Emerging economies as an alternative aid source

In the development field we are accustomed to learning of bilateral aid from developed nations to developing nations. However, over the last few decades there has been a rise in southern states, with newly emerging economies in Asia, South America and Africa. Not only are these economies on the rise, but they are able and willing to invest in development of low-income countries, while developing their own policies and projects for prosperity. One such initiative, the IBSA,  is a trilateral, developmental initiative between India, Brazil and South Africa. It is designed to promote three emerging countries, three multiethnic and multicultural democracies, and to contribute to the construction of a new international architecture and to bring their voice together on global issues.

 deccanherald.com

IBSA fourth summit, Brasilia 2011

IBSA was established in 2003, and was formalized by the Brasilia Declaration which mentions “India, Brazil and South Africa democratic credentials, their condition as developing nations and their capacity of acting on a global scale” as the main reasons for the three countries to come together. “Their status as middle powers, their common need to address social inequalities within their borders and the existence of consolidated industrial areas in the three countries” are individual elements  that unite the members of the forum together.

Following the 2003 G-8 summit, Foreign Ministers Nkosazana Dlamini Zuma from South Africa, Celso Amorim from Brazil and Yashwant Sinha from India met to formalize and launch the IBSA dialogue forum, which is an extension of the Brasilia declaration.

The objective of the dialogue forum was summarized as follows:

  • To promote South-South dialogue, cooperation and common positions on issues of international importance
  • To promote trade and investment opportunities between the three regions of which they are part
  • To promote international poverty alleviation and social development
  •  To promote the trilateral exchange of information, international best practices, technologies and skills, as well as to compliment each other’s competitive strengths into collective synergies
  • To promote cooperation in a broad range of areas, namely agriculture, climate change, culture, defense, education, energy, health, information society, science and technology, social development, trade and investment, tourism and transport.

The IBSA fund was developed in 2003 with the three members each contributing $1 million annually. The money contributed to the program is set aside for development projects and philanthropy in developing and low- income countries. Becuase the fund does not have its own secretary, the funding program IBSA: Forum for Economic development and Equity(PDF) is listed under the United Nations Development Program (UNDP), which handles all the financial administration of the fund. The fund provides the opportunity for emerging economies to “test their abilities in the driver’s seat” explains Dr Petrus de Kock, a senior researcher in the Governance of Africa’s Resources Program at the South African Institute of International Affairs (SAIIA), a research organization in Johannesburg. He noted that “Brazil is strongly driven by resources and mining. India is quite serious about seeing development in Africa because it is in their interest to grow markets. South Africa’s role is based on its influence on the continent.” Interestingly,  in 2008 India spent $547 million in aid and provided $2.96 million in lines of credit, mostly to sub- Saharan Africa.

Since newly emerging economies can better relate to the developmental obstacles from their own experience, IBSA is determined to separate its aid from the traditional line of donor- recipient model. It intends to do so with a new relaxed approach, that is not dependent on loans.   Fernando Sena from the Brazilian Embassy in South Africa states in an interview that:

“This has to do with the priorities of the country or government receiving the support. Unlike other donor relationships, it is not about imposing conditionality. Support from the IBSA Fund is not a loan and we are not expecting them to pay us back. We each bring our experience as a developing country. When we are talking about cooperating in another country, we are not trying to impose our views.”

Although only $3 million a year is generated towards the IBSA fund, IBSA is willing and proud to invest in small but sustainable projects. The first of these projects occurred in 2006 in Haiti, brought together members of conflicting factions in the violent prone Carrefour Feuilles zone, through a joint waste collection and recycling project.  Although the budget for the initial 14 month program was $550,000, the program proved to be very successful. Fernando Sena later affirmed that “the project provides a structure for people, who are traditionally from rival groups, to work together and it employs 385 neighborhood residents, including 207 women. Now 150,000 people benefit from improved sanitation.” Additionally, IBSA reported that violence had been reduced in the neighborhood of Carrefour Feuilles in Haiti’s capital. Another project funded by IBSA includes a drive in Guinea Bissau, West Africa, to improve agricultural practices.

As former aid recipient countries are becoming aid donors to other developing economies, a change in the dynamics of development emerges. During a speech in March 2011, the Brazilian envoy to South Africa, Jose de Sá Pimentel, explained that the reasons for IBSA’s establishment included an urge to function “independently of developed countries’ preconceptions,” implying that various former bilateral-aid models may be inefficient due to an overall difficulty in assessing the situation of one economy from the standpoint of another entirely different economy. IBSA is forming a new model where rising developing countries understand the issues of other developing economies and can help themselves as well as other developing nations with smaller and sustainable projects. Dr. Petrus de Kock concludes with: “for a picture of future growth in the global economy, we need look no further than the IBSAs of the world.”

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