The New Development Bank and Strategic Partnerships

By Suresh Nanwani - 01 June 2022
The New Development Bank and Strategic Partnerships

This is part of in a new collection of commentaries from the Emerging Global Governance (EGG) Project on the New Development Bank's evolution. Browse the series here. Suresh Nanwani explores the possibilities for the New Development Bank to collaborate with the European Bank for Reconstruction and Development to achieve its objectives.

When the BRICS-led New Development Bank (NDB) opened its doors in Shanghai in July 2015, one of its immediate challenges was figuring out how to get up and running from zero, and how to begin fulfilling its mandate in an efficient and effective manner.

As stated in the NDB Charter, the purpose of the Bank is to “mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries”, and to do so by “complementing the existing efforts of multilateral and regional financial institutions for global growth and development” (Article 1).

The NDB Charter further states that the Bank has two main functions in fulfilling its purpose: (i) support public or private projects through loans, guarantees, equity participation and other financial instruments; and (ii) cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the bank." (emphasis added) (Article 1).

In other words, cooperation with international organizations and other financial institutions, and   complementing the existing efforts of other multilateral and regional financial institutions were and are a key part of the strategic vision and design of the NDB from the outset. 

From the outset, a Vice President was named for ‘Strategy and Partnership, Risk and Research’ and was handed the responsibility to deliver on forming strategic partnerships as per the Bank’s design. 

In the six years since the start of operations, the NDB has signed more than 30 strategic partnership agreements with other international and national financial institutions, starting with the Bank of China and China Construction Bank in January and June 2016, the Asian Development Bank in July 2016, and the World Bank Group and the Development Bank of Latin America (CAF) in September 2016.  The NDB’s first financing project with other MDBs was in 2016 with the lesser-known International Investment Bank (IIB) and Eurasian Development Bank (EDB) to on-lend for a renewable energy project in Russia.

These partnerships are elements of the growth and evolution story of the NDB.

Below we examine the strategic decisions and paths that the NDB has taken in forming partnerships with other entities, looking at the progression of MOUs signed, and which entities the NDB has actually partnered with to date to co-finance projects.

Pledges and action

On its website, the NDB has a list of the 33 partnership MOUs that it has signed with 6 types of entities – or in the language of the Bank, “stakeholders in the global development community”:

  1. national development banks (5)
  2. multilateral development banks (11)
  3. commercial banks (10)
  4. multilateral institutions and initiatives (5)
  5. enterprises (1)
  6. academia (1)

The NDB’s online publication of the MoUs for public access is one example of the Bank’s effort to provide some transparency on its operations.  In the NDB’s “Strategy” for 2017-2021, the Bank states that: “Secretiveness is not admissible in a 21st century institution. The Bank is guided by the understanding that information concerning its activities will be made available in a timely manner to the public in the absence of an appropriate reason for confidentiality.” (NDB Strategy, 2017-2021, p. 32).

Why has the NDB arranged these partnerships?  According to the NDB's own explanation on its website, “partnerships support the achievement of NDB’s mandate by enhancing the Bank’s capacity to mobilize resources for infrastructure and sustainable development projects, while also fostering the exchange of knowledge, human resources and information.”

Through the partnerships, the NDB “seeks to complement the efforts of multilateral and regional financial institutions” to “support global growth and development”; and, in building these partnerships, the Bank adheres to SDG 17 on “Partnership for the Goals [2030 SDGs]”, to help accelerate NDB member countries’ efforts to strive for sustainable development.

In terms of moving from pledges of partnership to action, one of the most interesting observations is that the NDB’s first co-financed projects were not with fellow MDBs, but with a national-level development bank, Brazil’s BNDES, and Chinese financial institutions.  In so doing, the NDB took a different approach from the Asian Infrastructure Investment Bank (AIIB), which immediately started operations with large-scale co-financed projects with the World Bank Group and the Asian Development Bank (ADB). 

NDB’s partnered projects

Why did the NDB start with partnered projects with national-level institutions?  Part of the answer likely lies in the fact that the NDB self-consciously catered first to its BRICS founding member-nations; because the first Vice President for Strategy and Partnerships was a Brazilian national and they would have had preexisting professional connections and contacts with BNDES; the NDB head office is located in Shanghai and cooperating with Chinese financial institutions played to locational advantages.

