Draft African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2023 Draft African Development Bank (Sixteenth Replenishment of the African Development Fund) Order 2023

Preet Kaur Gill Excerpts

Monday 3rd July 2023 General Committees

[Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)]

I am grateful to the Minister for outlining the African Development Fund orders. We will not oppose them. I welcome the support they show for tackling poverty and food insecurity, creating new jobs and opportunities to meet the demands of Africa’s young and fast-growing population, and tackling the climate crisis.

Since 2019, Africa has been hammered by the converging crises of the pandemic, the climate crisis, debt, inflation and conflict. An estimated 55 million people on the continent have been pushed into extreme poverty since the onset of the pandemic. In 2021, nearly half a billion people in total were living on less than $1.90 a day. In that context, it is essential that we do what we can to prevent the current crisis from derailing long-term development gains.

Our financial support via the African Development Bank, with its significant financial clout, strong regional identity and deep knowledge, is one excellent means of doing that. Not only has Publish What You Fund ranked the African Development Bank’s sovereign lending as No.1 in transparency out of 50 global development institutions but the bank is also well aligned with the UK’s objectives and was green in its 2020 review.

While public-private infrastructure finance volumes in sub-Saharan Africa have stagnated over the past decade, the African Development Bank has punched above its weight, far outspending other multilateral development banks in support for infrastructure partnerships with the private sector in recent years and giving donors more bang for their buck. During the new funding cycle, the African Development Bank will focus on two strategic priorities: governance, capacity building and sustainable debt management in recipient countries; and developing sustainable, climate-resilient and quality infrastructure. As we heard from the Minister, it will also focus on empowering women and girls as a condition for achieving inclusive and sustainable development. Through those investments, the total replenishment will help to connect 20 million people to electricity, benefit 24 million people through agricultural improvements, provide access to water and sanitation for 32 million people and improve transport infrastructure for 15 million people.

The bank’s work over the next three years will complement long-standing investments in regional growth and infrastructure, offer a sustainable alternative to non-concessional Chinese lending and make headway on the long road to economic recovery from the pandemic and the worsening food security crisis, all of which are priorities that we support.

In that context, I must express some disappointment that we are again seeing a significant cut to UK financial support in this area; it is down nearly £200 million. The African Development Bank has done great work in the closely linked areas of climate adaptation and food insecurity in recent years. It has prioritised high-impact investments in water resource management and climate-smart agriculture, while also holding true to a model that puts countries in the driver’s seat of their own destinies. Will the Minister say whether we should take these funding cuts as proof of the former International Environment Minister’s comments on Friday? Do we have a Prime Minister who is “simply uninterested”, is it true that

“efforts on a wide range of domestic environmental issues have simply ground to a standstill”

and are the Government

“absent from key international fora”?

They are breaking their promises on international climate finance, hoping to leave a tab for the next Government to pick up.

The African Development Bank estimates that the continent needs $7 billion to $15 billion a year in adaptation finance to meet this accelerating challenge, yet ICF, international engagement and domestic commitments were conspicuous in their absence in Government announcements at the Paris summit. Can the Minister explain whether the Government remain committed to delivering the £11.6 billion in international climate finance that they promised in 2019? How and when will that be delivered? Will the Minister explain why the Prime Minister was absent from the summit while more than 100 world leaders were in attendance at a time when, by his own admission, there is growing anger at the international community’s failure to help the most vulnerable countries adapt to a climate crisis that they did not create?

Will the Minister say something specific about the absence of an announcement on the remaining half a billion special drawing rights that the United Kingdom promised but is yet to deliver? As he may well know, the African Development Bank has proposed an innovative new vehicle for the SDRs to be lent as hybrid capital. That would mean that every 100 million of SDRs recycled to the African Development Bank will be multiplied to increase loans to vulnerable African countries by up to 400 million. In effect, the African Development Bank proposes to leverage SDRs as capital to mobilise more lending funds so the SDRs are never spent; rather, they will be held as capital in the bank’s SDR account at the International Monetary Fund. Has the Minister looked at that proposal, and will he comment on it? Why has the delivery of the 100 billion SDRs promised at the G7 in Carbis Bay in 2021 been so achingly slow?

Finally, the previous replenishment round included an element of performance-based funding dependent on positive results reported at the mid-term review. Will he clarify how much was disbursed or held back at that point, and what support has the UK provided to the bank to recruit sufficient staff in key areas, such as environmental and social safeguards and fragile and conflict-affected states, in recent years? What efforts, if any, have the Government made to encourage closer working, better information flows and better-informed oversight between the bank and Government country teams?

On the sovereign debt crisis in many African countries, I must start by noting the incredibly positive news that, three years after its default, Zambia has finally agreed a deal for debt restructuring with straight creditors, including China. The £5 billion deal will provide crucial fiscal space for its Government to serve its people, 16% of whom live on less than a $1.90 a day, although billions owed to private lenders still needs to be tackled.

The situation is an ongoing illustration of the importance of the multilateral debt relief initiative agreed at the Gleneagles G8 summit 19 years ago. That was an outstanding example of what British leadership on the world stage can achieve and one of the proudest legacies of the last Labour Government. It has since had a transformative impact on many poor countries, freeing up their Governments to invest billions of pounds in public goods, such as health systems, climate action and education, that would have otherwise been spent servicing unsustainable debts. Will the Minister tell us how much debt the UK support has enabled the African Development Bank to cancel over the recent accounting period? What expectations does he have in relation to the orders? We welcome our latest contribution to the African Development Fund’s portion of the multilateral debt relief initiative, and will not divide the Committee on the order.

Many of the development gains that we have made in Africa in recent decades are currently at risk of reverse. We can, however, choose to forge a way to a more positive future with the expertise, influence and financial muscle of institutions such as the African Development Bank. For Labour, the power of co-operation is unmistakeable. We can choose to turn to each other when confronted with global crises, rather than turning inwards. We can choose to modernise our approach to international development. Learning from each other, we can and must address the world’s greatest challenges together.