Newsmakers | Malawi
Friday Jumbe is set to become the latest African finance minister to swap his political ambitions to take up a senior post in a development bank. Last May, Jumbe’s bid to become prime minister of Malawi failed. In September he announced his retirement from politics. At the end of the year, he was appointed CEO of the newly established Development Bank of Malawi.
The board of directors at development banks generally include finance ministers from each member state they represent, and it is not unusual for CEO appointments to go to respected board members.
Though African development banks have appointed the greatest number of former ministers as senior development bank executives, it is a strategy also adopted in Asia and Latin America. China, for example will appoint former vice Finance minister and development bank official Jin Liqun as head of the proposed $50 billion Asian Infrastructure Investment Bank.
Andrew Rogerson, senior research associate at Overseas Development Institute, a UK think tank on international development and humanitarian issues, says national development banks (NDBs) need qualified heads who understand opportunities as well as risks, and how to manage both in detail.
Rogerson says NDBs are public institutions that “are investing as a proxy for the public interest, so someone with experience of the national development agenda and challenges around it—which could very well be the case for an ex-minister of finance—has an added perspective compared to, say, someone having a purely private-sector and/or technocratic background.”
As former finance minsters have a good network of contacts in private investor circles, Rogerson says this helps them bring a broader pool of funders to the table, thereby reducing the direct financial exposure of the NDB itself. “That is the plus side,” he says, “with the possible downside being any tendencies to give unwarranted preference to special interests, which could come under the heading of crony capitalism, and the governance and accountability mechanisms of the NDB must always be alert to that.”