Bank on the verge of a nervous breakdown.

After a week of deliberation, debates, and elections at this years annual governors meeting of the African Development Bank, the institution is still miles away from its target of restoring corporate sanity to its operations.

"We should not fool ourselves, but admit without dramatising it that the African Development Bank faces serious problems. There are many questions that need to be answered ... What is required is a time of healing; healing not through miracles, but clinical analysis and then strong therapy," said the Governor for Switzerland in his address to the thirty-first annual meeting of the African Development Bank (ADB) in Abuja - Nigeria.

This year's meeting should have elected a new President to take over from Mr Babacar Ndiaye, who has been severely politically disabled following an intense power struggle with his Executive Directors. Instead, what has emerged after five rounds of balloting to find a new President for the troubled institution was further confusion and deadlock.

With its single largest shareholder, Nigeria, refusing to drop out of the race, and neither of the two leading candidates, Mr Timothy Thahene of Lesotho, and Mr Omar Kabbaj of Morocco gaining enough votes to win the day, Mr Ndiaye has been mandated to continue steering the troubled boat until this coming August when fresh elections will be held in Cote d'Ivoire.

Knox knocks

But even if the Abuja meeting had succeeded in naming a new President, internal wrangling and the confrontational posture of its non-African shareholders would still have cast a gloomy shadow over the entire functioning of the Bank.

In the last three years, the Bank has fallen into near total paralysis. Like a bad case of chickenpox, former World Bank Vice-President David Knox's independent audit of the institution last year forced a rough scratching of the ADB's sores.

Mr Knox's document described the Bank as "a chaotic, top heavy bureaucracy, weakened by the impoverishment of the continent it is meant to help, and riddled with political intrigue and suspicion".

It warned that if the operation of the ADB were not re-directed and strengthened, the organisation "may end up destroying itself".

Other areas of concern for the auditors included nearly $1m spent on equipment which is not working, over $750,000 spent on unauthorised and abandoned projects, and frauds totalling over $270,000, resulting from spurious claims for educational allowances by staff.

Tail wags dog

On a different front, the Bank's concessional lending arm, the African Development Fund, is totally devoid of cash because the industrialised donor governments will commit no more money until Knox's prescriptions have been fully effected. For now, that leaves the Bank unable to lend to most of the poorest countries it is mandated to assist.

In a continuation of the open confrontation which has affected positive decision making at the ADB for the last two years, the Bank's US representative Jeffrey Shafer told fellow Governors in Abuja that his Government will only support an environment that "fosters accountability, responsibility, transparency, and excellence. Audit, administrative, personnel, and procurement policies all need to be strengthened considerably ... For example, we are concerned that non performing loans are frequently re-packaged into 'quick disbursing policy loans' without new policy conditionality, and that management seems reluctant to cancel non performing loans".

Britain, often bed-mates with the US on international policy, predictably insisted that Africa's needs will only be well served by the ADB if it can "demonstrate an ability to use funds at its disposal in efficient and effective ways. Such evidence will be essential if it is to justify the provision of new money from donors whose budgets are under pressure".

The difference is clear

On its part the ADB management is claiming that it has already moved positively towards putting its house in order following wide criticism of its operations in the Knox report. The Board of Directors has conceded to a new tighter credit policy agreed in Madrid last October, which is rooted around the analysis of a country's credit-worthiness, on top of its GDP per capita income.

But in view of the credit policy changes, many in the Bank argue that the new dispensation unnecessarily excludes almost 60% of the Bank's African members from borrowing from the ADB loan window. Hard loan lending to the few member countries whose economies are eligible under the new criteria fell to $1.4bn in 1994 from $2.3bn in 1991. Most of the monies went to Morocco, Tunisia, Nigeria, and Gabon.

Secretary General of the Bank group Mr Hedi Meliane said in reaction: "We have not been able to increase the ADF and at the same time we are asked to adopt a credit policy which excludes most of our members from borrowing".

Mr Meliane blames "a problem of communication with our foreign partners" as being at the root of the current impasse.

The ADB has two lending windows: The Ordinary Capital Resources (OCR), which carry interest charges related to the cost of the borrowed fund, and the ADF, a concessional loan window funded exclusively from non regional member countries which do not qualify for OCR. Projects with long term maturities, or non financial returns, such as roads, education, and health, are the main features of ADF funding.

Since its inception the ADF has financed, (interest free) more than 1,300 development projects worth over $10bn in poorer African countries.

Sad reality

The obvious conclusion from Abuja is that while the ADB group management, Directors, and foreign shareholders wallow in their self-engineered mess, millions of Africans continue to suffer the biting effects of the continent's economic plight.

According to the ADB's annual snap-shot of the continent's economies, Africa is suffering a decline in per capita income for the fourth consecutive year, with output growth rates "considerably lower than that of other regions of the developing world".

The report states further that Africa's economic performance remained weak in 1994 and continues to be constrained by instances of political instability; weak internal production structures; poor physical and human infrastructure; inadequate flows of financial resources; and a heavy debt-service burden.

Another sad reality running throughout all this is the current inability of the ADB to take an active part in reversing this terrible decline in Africa's fortunes.

Everest Ekong is the publisher of Safara magazine.