Role of Development Bank Associations in the Twenty-First Century

It was in January 1968 when the Inter-American Development Bank (IDB) released one of its staff members to establish the first regional association of development banks, the Latin American Association of Development Financing Institutions (ALIDE), in Lima, Peru, in collaboration with the Industrial Bank of Peru, which provided office space and support staff to get ALIDE’s operations started. Ricardo Palma Valderrama from Peru became the first Secretary General of ALIDE and Rubens Vaz da Costa from Brazil, a former president of the Bank of the Northeast of Brazil, became its first President. In 1968, the Inter-American Development Bank considered this creation of an association of development banks in its borrowing member countries an item of the highest priority, because it felt that such an association could critically contribute to raising the quality, competency, and capabilities of these institutions, which were receiving large lines of credit (“global loans”) from the IDB for the financing of small and medium sized projects in their countries. This increase in quality of projects would raise the effectiveness of the global loans of the Inter-American Development Bank (IDB).

The decade of the 1960s was also the time when economic and social cost/benefit analysis became a standard practice for the appraisal of projects by development banks, as well as for calculating the expected internal rates of return of projects. The IDB considered it important to create a capability in cost/benefit analysis in each development bank and the new development bank association was to provide training in this field for its members.

Profile of Regional Assocciations

Latin American Association of Development Financing Institutions
African Association of Development Finance Institutions
Association of Development Financing Institution in Asia and the Pacific
Association of National Development Finance Institutions in Member Countries of the Islamic Development Bank (ADFIMI)
European Development Finance Institutions (EDFI)

National Development Bank Associations

For many years there have existed national development bank associations, mostly in a number of large countries. In Brazil, the Association of Brazilien Development Banks (ABDE) has played an influential and important role. It publishes the highly respected journal “Rumos” every month. In Malaysia, the Association of Development Finance Institutions of Malaysia (ADFIM) has played an important role in training. In Nigeria, the Association of Nigerian Development Finance Institutions (ANDFI) plays a coordinating role among this country’s development banks. In Indonesia the Indonesian Association of Regional Development Banks (IARDB) has provided an important link for the development banks in the numerous large islands. In thePacific, the Association of Development Finance Institutions in the Pacific (ADFIP) links development banks in the various island states of the South Pacific region. The website for ABDE is: www.abde.org.br

Need for Autonomy and Sustainability

The early sponsors of the associations were in agreement that they would reduce their support of the associations as more and more support was received from their members and they reached the point where their membership fees would become sufficient to support their operations. There was the need for institution building and capacity building in terms of publications, training, research, studies and advisory services. The membership grew in the 1970’s and the funding reached a point where it was expected to fully support the need for institution and capacity building. Steps were taken to cut the umbilical cord to the main sponsors, but it was hard to relinquish this dependence and support. While the associations had operational autonomy, they only became fully independent when their offices moved out of their original offices in the buildings of their sponsors. This happened first with ALIDE when it constructed its own headquarters building in 1979. ADFIMI relocated from Jeddah to Istanbul in 1987. It then was the case for ADFIAP when it occupied new quarters in 1989. AADFI moved out of the ADB building to a building in 1993.

The external debt crisis of 1982 had a strong negative effect on the finances of the member institutions of the associations. Membership dues remained outstanding and it became difficult to maintain previously achieved operational levels.

Members also sent fewer of their staff to training activities, which increased the costs per participant. Particularly in the case of AADFI, a large number of members failed to pay dues and AADFI became again more dependent on the support from the African Development Bank, UNDP, EDI and other sponsors. Even ALIDE and ADFIAP, the larger associations in terms of staff, had to restructure and downsize their operations. In the process they had to trim their publications, training and research activities. This paralleled restructuring and diversification trends in their member institutions.

With the external debt crisis of 1982, the justification for development banks was called into question. They have substantially changed during the intervening eighteen years, from 1982 to 2000. They have reaffirmed their importance as agents of development financing and shown, particularly during the Asian financial crisis, that they can be relied upon to provide sounder development financing than their competitors in the banking sector. In this new world of finance, with an new financial architecture emerging, the services to be provided by the associations have also changed.

