Senator Lee Rhiannon for the Australian Greens
The African Development Bank Bill 2013 enables Australia to become a
member of the African Development Bank Group by authorising the payments
required to subscribe to membership shares in the African Development Bank and
meet membership and ongoing subscriptions to the African Development Fund (the
AfDB Group). The third entity in the African Development Bank Group, the
Nigeria Trust Fund, has not been considered in this inquiry.
This inquiry has examined the purpose and provisions of the African
Development Bank Bill 2013 with particular attention to the substantial
financial and human resources that must be provided by the Commonwealth
Treasury and the Australian Agency for International Development (AusAID) to
support Australia's engagement with the AfDB Group.
The committee has also considered the effectiveness of the African
Development Bank and African Development Fund group's governance structures.
The additional comments to this report provided below give consideration
to the work of the African Development Bank and Australia’s potential
membership of this organisation in the context of the United Nation's eight
Millennium Development Goals.
As the MDGs unite international development efforts around the single
focus of tackling poverty they provide a useful frame for this assessment.
The Australian Greens believe Australia has a responsibility to
contribute to long term development that is aimed at eliminating global poverty
and enhancing self-reliance and community empowerment, while facilitating
positive and equitable change in the social, economic and environmental
conditions for the citizens of aid-recipient countries.
Australia should work to ensure that multilateral development banks
adopt programs consistent with a human rights-based approach to development; be
economically and environmentally sustainable; should promote local
participation and gender equality; and should enhance the political, economic
and social rights of the communities affected by funded projects.
Funding for long-term aid and development through multilateral
development banks like the AfDB should be directed towards enhancing
self-reliance in developing nations. Affected communities should be empowered
with decision-making abilities informed by free, prior and informed consent,
and with transparent mechanisms ensuring a right to accountability. The
facilitation of environmental, economic, and social justice should be embedded into
Australia’s multilateral and bilateral aid work.
Our aid and development dollar should never subsidise or favour
Australian businesses in recipient countries. Nor should our aid funds be used
to facilitate Australian businesses' claims to a developing country's natural
resources or access to contracts that lead to profits being exported from the
recipient country, displacement or disempowerment of local communities and
workers, or environmental degradation.
While many communities benefit from aid and development projects, some
large infrastructure and resource development projects can cause widespread
social injustice and disempowerment. Many communities have suffered the
dispossession of their land, destruction of their environments, and ruin of
their livelihoods, cultures and identities as a result of aid-development
The Greens note that regional development banks, such as the African
Development Bank, often focus on mega infrastructure project. In 2005 the AfDB
dedicated almost 40 per cent of its funds
to large infrastructure projects, particularly in the energy and transport
While such projects may assist a country’s overall economic development
people living in poverty rarely receive any direct benefits. They often face
eviction, loss of access to their land and local environmental damage. Regional
banks also often fail to involve local people in the projects they fund.
Australia’s involvement with the AfDB also needs to be assessed in the
context of our priorities for Africa which include food security, natural
resource management, water and sanitation, maternal and child health and human
The intentions behind Australia's joining the AfDB Group have been
identified as "growth in Australian commercial interests in Africa", "increased
trade opportunities continent wide," and the ability for Australian firms
"to bid for AfDB work in all 54 African member nations".
In short, the majority report's claim that substantial benefits are
likely to flow from Australia's investment in the AfDB Group if Australia takes
every advantage from its membership,
suggests the overriding reason for joining the AfDB Group is one of commercial
advantage for Australian companies "via procurement opportunities and
Cost to Australia
The Greens do not subscribe to the idea that the giving of aid and
development funding should have a commercial benefit to the donor country. Aid
money should be used to alleviate poverty around the world. Australia’s official
mission statement on overseas aid requires that it “serves Australia’s national
interests”. This approach is inconsistent with the MDGs.
The Committee report notes the “substantial benefits" of joining
the AfDB Group but the report fails to quantify or describe these benefits.
The costs of joining and continuing membership costs of being a member
of the AfDB are substantial.
$3.9 million has been allocated to Treasury and AusAID in the 2012-13
budget, for the preparation work to join the Group, and ongoing program
engagement, which is expected to take up a substantial portion of time for a
senior officer from AusAID. Ongoing membership obligations and engagement
strategies is also expected to take up much time of AusAID staff from all
Initial membership payments for the purchase of the maximum allowable
shareholding of 1.43% in the Group total $88.2 million over 3 years from
2014-15 to 2016-17, and the one-off capital subscription is budgeted at $160.9
2014-15 and 2016-17.
Subscription to the African Development Fund also requires regular
three-yearly replenishments by donor countries that will be determined during
each pledging round, and an emergency contingent liability of around $1.4
billion in the event of default of the bank would also be expected.
Recommendation: That the government
publicly disclose details regarding the benefits of joining the AfDB and who
will gain from those benefits.
