ADB celebrates 50 years, but there's a problem with development institutions
There are, however, new players in Asia to fuel development finance, such as New Development Bank and Asian Infrastructure Investment Bank.
- Total Shares
How much is required to satisfy the ever growing demand for financing global infrastructure needs? The Manila-based Asian Development Bank (ADB) seems to have a partial answer. In 2016 alone, the bank spent $ 31.7 billion, an 18 per cent increase from the 2015 spending.
The multilateral regional development bank is celebrating 50 years of existence during its ongoing 50th annual meeting (May 3-7) in Yokohama, Japan.
Under the tagline "Building Together the Prosperity of Asia", this year’s meeting focuses on the need for infrastructure investment for achieving sustainable development in the Asia-Pacific. For the bank, eradication of poverty in the region, including meeting 17 sustainable development goals (SDGs), squarely depends on financing infrastructure only, which has time and again attracted serious reservations from developmental professionals.
As Asia needs $26 trillion to satisfy the infrastructure appetite by 2030, the bank aggressively mobilises the private sector to chip in to save the world. Established in 1966 during the Cold War, the bank has 67 member countries (48 from the Asia-Pacific), which puts a tremendous limitation on being a democratic institution like its counterpart, the World Bank.
In a speech ahead of the World Bank Group-International Monetary Fund spring meetings on April 11, the World Bank Group president prescribed a strategy (rethinking development finance) to fuel development finance through infusing more private capital.
Can the private sector finance a project? Around $2.5 trillion is spent worldwide yearly on infrastructure. Since 1944, the World Bank with IMF (Bretton Woods institutions) has been facilitating private finance. The major thrust came when the former Soviet Republic disintegrated to bring the region into EU market reach.
So, development institutions are not providing "new" ideas to face the development challenges. By simply introducing a range of business mechanisms for quick project approval on the pretext of "new ideas and strategies", the developmental institutions are alienating people from democratising the development process.
But this is an interesting unusual time. While the spending on military swirls upward around the globe, money needs are neglected in certain domains.
Despite a remote call for stripping its immunity, the ADB is unstoppable with its professional and financial clout in Asia. Photo: Reuters
The new US administration is believed to propose to cut the budget by 37 per cent to the state department and the US Agency for International Development (USAID). The British aid agency DFID, which stopped funding in India in 2015, is believed to follow the US to drop its 0.7 per cent development assistance pledge.
Globally, fighting climate change, which requires $100 billion grant every year as pledged, has not been fulfilled. The Green Climate Fund has merely $7.5 billion in its kitty even after three years of its formation. The commitment for financing SDGs is far from promising.
However, there are new and emerging players in Asia to fuel development finance. The New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB) have already rolled up their sleeves to finance various projects, including co-financing with the World Bank and ADB.
The AIIB and World Bank have co-financed five projects: power generation in Pakistan, a natural gas pipeline in Azerbaijan, and slum upgrading, dam safety, and regional infrastructure development in Indonesia.
Similarly, the Chinese "One Belt One Road" initiative involving the China-Pakistan Economic Corridor (CPEC) and India’s BBIN Initiative (Bangladesh, Bhutan, India and Nepal) have all contributed to infrastructure growth in the region.
From the "million" requirement in the post-War period through the "billion" requirement in the post- Berlin Wall era to "trillion" now, development seems to be a distant mirage as the "trickle down" theory busted decades ago.
As governments and inter-governmental institutions are increasingly flouting and evading responsibility and accountability in recent times, concern remains about how to make private sectors accountable and transparent.
While the ADB is showcasing its achievements of 50 years in the Asia-Pacific through a sponsored book release at Yokohama, the bank has erroneously remained silent about its projects' impact on the environment and large communities in Asia.
The competition for financing infrastructure requirements in the region must not evade responsibility, accountability and transparency. Being a multilateral institution, the bank is immune from country laws and regulation. The emerging demand of stripping the immunity of the ADB by civil society groups won’t be realistic.
India being the fourth largest shareholder in the bank is an important strategic partner. One month back, a new leadership took charge of the India Resident Mission of ADB in New Delhi, which has a strong record of constructive consultations with various stakeholders.
As 50 years are being celebrated by the bank, it’s logical to extend the space for democratising the developmental process in Asia, and especially in India.