More than a decade after it was established, the SAARC Development Fund (SDF) is pushing hard to team up with the two newest players in multilateral developmental financing as it forays into infrastructure projects for the first time.
In its two-day meet beginning Monday in New Delhi, the development fund established by nations of the South Asian Association for Regional Cooperation (SAARC) bloc back in 2005, will be looking at ways to explore co-financing options with both the New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB), apart from other multilateral bodies and sovereign development creditors.
To be attended by the Thimphu based SDF secretariat as well as senior officials from member nations, the SDF Partnership Conclave 2018 is an attempt to revive the fund. While 12 projects - mostly in the social sector - are currently ongoing in various countries, budgetary constraints and lack of attention from private sector financiers have historically slowed progress, a senior visiting delegate said.
"SDF serves as the umbrella financial institution for SAARC projects and programs which are in fulfillment of the objectives of the SAARC Charter. We are currently implementing twelve regional projects with more than 70 implementing and lead implementing agencies covering all the eight Member States under the Social Window funding. We have already committed $ 73.74 million for social window projects as of date out of which it has disbursed $ 47 million to the Member States for Social Window projects," Sunil Motiwal, Chief Executive Officer at SDF said.
Into the big leagues
But the move into the infrastructure space is expected to attract the attention of member nations, and especially India, to ramp up funding for the body. "In-principle approval has already been accorded to a waste to energy project in Sri Lanka and a hydropower project in Nepal with the participation of Bangladesh and India. The total loan commitment would be $30 million," Motiwal added.
The timing of the meet is expected to go in SDFs favour as infrastructure financing has grown rapidly in South Asia with most of the funds headed to India. Both Brazil, Russia, India, China, South Africa (BRICS) nation group-backed NDB as well as the China-led AIIB have made India a priority area.
The latter has sanctioned projects worth more than $ 1.2 billion and signalled the final approval of a further $1.9 billion during its board of governors meet in Mumbai last week. SDF CEO Sunil Motiwal met with the AIIB President Jin Liqun, discussing SDFs plans to focus in the infra space with projects related to Energy, Power, Transportation, Telecommunications and Tourism, among others, a person in the know said.
"We will also focus on building a consortium of financing agencies that may bankroll specific projects. We already have agreements with the Asian Development Bank, the World Bank and other multilateral bodies," Sayeed Zeeshan Ali, Assistant Director, Economic and Infrastructure Windows at SDF said.
The body is also in the process of launching the Social Enterprise Development Program (SEDP). The program will be implemented in all the member states with the objective of identifying and building social enterprises by using a mix of grants and concessional returnable capital. The program intends to fund around 80 enterprises across the 8 nations annually.
Also, SDF has proposed to launch its Micro Small and Medium Enterprises(MSME) program in order to begin providing a line of credit. "This proposal has support from the government since it will bring trans national connectivity between small enterprises which our reports have proved to grow exports and economic growth", a senior Finance Ministry official said. Under the proposal, SDF would create access to financial services which can in-turn boost job creation, raise income, reduce vulnerability and increase investments in human capital in member nations.