The African Development Bank Group
The AfDB Group has the potential to contribute to the economic
development and the social progress of African countries as a majority
African-owned and run institution. Fifty-three regional African countries hold
nearly 60% of the voting power and no one country has veto. There is a
requirement that its President must always be African, and its operations and
offices permanently reside in Africa.
The USA has the second highest voting power at 6.366%, after Nigeria
with 8.739%. Non-regional countries have 40% of the voting powers.
The delegation of authority is with the Board of 20 Directors elected
from member countries; of which 13 represent regional African countries. The
Board oversees the daily general operations of the bank and approves all
projects, policies and strategies.
The Group's stated objective is "the sustainable economic
development and social progress of the African member countries of the Bank
The concessional arm of the AfDB Group, the African Development Fund
(ADF) provides concessional funding loans and grants to at least 40 Regional
Member Countries for projects and programs. ADF loans are interest-free with a
50 year repayment period, including a 10 year grace period. Lines of credit
have a 20 year repayment period with a 5 year grace period. 
Despite global financial turbulence, the AfDB continues to be recognised
as a strong financial institution with a recently reaffirmed AAA rating and a
The Greens acknowledge a number of international reviews have found the AfDB to
exercise good governance policies and practices.
The Greens also acknowledge that the AfDB Group is recognised as an
effective and efficient organisation, that its objectives concur with
Australia's objectives of helping people overcome poverty and achieve
sustainable development, and that it is a trusted partner of African
The AfDB Group has approved loans and grants to a substantial number of
projects that will bring benefits to African households and communities by
providing improved access to electricity, and water and sanitation services and
more health centres and schools.
However, concerns raised by Professor Michael M Cernea, a former
World Bank adviser, should be considered by Australia as it determines its
involvement with the AfDB. Professor Cernea has identified internal
displacement caused by conflicts or development projects as one of Africa’s
major social and economic problems, raising challenges to national governments
and to international donors. 
Criticism of the AfDB
Engaging civil society
A report by the University of Iowa Center for International Finance and
Development notes that “the AfDB does not have an extensive history of engaging
civil-society stakeholders”. 
This report notes that while this Bank has proposed a comprehensive policy for
integrating individuals, groups, and NGOs into the various aspects of its
operations, progress in this area is not occurring. Other regional banks are
seen as stronger in this area than the AfDB.
The Iowa Center has also identified that the AfDB is weak in disclosing
information and transparency. It states “even if all of the information the
AfDB has agreed to disclose was readily available to the public, it would not
promote the effective inclusion of non-state stakeholders—such as
non-governmental organizations and individuals—in its decision-making
Stopping damaging projects
There are limited opportunities for communities, individuals and
organisations to challenge the Bank on damaging projects. AfDB’s Independent
Review Mechanism (IRM) appears to have only been used once. Harmful projects
cannot be stopped even after the concerned people or their representatives have
filed a request. The IRM does not have to respond to lawsuits because the
AfDB’s charter provides it with immunity from actions taken in municipal
courts. The IRM in its current form cannot directly address problems with its
Recommendation: The Greens support the
recommendation of the Swiss Alliance of Development Organisations (Swissaid,
Catholic Lenten Fund, Bread for all, Helvetas, Caritas and Interchurch Aid)
calling on the AfDB to “implement its own good guidelines on transparency, the
inclusion of the population and possibilities for the filing of complaints”. 
Rights of indigenous peoples
The AfDB is currently the only multilateral development bank without a
standalone safeguard policy on indigenous peoples. The Greens do acknowledge
the AfDB is nearing completion of its new set of environmental and social
safeguard policies which recognise the rights of indigenous peoples in some
However, the Forest People’s Programme has noted that the question of
indigenous peoples has proven controversial at the African Development Bank as
“many members of the Board and staff are resistant to the notion that
indigenous communities merit specific treatment and are imbued with certain
Recommendation: The Greens support the
Civil Society Coalition on the African Development Bank and the Indigenous
Peoples of Africa Coordinating Committee's call for a standalone
safeguard policy on indigenous peoples, and for the Bank to establish a senior
staff position to provide a liaison point for indigenous peoples, to convene an
advisory board of indigenous peoples and to devote sufficient attention and
resources to training its own staff. 
Considering Australian money allocated to the AfDB will be from our
overseas aid budget, Australia needs to work with other members of the AfDB to
ensure its projects and programs are accountable and work to empower and
educate communities in order to achieve economic development that delivers
equality, human rights and independence for the peoples of Africa.
If Australia uses its membership of AfDB to foster a traditional
economic development model, driven by corporate interests such as mining,
resource and major infrastructure development, it will be a setback for
achieving economic justice, human rights and environmental protection across
On the ground experience of major development and infrastructure
projects shows that too often they are the drivers of dispossession and
As a member of this regional bank Australia should put the interests of
the African people before its own “national interests”.
Senator Lee Rhiannon
spokesperson for International Aid & Development
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