By Ashwani K Muthoo
In 2014, the BRICS grouping formed the New Development Bank (NDB). It was tasked with financing infrastructure and sustainable development projects in its founding countries and other emerging economies and developing countries. In addition to strengthening cooperation among BRICS, it was envisaged as an institution to supplement the efforts of multilateral and regional financial institutions for development. NDB has also been seeking to expand its reach and impact. Towards this, in 2021, it welcomed the admission of Bangladesh, Egypt, the UAE, and Uruguay into its fold. Over the years, it has built a diverse portfolio of development projects.
However, side by side, it has constantly been reviewing the ambit of its operations to stay relevant. For instance, when the Covid-19 pandemic broke out, the bank realised the need for a stronger emphasis on the robustness and sustainability of development results. It therefore provided a significant amount of funding for projects to support countries in combating the pandemic.
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In 2021, NDB approved ten new loans totaling $5.1 billion, which brought the cumulative approvals to over $30 billion since it inception. During the year, it disbursed $7.6 billion—more than the disbursements in all the previous years combined. As a result, the Bank’s cumulative disbursements amounted to $14.6 billion by the end of 2021.
The newly approved projects aligned with its priority sectors; beyond Covid-19 emergency loans, it funded urban development, transportation, clean energy, and rural water supply projects.
These projects are expected to build or upgrade approximately 660 km of roads and 30 bridges, construct 30 km of metro lines, avoid 7.5 million tonnes of carbon dioxide (CO2) emissions per year, increase drinking water supply capacity by 49,000 m3/day, and build 35,000 housing units, among a range of other development results.
NDB believes that its role doesn’t end with project approval and disbursement of funds; independent evaluation of projects plays a role in driving the quality of projects and the development impact. NDB Independent Evaluation Office (IEO) is responsible for independently evaluating the bank’s policies, strategies, processes, initiatives, and operations. This office also provides oversight to improve the effectiveness of the bank’s quality assurance and self-evaluation activities.
The IEO has thoroughly evaluated a recently concluded NDB-India partnership project, offering valuable suggestions and insights. This road infrastructure development project in the state of Madhya Pradesh (MP) is estimated to have touched people’s lives in 434,000 rural communities, enriching local livelihoods and improving access to clinics, hospitals, schools, colleges, markets, businesses, and job opportunities. At an estimated cost of $500 million, of which NDB financed $350 million, the project entailed improvement of over 1,500 km of roads in 24 districts of Madhya Pradesh. The objective was to improve the connectivity of rural areas with the national and state highways to boost economic activity and productivity in the hinterlands.
The project execution began in January 2017 by the Public Works Department of the government of MP (GoMP) and was completed in March 2022, after a one-year extension. After its completion, the IEO evaluated the operation using internationally-recognised criteria and methodologies. The evaluation process including primary and secondary data collection and analysis, site visits, and collection of additional information and data from multiple stakeholders at the national, state, and community levels using semi-structured questionnaires. Triangulation techniques were used to derive evaluation findings. Overall, the project performance that considers five evaluation criteria— relevance, effectiveness, efficiency, impact, and sustainability—was satisfactory, even though the efficiency of the project was only moderately satisfactory.
The IEO report pointed out that some areas limited the project’s performance. These included the lack of a broader country strategy to guide the India-NDB partnership, insufficient analytic work to inform choices and priorities at design, weak supervision and implementation support, and limited attention to non-lending activities such as knowledge management. It suggested that there may be opportunities to link road development with rail and even water projects in the future and underlined the need for a plan to ensure the road network is aligned with the National Logistics Policy. The report observed that the quality of the design document and loan agreement could also have been sharper and better aligned with each other. These areas for development certainly merit attention in future and ongoing projects funded by NDB.
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Nevertheless, it is understandable that the project’s design, which was undertaken in 2016, could have covered only some areas for development. Since then, NDB has invested in 20 projects at a total cost of $7.2 billion in India alone, and these projects are expected to benefit an estimated 4 million people. Clearly, with vigilant evaluation by its IEO, these projects and others that follow could achieve a much more significant impact on a host of parameters and drive sustainable development with greater speed and agility. Moreover, the benefits of constructive evaluation will not just be restricted to the projects undertaken but could unlock synergies for the nation.
About the author:
Ashwani K Muthoo, Director general, Independent Evaluation Office, NDB