NDB: The BRICS Bank Takes Shape
9 May, 2019
Take Note: Even the Reserve Bank of Australia Needs Sub-Editors
15 May, 2019Euromoney, May 9 2019
Read the full article here: https://www.euromoney.com/article/b1f9w2kjgk5f6s/how-multilateral-development-banks-moved-to-asia
The alphabet soup of multilaterals in the region has become hard to understand during the past decade, so Euromoney tries to read between the acronyms to assess what impact they will make.
The launch of New Development Bank (NDB) cemented a sense that the new centre of gravity among multilateral lenders is Asia and, more specifically, China.
The formal beginning of operations at NDB in its Shanghai headquarters came just a month after the same landmark at the Asian Infrastructure Investment Bank (AIIB), which opened its doors in Beijing in January 2016. AIIB has got going rather faster: while NDB has five members, AIIB has 93.
But in truth the total lending to date by the two institutions is similar. NDB has $8.4 billion of approved loans to AIIB’s $7.5 billion, although AIIB’s spread is bigger. Its 35 projects to date are in 13 countries, ranging from power distribution in Bangladesh and slum upgrades in Indonesia to road improvements in Tajikistan and maritime infrastructure in Oman.
AIIB plans to invest between $3.5 billion and $4.5 billion in 2019, in 15 to 20 projects, according to the bank’s 2019 business plan and budget summary, released in December. Again, that is a similar ambition to NDB.
AIIB and NDB are new players in a field that for almost half a century was the preserve of Asia’s original multilateral, the Asian Development Bank (ADB), conceived at a 1963 UN conference and formally launched with a mandate to alleviate poverty and help with rural development in 1966, a time when Asia was still largely agricultural.
The ADB remains far larger than the new China-based upstarts. In 2017 its total commitments – which means loans, grants and investments – were $20.1 billion, well up from $13.3 billion the previous year, and well over double the amount NDB and AIIB between them expect to lend this year. Co-financing adds another $11.9 billion to the ADB figure.
Euromoney’s April 2017 edition included detailed interviews with AIIB’s chairman and president, Jin Liqun, and the ADB’s president, Takehiko Nakao. And it is relatively easy to summarize the differences between the old guard and the new.
For a start, the ADB’s mandate is in large part about poverty alleviation. The two newer institutions are purely about infrastructure development (also part of the ADB’s role), although they argue that this infrastructure is itself a tool of poverty reduction.
Both China-based institutions aim to be far faster than the ADB. The Manila-based ADB also wants to be more nimble, but insists that in order to conduct proper due diligence, ensure environmental safeguards and avoid corruption, things have to be done properly.
For all their speed, both the NDB and AIIB insist that environmental and governance concerns are paramount, and point out that the language of sustainability is written into their articles of association; when the ADB was launched, those terms didn’t exist.
Full article: https://www.euromoney.com/article/b1f9w2kjgk5f6s/how-multilateral-development-banks-moved-to-asia?copyrightInfo=true
