Civil society welcomed its inclusion at the New Development Bank annual meeting but emphasised the need for consistent and formalised engagement if the bank is to be truly sustainable and people-centred.
The Ninth Annual Meeting of the New Development Bank, (NDB)which took place in Cape Town from 29-31 August 2024, marked a moment for the institution to re-commit to being a people-centred development bank.
Civil society groups across various sectors continue to advocate for principles that they believe should guide the New Development Bank, including respect for human rights and the environment, as well as a focus on participation and transparency.
This year’s theme, “Investing in a Sustainable Future”, was a timely discussion that focused on infrastructure development in emerging markets and developing countries, energy and climate change, and resource mobilisation for the global South toward achieving the 2030 Agenda for Sustainable Development.
These discussions are particularly significant as the international community looks ahead to the United Nations Summit of the Future taking place on 22 to 23 September.
As noted in the opening address by the New Development Bank’s first woman president, Dilma Rousseff, the multilateral development bank is uniquely “built by and for developing countries, emerging economies” – among those facing the biggest challenges in achieving sustainable development.
Established by the BRICS group of developing countries – Brazil, Russia, India, China and South Africa – in 2015, the New Development Bank’s engagements are particularly relevant in today’s global context of post-Covid recovery, fragmented global supply chains, geopolitical conflict, financial instability, and with less than 17% of the Sustainable Development Goals on track.
To achieve the New Development Bank’s ambitions as a relatively new institution, Rousseff stressed the importance of expanding its network of partnerships and social inclusion. Bangladesh, Egypt, the United Arab Emirates (UAE) and Uruguay were admitted as new members of the bank in 2021 “as part of an expansion drive”.
While Uruguay remains a prospective member, Bangladesh, Egypt and the United Arab Emirates (UAE) are now formal members of the New Development Bank and joined this year’s NDB annual meeting. Algeria was also recently authorised to become a member of the New Development Bank, as shared during this year’s meeting.
The New Development Bank has also made significant efforts to develop its institutional structure, including the creation of a new evaluation manual that has indicators for assessing partnerships, including those with civil society organisations (CSOs). CSOs also welcome New Development Bank efforts to create an independent accountability mechanism (IAM) to address grievances, as is found in more established multilateral development banks, and have expressed their desire to be included in the development of the draft policy.
However, the construction of large-scale infrastructures does not necessarily mean that development will be sustainable for all. As experience elsewhere has shown, projects by development finance institutions can have unintended consequences, displacing communities, violating human rights, and leaving communities without remedy.
Better due diligence through community engagement can prevent some of these costly repercussions. development finance institutions operate with taxpayer money, and with more than 500 of these organisations operating worldwide, attention to how they engage is critical. As such, civil society lauds the New Development Bank for its stated principles of transparency.
The New Development Bank’s decision to host a business lunch between the bank and CSOs on the third day of this year’s annual meeting was therefore welcomed as a sign of the bank’s commitment to encouraging public discussion. This, in turn, can improve the quality of its operations and institutional credibility. As noted in its original strategy (2017-2021), NGOs can help embed sustainability criteria that are based on local realities, but does this happen in practice?
Civil society expectations
Globally, CSOs have been calling on development finance institutions to strengthen inclusive participation through formalised CSO mechanisms, to promote human rights, and to be accountable and transparent. This includes not just inviting CSOs to the table but actively incorporating their insights and feedback into project planning and execution.
CSOs engaging the New Development Bank have therefore proposed that they engage with the bank in a more regular and sustained way, such as through quarterly meetings. CSOs are eager to strengthen their policy engagement on new policies and/or policy reviews, including the independent accountability mechanism, information disclosure, and environmental and social safeguards.
As with other multilateral development banks, such as the African Development Bank, CSOs would like to be actively engaged in the development of five-year country strategies.
While civil society celebrates the appointment of a woman New Development Bank president, some of civil society’s concrete demands relate to promoting gender equality and justice through its operations and projects. Rousseff has made public statements about promoting social and gender inclusion and projects capable of guaranteeing a range of opportunities, from entrepreneurship to public services, particularly for women and girls.
It is hoped that the New Development Bank, under Rousseff’s leadership, will urgently develop a specific gender policy and strategy to support women’s economic empowerment and to manage negative gender impacts associated with large infrastructure projects.
Climate finance is another area in which civil society has made suggestions for improvement. The New Development Bank’s strategy commits to directing 40% of its project financing towards climate change mitigation and adaptation. CSOs would like to see this more specifically focused on the latter, with the bank being more attentive to the needs of communities affected by projects and in line with best practices for environmental and social safeguards.
One of the biggest challenges (also considered one of its biggest selling points) is the New Development Bank’s reliance on country systems. While this may expedite project implementation and make it more efficient, clients do not always have sufficient systems in place to protect human rights. The use of country systems is further complicated by non-disclosure agreements (NDAs) between the client country and the bank, meaning that CSOs are limited in accessing information.
For several years, the New Development Bank has affirmed its commitment to post project information on its website as per Section 23 of its Environmental and Social Environment Framework, which states that the bank is committed to working with the client to ensure that social and environmental documents are made available in a timely manner, in an accessible place, and in a form and language(s) understandable to affected people and to other stakeholders.
However, to date, the public is not able to access these documents, beyond general project summaries on the NDB website.
In the case of Phase Two of the Lesotho-Highlands Water Project financed by the New Development Bank (with co-financiers from other development finance institutions), women and girls have faced gender-based violence and continue to have concerns about unfair compensation for resettlement.
In Lephalale, Limpopo, communities are suffering from the health consequences of pollution from the Medupi coal-fired power station, while a proposed New Development Bank loan to install cleaner technology appears to have been delayed without any feedback given to communities.
The New Development Bank therefore needs to take a stronger oversight role in ensuring that country systems align with human rights principles and make all environmental and social documents available on the bank’s website. CSOs would like opportunities to share with bank staff the experiences of communities affected by New Development Bank projects.
Future directions
Five years after the last New Development Bank meeting in South Africa, and nearly 10 years into the bank’s existence, its annual meeting was an opportunity to inject new ideas from its member states on to the global stage.
The New Development Bank has made significant headway in its lending, with new projects in South Africa intended to upgrade the country’s rail system through Transnet, which received a R5-billion loan, and funding to local municipalities which received a $1-billion loan for water and sanitation infrastructure development under the Municipal Infrastructure Grant of the government of South Africa. Its focus on green development and social inclusion also heralds optimism.
However, the real test lies in whether these projects have led to sustainable development outcomes that prioritise the wellbeing of people and the planet.
The New Development Bank’s annual meeting provided a platform for civil society to voice concerns and propose solutions, but these discussions must lead to actionable commitments from the bank to engage CSOs and communities at all stages of the project cycle and in policy development.
Civil society looks forward to a deeper and more meaningful engagement with the New Development Bank in the future. DM