionality on economic reforms and financial discipline. The US’s approach hasn’t changed, and its view is that the AfDB is lending too easily. David Malpass, the World Bank president, made this point in February when he said that the AfDB “is pushing large amounts of money into Nigeria, South Africa and others”, adding that the bank “has a tendency to lend too quickly.”

Of course, it’s true that the US frowns at the AfDB pouring money into Nigeria’s agricultural sector because Nigeria bans US agricultural imports. In 2018, when President Buhari went to the White House, President Trump told him point-blank: The US “gives Nigeria well over $1 billion in aid every year”, he said, adding that it’s very important that “we are able to sell our great agricultural products into Nigeria”. So, there is an element of President Trump’s transactional worldview in his attitude to the AfDB’s lending to Nigeria. But the general concern is that the AfDB is behaving like China, lending heavily to Africa without demanding reforms, and worsening the continent’s debt problems. I share that sentiment!

Unfortunately, the US’s concerns about AfDB’s governance fuelled its hawkish response to the whistle-blowers’ allegations. But Adesina should have handled the matter with tact. Instead, he wrapped himself in the Nigerian and African flags, turning the issue into a Nigerian/African-US face off, with former African leaders, such as President Olusegun Obasanjo, issuing grandstanding statements. President Buhari’s chief spokesman, Femi Adesina, wrote a piece referring to “an onslaught led by America” and bragging that the finance minister, Zainab Ahmed, wrote a “decisive letter”, rejecting America’s demand for an independent review.

But how “decisive” was the letter? The bank’s board eventually bowed to US pressure and agreed to an independent probe. The truth is that it wasn’t only the US that called for an independent review, the UK as well as the eurozone and Nordic countries also called for an independent investigation, which made the opposition of African leaders to an external review seem like special pleading.

Surely, if, as I hope, the independent review exonerates Adesina, it would hugely boost his position and reputation. But he should learn the lessons of his travails. We live in the world of realpolitik, where technocratic ability or policy expertise is not enough. In running a multilateral organisation like AfDB, a leader also needs political skills to recognise and work with real sources of power. I wish him well!

Get real time updates directly on you device, subscribe now.

Comments are closed.