Summary

The New Development Bank (NDB) held its Flagship Governors Seminar on August 30, 2024, a key event during the Ninth Annual Meeting of the Board of Governors.

Focusing on “Unlocking Financing for Sustainable Development in Emerging Markets and Developing Countries”, Governors and Alternate Governors of NDB, the NDB President, heads of international organizations, renowned scholars, and business leaders highlighted the joint actions needed by the EMDCs to advance international financial architecture reforms and scale up financing for sustainability, discussed innovative ways to mobilize private investment, and proposed effective measures to enhance global development cooperation.

H.E. Ms. Dilma Rousseff, President of the NDB, highlighted in her opening remarks the urgent need to enhance financing for sustainable development in EMDCs. She emphasized the importance of domestic financial deepening, urging EMDCs to reform their financial systems to mobilize resources for sustainable investments. Ms. Rousseff also called for fundamental reforms to the international financial architecture currently dominated by developed economies, advocating for inclusivity and the use of multiple currencies to facilitate more favorable financial flows for development. She stressed the necessity of continued international collaboration guided by principles of multilateralism, fairness, and justice. Additionally, she pointed out the unique role of the NDB in unlocking financial resources, fostering knowledge sharing among EMDCs, and enhancing the use of local currencies in the global financial system.

Four keynote speeches were delivered at the Flagship Governors Seminar by H.E. Dr. Ngozi Okonjo-Iweala, Director-General, World Trade Organization, H.E. Mr. Liqun Jin, President and Chair, Asian Infrastructure Investment Bank, Prof. Kishore Mahbubani, Distinguished Fellow, Asia Research Institute of National University of Singapore, and Mr. Sim Tshabalala, CEO, Standard Bank Group.

Dr. Ngozi Okonjo-Iweala, Director-General, World Trade Organization, acknowledged the significant challenges facing EMDCs in achieving Sustainable Development Goals (SDGs) while transitioning to a low-carbon economy. She highlighted a staggering USD 4 trillion annual investment gap necessary for these goals, with USD 2.2 trillion needed specifically for energy transition. She pointed out that the current financial landscape shows a severe shortfall in investments, with only USD 471 billion allocated to SDG sectors in 2022 in terms of greenfield investment and international project financing in developing economies. Dr. Okonjo-Iweala outlined six areas for action: enhancing the capital mobilization capacity of multilateral development banks, increasing domestic resource mobilization of developing economies, reforming subsidy practices to reflect environmental-friendly principles, implementing global carbon pricing, leveraging remittances to raise sustainable financing, and improving the multilateral trading system anchored by the WTO. She concluded by stressing the need for collaboration between public and private sectors to close the financing gaps for sustainable development.

Mr. Jin Liqun, President and Chair, Asian Infrastructure Investment Bank, emphasized the importance of mobilizing investments for a sustainable future. He noted that EMDCs have unique insights into sustainable development, particularly regarding the net-zero transition, and, as the two new MDBs created in the 21^st Century, both the AIIB and the NDB are working to provide developing countries with a meaningful and resounding voice on development issues. Mr. Jin acknowledged the formidable challenges ahead in sustainable development. With a staggering USD 4 trillion annual investment gap for SDGs, he stressed the urgency of climate action, especially in light of recent environmental crises. Mr. Jin called for collaboration among multilateral development banks to enhance the global pipeline of infrastructure projects and mobilize a much larger coalition of local financial institutions that is able to connect international capital and expertise to local development project opportunities. He expressed optimism for continued solidarity among MDBs to achieve shared development goals amidst rising geopolitical tensions.

