The US Mindgames and The AfDB; Deconstructing A Conflict

Proshare

Monday, July 27, 2020 / 5:35 PM / Jean-Michel Meyer Op-ed / Header Image Credit: Reuters/Ecographics

 

Proshare Nigeria Pvt. Ltd.


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

The economic and trade war between the United States and China is opening upfront 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?.

 

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 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.

 

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. 

 

A Slow Work Of Persuasion Begins Concerning 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.

 

Proshare Nigeria Pvt. Ltd.


Attack Through Commercial Means 

The cornerstone of the American trade strategy on the African continent, the AGOAa (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.

 

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 African 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, feed the Trump administration's perspective on the economic engagement of the United States in the world, in particular in terms of development.

 

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. 

 

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 endeavour to open Africa to American investments and know-how." This close friend of Daniel Runde then made the promise to American senators 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 are 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 

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

 

Proshare Nigeria Pvt. Ltd.


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 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 the 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". Those who finance designate the kings and commanders.

 

Proshare Nigeria Pvt. Ltd.


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 favourably in October 2019, and will raise capital from $93 to $208billion 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. "

 

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 behaviour, favouritism 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 is "carried out by a neutral, honest person, of high calibre 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, by our expectations, this issue has been dealt with appropriately through the appropriate institutional channels. [...] We expect shareholder's 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.

 

Proshare Nigeria Pvt. Ltd.


Related News

1.       Now Is The Time For A 'Great Reset'

2.      An African Perspective on the impact of COVID-19 and the Response to it - FBNQuest

3.      Corporate, Financial Institution Downgrades On Pace for Record

4.      The Case Against High Interest Rates in Time of Contagion - Bola Tinubu

5.      The Coming Greater Depression of the 2020s

6.      Why the Global South Should Temper Expectations Over The Basel Convention Ban Amendment

7.      Of Q1'20 Economic Output and GDP Forecasts - Lessons from China

8.     It's Time to Build - OpEd

9.      What Would the World Look Like after Coronavirus: Economically, Politically and Socially?

10.  Risk-Weight Variation Among Emerging Markets Banks Impedes Capital Comparisons

11.   As For South Africa, So For Jigawa: Understanding The Missing Point - Fasua

12.  European Banks Face Weaker Revenue Outlook

13.  Peter Drucker And The Things That Changed

14.  Repositioning for Relevance in a Competitive Environment

15.  Nigeria's Unconventional Policies Aggravate External Vulnerability

16.  Negative Yields Do Not Necessarily Support Sovereign Credit

17.   No Deal Brexit Threat Shifts Priorities For Autos Investment

18.  Lies, Damned Lies and Statistics: How to Make Sense of FDI Data

19.  Nigerian Banking Sector Recovery Still Hampered By Bad Loans

20. Loan-to-Deposit Requirement Credit-Negative for Nigerian Banks


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP