Global Development: Views from the Center

Superficially, the two reports are quite different. CGD's working group report is a mere 21 pages, with the body of the report a slim 12 pages. (When we presented the report to the AfDB Executive Directors in Tunis, one director told us that he wanted to see the main report, not the summary; I had to explain that they were already holding the FULL report). The HLP's report runs 53 pages with the body of the report coming in at 38 pages. These physical differences presage an underlying substantive difference, to which I will turn in a moment, but first, I want to focus on where we agree.

The HLP report is well-written and beautifully presented. On objectives, there is no light between CGD and the HLP -- both groups concluded that this is a crucial time in Africa's development and both want the AfDB, as the HLP report puts it, "to become the motor (for Africa's development), as the premier development institution in Africa." The difference comes in the paths the reports set out for transforming AfDB from what it is today to what it needs to be to play this role.

But we agree on more than these overarching motivational themes. We agree as well that Africa's future lies in its private sector, in its ability to join the global market place. We also agree that the AfDB would do well to concentrate its near-term operations on Africa's infrastructure needs, as improving the continent's cripplingly bad power systems, roads, railways and ports, is critical to Africa's private sector.

More importantly, we agree that breaking down the barriers among African countries, creating bigger markets for Africa's many small economies, is essential to its future. There are two barriers to increased regional economic integration, one political and one physical. On the political front, no country likes to join a club in which it will be seen as one of the weaker teams. Pushing hard to get all African economies on a reasonable growth path is a necessary and critical step toward making everyone comfortable integrating with neighbors. Second, markets that are not connected can't integrate, which brings us back to infrastructure, but most especially to regional infrastructure. Africa's many small land-locked countries (and others as well) must have better physical assess to each other and to the sea if their economies are to grow.

This is a difficult Catch-22: Africa's small, weak economies won't grow unless they integrate with others, but fear that they will be swamped economically by stronger neighbors means that better roads may lead to the border but not across it. It is also tough for donors: it can mean that to run a road or rail line from one to another well-performing African country, you have to deal with the badly governed country in between. Tough, yes, but a way has to be found.

Where we disagree is on the path to a reformed and vibrant AfDB. The HLP report calls for an African Development Bank with leadership and authority in four areas: providing infrastructure; building state capacity; promoting the private sector; and developing skills. This is a tall order for an institution that is still finding its feet operationally. The CGD report is much stricter on the focus issue, arguing that the AfDB should first demonstrate its operational excellence as Africa's infrastructure bank, and then, and only then, move on to other challenges.

There is, however, a way that these views can be reconciled: treat the HLP recommendations as a longer term vision for the AfDB and the CGD report as suggestions on what the AfDB needs to do next. Taking the two documents together strengthens both of them.

Even without having been part of the process, it's pretty obvious that the HLP would have faced much more severe political constraints than did the CGD working group (which faced none), meaning that some things that needed to be said probably could not be said. One of those too-sensitive topics is likely to have been the governance of the AfDB. Like other multilateral development banks, the AfDB is governed by a resident Executive Board. Our report calls for the board to be replaced with a non-resident, non-executive board, to boost the reform process and get the board out of AfDB President Don Kaberuka's daily management affairs. The HLP report admonishes the AfDB Board to stay out of day-to-day management issues, which is right. The problem is, a resident board cannot and will not resist the temptation to meddle. As Todd Moss and I argue in Fixing International Financial Institutions: How Africa Can Lead the Way a non-resident, non-executive board would be a triple winner: it would cost less, it would interfere less, and it would govern better. It's still a good idea, and one that I hope the donors supporting the AfDB will seriously consider.