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OPINION: Development policies should focus on producers, not consumers

The strongest voices on Africa’s development economy are often in favour of policies intended to prioritize low consumer prices and view development policies with suspicion.

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Development Policies

Africa enjoys a very active and international community of interested and informed commentators on African economic and development policy; most notably on various social media platforms.

The strongest voices are often in favour of policies intended to prioritize low consumer prices and view development-oriented policy advice with suspicion. They often accuse promoters of such schemes of financing unearned rents for well-connected economic insiders with a tax of artificially high prices levied on consumers — particularly the poor. African economic policy is often judged by the price of rice, a staple in many African cuisines.

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I sympathize with such caution and the concern for economically disadvantaged members of society. However, the focus on reducing prices and maximizing the consumption potential of the economy as a whole suggests a potential misunderstanding of how development works.

How Development Works

Instead of focusing energy on raising wages, for instance, development is best encouraged through the expansion of the production capacity  — particularly in the domestic manufacturing of various nodes of the value chains consumed by the economy in question which represent attractive markets that support opportunities for significant returns to scale.

In Africa, many consumer categories  — including rice —  have the majority of their value chains abroad; particularly in Asia where it is often cheaper to produce and export to African markets. Nigerian tomato pastes, which are overwhelmingly imported from China as tomato puree, also fits this model.

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The Nigerian Government has intervened strenuously in this category, given tomato paste’s ubiquitous presence in the cuisine of Nigeria’s diverse, 200 million-strong population. I’m talking about Nigerian dishes ranging from the world-famous jollof rice to Nigeria’s famously spicy soups. According to Harvard Business Review, Nigeria is simultaneously the world’s 13th largest tomato producer and the world’s largest importer of tomato paste. This begs the question: how can you be a massive tomato producer and yet be much more attracted to import and distribute paste? Why does no one want to make tomato paste with local tomatoes?

As it turns out, the retail prices for finished tomato goods do not cover the production cost of growing and processing tomatoes locally. The tomatoes simply cost too much for local paste processors to use as inputs and profitably produce value-added products that can compete with the prices of products derived from imported purees. As such, upwards of 70% of Nigeria’s fresh tomatoes — grown primarily in the country’s poverty-stricken northern region — rot unpurchased before getting to market.

The vast majority of Nigeria’s paste processing capacity goes underutilized or mothballed, thereby hampering further investments in production stock. It goes without saying that underutilized and mothballed processing plants do not employ many people — and Nigeria would sorely benefit from the high-quality jobs additional processing facilities would create.

READ FURTHER: Nigeria’s local wheat production declines as flood threatens wheat-based foods

Capacity and the Role of Consumer Prices

This is the classic chicken and egg problem of development: encouraging investment in manufacturing and production capability often requires attractive (read: high) end-product pricing to support wages and profits upstream in the value chain. This is important because domestic operators and entrepreneurs will likely be uncompetitive when competing with cheaply imported finished products from sophisticated foreign manufacturers. Tomato puree manufacturers in China enjoy Olympic scale production, which the by-product of decades of relentless investment by the Chinese public and private sector — in addition to efficient transport logistics, cheap credit, and abundant gas, power, and other related infrastructure.

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The producing nations of Asia and the West became efficient in the first place by pumping tens of billions of dollars into propping up upstream value nodes like tomato growers, restricting imports for a time, and providing cheap credit and other support to value additive production activity such as creating paste processing sales. This makes you wonder- how can countries just starting out on the development curve, like Nigeria, possibly compete?

They don’t do it by simply importing cheap Chinese paste — which certainly brings down the market price of tomato soup whilst ensuring that African populations remain poor. To tackle thorny issues like migration and extremism, driven by large and largely idle populations, African nations will ultimately need to create the sort of sustainably robust jobs that come with processing and adding value to consumer products like food. Thus, policy focus should be almost entirely on increasing local, domestically-owned production capacity that will neither be globally competitive nor efficient at first. Local entrepreneurs with the financial capacity will be inexperienced and those with some know-how are likely to be undercapitalized, suggesting production prices will be high. How can high production prices be sustained in a world of cheap imported alternatives?

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Sustaining High Production Prices…

One proven method is to manage imports such that demand is supported for nascent local producers. There is broad agreement that governments and development investors should provide subsidies such as cheap credit, preferential tax treatment for capital investments and generous public sector purchases to nascent industrial producers.

