New Development Bank needs to significantly scale up its funding capacity - India
TO EFFECTIVELY deliver on sustainable investment, the New Development Bank (NDB) needs to significantly scale up its funding capacity, mobilise additional private capital and widen the horizon of its non-lending services.
This was said by Manisha Sinha, the temporary alternate governor to the NDB additional secretary, Department of Economic Affairs, Ministry of Finance of India, at the NDB’s ninth annual meeting held in Cape Town on Friday.
She said: “We are meeting at a time of unique global challenges marked by subdued economic growth, rapid technological change, climate change-related vulnerabilities and geopolitical uncertainties.
“The world is woefully off track to achieve the Sustainable Development Goals (SDGs) by the 2030 deadline. Estimates suggest a financing gap of $4 trillion (R71trillion), while many countries face risks of debt distress exacerbated by high borrowing costs.”
Sinha said the role of multilateral development banks (MDBs), including the NDB, remained central to achieving the global agendas such as SDGs.
However, to effectively deliver on this mandate, MDBs needed to be radically reformed and strengthened in line with the recommendations of the Group of 20 independent expert group.
“In essence, key policy recommendations for the MDBs include operating together as a system, bringing operational efficiency and tripling of their financing levels to respond to the rising demands,” she said.
In particular, the NDB was looked upon to scale up its investments in emerging sectors such as clean energy, disaster resilient infrastructure and social infrastructure, with a keen focus on health, education and digital infrastructure.
Apart from direct investment to phase in renewables, low carbon technology transfer was also of great relevance.
Sinha said: “Standardisation and scale of financial products, and fostering an enabling environment, particularly through de-risking, greater use of guarantees and insurance is key to attracting and mobilising greater private capital.”
In addition, addressing technology risk, development risk and pricing risk were critical for incentivising the institutional investors to promote the adoption of renewable energy.
Overall, she said, there was an urgent need for transformation of the MDB system and alignment of the international financial architecture with the principles of sustainable development.
The NDB’s establishment in 2015 had completely redefined the paradigm of multilateral co-operation with its unique model of inclusive governance led by emerging and developing economies having equal contributions and equal voice.
The NDB is a multilateral development bank established by Brazil, Russia, India, China and South Africa (BRICS) with the purpose of mobilising resources for infrastructure and sustainable development projects in emerging markets and developing countries.
In September 2021, Bangladesh, the United Arab Emirates and Uruguay joined the NDB. In December 2021, the NDB admitted Egypt.
Sinha said: “Now, almost after a decade, it’s time to turn the heads again. It’s time to take the lead in driving the sustainable development agenda for the world.
“Finally, it goes without saying that the key to all these interventions lies in strategic partnerships and effective collaborations. So, let us all rise to the challenge with our collective wisdom, experience, skills and technology.”
Sinha also added that India’s G20 Presidency, from December 1, 2022, until November, 30, 2023, had provided a unique opportunity to voice the concerns and aspirations of the Global South in multilateral forums.
“The inclusion of the African Union as a permanent member of the G20 is a big boost for the representation of the Global South in the G20 forum. This focus has been taken forward by the Brazilian G20 presidency and we are happy to collaborate with South Africa to take it further during its G20 presidency in 2025,” she said.
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