What is new about the BRICS-led New Development Bank?

Originally published on Devex on 9 May 2016

About three weeks ago, the board of directors of one of the world’s newest multilateral institutions, the New Development Bank of Brazil, Russia, India, China and South Africa, met on the sidelines of the World Bank and International Monetary Fund spring meetings in Washington, D.C., to approve its first set of loans.

Valued at $811 million, this first tranche of funding will support renewable energy projects across the BRICS countries including two solar energy projects in India and China, and a hydropower dam in Russia. For Brazil, it created a credit line worth $300 million for renewable energy projects such as solar and wind power.

When the idea of a BRICS-led development bank was first announced by Brazil, Russia, India, China and South Africa four years ago in New Delhi, it was met with a range of reactions from wariness to cautious optimism to overt celebration. Almost from day one, it was seen to be a direct challenge to existing development banks, notably the Western-dominated World Bank and IMF. BRICS governments have maintained that their bank serves to complement and not substitute these institutions.

But what exactly is new about the New Development Bank?

Three key features set the NDB apart from existing multilateral development banks: “south-south” cooperation, equity in power-sharing and sustainable development.

Each of the BRICS governments has ownership of one-fifth of the share of the Bank, which translates into an equal say in decision-making. This is unlike the World Bank or the IMF where decision-making power is heavily skewed in favor of a particular set of countries.The creation of a development bank by countries of the “global south” for the global south is both unique and necessary. It has been created to meet the specific development needs of the global south, namely those of infrastructure. Based on their own experiences as recipients of foreign aid from the “global north,” the BRICS governments are keen to ensure that development funding provided by them is free of political conditionalities and is disbursed without delays.

Perhaps the single most important differentiating feature of the NDB is its stated commitment to the principle of sustainable development. This is a departure from a business-as-usual approach.

But apart from stating that sustainable development will be linked to the financing of particular kinds of infrastructure projects, namely “green” or renewable energy projects, the NDB has been less clear about how it will ensure that these projects will be rooted in sustainable practices. Also unclear is whether and how they will be linked to the implementation of the internationally agreed Sustainable Development Goals. While the bank has officially opened for business, addressing these questions will be critical for the next phase of the NDB.

The NDB could incentivize governments to design projects that are respectful toward the environment and local communities. It could offer differential interest rates and repayment terms on loans given to governments, depending on the latter's ability to meet certain criteria such as their consideration of potential socio-environmental impacts of projects, project alignment with international best practice in sustainable development and integration of key components of the Sustainable Development Goals. These criteria could be consolidated into a composite index to measure the actual sustainability of projects, both in terms of processes employed and outcomes achieved.

Linking sustainable development to incentives would encourage governments to think about sustainable practices not as bureaucratic formalities or risks, but as actions ultimately linked to better development outcomes. This would be a major shift in the way environmental and social standards are currently conceived in the international financial architecture.

While these are no doubt important questions for BRICS policymakers and the NDB’s officials to consider, they also open up the space for greater engagement by civil society. Defining the precise sustainability criteria against which projects could be judged for selection is an area where civil society could provide input. Civil society could also play a critical role in providing oversight of the NDB’s lending practices by ensuring that these preagreed criteria are indeed used to inform the bank's decision-making.

The NDB is expected to inject fresh thinking into development practice. It has already laid down the framework for this by placing sustainable development at the core of its mandate. Acknowledging that sustainable development is as much an outcome as it is a process will help to further guide the Shanghai-based bank in its selection and implementation of projects. As the NDB embarks on this journey, it should proactively encourage dialogue with different stakeholders, including civil society actors, who could be valuable partners in this process.

About the authors

Supriya Roychoudhury

Supriya Roychoudhury is a researcher, published author and commentator on "south-south" development cooperation issues, specializing in Indian development cooperation policy. She previously led Oxfam India’s foreign policy program.

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Karin Costa Vazquez

Karin Costa Vazquez is an adviser and researcher specialized in international cooperation for development, strategic planning and operations. She has worked with the World Bank, UNDP, and the Brazilian Ministry of External Relations, and published extensively on BRICS's contribution to the implementation of the Sustainable Development Goals.

Transparência da cooperação para o desenvolvimento: para que e para quem?

* Read the blog in 80+ languages with the translator widget on the right side of the page!

Hoje recebi um email de um querido amigo brasileiro com o seguinte título: 'Talvez vocês achem interessante.' E era tão interessante que virou blog post.

O email trazia o link para o Aid Transparency Index 2014 da ONG inglesa Publish What You Fund. Trata-se de um ranking de transparência dos países que prestam cooperação internacional para o desenvolvimento. O ranking usa o standard de transparência do International Aid Transparency Initiative (IATI) e mostra o Brasil em 59 lugar em uma lista de  68 países. 

