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AFRICAN DEVELOPMENT BANK
Comparative Study of Board Processes, Procedures and Practices (BPPPs)
IDEV, African Development Bank
Inception Report
1. Introduction
The Independent Development Evaluation (IDEV) of the African Development Bank (the Bank)
has retained the services of a consulting firm to prepare a synthesis of experiences and lessons that
the Bank could learn from other international organizations, regarding Board processes,
procedures, and practices and the extent to which they contribute to the effectiveness and
efficiency of the Board of Executive Directors (the Board) in fulfilling its mandate. The synthesis
is intended primarily as a fact-finding, comparative study leading to the identification of lessons
and good practices. In view of the sensitivity of the topic and the experience it requires, the study
will be conducted under the leadership and overall guidance of the Head of IDEV. The
background, methodology, key deliverables and timeline are presented in this Inception Report.
2. Background
The International Bank for Reconstruction and Development (IBRD) was the first multilateral
development finance institution (DFI) to be established in 1944. Its governance structure evolved
out of the discussions at Bretton Woods and responded to the realities of the day. While there have
been some innovations in the almost 70 years since, its governance remains fundamentally the
same. Some of the DFIs that have been set up since largely replicated this structure, e.g., the Asian
Development Bank (AsDB). Others followed a different pattern driven by a different ownership
structure, e.g., the Development Bank of Latin America (CAF). The African Development Bank
started with one ownership (and hence governance) structure but then transitioned to a different
one. See Figure 1 for a timeline of the establishment of DFIs.
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Figure 1: DFI Establishment Timeline
The DFIs that have been set up recently, the Asian Infrastructure Investment Bank (AIIB) and the
New Development Bank (NDB, commonly referred to as the BRICS Bank), have sought to draw
on the experience of the other institutions and adapted accordingly. There have also been a number
of reflections on the matter of DFI governance over these years. It is timely for AfDB to take stock
of the changes that have taken place and learn from past and ongoing reflections with a view to
identifying lessons and good practices toward improving its own governance.
3. Objective and Scope
The primary objective of the study is to draw out lessons and good practices emerging from other
DFIs and from relevant reviews and evaluations for the information of and consideration by the
Bank’s Board. As discussed further below, IDEV will adapt the more specific objectives to what
is deemed to be the most relevant and useful to the Bank’s Board.
The study will cover Board policies, procedures, practices and processes and, importantly, their
impact on the Board’s effectiveness and efficiency. Specifically, the study will address the
following topics:
Corporate Governance
o Balance of roles and responsibilities as delegated between Board of Governors, and
Board of Executive Directors and Management regarding oversight, supervision
and executive actions and decisions of organization. Will address the following
components:
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Clarity of agreement on organizational objectives, targets, strategies and
resources (HR and financial)
Adequacy and timeliness of information flows on implementation and
results
Trust and confidence between management and Board
Appointment of senior management
Project threshold criteria
o Composition of the Board including the structure of shareholding and how it is
represented at the Board, such as through a ‘constituency’ system
Accountability
o Mechanisms by which the Board of Executive Directors, as delegated by the Board
of Governors, exercises its role to hold Management accountable for the
responsibility it has delegated to delivery of strategy and objectives. Will address
the following:
Extent accountability is addressed in the Articles of Agreement
Existence and effectiveness of mechanisms to hold management
accountable for the delivery of objectives, strategies and implementation.
Possible mechanisms include:
Dashboards
Corporate Scorecards
Results Measurement Frameworks
Annual reports
Evaluations
Budgets
Quarterly reports
Effectiveness in managing accountability
o Board’s accountability to and interaction with Governors/Council and respective
capitals including: mechanisms to assess the Board’s effectiveness and efficiency,
Board self-evaluation, Key Performance Indicators (KPIs), and transparency
Board Operations
o Two concepts (a) Effectiveness, which relates to relevance and timeliness of setting
of strategic goals; and (b) efficiency, which relates principally to the resources cost
and time of the Board and an entity to acquit itself of its responsibilities. Will
address: Board of EDs (process of appointment, terms, dean, chairperson)
Constituency office size, number of advisors, budget
Agenda Process (clarity, timing)
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Committees (frequency, processes, chair, terms of reference, number,
secretariat support, summaries)
Meeting Functioning (frequency, processes, chair, summaries, speaking
times, written statements)
Board document package
Decision-making process and monitoring
Continuity-coherence-clarity
Informal within Board to develop affinity groups and facilitate consensus
Consensus building between Board and management
Support to the Board
o Role of Board Secretariat
o Board Handbook and Manual on Working Procedures
o Board Induction Process
o Terms of Reference and Job Descriptions
o Document preparation and translations
o Board Retreats
o Handover process for EDs and Committees
o Training for Executive Directors (e.g., chairing and on substantive issues)
o Lexicon
o Budget and size of Board and Secretariat
o Use of technology
While the study will center on the Board of Directors, it will cover the interface and interaction of
the Board of Directors with the Board of Governors.