These production subsidies can help level the playing field for local players but do not work without tariffs and other measures to discourage imports of items that could be manufactured locally supporting local wages. Limiting supply and maintaining the elevated pricing needed to support less efficient local production helps protect local manufacturers as they learn to become more competitive and make investments in scale.

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Thus, higher domestic prices support job-creation in the manufacturing sector — helping to jumpstart the value chain. Without this interim bump in prices, producers will never achieve the scale and acquire the capacity to produce cheaper tomato puree or parboiled rice profitably.

Countenancing short term high consumer prices to fund development is not an easy or politically expedient proposition — the payoffs are long term and the costs are immediate. In contrast, reducing the market price of rice by allowing cheap imports offers immediate consumer relief which will be popular with voters — akin to a sugar high for politicians and policymakers. However, doing so costs Africa the jobs that would have been created if those processors of rice and tomato puree achieved scale.

This does not mean giving favoured local manufacturers free rein and a blank check. African Governments should enact policies that encourage competition between local producers for subsidies, cheap credit, government contracts and other rents provided by the government and force manufacturers to iterate towards efficiency and competitiveness within an explicit time frame. They should also be required to spend a share of profits on R&D, perhaps further subsidized with development capital from the government and other institutions.

A brief look back at history

Tariffs and outright import bans, mercantilist policy relics of a bygone era are sensitive, unpopular topics in an era of free trade consensus. But it was during those bygone mercantilist periods that most modern developed nations became rich. Similarly, the so-called “Asian tiger” economies dusted off the textbooks of Friedrich List and employed industry incubating import management to great effect over much of the post-war 20th century, joining the rich nations’ club in the process.

Western policy experts, led by Bretton Woods Institutions, fretted about infant-industry driven protectionism and warned that high consumer prices and persistent food inflation during the development journeys of Asian tigers portended disaster. This advice ignored the development experiences of the Western nations themselves in the century prior — where prices were high by design and limited inflation was often the result of expanding employment: new industrial jobs gave workers more money to spend and still more producers sprung up (often with direct and indirect government support) to meet the sudden new demand. Africa should borrow this leaf from European and Asian textbooks.

READ THIS: Nigeria Customs Service changes exchange rate from N305 to N326 

People will complain  — loudly, at first —  about high prices. However, so long as you complete the loop to higher wages and jobs, in the end, the cost is likely worth bearing. Historically, successful economic development has focused almost entirely on expanding production, not promoting cheap consumption, and is not free. You solve poverty by creating jobs and increasing wages — by making and selling ever more valuable things — not by encouraging ever cheaper consumption of imported products. If you want to raise consumption — focus on higher incomes, not lower prices.

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The focus and the logic

Development has a cost , and  that cost is always, in part, higher prices. In other words, Nigeria should focus on how to pay people enough to buy tomato-based products at the price it costs to make them in Nigeria.

Quite frankly, you do not make people less poor by reducing the cost of food. You simply enable people who remain poor to consume more and remain unproductive; any poor person would prefer doubled wages to a halving of the price of rice. In the pursuit of higher production capacity, it is misguided and unhelpful (and slightly condescending) to view the inevitable by-product of higher prices as a “tax on poor people”. There is a tax on everyone in a development policy regime.

Development has a cost; anyone claiming to be able to immediately raise wages and cut prices is being dishonest. Faced with a choice between policies that prioritize low consumer prices or policies that support expanded employment and higher wages, it is empirical fact that a focus on wages has generally led to widely-shared prosperity.

Note that development policies emphasizing low prices invariably reward past investments in production scale and capacity by wealthier countries who have elected to pay the cost of development. These countries now have higher domestic prices and much higher domestic wages underwritten by the massive scale paid for by those higher prices and are now in a position to export cheap parboiled rice and cheap tomato puree profitably to countries like Nigeria.

Nigeria, like many African nations, has a “non-consumption” problem: sellers faced with robust demand and willing buyers are unable to drop their prices  — they are operating at marginal cost. This suggests that the economic problem for policy to solve is not that prices are too high, it is that the buyers don’t have enough resources to transact. To jump-start such a stuck transaction you need to arm the buyers with the necessary income to meet the market clearing price.

READ FURTHER: Dangote tomato factory reopens amid fall in local demand

Solving for the price issue by opening the flood gates to cheaper products from highly sophisticated foreign suppliers will ensure the poverty of both your consumers and your suppliers — cementing low wages, insufficient jobs and a dearth of local capital for savings and further production capacity investments. Such policy measures smack of low ambition and lower imagination. Africans are voting with their feet: the migration pipeline grows by the day as able-bodied, economically valuable citizens frustrated with a dearth of remunerative career opportunities opt to take their chances crossing the Mediterranean for a better life. Long term, a policy of cheap imports means poverty for all.