O Brasil disponibiliza boa parte dos dados que compõem o IATI standard no site da Agência Brasileira de Cooperação. Se essas informações estivessem no formato IATI e fossem publicadas no 'registry' da iniciativa, o Brasil possivelmente ganharia muitas posições no ranking. Me parece que isso não demandaria maiores esforços do Brasil, para além de atualizar e sistematizar informação que já existe e que já é pública. Ok, dá um trabalhinho sim... :-)

Contudo, como país não signatário de Busan, por considerar o IATI uma iniciativa de países do CAD-OCDE e por acreditar que o formato IATI não abarca aspectos críticos para a CSS (como a monetização de horas técnicas, a transferência de conhecimento e tecnologia, e resultados de desenvolvimento) isso ainda não acontece. Há, portanto, razões políticas e técnicas para não reportar dados segundo o standard IATI.

Boa parte dos componentes do standard IATI são aplicáveis à cooperação Sul-Sul. Ainda assim, o IATI reconhece as incongruência técnicas remanescentes e tem tentado criar módulos específicos para que países possam reportar a CSS. O mesmo tem sido feito com a cooperação humanitária e financiamento das mudanças climáticas de maneira experimental e voluntária. 

No aspecto político, o fato de a maioria das organizações que reportam segundo o standard IATI serem governos e ONGs do 'Norte' não ajuda diminuir as resistências de países como o Brasil. Outro aspecto importante é a dificuldade que o IATI sempre teve de ganhar tração nos países 'receptores'. Curiosamente, essa semana reencontrei um amigo do Ministério da Fazenda de Bangladesh que confirmou a permanente dificuldade do IATI em conectar com os sistemas nacionais de gestão da cooperação para o desenvolvimento. 

Apesar de ser uma das prioridades da iniciativa, ainda são poucos os países 'receptores' que de fato usam o standard IATI para monitorar os resultados e impacto da cooperação recebida.

...e seguimos nossa luta diária por um maior e melhor entendimento da cooperação Sul-Sul, maior transparência e diálogo entre as várias iniciativas.

Private sector contribution to development: the Interamerican Development Bank ‘South-South Knowledge Transfer Program’ experience

* Read the blog in 80+ languages with the translator widget on the right side of the page!

The exchange of knowledge and technology among countries of the global South to accelerate development has gained new impetus over the past years. Most South-South cooperation, however, focuses on government-to-government initiatives, thereby overlooking the potential contribution of non-state actors, particularly private sector organizations and networks.

Within the South-South and triangular cooperation framework, chambers of commerce, business associations, private foundations, universities and financial institutions have been developing innovative solutions to development challenges. Many are investing in knowledge and skills development to build productive capacities and integrate the disadvantaged to the market. Others are developing innovative business and financial instruments to foster entrepreneurship. These initiatives are being exchanged by private entities directly or in collaboration with governments through Public-Private Partnerships (PPPs).

In Latin America and the Caribbean, the Multilateral Investment Fund (MIF) has been using the vast repository of knowledge generated by private entities to boost development in the region. Launched in 2009, the South-South Knowledge Transfer Program replicates successful MIF projects by capturing knowledge derived from those initiatives and reusing it in other institutions facing similar development challenges. Between 2009 and 2014, 11 projects in areas like value chain development, youth entrepreneurship, microfinance and business incubation were funded. These projects provided direct benefits to 45 public and private organizations, 150 additional local institutions, 350 technical staff, and more than 3,500 individuals in 17 countries.

In Colombia, the MIF supported the Chamber of Commerce of Cartagena (CCC) develop methodologies, technical assistance initiatives, and training programs to enhance small retailers businesses. The service sector accounts for approximately 50% of Colombia’s gross domestic product and employs 60% of the economically active population. Approximately 700,000 neighborhood shops provide more than one million jobs, and account for 62% of the sector’s businesses. Yet, Colombian retailers face numerous challenges such as limited business education, inadequate facilities, and unfamiliarity with the laws governing businesses. CCC and MIF helped over 300 retailers move from survival strategies to efficient and profitable businesses.

The Chambers of Commerce of Ibagué, Cauca, Guajira, and Quibdó, who had been exposed to CCC methodologies, expressed their interest to learn more from the experience. These chambers had started similar initiatives, but they were mostly ad hoc efforts with little impact on the ground. Working with CCC and the South-South Knowledge Transfer Program was therefore an opportunity to develop more structured and systematic initiatives based on a previously tested experience. In Cauca, the project helped increase sales by 20% and USD20 million were reinvested to expand and/or modernize businesses. In La Guajira, the microenterprise development program was incorporated into the portfolio of the Chamber of Commerce and is being replicated in other sectors.

