Genesis of the creation of BOAD

Two main ideas inspired the creation of the WADB through successive approaches. Firstly, it was found that the benefits derived by countries from their membership of the Monetary Union remained limited to the monetary sphere, without sufficient impact on development. Secondly, the fact that, without prejudice to any other resources that may be required, BCEAO's operating profits could provide significant resources to finance joint development initiatives.

A study presented to the WAMU Council of Ministers in December 1970, at its request, noted that the idea of allocating part of the BCEAO’s net profits to actions of common interest met two concerns often expressed by the States:

  • Give the Monetary Union a consistency that goes beyond the simple monetary framework to develop an area of common economic interests and development.
  • Make the Union’s institutions instruments of promotion, without the Central Bank stepping outside its monetary responsibilities.

At the same time, a study carried out by Prof. Tremblay, Director of the Centre de Recherche en Développement Économique at the Université de Montréal, at the request of the President of the Republic of Niger, concluded that WAMU institutions were focusing too much on monetary management and maintaining external reserves, and that they needed to be redirected towards contributing to development efforts.

Various possible forms of intervention were listed:

  • contribute to the creation and operation of a West African financial market, with the special fund to be created being entrusted, above the banking system, with the task of directly or indirectly absorbing offers and possibly serving requests for public securities;
  • relieve certain development banks from financing forward transactions that tie up part of their resources, such as deferred payment markets;
  • create a long-term Union fund or credit institution that could make up for the lack of resources available to finance regional projects or projects of general interest to the Union;
  • contribute to the creation of one or more West African SICAVs that would mobilize domestic savings to take equity stakes in African companies in order to facilitate their creation or development;
  • create an industrial expansion bank for the West African States, operating alongside the BCEAO and with its active participation, to enable it to reconcile monetary management and development concerns.

Other possible interventions were also mentioned: interest-rate subsidies, domestic loan guarantees, reinsurance of credit guarantee funds for African small and medium-sized enterprises.

At the Council of Ministers meeting in March 1973, the Chairman of the Committee of Ministers in charge of WAMU reform presented the preliminary draft of the new Treaty of the West African Monetary Union, which provided for the creation of joint development financing institutions alongside the BCEAO, under the authority of the Union’s Council of Ministers. The Chairman of the Committee also presented the draft Agreement creating a West African Development Bank and draft Articles of Association concerning the establishment and operation of this institution.

The Council of Ministers decided that development activities would be carried out by an organization separate from, but closely linked to, the Central Bank. He also gave his opinion on the long-debated option between creating a merchant bank dedicated to promoting highly profitable operations, likely to be financed under normal market conditions, and creating a development bank, more specifically oriented towards financing infrastructure or long-term, low-profit operations.

As a first step, the Council of Ministers decided to adopt the second formula, and to set up a development bank that could operate, if necessary with a subsidiary, in the investment banking sector.

Detailed studies on how to implement these decisions were carried out by the Central Bank with the support of development partners (World Bank, European Commission, etc.). All the texts governing the Bank were adopted by the WAMU Heads of State on November 14, 1973 in Dakar, at the same time as the new statutes of the Central Bank and the new Treaty establishing the Monetary Union.