Comparative Study of Board Processes, Procedures and Practices (BPPPs)

IDEV has conducted a comparative study of Board processes, procedures, practices across International Financial Institutions (IFIs), and the extent to which they could contribute to the effectiveness and efficiency of the Board of Directors in fulfilling its mandate. The primary objective of the study is to draw lessons and good practices emerging from other IFIs and from relevant reviews and evaluations for the information of and consideration by the AfDB’s Board of Directors. The study covers corporate governance, accountability, Board operations, and support to the Board.

The study includes a range of broadly comparable IFIs — the African Development Bank (AfDB), Asian Development Bank (AsDB), Asian Infrastructure Investment Bank (AIIB), Development Bank of Latin America, formerly Corporación Andina de Fomento (CAF), European Bank for Reconstruction and Development (EBRD), Inter-American Development Bank (IaDB), International Monetary Fund (IMF) and World Bank (WB). It is intended to be primarily a comparative review leading to the identification of lessons and good practices, to inform, rather than recommend, a particular course of action.

Some of the findings include:

• The AfDB’s Board of Directors is similar and in line with others in terms of the stated objectives of corporate governance, in the institutional and organizational structure, and in the language spelling out the general and specific roles and responsibilities of oversight.
• There were differences between Boards in the efficiency and effectiveness of the implementation of processes, procedures and practices and the day-to-day operation of organizational structures.
• All organizations’ Boards and managements struggle to varying degrees with finding the appropriate balance between providing oversight over strategy, risk and results, and engaging in more executive, transactional activities and decisions, especially as the internal and external context changes.
• Well-functioning Board committees are important to the Bank. Committee work reduces the burden on the full Board, and allows it to focus on critical issues and provide oversight over strategy, risk and results. This is certainly true for AfDB and it is important to strengthen Committees to provide clear and timely inputs to full Board discussions.
• Greater delegation to Management requires the ability to track Management commitments and results. In this regard the AfDB would want to substantially strengthen an on-line tracking system.
• It is important to build morale and a shared understanding of the opportunities and challenges among Executive Directors as officers of the organization, who otherwise represent different shareholder interests.
• Building social capital, the basis for trust and confidence among Executive Directors, and between the Board and Management, is vital for effectiveness and efficiency of corporate governance.

The study has been well received by the AfDB Board of Directors, which, under the auspices of the Dean, is preparing an action plan as a follow-up.