Inside the New Development Bank: What You Need to Know
Were you aware of the existence of a bank that finances infrastructure and development projects across different continents and promotes sustainable development?
The New Development Bank was created by the BRICS countries - Brazil, Russia, India, China, and South Africa - in 2014 as an alternative to international financial institutions dominated by developed countries.
The Bank offers loans, guarantees, and other financial support for infrastructure projects in areas such as renewable energy, transportation, water, sanitation, and urban development.
With its unique operational model, the Bank approves loans within six months without sacrificing quality and uses country systems to handle environmental and social aspects, as well as procurement procedures related to the infrastructure projects it finances.
Additionally, the New Development Bank stands out from other financial institutions in that it offers local currency loans, which reduces foreign exchange risks.
The Bank has already invested in many sustainable infrastructure projects and has welcomed new members such as Bangladesh, the United Arab Emirates, Uruguay, and Egypt. As of 2022, the Bank's reputation as a leading development finance institution has grown, and it has a larger pool of resources to invest in sustainable infrastructure projects across all its member countries.
Overall, the New Development Bank represents a significant shift in the global financial landscape, providing an alternative to traditional international financial institutions dominated by developed countries. It aims to promote sustainable development and infrastructure projects in its member countries, with a focus on renewable energy, transportation, water and sanitation, and urban development.
While there are concerns and criticisms about the bank, including its governance structure and potential influence from China, it has made significant strides in funding and implementing projects that benefit its member countries. With the addition of new members, the New Development Bank has the potential to further expand its reach and impact on sustainable development across the globe.
The Future Governance
The Bank's presidency rotates among the member countries every five years, and Brazil's current president, Luiz Inacio Lula da Silva, has requested a new leader be chosen for the Bank as the term of the current Brazilian president of the Bank, Marcos Prado Troyjo, will end on March 24th, ahead of its natural expiration in 2025.
This leadership change could bring new perspectives and ideas to the New Development Bank, as the new president will have the opportunity to shape the direction of the institution.
In recent years, the New Development Bank, led by President Marcos Prado Troyjo, has made significant strides in expanding its social framework, strengthening its ESG department, and approving billions of dollars in project financing. In addition, the bank has improved its public profile and introduced a new project portfolio management structure. Moreover, the bank partnered with the United Nations Development Program (UNDP) to issue China's first Sustainable Development Goals (SDG) bond issue.
However, with Troyjo's departure, the bank is in the process of electing a new president. Former Brazilian President Dilma Rousseff has been nominated for the position and is expected to complete all pre-election procedures by the end of March. If she is appointed, Rousseff's leadership could bring the Workers' Party back into the spotlight in Brazilian politics, which could potentially affect Brazil's relationship with other BRICS members and its approach to development finance.
Rousseff's appointment is also expected to bring a greater focus on social and environmental projects, such as education, healthcare, and sustainable development. However, there are concerns that her appointment may politicize the bank's operations and decision-making processes, which could jeopardize its independence and integrity.
The New Development Bank was created to operate independently of political influence and to focus on sustainable growth and development finance. Therefore, it will be crucial for Rousseff to maintain the bank's impartiality and integrity while pursuing its mission.
The transition of leadership at the New Development Bank is an important milestone for the bank and the BRICS group, and with a new leader, the bank has the potential to make a significant impact on the lives of people in its member countries.