The Bill, if approved by the Oireachtas, will facilitate Ireland’s future membership of both the African Development Bank and African Development Fund. The Bill will provide for the approval of the agreement establishing the African Development Bank and the agreement establishing the African Development Fund, and for the payments to be made to the bank and fund, respectively. Additionally, it serves to amend the International Finance Corporation Act 1958 and section 851A of the Taxes Consolidation Act 1997, respectively.
Most significantly, completion of Ireland’s membership of the bank and fund will require the ratification of international agreements represented by the agreement establishing the African Development Bank and the agreement establishing the African Development Fund. Membership shall also entail Ireland making capital payments to both the bank and fund.
Article 29.5 of the Constitution provides, among other things, that "the State shall not be bound by any international agreement involving a charge upon public funds unless the terms of the agreement shall have been approved by Dáil Éireann". The enactment of the Bill would confirm such approval. Similar requirements applied when Ireland joined other international financial institutions such as the World Bank and, most recently, the Asian Infrastructure Investment Bank.
The mission of the African Development Bank and Fund is to reduce poverty, improve living conditions and mobilise resources for the continent's economic and social development. Providing resources, advice and assistance to its regional member countries, the bank and fund will make a significant contribution to the improvement of the quality of lives in Africa.
The key driver in Ireland's seeking membership of the bank and the fund has been the bank's alignment and objectives with Ireland's development priorities. While membership may enhance our relationship with the wider African economy, the primary motivation of joining is from a development perspective, in particular the focus of the bank in the areas of climate change, agriculture and nutrition, fragile states and jobs and economic development align closely with priority areas for action identified in Ireland's current international development policy. Moreover the cross-cutting gender lens that the bank applies to its operations particularly resonates with development ambition for equality. Ireland has had a long and positive relationship with Africa. Strong links were built through the development work of aid workers, missionaries and the effectiveness of our aid programme.
Membership will reinforce and enrich our engagement and relationship with the region and its people. Membership of the bank and fund will also be consistent with the priorities set out in the recently launched Global Ireland initiative, which seeks to double the scope and impact of Ireland's global footprint across the next seven years, in particular with regard to extending our influence in Africa.
As Senators will be aware, Ireland is in the process of developing a new international development policy to take account of the significantly evolving international development context. Given the increasing interconnectedness and scale of the international agenda, the co-ordination of efforts and the combining of resources will be increasingly important. Hence, our partnership with multilateral institutions will be a key part of our approach.
Ireland's membership of the bank and the fund is consistent with our commitment to the UN 2030 agenda for sustainable development and, therefore, our membership of the bank and fund will be consistent with the whole-of-Government approach to implementing the sustainable development goals. Finally, our membership will provide an opportunity for us to deepen trade relations with the African through creating opportunities for Irish businesses to tender for the delivery of bank and fund projects and services. While this potential dividend is welcome, I would like to unambiguously state that Ireland's commitment to united aid remains unchanged with no strings or quid pro quo arrangements attached to this development contribution.
The operations of the bank and fund are underpinned by corporate strategy. The African Development Bank's strategy for 2013 to 2022 focuses on two objectives: improving the quality of Africa's growth and facilitating inclusive growth and the transition to green growth. In turn, the delivery of this work is to be achieved through five channels: infrastructure development, regional economic integration, private sector development, governance and accountability, and skills and technology. These areas are in line with our own international development policy. The bank and fund finances a wide range of projects and programmes covering areas such as health, education, agriculture, public utilities, transport and telecommunications and the private sector. Furthermore, the bank finances non-project operations, including structural adjustment loans, policy-based reforms and various forms of technical assistance.
Regarding performance, the bank and fund has a strong record. The success of the bank in delivering results for Africa has been recognised by the Multilateral Organization Performance Assessment Network, MOPAN, which is a network of like-minded donor countries that monitors the performance of multilateral development organisations and of which Ireland is a member. A recent assessment from the network, which was conducted in 2016, concluded that "the Bank is a robust and resilient organisation that, while operating in a particularly difficult environment, is able to continually adjust and improve to meet the changing conditions". The bank and fund's financial resources are largely derived from subscriptions paid by member countries.
The authorised capital stock of the bank is approximately €79 billion, with approximately €6 billion of paid-in capital. In addition to member countries' subscriptions, like other multilateral development banks the bank raises capital on international markets at competitive rates through maintaining its AAA rating. In the year 2017 we saw total disbursements peaking at approximately €6.6 billion, with project approvals amounting to approximately €7.5 billion across 249 operations.