Through the various initiatives supported so far, the South-South Knowledge Transfer Program has learned that the limited availability of best practices and mechanisms in matching the supply and the demand for knowledge and technology hinder more pro-development initiatives by the private sector. Acquiring, adapting, and applying the knowledge generated by private entities is a medium-term process, and recurrent interaction is necessary in all relationships. Hence, the program has been combining one off activities (i.e. trainings and visits) and support services (i.e. technical assistance, advisory, mentoring, and online communities) over time to advance and strengthen partners’ learning process.

One example was the transfer of the Uruguayan Ingenio’s expertise in supporting startup businesses to other business incubators in El Salvador, Panama and Paraguay. The transfer consisted of a sequence of training and mentoring activities in each participating country designed to match specific partners’ needs. The transfer also included reference materials and networks to enhance personal ties and contact opportunities beyond the project life span. The project originally intended to create a virtual learning community to deepen networking among the four partners, but the lack of a communication and knowledge management strategy as well as funds to maintain the IT system and manage the community after the end of the project limited the results of this particular effort.

The knowledge generated by private-sector entities and networks has the potential to become innovative development experiences that can be replicated and scaled up. South-South and triangular cooperation should build on this knowledge to catalyze change of greater magnitude, including through public-private partnerships. More information on private sector-led experiences and public-private partnerships in development should be collected to enhance knowledge exchange instruments and the adaptation of these experiences to the local context.

From the first to the 4th draft of the Mexico HLM Communiqué, "stormy weather"?

                                   1st Draft of the Mexico HLM Communiqué, 3 March 2014

4th Draft of the Mexico HLM Communiqué, 9 April 2014

Redacción de la AOED al 4º Borrador del Comunicado de la AGCED

The CSO Partnership for Development Effectiveness (CPDE) is a network of organizations created at the 4th High Level Forum in Busan in 2011 promotes development effectiveness in all areas of work including through active engagement with the GPEDC, guided by a human rights based approach. Read CPDE contribution to the 4th draft of the Mexico HLM Comuniqué below in 80+ languages with the translator widget on the right side of the screen. Original text in english available here

This post was a contribution from Camilo Molina, Principal Research Analyst at CODHES. Cafezinho is a collaborative blog. Authors are responsible for the concepts, ideas, views and opinions disseminated in the blog posts.

La Alianza de las Organizaciones de la Sociedad Civil para la Efectividad del Desarrollo (AOED) da la bienvenida a la decisión de mantener abierto el debate sobre el Comunicado de cara realizar consultas en la RAN y apreciamos la oportunidad para proporcionar nuevos aportes. La AOED querría sugerir que el Comité Directivo se reúna en la Reunión de Alto Nivel para analizar el documento final de modo que se pueda asegurar una mayor apropiación del resultado para la totalidad de la Alianza Global. Esto estaría en línea con la naturaleza multilateral e inclusiva de la AGCED, a la cual AOED sigue apoyando decididamente.

• El Párrafo 11 del comunicado de Busan identifica “principios comunes que – en consistencia con nuestros compromisos internacionales sobre derechos humanos, trabajo digno, igualdad de género, sostenibilidad medioambiental y discapacidad – son la fundación de nuestra cooperación para la eficacia del desarrollo”. Esto debería ser reconocido al frente de este comunicado dado que era un compromiso de todos los actores del desarrollo y no debería aplicarse solo a las OSC, si no también a los gobiernos, incluyendo aquellos implicados en la Cooperación Sur-Sur, y al sector privado. Si esto no se reincorpora, el texto constituirá un paso atrás.

• Además, este borrador menoscaba la noción de apropiación democrática de país, firmemente articulada en la Alianza de Busan para la Eficacia del Desarrollo como una acción clave para la eficacia del desarrollo que apuntala los principios de Busan en su párrafo 12 (a): “Profundizar, extender y operacionalizar la apropiación democrática de las políticas y procesos del desarrollo”.

• Los esfuerzos planteados con respecto a la ayuda no condicionada (Párrafo 9) son débiles en comparación con el documento de Busan que hace un llamamiento a los donantes a “acelerar los procesos para descondicionar la ayuda”.

• A la luz de la bien documentada reducción de espacios para la sociedad civil, lo que está ocurriendo a nivel global, necesitamos apoyar soluciones que muevan esta conversación hacia delante, no que solo reiteren lo que ya acordamos en Busan. En este punto, el establecimiento de marcos de seguimiento sobre entorno propicio y la institucionalización de un diálogo multilateral inclusivo y democrático a nivel de país deben ser incluidos en el Párrafo 15.

