The President of the African Development Bank (AfDB), Dr. Akinwunmi Adesina, has faulted the World Bank President, David Malpass, on his recent comments on Africa’s debt profile.
In a statement yesterday, Adesina said the World Bank President’s statement is: “Inaccurate and not fact based.”
The statement reads: “In several news reports, World Bank President, David 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.
“This statement is inaccurate and not fact based. 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.”
Stressing that the AfDB, “maintains a very high global standard of transparency,” Adesina noted that the “2018 Publish What You Fund report” ranked the Bank, the 4th most transparent institution, globally.
In rebutting the World Bank President’s claims, Adesina pointed out that the Bretton Woods institution has larger operations on the continent than the AfDB.
Specifically, he stated: “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.”
Commenting on heavily indebted countries on the continent, Adesina said the AfDB recognizes and closely monitors the rising debt profile , adding that: there is no systemic risk of debt distress.”
He said: “According to the 2020 African Economic Outlook, at the end of June 2019, total public debt in Nigeria amounted to $83.9 billion, 14.6% higher than the year before. That debt represented 20.1% of GDP, up from 17.5% in 2018. Of the total public debt, domestic public debt amounted to $56.7 billion while external public debt was $27.2 billion (representing 32.4% of total public debt). South Africa’s national government debt was estimated at 55.6% of GDP in 2019, up from 52.7% in 2018. South Africa raises most of its funding domestically, with external public debt accounting for only 6.3% of the country’s GDP.”
He further noted that the AfDB coordinates lending activities, especially its public sector policy-based loans, closely with sister International Financial Institutions (notably the World Bank and the IMF).
He pointed out that the AfDB relies on the IMF and World Bank’s Debt Sustainability Analyses (DSA) to determine the composition of its financial assistance to low-income countries and joint institutional approaches for addressing debt vulnerabilities in the African Development Fund (ADF) and International Development Association (IDA) countries.
According to him, country economists of the AFDB also fully participate in regional and country level IMF Article 4 missions.
The AfDB President said: “We are of the view that the World Bank could have explored other available platforms to discuss debt concerns among Multilateral Development Banks. The general statement by the President of the World Bank Group insinuating that the African Development Bank contributes to Africa’s debt problem and that it has lower standards of lending is simply put: misleading and inaccurate.”