NOTE: This article was written by Franklin Olakunle Amoo, a Partner at Baylis Emerging Markets and a Director of Whitman Group Holdings.

Patricia

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform. To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.

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Manufacturing: Activity levels pick up albeit readings still below water

For the second consecutive month, the non-manufacturing PMI showed broad-based improvement.

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Manufacturing: Activity levels pick up albeit readings still below water

According to the Purchasing Managers Index (PMI) data released by the Central Bank of Nigeria (CBN) for the month of July, activity levels improved, through readings still remained below 50 index points. Specifically, manufacturing PMI improved to 44.9 in July from 41.1 in June, the third consecutive month of negative (below 50) reading in the sector. However, the continued relaxation of the lockdown measures which enabled service-based
organisations to improve their scale of operations sustained the faster recovery in the non manufacturing PMI for the second consecutive month, as it improved further to 43.3 in July from 35.7 in June.

Although, the readings in the manufacturing sector improved in July (Save for Supplier delivery time (-4.5) which declined, the remaining four indices used in gauging the manufacturing sector strengthened in July; Production level (+8.1), New orders (+6.7), Raw materials/WIP Inventory (+2.2) and Employment level +1.2). We believe the sluggish pace of recovery in the sector when compared with the non-manufacturing sector is reflective of supply chain disruptions given the continued ban on international airline operations, FX liquidity constraints, weak production runs and subdued demand from customers. The data revealed that, of the 14 surveyed subsectors in the manufacturing sector, only transportation equipment subsector reported growth while 12 subsectors contracted.

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READ: CBN, Bankers committee back N3.5 trillion stimulus package for Nigeria

For the second consecutive month, the non-manufacturing PMI showed broad-based improvement across the four key metrics; Business Activity (34.3 to 46.1), Level of new orders (32.5 to 43.4), Inventory level (38.5 to 42.7) and Employment level (37.4 to 41.1) used in gauging activity level. We believe the continued relaxation of the lockdown measures in the month under review enabled most service-based organisations to improve their scale of operations.

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CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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VAT collection edges higher but indicates weaker economy

VAT collection for Q2 2020 climbed higher by 0.8% q/q and 4.9% y/y to N327.2bn.

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Yesterday, the Nigerian Bureau of Statistics (NBS) published data on Value Added Tax Collection (VAT) collection for the first half of 2020. According to the data, VAT collection increased by a modest 8.5% y/y to N651.8bn in H1 2020 from N601.0bn in H1 2019.

Suprisingly, VAT collection for Q2 2020 climbed higher by 0.8% q/q and 4.9% y/y to N327.2bn. The biggest contributing sectors to VAT collection, Professional services (up 40.9% y/y) and Other manufacturing (up 2.7% y/y) remained resilient during H1 2020. In addition, VAT collections on Breweries, Bottles and Beverages increased 12.0% y/y in H1 2020 although on a q/q basis, we observed a deep contraction of 27.3% in Q2 2020.

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Further analysis of the data provided some indication on how weak economic activities were in H1 2020 given the disruptions brought by the global pandemic particularly in Q2 2020 when there was full lockdown in Lagos, Ogun and FCT in April. We recall the VAT rate which was increased by 50% from 5.0% to 7.5% kicked off in February 2020 and must have provided a significant buffer for VAT collections in H1 2020. If we adjust for the increase in the VAT rate, we think economic activities must have slowed heavily given that the impact of a 50% increase in rate translated to a relatively meagre 8.5% y/y increase in absolute collections.

The numbers confirm our view that the steep rise in prices of goods and services nationwide occasioned by high inflation and a steep currency depreciation in the face of stagnant wages and a pandemic has tightened the squeeze on consumer spending and as such raising taxes in this setting would only do little to improve government revenues. Thus, the Federal government needs to do more from a policy perspective to improve business operating environment, as well as consumer conditions, post the pandemic. In our opinion, this would have a multiplier effect on companies’ revenue as well as consumer demand which would not only boost VAT collections but also other taxes such as Company Income Tax.

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CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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How the United States plans to control the African Development Bank

An illustration of the new cold war that the United States and China are waging within institutions and international donors.