Prof. Kishore Mahbubani, Distinguished Fellow, Asia Research Institute of National University of Singapore, in his video speech, underscored the significant rise of the global South, noting that BRICS nations now hold a greater combined GDP than the G7 economies in Purchasing Power Parity terms. He regards the establishment of the NDB in 2014 as a timely response to shifting global power dynamics, and highlighted the bank’s innovative practices, such as expedited project approvals and local currency loans. He also welcomed NDB’s membership expansion, which will enhance the NDB’s representation of emerging markets on global platforms. He called for additional efforts from the global development community to mobilize private capital and urged for established global institutions to recognize the NDB as a crucial partner in tackling challenges like climate change and economic inequality. Prof. Mahbubani advocated for a cooperative approach to foster sustainable development and ensure that the voices of the global South are heard in international decision-making.

Mr. Sim Tshabalala, CEO, Standard Bank Group, highlighted the challenges facing EMDCs but also expressed optimism about overcoming them. He emphasized the importance of strengthening trade relations with major economies amid rising geopolitical tensions, and advocated for economic diplomacy to attract investment in Africa. On climate change, he noted significant opportunities for Africa in the energy transition, given its abundant renewable resources and potential for manufacturing, and pointed out that EMDCs have the right to utilize hydrocarbon resources as part of the just transition in line with the Paris Agreement. Mr. Tshabalala also discussed high interest rates and debt service costs, addressing the need for effective communication between sovereigns and investors to reduce borrowing costs. He estimated that Africa requires USD 3.4 trillion in investment for energy and transport infrastructure, underscoring the urgent need for more developmental finance. He calls for the MDBs, including the NDB, to enhance private capital mobilization, and proposed that commercial banks could leverage adequate equity guarantees to significantly increase lending.

In the following panel discussion moderated by Ms. Fifi Peters, Senior Anchor of CNBC Africa, Governors and Alternate Governors of the NDB shared their perspectives on unlocking sustainable development financing for EMDCs and the role of the NDB in this regard.

Mr. Guilherme Mello, Temporary Alternate Governor for Brazil, Secretary of Economic Policies, Ministry of Finance, Brazil, highlighted Brazil’s commitment to sustainable development is essential for thriving amid global crises. He stressed the importance of coordinated actions through multilateral development banks, particularly the NDB, to mobilize resources for sustainable infrastructure and foster ecological and social sustainability. He points out that Brazil’s G20 presidency has prioritized reforms in multilateral institutions to enhance representation for developing countries and facilitate access to climate funds. Mr. Mello introduced the Eco Invest Brasil initiative, offering exchange rate hedges to international investors in Brazil’s green projects. He also outlined three strategic axes in fighting hunger and poverty under the Brazilian G20 presidency: promoting social inclusion through the Global Alliance Against Hunger and Poverty, advancing the energy transition with a comprehensive sustainable development strategy, and fostering collaboration between multilateral banks and the private sector to achieve a just and sustainable world.

H.E. Mr. Ivan Chebeskov, Temporary Alternate Governor for Russia, Deputy Minister of Finance, Russia, emphasized the need for strengthening domestic policy frameworks to enhance resource mobilization for sustainable development, including responsible budget policies, low inflation, reasonable debt levels, and efficient tax systems. He also noted the significance of financial infrastructure in facilitating investments, mentioning Russia’s initiatives during its BRICS presidency, such as BRICS Bridge, BRICS Clear, and BRICS Reinsurance, as financial infrastructure to channel investments for sustainable development. Mr. Chebeskov pointed out that debt vulnerability remains a critical risk for emerging markets, particularly when debts are denominated in hard currencies, as fluctuations in interest rates can adversely affect these countries. He concluded by supporting the need for greater cooperation among BRICS nations to ensure better representation and access to financial resources within the international monetary system.