The study will equally cover the Board’s relationship and interactions with the President and senior
management particularly in the context of discussions at the Board and its committees. In view of
their important role, the study will pay specific attention to the functioning of the committees.
Finally, the study will pay specific attention to the role played by the Secretariat in supporting the
Board.
With respect to the organizations to be included in the study, there are a number of comparators
from which to choose. The principal focus would be on the Bank itself and other DFIs. IDEV will
use three DFIs that are most similar to the Bank – The Asian Development Bank (AsDB), IBRD,
and the Inter-American Development Bank (IDB)—as the core group of comparators. The IMF,
which has carried out a relatively comprehensive evaluation of its governance, is also proposed to
be included.
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In addition, other comparators will be included to focus on specific aspects. For example, the
review would specifically review any “innovations” introduced by the most recent entrant (AIIB).
The Development Bank of Latin America (CAF) would be included to address the topics of a
different shareholding structure (borrowers only) and a non-resident Board.
4. Approach and Methodology
The comparison will be grounded in a systematic review of a wide range of Board-related
documents. It will also draw on reviews of literature and past assessments of Board policies and
practices carried out by the DFIs themselves or by interested think-tanks and organizations.
Importantly, IDEV will aim to draw out lessons based on practical examples of other
organizations, rather than abstract, theoretical principles. As part of the Board processes and
practices are typically embedded in the institution’s memory and principals' tacit knowledge rather
than fully documented, IDEV will go beyond the review of relevant documents and seek to capture
the views of both past and present Board members and senior managers. Accordingly, the study
will rely heavily on interviews with Board members, staff of the secretariats that support the
Boards, and with the Presidents and senior managers who interact frequently with the Board.
IDEV will provide the Board with the opportunity to shape the questions and issues they would
like to address in the context of this comparative study.
The study is being carried out in three phases:
Inception Phase. The Inception Phase began with an extensive document and literature review.
The documents include, for a number of comparator DFIs: (i) Articles of Incorporation and
Charters; (ii) Codes of Board Conduct; (iii) Board Work Programs and Agendas; (iv) Board
Regulations; (v) Annual Reports and (vi) Terms of Reference of the different Board Committees.
With respect to the AfDB, the documents also include: (vii) Board Rolling Agendas; (viii) Board
Provisional Agendas and (ix) Board Meeting Highlights. The literature review has covered the
Independent Evaluation of the Governance of the IMF and a number of reviews and reflections on
DFI Boards carried out by the institutions themselves or by think-tanks and academics. The
Bibliography is included as Annex 1.
The Inception phase has also entailed a set of initial interviews with members of the Bank’s Board
and the Boards of the selected comparators. These early discussions helped to clarify the types of
questions of most interest for the Bank’s Board, and to “test” the design of the interviews to be
carried out in the next phase (see Annex 2).
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Data gathering Phase. The second phase, while continuing the document review, will focus on
interviews with Board members, and also the Board’s counterparts – the President and senior
managers. The interviewees will include the “Deans” of the Boards and the Chairs of key
committees, at both the Bank and comparators. One key support area to the Boards are Board
Secretariats. They are expected to be an important source on procedural information, as well as
metrics on frequency of Board meetings, issues discussed, and other matters relevant to the study.
The team will work both with the Secretariats’ websites and with key personnel to obtain this
information. The team will also gather information on other areas reporting to the Boards—
typically Evaluation Departments and Inspection Mechanisms. The study will not delve into these
functions in themselves, but rather seek to reflect how and to what extent they support the Boards
in discharging their duties.
Finally, the team will gather information about the Boards’ interaction with their Boards of
Governors, including in the context of their annual meetings.