Need for a Strong and Clear Image

An important study of the first fifty years of development banking (Kapur/Lewis/Webb) concludes that the aspect in which development banks have least fulfilled their functions was to build their profile with the public and to make the importance of their role generally known and understood. That profile had been defined by their governments for them when there was still development planning and every developing country had a five-year plan. Development banks have now stepped out from under their governments’ umbrellas and they had to create and project their image themselves to the public and stand in the open during good weather and bad.

Today this open environment requires an effective use of the media and of the internet. Publications, videos, compact disks and websites are needed to project the image, mission and functions of development banks. The regional development bank associations can fill the new needs and where they need to collaborate under the umbrella of the World Federation of Development Financing Institutions (WFDFI) to achieve this objective. To have a strong voice at the regional level, but also to have a clear voice at the international level, is becoming vital for surviving in the Twenty-First Century. This is the different role they have to assume for assuring the success of private and public development banks in the financing of development in the future.

Delivery of Services

This does not preclude the delivery of service that the development bank associations have been offering to members in the past. The members of the associations continue much in need of the range of services and assistance that the associations can provide. This assistance includes training, publications, research, studies, regional meetings, workshops, financial intermediation and advisory services. There is a consensus that the majority of development banks should diversify their operations adjusting them to the new business opportunities and necessities to strengthen their competitive position and to generate profits with the support of the training and technical advise coming from their associations and the World Federation. Development banks also need to act more as catalysts to coordinate member activities to achieve larger scale, greater scope and better quality. Networking and the building of partnership relations becomes a requirement in the Twenty-First Century.

In this new world, relationships have also changed. The requirements are now for global-, regional- and sub-regional partnerships that contribute a degree of synergy and create wider public participation and participation at the grass roots level. This implies that association membership cannot be limited any more to those who can afford and are willing to pay annual membership fees. The constituency and membership needs to include all development banks. Those who can least afford to pay need the services most. This means that the associations need to finance their operations out of fees and charges for their services. Fees would not only be charged to their members, but also to all non-members making use of these services. Associations will need to operate in response to public and market needs. Like private businesses, or consulting firms, they need to assure themselves that revenues will cover their operating costs and yield additional funds for expanding and improving future services.

Annex

List of Presidents and Secretaries General of Development Bank Associations from 1968 to 2008

Presidents of ALIDE

  • Rubens Vaz da Costa, Brazil, 1968-1969
  • Ignacio Copete-Lizarralde, Colombia, 1969-1973
  • Eduardo Gómez Tamayo, Venezuela, 1973-1974
  • Ernesto Rohrmoser García, Costa Rica, 1974-1977
  • Karlos Rischbieter, Brazil, 1977-1978
  • Tomás A. Pastoriza, Dominican Republic, 1978-1980
  • Igidio Ianella, Argentina, 1980-1981
  • Adolfo Nass, Venezuela, 1981-1983
  • Camillo Calazans de Magelhaes, Brazil, 1983-1986
  • Gustavo Petricioli, Mexico, 1986-1987
  • José Salaverry Llosa, Peru, 1987-1988
  • Ricardo Avellaneda, Argentina,1988-1989
  • Frederich E. Bergés, Dominican Republic, 1989-1990
  • Jesús Villamizar Angulo, Colombia, 1990-1992
  • Oscar Espinoza Villareal, Mexico, 1992-1994
  • Hindenburgo C. Pereira-Dinitz, Brazil, 1994-1995
  • Rodolfo Anibal Frigeri, Argentina, 1995-1996
  • Marcos R. Pessoa Duarte, Brazil, 1996-97
  • Noel Lezama Martínez, Venezuela, 1997-1999
  • César Rodríguez Battle, Uruguay, 1999
  • Carlos Sales Gutiérrez, México, 2000
  • Gonzalo Rivas Gómez, Chile, 2001-2003
  • William Hayden Quintero, Costa Rica, 2003
  • Mario Laborín, México, 2004-2006
  • Nicolla Angelucci, El Salvador, 2006-2008
  • Luis Rebolledo, Peru, 2008-2009
  • Roberto Smith, Brasil, 2009