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Africa Development Bank. AfDB develops Index to aid women empowerment , African Development Bank awards $1.1 million to boost food production in Africa , AFDB increases capital to $208 billion in bid to secure Africa’s future , African Investment Forum: AfDB eye $67 billion deals , ECOWAS backs Adewunmi Adesina’s re-election as AfDB election nears , AfDB bows to pressure from U.S., orders an independent probe of Akinwumi Adesina, Fitch rating agency affirms AfDB's AAA rating with stable outlook

The economic and trade war between the United States and China is opening up front lines in Africa. After openly neglecting the continent at the start of Donald Trump’s mandate, the US administration is working hard to block Chinese expansion and regain abandoned market shares. This is a strategy developed by the shadow advisers of the American president since 2017.

In this fight, the takeover of financing levers on the continent is a priority for the Americans, with the African Development Bank (AfDB) as a major target. In this context, is its president Akinwumi Adesina a pawn to be released?

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*Adesina, a stone in the shoe of American influence?*

Engaged in a lip-service campaign to win a second term at the head of the African Development Bank at the end of August, Akinwumi Adesina has been plunged into the heart of a fight that is beyond him. Of course, the Nigerian remains the only candidate for his own succession. And even if he can avail himself of the support of the African Union, he will not obtain the easy victory that everyone promised him, essentially due to the economic and commercial rivalry between the United States and China raging across Africa. In this fight, to control the decision-making and financing levers on the continent, the AfDB, and therefore the president who directs it, are major issues for the American camp.

READ MORE: Here is what Akinwunmi Adesina said about allegations against him

*The Trump administration’s strategy of winning back?*

Since coming to power in January 2017, Donald Trump has seemed to ignore Africa. So far, the American president has received only two heads of state from the continent at the White House. This is unprecedented. Worried about the omnipresence of Beijing on the continent and the loss of Washington’s economic influence on the ground, beginning in 2018, the advisers of the Trump administration concocted a strategy of reconquest to counter China in Africa .

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*A slow work of persuasion begins with regard to the American president and turns into obsession in the ranks of the neoconservatives*

Ironically, the offensive was designed and led from the start by the hawk John Bolton, then-National Security Advisor

The American conservatives are very worried. From 178 billion dollars in 2016, the volume of trade between China and Africa reached 186 billion dollars in 2018, and exceeded the symbolic mark of 200 billion dollars in 2019. Even if the objective announced by Beijing in 2014 to aim for 400 billion dollars in trade by 2020 is proving unrealistic today, the inexorable and rapid upward trend in trade between China and Africa is irreversibly written.

This is quite the opposite of trade relations between the United States and the continent.

READ ALSO: African Development Bank joins Nasdaq sustainable bond network

*Attack through commercial means*

The cornerstone of the American trade strategy on the African continent, the AGOA (law on growth and opportunities in Africa) has a poor record for its 20 years in 2020. Launched in 2000 under Bill Clinton, AGOA offers duty-free entry into the American market for 6,500 African products (petroleum, agricultural, textiles, handicrafts, etc.). Thirty-nine predominantly sub-Saharan countries benefit from it. AGOA goals? Help diversify trade with the continent and promote industrialization in sub-Saharan Africa.

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However, petroleum products continue to represent two thirds of American imports. According to USAID figures, bilateral trade between the United States and the United States quadrupled from 2002 to 2008, to reach 100 billion dollars. But Africa trade is crumbling. It fell to $ 39 billion in 2017, only to rebound slightly to $ 41.2 billion in 2018, mainly due to the United States’ energy self-sufficiency.

Meanwhile, over the past five years, US exports to sub-Saharan Africa have stagnated on average at $ 19 billion per year. With $ 54 billion in foreign direct investment in Africa, the United States is still ahead of China in this area.

However, Chinese domination in Africa is a snub for Uncle Sam. Little by little, advisers will convince the American president to look beyond the borders of the United States. The Vice-President of the Center for Strategic and International Studies (CSIS), Washington, and the President, of the Sub-Saharan Africa Advisory Committee for the Export-Import Bank of the United States United (Exim), Daniel Runde, among others, feeds the Trump administration’s perspective on the economic engagement of the United States in the world, in particular in terms of development.

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READ ALSO: AfDB agrees to the review of ethics committee’s report on Akinwumi Adesina

*Go through development institutions, including the AfDB*

Countering China in Africa, by relying on development institutions, has become an end in itself. In a memo titled “The Trump Administration Will Eventually Lead the Bretton Woods System,” Daniel Runde wrote in mid-2017 that “the United States will seek to have a say in the upcoming appointments of the heads of the multilateral banks of development.

