The New Development Bank: towards greater efficiency

Multilateral development banks (MDBs) increasingly struggle to respond effectively to the needs of middle-income countries (MICs). This has influenced not only their potential development impact but also their own financial stability. Part of the challenge has been internal business processes that deter greater borrowing by countries, especially in the presence of other financiers with less strenuous requirements. These processes include lengthy loan approval processes, limited use of in-country management systems and sensitivities around environmental and social safeguards. There is also a need for greater responsiveness and an emphasis on the importance of knowledge services.

This policy briefing (drawing on a more in-depth discussion paper) highlights some of these challenges and offers some alternative solutions. The New Development Bank (NDB), as a new entrant to the development finance milieu, will do well to draw on the experiences of existing MDBs to improve its offerings to countries.

Recommendations:

by simplifying and decentralising loan approval processes or creating simplified and standardised procedures for loans, MDBs can be more efficient, making their services more attractive to borrowing countries
the NDB cannot divorce its operations from global discourse and pressures (from countries and non-state actors alike) related to environmental and social safeguards and should ensure adherence to international best practices
there is a clear preference for the use of country systems from borrowing countries and thus the UCS approach should be prioritised. Where countries lack capacity, the NDB should provide the additional capacity-building support
technical knowledge sharing should be a priority focus area of the NDB, as such services are greatly valued by borrowers, more so than ‘soft’ knowledge services such as reports or databanks
to ensure greater inclusive development, the NDB needs to ensure gender considerations are included throughout the lifecycle of infrastructure financing and in institutional arrangements

How good is this research?
Assessing the quality of research can be a tricky business. This blog from our editor offers some tools and tips.
Read now

Related content

Document
At the table, off the menu? Assessing the participation of lower-income countries in global tax negotiations
R. Corlin Christensen, M. Hearson, T. Randriamanalina / Institute of Development Studies UK, 2020
For half a century, the most influential international rules and standards for taxing multinational corporations have been formulated by a select group of developed countries, the OECD, with lower-income countries on the outside. Since 2013, this has changed: decision making at the OECD has moved to the ‘Inclusive Framework’ (IF), which today encompasses 137 jurisdictions.
Document
Economic transformation in Vietnam
United Nations University World Institute for Development Economics Research, 2020
During the last three decades Vietnam has undergone a considerable economic transformation. However, little research has considered the role that financial reform has played in the development of small and medium size enterprises (SMEs).
Document
COVID-19 and the African energy sector: Energy insight
W. Shen, S. Ayele / Oxford Policy Management, 2020
As elsewhere in the world, COVID-19 continues to ravage Africa, causing thousands of deaths and an unprecedented health crisis that is damaging to every aspect of the social and economic lives of millions of people.
Document
Lend or suspend? Maximising the impact of multilateral bank financing in the Covid-19 crisis
C. Humphrey, S. Mustapha / Overseas Development Institute, 2020
The Covid-19 pandemic has triggered a collapse in global economic activity that will have lasting economic and social impacts across the world. Recent World Bank estimates suggest that there could be more than 100 million additional people earning less than $1.90 per day as a result of the crisis.
Document
A comparative study of export processing zones in the wake of the Sustainable Development Goals: The cases of Botswana, Kenya, Tanzania, and Zimbabwe
R. Adu-Gyamfi, S.A. Asongu, T.S. Mmusi, H. Wamalwa, M. Mangori / United Nations University World Institute for Development Economics Research, 2020
The objective of this research is to assess the extent to which export processing zones in Botswana, Kenya, Tanzania, and Zimbabwe integrate the Sustainable Development Goals in their implementation and operations. We focused on four Sustainable Development Goals— gender equality, decent work, industry, and climate action. We interviewed four zone authorities, one in each country.

Eldis

The New Development Bank: towards greater efficiency