• En este momento, todas las referencias al Enfoque Basado en Derechos Humanos, una pieza clave para una cooperación al desarrollo eficaz y un desarrollo verdaderamente inclusivo, han sido retiradas. Urgimos decididamente a reintroducir el lenguaje sobre derechos humanos y Enfoque Basado en Derechos Humanos en los Párrafos 3, 5, 11, 12, 31 del presente borrador, que estaba previamente presente en la segunda versión del Comunicado.

• En relación a al igualdad de género, el segundo borrador contenía un lenguaje más decidido, particularmente en el Párrafo 16. Este hacía referencia específica a las necesidades críticas de información de los países al desarrollo y a todas las partes a nivel de país, “incluyendo mediante el seguimiento y asignando recursos públicos para la igualdad de género y el empoderamiento de las mujeres”. Además, la noción de igualdad de género ha desaparecido del Párrafo 3.

• Pese a que el sector privado posee un espacio creciente dentro del comunicado, no hay referencia a su transparencia, responsabilidad y rendición de cuentas con respecto a sus acciones y al seguimiento de las mismas a través de mecanismos multilaterales y diálogo con los aliados sociales. La naturaleza voluntaria de las obligaciones del sector privado en el desarrollo, y las vagas o débiles referencias a la responsabilidad social y ambiental de estos actores, así como el respeto por los derechos humanos, previamente presentes en el Párrafo 32, han sido sustituidos poniendo los reingresos financieros y el crecimiento por encima de los impactos de desarrollo sostenible. Si los compromisos en esta sección con respecto a estos temas siguen ausentes, será difícil ver como el sector privado puede ser considerado una parte interesada que se adhiera a los principios originales de la Alianza Global.

• También seguimos preocupados por la falta de referencias a la transparencia y responsabilidad de la cooperación sur-sur

• El lenguaje que animaba a las “naciones industrializadas a asegurar, en alianza con otros países y partes interesadas, que sus propios sistemas impositivos y políticas económicas y comerciales no tienen impactos negativos en los prospectos de los países de bajo ingreso de cara a movilizar eficazmente sus recursos domésticos” del Párrafo 21 del segundo borrador debería ser reintroducido.

• Finalmente, debe traerse de vuelta una referencia a la coherencia política para el desarrollo en el Párrafo 10.

Nos gustaría reiterar formalmente nuestras sólidas y fundamentales preocupaciones sobre el actual borrador del Comunicado para la Reunión de Alto Nivel. Todavía falla a la hora de reflejar varios puntos clave planteados por la AOED a lo largo del proceso de consultas.

La AOED como parte interesada de la Alianza Global defiende la promoción de un desarrollo inclusivo, pero el lenguaje en el comunicado no es inclusivo con nuestras posiciones y prioridades; tampoco tiene el comunicado ningún compromiso político firme para hacer avanzar la agenda de la eficacia del desarrollo. Apreciamos que haya considerado algunas de nuestras posiciones entre el tercer y el cuarto borrador, pero desaprobamos la notable diferencia entre la actual versión en relación al segundo borrador – cuya naturaleza era mucho más inclusiva y completa.

Más específicamente, dado que la AOED sigue comprometida con los resultados de Busan, nos preocupa que este comunicado supone un sustancial retroceso en relación a aquellos compromisos. En consecuencia nos gustaría sugerir las siguientes enmiendas:

Mientras que la atención sigue estando en crear un entorno propicio para el sector privado en la cooperación al desarrollo, el desarrollo inclusivo y el principio de apropiación democrática y de país requieren acciones conmensuradas que hagan lo mismo para las OSC y otras partes interesadas, incluyendo gobiernos locales y parlamentarios. Sin ello, el espíritu y los propósitos de la eficacia del desarrollo se verán socavados.

Es más, el lenguaje previo del segundo borrador del comunicado debería reintroducirse dentro de la versión final, in particular con respecto a los derechos humanos, igualdad de género y responsabilidad, así como compromisos más sólidos que ayuden a avanzar en la agenda de la eficacia del desarrollo.

A pesar de que reservamos un juicio completo sobre el comunicado hasta que veamos la versión final, insistimos que los puntos mencionados arriba deben ser integrados en la versión final como mínimo para aceptar el documento. Nos complacerá reenviar las propuestas sobre lenguaje en relación a nuestras demandas clave.

2013 year in review

Despite all the acronyms...2013 was quite an exciting year! :-) Here is a bit of my work in the past +-12 months. My sincere gratitude to all the colleagues who are innovating development cooperation and improving organizational effectiveness in UNDP!