How the BRICS New Development Bank Can Improve Transparency and Accountability :: InvestMacro

By Magali MasambaAnd the University of Pretoria

New Development Bank who was formed In July 2014, it marks his eighth birthday this year. It was formed by the leaders of Brazil, Russia, India, China and South Africa (BRICS) when they met in Fortaleza, Brazil for the bloc’s summit. The Bank was seen as a potential alternative to the World Bank, capable of a new approach to development financing.

The New Development Bank has since approved 11 projects in South Africa and Lesotho. These include sustainable energy, transportation, water resource management, and the COVID-19 Emergency Loan Program. Some of these projects, for example Environmental Protection Project for Medupi Thermal Power Plantof strategic importance to South Africa. Of the estimated total project cost of $2.75 billion, the Bank is providing a loan of $480 million.

This is in line with hopes that the Bank will serve as a much-needed new source of funding for national and regional initiatives. Another hope was that it would be more transparent and accountable than other multilateral banks such as the World Bank. that it Message and valuesAnd the Terms of AgreementAnd the Environmental and Social Framework And the Information Disclosure Policy Make commitments on transparency and openness.

Banks mission statement It expresses its goal not only to “achieve development goals with transparency” but also to show “sympathy” with the intended beneficiaries of its projects.

Billions of dollars of investment later, however, the reality indicates that improvement is needed.

A study on transparency and accountability by Oxfam South Africa and the Center for Human Rights at the University of Pretoria raises concerns about how the Bank will act Access to information. It also lacks a file independent accountability mechanism. The study calls into question whether the Bank shows empathy towards the communities affected by its projects.

a little openness

The study highlights transparency and accountability challenges in some of the projects co-financed by the Bank. The researchers interviewed representatives of the communities close to Lesotho Highlands Water Project, South Africa, Phase II and the Medupi . Project.

Some of these challenges are cross-cutting. For example, representatives said that the influx of migrant workers into their communities has put pressure on resources and services. There were also project-specific issues. These included concerns about resettlement More than 3000 people To make way for the Lesotho project.

The study shows the difficulty of obtaining project information. The responses of the New Development Bank to requests for information from researchers lacked sufficient detail. Without timely and comprehensive access to information, how can project-affected communities adequately address their concerns?

The Bank’s website does not contain project documents and its information portal is difficult to use. This affects the right of communities to be heard, a right that cannot be exercised without access to information.

Unlike most multilateral development banksThe New Development Bank does not have an independent accountability mechanism. Nor are there other ways for these communities to seek or hold them accountable.

Such mechanisms are created to Development finance institutions contract And their clients are responsible for their own policies. They also provide access to remedies for individuals and communities affected by activities funded by these institutions. Without such a mechanism, the Bank’s approach to accountability falls short of global best practice.

It is clear that much can be done to improve the transparency and accountability of the New Development Bank.

I look ahead

The bank can do this in several ways:

  • Section 23 of it should be placed environment and social framework under excution. This requires the Bank to disclose project documents and information to communities and the general public during the project design and implementation phases, and throughout the project life cycles.
  • It should create a structure or platform, and an independent accountability mechanism, that affected communities can use to sway the Bank when it fails to provide timely access to project information or comply with its policies and procedures. Better and more sustainable development outcomes can be achieved when the process of designing the mechanism includes public consultations involving various stakeholders. Such public consultations should aim to solicit inputs affecting the design and implementation of the proposed mechanism.Conversation
  • At the national level, there have also been calls to form South African Contact Group for International Financial Institutions. This group will be a platform to promote dialogue between South African government institutions such as the Treasury and civil society regarding the country’s relationship with international financial institutions. This group could, for example, be a good platform for discussing civil society concerns about the New Development Bank.

About the author:

Majali MasambaPostdoctoral Fellow, Center for Human Rights, University of Pretoria

This article has been republished from Conversation Under a Creative Commons License. Read the original article.

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