Analysis and Report preparation phase. The final phase will be that of analysis of the data and
preparation of the report. The study team will seek to have a session to share early findings with
the Bank’s Board. It is important to highlight that the report will not make formal
recommendations, but will identify from within the synthesis of good practice, those elements that
may warrant consideration by the Board. The way forward will be led by the Bank’s Board itself,
with full support from IDEV staff as necessary.
Methodology. As explained above, the study will rely on a range of methods:
Document review
This study will involve an extensive review of Bank documents in addition to those
from selected comparator organizations. For each selected comparator, the documents
to be reviewed will include, where available, the following:
o Articles of Agreement
o Code of Conduct for Executive Directors
o Rules of Procedure for Executive Directors
o Annual Reports
o Board of Directors’ Manuals and Handbooks
o Board of Directors’ Orientation Materials
o Board Committee Terms of Reference
o Board Committee Rules of Procedure
The following documents specific to the Bank also will be reviewed:
o AfDB Board Rolling Agendas
o AfDB Board Provisional Agendas
o AfDB Board Meeting Highlights
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Relevant data and information drawn from the documents and files will be captured
systematically in an assessment template based on the key questions and indicators
found in Table 1.
Literature review
Literature related to the Board processes and practices and general corporate
governance at comparator organizations will also be reviewed, including independent
evaluations of these institutions’ Board processes. The evaluation will also include a
review of relevant literature from other institutions such as think tanks, academics, and
other organizations. A preliminary list of the literature to be consulted by the
assessment team is provided in Annex 1.
Semi-structured interviews
Internally at the Bank, semi-structured interviews will be conducted with selected
Executive Directors, Alternate Directors, advisors, and senior managers. Externally,
interviewees will include a sample of Executive Directors from the selected comparator
institutions. The Corporate Secretariats will be interviewed at the Bank and at the
selected comparators institutions. The interviews topics will cover the shareholding
structure, role of the Board, operations of the Board, topics related specifically to the
Executive Directors, and Board accountability. The interview template can be found in
Annex 2.
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Table 1: Evaluation Matrix Topic Key Questions to be “answered” Sub-questions/ Indicators etc. Sources of information
Co
rpora
te G
ov
ern
ance
What is the practice re balance of roles and responsibilities as
delegated between Board of Governors, Board of Executive Directors
and Management regarding oversight, supervision and executive
actions and decisions of organization?
Clarity of agreement on organizational objectives, targets,
strategies and resources (HR and financial)
Adequacy and timeliness of information flows on
implementation and results
Trust and confidence between management and Board
Appointment of senior management
Project threshold criteria
Review of
Documents, Agenda,
Minutes, Resolutions
Interviews with
comparator EDs and
senior managers
Interviews with Bank
EDs and staff What is the situation re “segmentation/division” among shareholders?
What are the pros and cons of the current situation?
Shareholder structure: regional vs non-regional; borrowers vs
non-borrowers
What is the practice re fostering openness to new shareholders? Clauses in articles that constrain entry
Support for openness
Examples of opening up” (e.g., CAF? AIIB). How is it
accomplished?
What is the relative experience of boards of various sizes?
Acc
ou
nta
bil
ity
What is the practice re mechanisms by which the Board of Executive
Directors holds Management accountable?
Extent accountability is addressed in the Articles of
Agreement
Existence and effectiveness of mechanisms to hold
management accountable for the delivery of objectives,
strategies and implementation
Effectiveness in managing accountability
Document review
Interviews with EDs
and Senior Managers
of AfDB and
comparators
What is the practice re Board accountability to and interaction with
Governors/Council and respective capitals?
Mechanisms to assess the Board’s effectiveness and
efficiency
Key Performance Indicators (KPIs
What are the good practices for institutionalized process of board self-
evaluation?
Adequate formal evaluation mechanism for the Board as
whole
What are the good practices of disclosure process? Transparency/length of time before documents are made
public
Bo
ard
Op
erat
ion
s
What are the “good” practices re:
a. Terms of Reference of EDs
b. Qualification Requirements
c. Code of Conduct/Ethics
Are there job descriptions for EDs? Are the descriptions
clear?
Are there mechanisms to correct/compensate for gaps in
experiences/qualifications/skills of EDs?
Satisfaction with the clarity of the language of the Board code
of conduct?
What are the good practices of clear process for dealing with
ethics violations at the Board level?
