On 30 May 2013, the Hon Mr Bernie Ripoll, Parliamentary Secretary to the
Treasurer and Parliamentary Secretary for Small Business, introduced the African
Development Bank Bill 2013 (the bill) into the House of Representatives.
That same day, on the recommendation of the Selection Committee, the bill was
referred to the Joint Standing Committee on Foreign Affairs, Defence and Trade.
This committee was to review the commitments Australia would enter into on
becoming a member of the African Development Bank Group (AfDB Group or the
On 18 June 2013, the Senate referred the provisions of the bill to the
Senate Foreign Affairs, Defence and Trade Legislation Committee (the committee)
for inquiry and report by 20 August 2013.
In undertaking the inquiry, the Senate asked the committee to examine in
particular the additional financial and human resources that the Commonwealth
Treasury and the Australian Agency for International Development (AusAID) would
require to support Australia's engagement with the AfDB Group. The committee
was also to consider the effectiveness of the Group's governance structures.
The AfDB Group comprises three distinct entities: the African
Development Bank (AfDB or the Bank), which is the parent institution; and two
affiliates, the African Development Fund (ADF or the Fund) founded in 1973 and the
Nigerian Trust Fund, established in 1976.
For the purposes of this inquiry, which is concerned with Australia's proposed
membership of the Group, the committee's consideration is limited to the AfDB
Conduct of inquiry
The committee advertised the inquiry on its website and wrote to relevant
ministers and departments calling for written submissions. It also contacted a number
of other organisations, including Transparency International Australia and the
Australian Council for International Development, and relevant businesses and academic
institutions inviting them to make submissions to the inquiry. The committee
received 5 submissions, which are listed at Appendix 1.
On 5 August 2013, the 43rd Parliament was prorogued. Senate
committees, however, are authorised to continue to meet and transact business,
such as conduct hearings and make reports, after a prorogation if they choose
to do so. Reports which are due by a particular date under an order of the
Senate should be presented to the President by the due date.
The committee decided to proceed with its deliberations on the legislation and
to table a report.
A number of recent reviews and inquiries have made findings relating to
Australia becoming a member of the AfDB Group. They include a 2011 independent
review of Australia's aid effectiveness, AusAID's 2012 assessment of
multilateral organisations, an Australian Treaty National Interest Analysis and
an inquiry by the Joint Standing Committee on Treaties. Based on their work, a
substantial body of current views and evidence is now available on this matter,
all of which advocated Australia joining the AfDB Group. Submissions to this
inquiry likewise supported this measure.
Overseas agencies have also recently undertaken a number of performance evaluations
of the Bank, including a review by the United Kingdom's Department for
International Development and an assessment by the Multilateral Organisation
Performance Assessment Network (MOPAN).
The Bank itself undertakes appraisals including its Annual Development
Effectiveness Review. In considering Australia's proposed membership of
the AfDB Group, the committee has drawn significantly from these various
In response to the committee's request for additional information, Treasury
and AusAID provided answers, which, in effect, gave added weight to the case
for Australia becoming a member of the AfDB Group.
In light of the substance and general thrust of the evidence, the
committee decided that there was no need for a public hearing: that there was
more than ample evidence available for the committee's deliberation and for
members to make informed recommendations. Thus, this report takes account of
the evidence and views gathered since the independent review of Australia's aid
effectiveness highlighted the benefits of Australia becoming a member of the Group.
Background to the African Development Bank Group
Established in 1964, the AfDB is the leading development financial
institution in Africa.
The AfDB is a regional development bank belonging to a group of institutions
known collectively as multilateral development banks (MDBs). This group
includes the World Bank Group and three other regional development banks—the Asian
Development Bank; the European Bank for Reconstruction and Development (EBRD);
and the Inter-American Development Bank Group. MDBs provide 'financial support
and professional advice for economic and social development activities in
Each bank draws its membership from both borrowing developing countries and
developed donor countries and its broad membership extends to countries beyond the
bank's particular region. Although the banks have similar mandates, each one
has its own independent legal and operational status.