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In October 2017, Steven Dowd, the current Executive Director of the AfDB who is the representative of the United States at the Bank and the chairman of the audit and finance

committee of the pan-African bank, confirmed this desire. “I will leverage the US financial contribution to the bank to ensure that it is best used for Africa and serves the interests of US foreign policy there.” […] I will endeavor to open Africa to American investments and know-how.” This close friend of Daniel Runde then made the promise to American senators in order to get the post with the AfDB.

In October 2019, Daniel Rundee, a Republican loyal to Donald Trump, specified the interest of the Americans in controlling the AfDB to halt Beijing’s long march on the continent. “The AfDB is an alternative to engaging in Africa that is not led by China and it can help reframe Africa as a tremendous economic opportunity. ”

In a charge against Adesina carried in a column on the American online site ‘The Hill’, the message is clear. The writer, Daniel Rundee led a charge against the management of the bank by Akinwumi Adesina, its president. Runde insisted on his lack of transparency and his support for authoritarian regimes, in particular by organizing the AfDB’s annual meetings in Malabo (Equatorial Guinea), in June 2019. “Anyone who has read the classic book Tropical Gangsters will recognize that the government of Equatorial Guinea is probably one of the most corrupt in the world”, asserted Daniel Runde.

The offensive had already accelerated following the appointment of Tibor Nagy in July 2018 as US Assistant Secretary of State for African Affairs, a post left vacant for several months. On March 3, at the United States Embassy in Kinshasa, he began his speech on what “the Trump administration in Africa should do: counter China’s narrative and clearly show that the breadth and depth of the United States’ engagement in Africa is second to none.”

On the ground, Tibor Nagy could count on the rebirth, in May 2019, of the Export-Import Bank of the United States (Exim) chaired by Kimberly Reed, a lawyer who served as senior advisor to the Secretaries of the United States Treasury in 2004. Congress gave a mandate to the federal agency, which now has a theoretical strike force of $ 135 billion. It is up to the Exim to devote 20% of its resources to unlocking financing that is capable of neutralizing Chinese offers in Africa. On May 14, 2020, the board of directors of the American agency validated a loan of 4.7 billion dollars for the benefit of Mozambique to build an LNG installation. “This is a prime example of how a revitalized Exim, thanks to the leadership of President Trump and bipartisan support from Congress, can help ensure the use of made in USA products and services, without giving way to countries like China and Russia, ”said Kimberly Reed.

*From 2018, a tool called Prosper Africa …*

In addition, when John Bolton presented the US Strategy for Sub-Saharan Africa in December 2018, he took the opportunity to launch Prosper America. This initiative, which brings together the resources of more than 15 American government agencies, is intended to counter the new Silk Road (Belt & Road), traced by Beijing since 2013, with the mission of doubling trade and investment between United States and Africa. Prosper America is establishing a one-stop-shop to make it easier for US businesses to access more than 60 business investment support services.

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However, the initiative is slipping. “It has lost a lot of its momentum due to a very slow deployment,” said Judd Devermont, Africa program director at CSIS last June.

READ MORE: Recession: Nigerian economy to slide by 3.4% in 2020 – IMF

*… Followed by the Build Act*

Another brick laid by Congress in March 2018, is the adoption of the Build Act, which created the US International Development Finance Corporation (IDFC), and the American development bank, with $ 60 billion in investments compared to $ 29 billion for its predecessor. Concretely, the Trump administration is also seeking to score points by dealing directly with states. Washington is therefore trying to sign a free trade agreement with Kenya at all costs. Negotiations are underway. After the one concluded with Morocco in 2004, it would be the second time that the United States would ratify and conclude a deal with a country on the continent. The example would be symbolic of the return of Uncle Sam. In 2019, Kenya imports from the United States totaled 391 million dollars, against more than 3 billion from China. In the minds of the Americans, an agreement with Kenya would serve as a springboard for negotiating new agreements bilaterally with other states.

But Washington’s neoconservatives are convinced that the United States can only effectively curb China’s stranglehold in Africa if it controls the major levers of financing on the continent, such as the AfDB, which approved more than $ 7 billion in commitments in 2018 and which benefits from the remarkable triple A rating from international rating agencies.

