Bangladesh is entering the global economy even more prominently with the inauguration of the New Development Bank in the capital. The country officially became the first new member country of the New Development Bank of BRICS on 28 September 2021.
NDB was founded by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, such as Bangladesh, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. NDB has an authorized capital of US$100 billion, which is open for subscription by members of the United Nations. The founding countries own the lion share of stocks, and Bangladesh started off with 9420 shares, and bargained for a seat at the table among the other UN country members in the bank.
“Recently we have had the admission of three new members of the New Development Bank. And Bangladesh was the first to deposit its instrumental accession. Officially, Bangladesh is now a full member of our institution,” Marcos Troyjo, the current President of the Bank stated in his press release, after the handover and move-in ceremony of the banks’ permanent headquarters building in Shanghai’s Pudong New Area.
“We are delighted to welcome Bangladesh, one of the world’s fastest growing economies, into the NDB. Bangladesh joining us in the year it celebrates the 50th Anniversary of its Independence is an important milestone”,
Marcos quoted in the official press release.
Additionally, he said this handover ceremony represents a lot in terms of its institutional development and what has been accomplished over the past six years. Their aim is to raise Bangladesh to the platform of world economy, and cater financial solutions for development in the public and private sector.
“I think it’s also a great opportunity for Shanghai because we are an important addition to the city’s profile as a global financial center,” added the president. The bank announced that it will add the United Arab Emirates, Uruguay and Bangladesh as its newest members earlier this month.
NDB’s Board of Governors authorized the Bank to conduct formal negotiations with prospective members in late 2020. After a round of successful negotiations, NDB is increasing its global outreach with the announcement of Bangladesh, UAE and Uruguay as the first countries admitted into the bank.
“We are delighted to welcome Bangladesh, one of the world’s fastest growing economies, into the NDB. Bangladesh joining us in the year it celebrates the 50th Anniversary of its Independence is an important milestone”, Marcos quoted in the official press release.
“Membership of Bangladesh to NDB has paved the way for a new partnership at a momentous time of the 50th anniversary of our independence. Kinship with NDB is a milestone towards the future envisioned by our Hon’ble Prime Minister, Sheikh Hasina. We look forward to working closely with NDB to build together a prosperous and equitable world for our next generation as dreamt by our Father of the Nation Bangabandhu Sheikh Mujibur Rahman”, said Hon. A H M Mustafa Kamal, Minister of Finance of Bangladesh in the press release.
Origin of NDB
NDB was founded on 18 July 2016, signing its first green financial bond with issue size of RMB 3 billion, tenor of 5 years in China onshore interbank bond market. It became the first international financial institution that issued a green financial bond in the China onshore bond market with the bond’s nominal interest rate of 3.07%. The proceeds of the bond will be used for infrastructure and sustainable development projects in the member countries.
The Bank’s Articles of Agreement specify that all members of the United Nations could be members of the bank, however the share of the BRICS nations can never be less than 55% of voting power.
So far, NDB has approved about 80 projects in all of its member countries, totaling a portfolio of US$ 30 billion in a short span of 6 years. Projects in areas such as transport, water and sanitation, clean energy, digital infrastructure, social infrastructure and urban development are within the scope of the Bank.
NDB’s membership expansion is in line with the Bank’s strategy to become the premier development institution for emerging market economies, such as Bangladesh.
Vision/ Goals of NDB
Recently, the leadership of the member countries BRICS tasked the Bank with developing a strong pipeline of projects and responding in a fast and flexible manner to the aspirations and interests of its members.
The New Development Bank is planning to give a priority to projects aimed at developing renewable energy sources towards a sustainable future. As stated by the Bank, it wants to cooperate with other institutions in accelerating ‘green’ financing expansion and promoting environment protection as a dire step of planning. Expanding the NDB’s membership is considered to be crucial to its long-term development by helping boost the Bank’s business growth at the same time.
As the name suggests, the Bank started off with three very streamlined agendas to carry forward:
- Promote infrastructure and sustainable development projects with a significant development impact in member countries.
- Establish an extensive network of global partnerships with other multilateral development institutions and national development banks.
- Build a balanced project portfolio giving a proper respect to their geographic location, financing requirements and other factors.
Bangladesh will have a new platform through NBD to foster cooperation in infrastructure and sustainable development with BRICS and upcoming new members. The press release states that the membership to NDB becomes effective once the admitted country completes its domestic processes and deposits the instrument of accession. The Bank is hopeful that our country will be able to meet its target in the next 20 years, and emerge as an industrially capable market.
The Finance Ministry quoted in the press release, “Along with the development of Bangladesh, the demand for foreign aid is also increasing. In this context, Bangladesh’s joining the New Development Bank will be beneficial for both.”
The Finance Minister also hoped that the financing of the New Development Bank would play a significant role in making development sustainable by 2041.
Probable Outcome of this Venture
According to Bangladeshi media outlets, Bangladesh will be completely out of the low-income country by the year 2024. Subsequently, the country will be recognized as a developing unit by various donor agencies around the world. Other benefits including foreign loans will be accessible at its own expense. The Bank is planning to provide financial solutions to the entrepreneurs and industries evolving in the market, so they avail a different type of loans to cater to their needs to invest on innovative enterprises.
Being a newly elected member of NDB, Bangladesh will have a representative member on its board of directors, and have a say in the major economic agendas. An economist from Bangladesh has joined as an alternate executive director on the board of directors of the Asian Development Bank. With competitive interest rates, capital will be easily accessible for the young bold entrepreneurs to follow their financial expedites, that could easily inspire future entrepreneurs or scientists. This would give financial assistance and the means and courage to pursue trades and projects.
Many green and sustainable infrastructures will be funded by the Bank that would change the face of our economy and infrastructure in the next 20 years. We are hopeful that Bangladesh will make a record in loan repayments among donor agencies that would encourage other donors organisations to invest, and more benefits will follow as opportunities will arise at the corner of hope for a better future.