The AfDB was modelled in many respects on the World Bank but is focused
entirely on development in Africa.
The Bank provides concessional and non-concessional loans, grants and technical
assistance to clients in regional member countries. The AfDB has a distinctly
African character—its headquarters are in Africa, its investment operations are
exclusively in Africa and the Bank's President is always African.
Initially, only independent African countries were eligible to be
shareholders in the AfDB but in 1982 the Bank opened its capital to non-African
Currently, the Bank is owned and financed by 78 member countries, comprising
54 African countries (regional member countries) and 24 non-African countries
(non-regional member countries).
As at June 2013, Libya, Australia and Turkey were in the final stages toward
Australia must first become a State Participant in the ADF before it is
eligible to become a member of the AfDB.
Over half of the non-regional members belong to the Group of Twenty
(G20) countries and three quarters are members of the Organisation for Economic
Co-operation and Development (OECD), including major economies such as France,
Germany, Japan, the UK and the US. Australia is one of the few major OECD
donors and one of only two developed G20 members (with Russia), that is not a
member of the Bank.
Mr Robin Davies, Associate Director of the Development Policy Centre, Australian
National University (ANU), noted that Australia 'is quite conspicuous by its
absence from the AfDB membership'.
In May 2012, the Minister for Foreign Affairs, Senator the Hon Bob Carr,
announced that Australia would pursue membership of the African Development
Bank, which would signal 'Australia's commitment as a long-term development partner
In July 2012, the Treasurer and Minister for Foreign Affairs restated the government's
intention to pursue Australian membership of the AfDB and ADF 'to support
Australia's efforts to overcome poverty and achieve the Millennium Development
Goals in Africa'.
They noted that:
...the Bank is already a valued partner in Australia's
increasing aid program in Africa and formal membership would demonstrate
Australia's intent to remain a long-term partner in Africa's development.
The Australian Government proposes to sign and ratify the Agreement
Establishing the African Development Fund as amended and the Agreement
Establishing the African Development Bank as amended. The Australian Treaty
National Interest Analysis (ATNIA 23) noted:
While the relevant provisions suggest, on the face of it,
that accession alone would meet the requirements of the AfDB Agreement, firm
advice to Treasury from the African Development Bank (AfDB) is that it expects
Australia to sign and ratify both agreements.
According to the ATNIA 23, Australia would take the following relevant
- lodge a letter with the AfDB Group indicating Australia's
intention to become a party to the ADF and AfDB Agreements and outlining the
size of membership contributions that Australia would make;
sign the ADF and AfDB Agreements after negotiations with the AfDB
Group and the Terms of Membership have been approved by the Board of Governors;
following the passage of necessary legislation, lodge instruments
of ratification for the ADF and AfDB Agreements, which the government intends
to do between 1 July 2014 and 30 June 2015.
The Treasury and AusAID informed the committee that in May 2013
Australia submitted a Formal Declaration of Intent to join the Bank in 2014–15,
subject to passage of domestic legislation enabling Australia to become a Group
Scope of inquiry
The committee is inquiring into this enabling legislation, which
prescribes the conditions under which Australia's initial and future
contributions to the AfDB are made. A Treasury representative told the Joint
Standing Committee on Treaties that the legislation would be 'a fairly simple
piece of legislation' that would ratify the joining process for both the Bank
and the Fund and provide the appropriation to buy the shares in the Bank.
In this report, the committee focuses on the human resource and
financial investments that Australia must make to become a member of the Bank
and whether, in light of Australia's overseas development assistance policy, it
represents value for money. In the following chapters, the committee considers:
the purpose and provisions of the bill;
the costs associated with Australia's proposed membership of the
AfDB Group, including future financial commitments, and the anticipated
benefits of becoming a member; and
the governance structure of the Bank and the Fund.
The committee thanks all those who assisted with the inquiry. It
especially acknowledges the contributions of those who made written submissions.
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