Chairmen of AADFI

  • August Daubrey, Ivory Coast, 1975-1976
  • René Amichia, Ivory Coast, 1977-1985
  • John Bentum-Williams, Ghana, 1985-1988
  • Alhaji Abubakar Abdulkadir, Nigeria, 1989
  • Mohammed Aissaoui, Marocco, 1989-1991
  • Alhaji S. Y. Kasimu, Nigeria, 1995-1997
  • Gershom M. B. Mumba, Zambia, 1998-2003
  • Remis Omotoso, Nigeria, Nigeria, 2003-2006
  • Mvuleni Geoffrey Qhena, South Africa, 2007

Chairmen of ADFIAP

  • H. F. G. Lembruggen, Malaysia, 1976
  • Vicente R. Jayme, Philippines, 1976-1986
  • John Fletcher, Australia, 1986-1989
  • Suresh S. Nadkarni, India, 1989-1992
  • Chang-Dal Kim, Korea, 1992-1995
  • Aswin Kongsiri, Thailand, 1996-1998
  • Saleh Ghazali, Malaysia, 1998
  • Isoa Kaloumaira, 2003
  • Anothai Techamontrikul, Thailand, 2003-2004
  • Jesus P. Tambunting, Philippines, 2004-2007
  • Fuimaono Falefa Lima, Samoa, 2007

Chairmen of ADFIMI

  • Rajab Salim As-Saad, Jordan, 1986-1993
  • Tahir Abbas, Pakistan, 1993-1994
  • Hayati Ozkan, Turkey, 1995-1998
  • Safa Ocak, Turkey, 1999
  • Sudi Apak, Turkey, 1999-2000
  • Orhan Güleç, Turkey, 2000- 2001
  • Mehmet Emin Ozcan, Turkey, 2006, Malaysia, 2001-2004
  • Muhammad Rashid Zahir, 2004-2006
  • Mehmet Emin Ozcan, Turkey, 2006

Chairmen of EDFI

  • Loet Mennes, Netherlands, 1992-1994
  • Sven Riskaer, Denmark, 1995
  • Joaquín de la Infiesta, Spain, 1996
  • Rainer von Othegraven, Germany, 1997
  • Philippe Wilmès, Belgium, 1998
  • Antoine Pouillieute, France, 1999
  • Olle Arefalk, 2003
  • R. Michael Barth, 2003 – 2004
  • Winfried Polte, 2003-2005
  • Richard Laing, Unite Kingdom, 2005-2007
  • Remedios Romeo, Spain, 2007

Secretaries General of Development Bank Associations

ALIDE

  • Ricardo Palma Valderrama, Perú, 1968-1978
  • José Andrés Bellido, Perú, 1978-1979
  • Carlos Garatea Yori, Perú 1979-1999
  • Rommel Acevedo, Perú, 1999

AADFI

  • George Aithnard, Togo, 1975-1980
  • Pierre William, Senegal, 1981-1983
  • Sedozan J. C. Apithy, Cameroon, 1984-1987
  • G. Henry Andrews, Liberria, 1987-1988
  • Pierre William, Senegal, 1988-1989
  • Mohammed Ould Cheikh-Sidia, Mauritania, 1990-1993
  • John A. Hammonds, Ghana, 1993-1996
  • Magatte Wade, Senegal, 1997-2003
  • Joseph Alfred Amihere, 2003

ADFIAP

  • Orlando P. Peña, Philippines, 1976-2004
  • Octavio B. Peralta, Philippines, 2005

ADFIMI

  • Abdelaziz Kuntoadji, Indonesia, 1986
  • Aydemir Koc, Turkey, 1987-1996
  • Orhan Sagci, Turkey, 1997-2006
  • Nuri Birtek, 2006

EDFI (“Representatives”)

  • Hans Meier Ewert, Germany, 1992-1996
  • Frans Baneke, Netherlands, 1997-1998
  • Sean Magee, United Kingdom, 1999 – 2004
  • Jan Rixen, Belgium, 2004