The bank and fund currently have 80 member countries, made up of 54 regional member countries, and 26 non-regional member countries, largely comprised of countries from Europe, America and Asia. Non-regional member countries account for approximately 40% of the total shares and 40% of the total voting power at the bank. On the basis of the terms offered by the bank, it is intended that Ireland will acquire 53,620 shares, equivalent to 0.799% of the bank’s total shareholding, which is in the region of the shareholding held by Belgium and the Netherlands. which hold 0.65% and 0.8% of total shareholding, respectively.
Ireland, like all other member countries of the bank, will be represented on the board of governors, which is the bank’s highest decision making body. As is the case at each of the other international financial institutions of which Ireland is a member, the Minister for Finance will be governor for Ireland. The board of governors meets formally once a year for the bank’s annual meeting and is responsible for electing the president, who is elected for a five-year term, once renewable. The current president is Mr. Akinwumi Adesina, formerly Nigeria’s Minister of Agriculture and Rural Development, who was elected as eighth president of the bank in May 2015. Additionally, through our constituency membership Ireland will be represented at the board of directors, which is responsible for the bank’s general operations. The board of directors comprises 20 members who are neither governors nor alternate governors. Thirteen members are elected by the governors of regional countries and seven by the governors of non-regional member countries. Directors are elected for a term of three years renewable once. The non-regional representation at board level is broken up into seven constituencies, four of which are led by EU member countries. Negotiations regarding the constituency which Ireland will join following membership are ongoing.
Subject to the passage of this Bill, and the completion of our membership application, it is intended that Ireland will acquire 53,620 shares, equivalent to 0.799% of the bank’s total shareholding. On this basis, the expected cost of Ireland’s membership of the bank and fund will be approximately €99.8 million, payable over eight years, or approximately €12.4 million per annum, depending on prevailing exchange rates. This is comprised of two components; first the paid-in capital associated with our proposed bank shareholding of approximately €37.8 million or €4.7 million annually; and second, our subscription to the fund in the order of €62 million to be encashed in up to eight annual instalments amounting to approximately €7.7 million annually.
In capital terms, this shareholding in the bank equates to a capital allocation of approximately €630 million, made up of €37.8 million paid-in capital, with the remainder of the allocation, €592.2 million comprising callable capital. The callable capital element represents the capital which Ireland would be liable for if the institution encountered acute financial distress, while the paid-in capital element is the amount which we would contribute under normal circumstances.
Based on Ireland’s experience with international financial institutions of which we are already a member, the probability of the callable capital being called upon is negligible.
As is the case with our membership of other international financial institutions, Ireland’s contributions to the bank and fund would be sourced from the Central Fund, with payments to be provided for in the legislation. In accordance with OECD guidelines, our contribution to both the bank and fund will be reckonable in respect of the calculation of Ireland’s overseas development assistance, ODA.
I will now turn to the specific provisions of the six sections of the Bill. Section 1 deals with the Short Title of the Bill. Section 2 sets out the definitions used in the Bill. Section 3 provides for the approval of the agreement establishing the bank, thereby enabling the State to be party to the agreement. The agreement establishing the bank is in the Schedule to the Bill. Section 4 makes provision for payments and receipts under the terms of the agreement establishing the bank. Section 5 provides for the approval of the agreement establishing the fund, thereby enabling the State to be party to the agreement. The agreement establishing the fund is in the Schedule to the Bill. Section 6 makes provision for payments and receipts under the terms of the agreement establishing the fund. The Bill now contains two additional sections under the heading “Miscellaneous Amendments”, following their approval on Committee Stage in the Dáil.
Section 7 provides for the amendment of the International Finance Corporation Act, which governs Ireland's relationship with the International Finance Corporation, IFC, a sister organisation of the World Bank involved in encouraging private sector development in developing countries. The amendment will allow changes in the IFC's articles of agreement to be approved by way of Dáil resolution rather than by primary legislation. This will alleviate the legislative burden associated with Ireland's participation in the IFC and bring the legislation in line with that governing Ireland's membership of other international financial institutions, including the provisions now proposed in respect of the African Development Bank.
Section 8 makes provision for amendment to section 851A of the Taxes Consolidation Act 1997, which relates to the confidentiality of taxpayer information, and will address a conflict between the legislative provisions of section 851A and those of the Freedom of Information Act. This anomaly currently prevents the Department of Finance from providing records to the Office of the Information Commissioner, even when it is statutorily required to do so in the context of the operation of freedom of information legislation. The proposed amendment to section 851A should address this legislative conflict and remove this anomaly. It will ensure that the requisite records can be provided to the Information Commissioner in order that he can conduct his review and fulfil his statutory function without further delay.
I strongly encourage Senators to support the Bill and Ireland's membership of the bank and fund. I commend the Bill to the House.