Ms. Manisha Sinha, Temporary Alternate Governor, Director for India, Additional Secretary, Department of Economic Affairs, Ministry of Finance, India, emphasized the importance of effective resource mobilization in addressing the challenges of sustainable development, highlighting the need for strong domestic policies alongside collaboration. She noted that mobilized resources must be utilized efficiently to achieve the maximum multiplier effect, particularly in capital formation. She highlighted India’s significant increases in capital expenditure, particularly in digital public infrastructure, and pointed out the importance of government investment as a catalyst for private sector involvement. Ms. Sinha stressed the critical role of multilateral development banks in developing de-risking strategies, considering the impacts of climate vulnerabilities on infrastructure maintenance. She advocated for the NDB to leverage its expertise in developing countries to facilitate knowledge exchange, conduct targeted research, and enhance capacity building.

H.E. Mr. LIAO Min, Alternate Governor for China, Vice Minister of Finance, China, shared insights from China’s experience in attracting FDIs. He emphasized that improving business environment is crucial for attracting global capital, as evidenced by China’s significant advancements in the World Bank’s Doing Business rankings. He also stressed the importance of placing people at the center of development, mentioning China’s efforts to cultivate a middle class and boost domestic consumption. He also stressed that openness to globalization is vital, highlighting China’s efforts to create a level playing field for foreign investors. Speaking of the Third Plenary Session of the 20th Central Committee of the Communist Party of China, Mr. Liao emphasized that China’s digital and green transition will bring opportunities to other emerging economies in trade and investments, and urged the NDB to actively support innovative and green development by fostering partnerships and facilitating technology exchanges among member nations.

H.E. Mr. Enoch Godongwana, Governor for South Africa, Minister of Finance, South Africa, emphasized three critical issues: the interplay of debt and growth, climate change, and the need for a stronger voice for developing economies. He argued that managing debt is only feasible when economic growth is prioritized, warning against repeating past mistakes in this field. He highlighted climate change as a significant challenge, particularly regarding Africa’s infrastructure deficits. He also noted the importance of enhancing the representation of developing economies in global institutions. Additionally, he discussed South Africa’s power sector reforms, including the role of independent power producers and Operational Vulindlela, a project between the Presidency and Treasury to implement reforms in the South African economy. He pointed out that, despite being coal-intensive, South Africa is advancing in renewables, with a projected 43 gigawatts of new capacity and plans for private sector participation in grid development.

Mr. Md. Shahriar Kader Siddiky, Alternate Governor for Bangladesh, Secretary, Economic Relations Division, Ministry of Finance, Bangladesh, emphasized the importance of sustainable and equitable development, highlighting Bangladesh’s impressive economic growth. He pointed out that, as the country focuses on graduating from Least Developed Countries (LDC) status and achieving the Sustainable Development Goals (SDGs), Bangladesh aims to attract more foreign direct investment (FDI) by simplifying procedures and enhancing the ease of doing business. Despite facing challenges such as climate change-related disasters, Bangladesh is committed to building sustainable infrastructure and aligning its budget with disaster management. Key priorities include securing food and energy, capacity development, poverty reduction, and job creation. Mr. Siddiky also noted the country’s need for diversification beyond the Ready-Made Garment (RMG) industry, improvements in logistics, and increased concessional financing for climate resilience projects. He called for collaboration with multilateral partners like the NDB to blend global financing and support Bangladesh’s development efforts.

H.E. Dr. Rania Al-Mashat, Governor for Egypt, Minister of Planning, Economic Development and International Cooperation, Egypt, emphasized the importance of prioritizing public-private partnerships (PPPs) in infrastructure development. She stressed that countries must clearly define their infrastructure priorities to attract private sector investments. Addressing the persistent financing gap, she noted the critical role of concessional finance and the necessity for complementarity between public budgets and multilateral development bank financing, as well as the catalyzing role of transparency in building an effective investment pipeline. Dr. Al-Mashat also underscored the value of experience sharing among countries in the Global South, facilitated by MDBs through South-South cooperation. Additionally, she pointed out that platforms integrating SDG investments could be effective tools for development, such as Egypt’s Nexus of Water, Food and Energy (NWFE) Program, which adopts interdisciplinary solutions that can have cross-sectoral benefits and fosters linkages between all of the Sustainable Development Goals.