LONDON (Reuters) - A $5 million prize for former African leaders who set examples of honest, democratic government will not be awarded this year, the prize committee said on Monday.

Mo Ibrahim, a Sudanese-born telecommunications entrepreneur who set up the award, denied the decision was a snub to leaders such as former South African President Thabo Mbeki or former Nigerian President Olusegun Obasanjo, who would have been eligible.

"We have full respect to the people you mentioned. Some of those people are personal friends. There is no issue of disrespect here," he told a news conference at London's City Hall.

Committee members declined to give a reason for their decision, citing the confidentiality of their discussions, or to say if it meant no leader had met the standard required.

Ibrahim founded the world's largest individual award as a way to encourage good governance in a continent blighted by corruption and a frequently loose adherence to democratic principles.

"This year, the prize committee has considered some credible candidates. However, after an in-depth review, the prize committee could not select a winner," former Botswana President Ketumile Masire said.

Ibrahim said he had made clear when he set up the prize two years ago that there may be years when there was no winner.

He said the decision not to award the prize had nothing to do with the global financial crisis. "The prize committee doesn't pay any attention to my bank statement," he said.

The prize is awarded to a democratically elected former leader of a sub-Saharan African country who served his constitutional term and left office in the past three years.

This year, the committee considered about 11 leaders who had left office between 2006 and 2008, committee members said.

Last year, the prize went to former Botswana President Festus Mogae, who was honoured for steering his country along a stable, prosperous path and for leading the fight against AIDS.

The first winner of the prize in 2007 was Mozambique's former President Joaquim Chissano, who stood aside after leading his country to peace and democracy after years of civil war.

Former U.N. Secretary-General Kofi Annan, a Ghanaian, chairs the prize committee which includes fellow Nobel peace laureates Martti Ahtisaari, a former president of Finland, and Mohamed ElBaradei, the director-general of the International Atomic Energy Agency.

The winner receives $5 million over 10 years and then $200,000 a year for life, with another possible $200,000 a year for 10 years for "good causes" that he supports.

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