What are the good practices in terms of comprehensiveness of
Code of Conduct?
Review of Terms of
Reference of EDs,
Articles of
Agreement, Codes of
Conduct
Interviews with EDs
and Managers to
understand practices
Board Agendas,
Minutes
Lessons re Tenure (term, renewal), practice re rotation/growth from
advisor to alternate to ED (and back)?
What is the selection/election process?
What is the renewal/removal process?
How to change the number of Board members?
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Topic Key Questions to be “answered” Sub-questions/ Indicators etc. Sources of information
How long is the term?
What is the mechanism for rotation/growth?
What is the process re selection and duties of Deans and
Chairpersons?
Terms
Duties
Training
What is the relative experience with varying constituency office
sizes, numbers of advisors, and budgets?
Constituency sizes
Number of Advisors
Budget
What are the “good” practices re selection of advisors and staff? The role played by EDs in choosing their staff
What is “good” practice re agenda setting process? Who is responsible for setting the agenda?
Clarity of agenda
Volatility of agenda
What is “good” practice re meeting functioning? Frequency of meetings
Processes
Chairperson
Summaries
Speaking Times
Written statements
Board document package
What is good practice re the distribution of Board time allocated to
different discussions?
Is the Board’s involvement adequate?
Board discussion time on policies/strategies and projects
What is good practice for decision making and monitoring? Voting-process innovations
Special procedures in decision making (e.g. for lending)/
Criteria
Mechanisms to monitor decisions
What is the contribution of the committees to Board effectiveness and
efficiency?
What is practice re committees:
o Frequency
o Processes
o Chairs
o Terms of Reference
o Number of committees
o Secretariat support
o Summaries
What is good practice re consensus building among Board members
and between the Board and management?
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Topic Key Questions to be “answered” Sub-questions/ Indicators etc. Sources of information S
upp
ort
What is the value-added by Secretariat support?
What is the value-added by orientation activities and materials?
Role of Board Secretariat
Board Handbook and Manual on Working Procedures
Board Induction Process
Terms of Reference and Job Descriptions
Document preparation and translations
Board Retreats
Handover process for EDs and Committees
Training for Executive Directors (e.g., chairing and on
substantive issues)
Lexicon
Budget and size of Board and Secretariat
Document review
Interviews with EDs and
Senior Managers of AfDB
and comparators
What are some innovations that have improved effectiveness?
How has the advance in ICT impacted Board operations?
Use of technology
The use of boardroom time
Meeting Minutes writing process (Reporting of minority
views)
What is good practice for shareholding structure innovation?
Decision making and Follow up process
Evaluation mechanism
Approaches of the Board to support EDs (retreat, orientation,
etc.)
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5. Management
The assignment will be overseen and the consultant team led by the Head of IDEV. The Team
leader will guide the conduct of interviews with Board members and senior managers, ensure that
draft reports are peer-reviewed and feedback taken into account, and organize early and subsequent
briefings of the Bank’s Board.
6. Timeframe
The assignment was begun at the end of November 2016, and will last through June 2017. As
shown in Table 2, the draft report is to be delivered in early-June 2017, and the final report in late-
July 2017.
Table 2: Timeframe
Reports Due/Activities
November 28 - June 30
Nov
28 December January February March April May June
Document Review
Initial Interviews
Inception Report
Continuing Interviews
Preparation of Draft Report
Draft Final Report
Review and Feedback
Preparation of Final Report
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Annex 1: Bibliography
Documents
Agreement Establishing. African Development Bank. Amended July 5, 2002.
Agreement Establishing. Asian Development Bank. Amended December 31, 1994.
Agreement Establishing. Inter-American Development Bank. Amended July 31, 1995.
Articles of Agreement. International Bank for Reconstruction and Development. Amended
June 27, 2012
Code of Conduct. African Development Bank. Amended June 28, 2007.
Code of Conduct. Asian Development Bank. Adopted April 19, 2001.
Code of Conduct. Inter-American Development Bank. Amended April 28, 2009.
Code of Conduct for Board Officials. International Bank for Reconstruction and
Development. Adopted November 1, 2007
Literature
Calice, P. 2013. African Development Finance Institutions: Unlocking the Potential.
Working Paper Series No. 174 African Development Bank, Tunis. Tunisia. 1-40.