*Final objective: control the funding levers with candidates dubbed by Washington*

Is the statutory designation of a new AfDB president in 2020 a dream opportunity for Washington to maneuver and control the Pan-African institution and promote the appointment of a president committed to American interests? Except that Akinwumi Adesina stands in the way of Washington advisers. And he is the only candidate to run for his own succession. In addition, he is a national of Nigeria, the largest shareholder of the AfDB with 9.1% of the bank’s capital. With 6.5% of the shareholding, the United States comes “only” in second position.

Whatever. The bank has 80 shareholder countries, including 26 non-African countries. Daniel Runde openly contests the governance of the AfDB which gives the voting preeminence to African countries, with “58.89% of the votes”.

However, in October 2019, the Republican in a note from the CSIS on the future role of the AfDB, said “at the World Bank, the United States has 15.7% of the vote and a de facto right of veto, while they do not hold a veto similar to the AfDB”. One thing is obvious for the adviser: “Regional development banks work best when they follow the golden rule, namely: whoever owns the gold sets the rules”. Clearly, those who finance designate the kings and commanders.

READ ALSO: African Development Bank to launch African Economic Outlook 2020 Supplement

*Obstacles on the way to the AfDB’s capital increase*

As luck would have it, this pressure from the United States came when Akinwumi Adesina was negotiating the Bank’s general capital increase, which was concluded favorably in October 2019, and will raise capital from $ 93 to $ 208 billion over ten years from 2020 to 2030. This represents an increase of 125%. At the same time, Daniel Runde writes: “Shareholders are going to have to ask serious questions. The United States, as the main donor, does not have the same vote and influence within the AfDB as it does in other multilateral development banks,” such as the Asian Development Bank and the Inter-American Bank of development. “The AfDB should reconsider the position of its large non-regional shareholders, who are increasingly speaking out about the disproportionate voting power they hold in relation to the size of their contributions. If they are ready to pay, they should have more actions to take in the bank. ”

Obviously, the United States did not succeed. Did Akinwumi Adesina reject them? Did he stand up against American design? Hard to say. For the moment, the protagonists remain walled in silence. But this is where the troubles of the AfDB President began.

*In the wake of whistleblowers alleging unethical behavior*

To strengthen the attacks against Adesina, the architects of the Nigerian destabilization operation took the opportunity of a letter sent to the governors of the Pan-African bank in January 2020 by whistleblowers. The latter accused Akinwumi Adesina of unethical behavior, favoritism in appointing Nigerians to senior positions, and personal enrichment. Allegations he denies. In the meantime, the grievances against the president of the bank were leaked to the press, giving a global echo to the accusations against him, while he was engaged in the campaign for his re-election. Conservative Steven Dowd, the current US chairman of the AfDB’s audit and finance committee, is suspected of being behind the leaks over the accusations affecting the Nigerian.

On May 5, an internal bank investigation exonerated Akinwumi Adesina for lack of evidence. Annoyed, the United States threw a stone in the pond. In a letter dated May 22, US Secretary of State for the Treasury, Steven Mnuchin, expressed “serious reservations” about the findings of the investigation. And as a member of the Board of Directors of the AfDB, he calls for “a thorough investigation of these allegations by an independent external investigator”. After 15 days of silence, the Board of Governors of the AfDB accepted, on June 5, that a new investigation be “carried out by a neutral, honest person, of high caliber with undeniable experience and a proven international reputation, in a period of two to four weeks at the most, taking into account the electoral calendar of the bank. This mission was entrusted at the beginning of July to the former Irish president Mary Robinson.

*Suspense as to the outcome, but the battle will leave its mark*

Whether cleared or accused, what will be the fate of Akinwumi Adesina, under the threat of the American steamroller? Washington has meanwhile garnered support from Switzerland, as well as Denmark, Sweden, Norway and Finland, according to Bloomberg. The Nigerian still enjoys the backing of the African camp and the rating agency S&P Global Ratings. While maintaining that AfDB’s triple A rating, S&P stated in a press release dated June 19, 2020 that “the Board of Governors of the AfDB endorsed the conclusions of the ethics committee which exonerated the president of any wrongdoing, although it allows for an independent review of the report given the differing views of the Governors. We believe that, in accordance with our expectations, this issue has been dealt with appropriately through the appropriate institutional channels. […] We expect shareholders support to remain strong, regardless of the outcome of the independent investigation.”

Asked by the BBC on May 30, 2020, Nancy Birdsall, senior associate at the Center for Global Development, an Anglo-Saxon think tank, predicted that “the US Treasury would seek a form of discreet compromise in which no one loses face”. The end of the suspense is expected in a few weeks.

Patricia
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