Sir Suma Chakrabarti, the President of the European Bank for Reconstruction and Development, on Wednesday called for a fresh approach for cooperation among the world’s regional development banks to make their contributions to developing economies more agile and effective.
In a speech entitled “The new Multilateralism: The Role of Regional Development Banks”, Sir Suma said the banks had to change in line with the evolving challenges facing their recipient countries. Their needs were no longer the ones that existed when the banks were conceived.
He told the Washington D.C.-based Peterson Institute for International Economics that the geographical divisions of the regional banks were a great strength of the multilateral system. The banks were able to ground their work in a robust local presence, nurture long-term relationships and know their markets to the benefit of both clients and donors.
He also pointed to the different mandates and ownership structures that resulted in specific niches of expertise.
Recipient countries saw a clear case for sharing skills and tools and pockets of deep, specialised expertise across the various regions. Such a new approach reflected the needs of recipient countries and their view of a “new multilateralism”, he said.
In calling for a new way of working in the future, the President said the new approach was not simply a question of better coordination:
“This is about building into our existing geographic architecture the selective cross-cutting mechanisms that allow a more flexible skills-based architecture,” he said.
The President outlined four specific areas in the agenda for change.
The first was in the area of technology transfer, where the EBRD was already taking steps forward. The EBRD had developed a private-sector driven mechanism for climate finance and energy efficiency investments. Its Sustainable Energy Financing Facilities had successfully financed 55,000 loans via 80 banks in 19 countries where the EBRD has a mandate to work.
As there was demand for this type of financing well beyond the EBRD’s region of operations, the Bank was pursuing a vision to transfer that model and mechanism to partners with a mandate to invest in other parts of the world.
Sir Suma secondly said recipients believed development banks could maximise their impact by considering joint ventures that could tap into proven tools, staff and financial resources without having to reinvent them in every region.
A third item would be the development of global platforms that cut across the individual institutions to bring together expertise on a particular development challenge. He referred specifically to the areas of climate change and infrastructure development.
Finally, the EBRD President proposed a pilot to see whether the individual development banks could develop joint country strategies reflecting their different mandates. He conceded that this might be a radical departure but he believed it would be in the clear interests of the recipient countries.
“We are doing a good job but the regional development banks can do an even better job if we respond rapidly to this agenda for change,” he concluded