Claessens, S. 2006. Corporate Governance and Development. The World Bank Research
Observer, Vol. 21, No. 1, pp. 91-122. http://www.jstor.org/stable/40282344
Di Benedetta, P., Lieberman, I., Ard, L. 2015. Corporate governance in microfinance
institutions. World Bank Group.
Griffith-Jones, S. Governance of the World Bank. 1-17.
Lamandy, R., 2008. Governance of the International Monetary Fund. Independent Evaluation
Office. 1-53.
Martinez-Diaz, L. 2008. Executive Boards in International Organizations: Lessons for
Strengthening IMF Governance. Independent Evaluation Office of the International
Monetary Fund.
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Annex 2: Interview Template
Venue and date:
Interviewer(s):
Interviewee:
(1) Role of Interviewee
a) Executive Director
b) Alternate
c) Advisor/Counsellor (IDB)
d) Senior Manager
(2) Nationality/country represented
(3) Years of experience in the current position/role
a) 2 years or less
b) Between 2 to 5 years
c) Between 5 to 10 years
d) More than 10 years
(4) Past Boards of other MDBs/IFIs, or Corporate Boards that once served
(5) Whether or not had worked at these institutions in a staff/managerial capacity
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A. Interview Questions
1. Do you think the shareholding structure has an impact on the effectiveness of the Board?
-- In what way? (Strategic choices, representation, etc.)
-- Any views on bringing on board new members: process, implication?
-- Is size and issue for effectiveness/efficiency? If so what are alternatives?
2. What is your view of the value-added by the Board of Governors (BoG)?
-- What is your view on the Frequency of Board of Governors meeting?
View of
Frequency of
BoG Meetings
(Current 1/yr)
Too
frequent
Somewhat
more than
enough
About right
Somewhat
less than
enough
Very
infrequent
3. Does the Board have adequate mechanisms in place to hold management accountable for
its performance?
-- How effectively is it used?
-- How would you improve it?
-- The above applies to “Management”; are there adequate established mechanisms to hold
“Senior Management” accountable (EXC/EVP, MDs, COO, CGs)
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4. What is your perception of the “division of responsibility” between the Board and
Management? How do you assess the balance and clarity between the Board playing an
oversight/supervisory role and taking on executive responsibilities?
-- Delegation?
What are your views regarding the following specific items?
Board’s role with respect
to approval of: Essential
Board could
be less
engaged
Consultation
would be
adequate
Could be
Fully
delegated
Policies
Corporate strategies
Country strategies
Sector strategies
Budget
Projects
Small grants
Organizational changes
Process re comments in
advance
Senior appointments
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5. Which aspects of Board operations have an important bearing on its effectiveness and on
its efficiency?
Such as:
Knowledge of the issues and the history
Preparing for meetings
Quality of Discussion
Summary: clarity of decisions/signals (A Lexicon?)
Residence/non-residence, Size of Board,
Balance of time spent on different issues,
Frequency of meetings, Time spent in Board meetings,
Process re comments in advance, Time limits for oral comments,
Committees –number, composition, process,
Support of Secretariat
Orientation, Retreats, country visits
-- In what way does it work/not work?
-- Are you familiar with other comparators of good practice worth signaling?
Do you find we have the right number/structure of Board Committees to be effective and
efficient? Why/not?
Which of the Board Committees do you see as adding the most value? The least value? Why?
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6. What are the most important factors relating to individual Executive
Directors/Alternates/Advisors in terms of their impact on the Board’s effectiveness?
ToR/Job description
Qualifications and experience
Selection/election process (especially in case of multi-country/constituency system)
On-boarding, orientation, retreats
Term/tenure,
“System” of “growth” from Advisor to Alternate to ED,
Code of Conduct/Ethics
Cooling off period
-- What else?
-- Is there an Evaluation mechanism?
7. Are there in your view adequate mechanisms in place (used?) to assess the Board’s
effectiveness and efficiency?
-- e.g. Do you conduct periodic surveys?
-- ED only Retreats?
-- What would you regard as relevant indicators (KPIs) to measure the effectiveness and
efficiency of the Board?
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8. What are noteworthy innovations in the above areas?
-- How has the advance in information and communication technology impacted Board
operations?
-- Other?
9. Are there any other aspects that you would like to emphasize or issues that you want to
highlight? (Important, especially for those who have (a) experiences with other IFI Boards;
(b) worked in staff/management capacity in IFIs.)