In the period since its opening, the NDB has, in addition to the Brazilian and Chinese institutions above, also entered into partnerships with other entities from Indian, Russian, and South African member countries. These include the State Bank of India (2018), the Standard Bank of South Africa (2016), the Development Bank of Southern Africa (2018), and Russian Railways (2017).  The NDB has co-financed projects or partnered projects with the following BRICS-entities which include Financing of Renewable Energy Projects and Associated Transmission (Brazil, 2016, BNDES); Locomotive Fleet Renewable Program (Russia, 2019, Russian Railways); Putian Pinghai Bay Offshore Wind Power Project (China, 2016, Chinese banks); and Greenhouse Gas Emissions Reduction and Energy Sector Development Project (South Africa, 2018, Development Bank of Southern Africa).

The NDB has worked with other MDBs to provide project financing in Russia, namely with the IIB and the EDB, lesser known MDBs, with links to Russia.  But it has not done so with the  European Bank for Reconstruction and Development (EBRD), which also has links with Russia.  Why has this been so?  What stands in the way of the NDB and the EBRD co-financing projects?

The puzzle

The IIB was established in 1970 to serve the Soviet bloc countries, with Russia as the largest shareholder (47%) and the main champion. The IIB underwent large-scale reforms in 2012 to attempt to lessen the impression that the Bank is Russian-controlled.  In 2019, the IIB headquarters was shifted from Moscow to Budapest, Hungary.  The IIB has 10 member countries: Bulgaria, Cuba, Czech Republic, Hungary, Mongolia, Romania, Russia, Serbia, Slovakia, and Vietnam. With an authorized capital of Euro 2 billion, it “specializes in medium and long-term financing of projects”, and refers to itself as a “multilateral development institution” that “aims to facilitate connectivity and integration between the economies” of the Bank’s member states to “ensure sustainable and inclusive growth”, and the “competitiveness of national economies”, and importantly, “backed by the existing historical ties” of its member states, i.e., former territories and allies of the USSR.  The IIB notes that it also “offers direct financing” and “loans in partnership with other financial institutions”, as well as “through partner banks.”

The EDB was founded in 2006 by Russia and Kazakhstan, headquartered in Almaty, Kazakhstan, and has six member countries located in Asia and Europe, primarily in the former USSR: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. Russia is the largest shareholder (65.97%), second Kazakhstan (32.99%), Belarus (0.99%), Tajikistan (0.03%), Armenia (0.01%), and Kyrgyzstan (0.01%).  The EDB has branch offices in St. Petersburg (Russia), Astana (Kazakhstan), Bishkek (Kyrgyzstan), Dushanbe (Tajikistan), Yerevan (Armenia), Minsk (Belarus), and Moscow.  The Bank’s self-declared mission is to “facilitate, through its investment activity, the development of market economies, economic growth, and expansion of trade and other economies ties” between its members countries.  The EDB’s charter capital is US$7 billion, including US$1.5 billion as paid-in capital, and US$5.5 billion of callable capital.

The EBRD was founded in 1991 to help build a “new, post-Cold War era in Central and Eastern Europe” with a “commitment to the market” and “entrepreneurship” and the guiding mission of “furthering progress toward ‘market-oriented economies and the promotion of private and entrepreneurial initiative.’”  Headquartered in London, the EBRD has members from around the world, and its single biggest shareholder is the United States.  Though initially focused on the countries of the Eastern Bloc, the EBRD’s operations have expanded to more than 30 countries across three continents (Europe, Asia, and Africa), with investments in Mongolia through Central Asia; Russia; Central and Eastern and South Eastern Europe; Turkey; and in the Southern and Eastern Mediterranean region. The Bank is ‘owned’ (shareholders) by 71 countries and two EU institutions.  The Bank invests in private enterprises, with commercial partners.

The EBRD and the NDB partnered when the EBRD provided the NDB with organizational information and institutional knowledge when the latter was establishing itself. 

But what then has stood in the way of the NDB and the EBRD actually moving together on co-financing projects or working together on project financing? 

This lack of action is especially noteworthy when considering, on the one hand, that the NDB, IIB and EDB have already worked on projects together in Russia since 2016, and on other the hand, that EBRD is already involved in joint projects and co-financing with the AIIB.

The NDB entered into a Memorandum of Understanding (MoU) with EBRD on 1 April 2017. Interestingly, the NDB also signed partnership MOUs with the AIIB, EDB, IIB, and European Investment Bank on the same day.

It is interesting to note that the title of the NDB-IIB agreement is “Memorandum of Understanding  between New Development Bank and International Investment Bank on Strategic Cooperation", and the NDB-EDB signed an  “MOU on "General Cooperation.”  In comparison,  the NDB-EBRD agreement has the rather generic title of “Memorandum of Understanding between the New Development Bank and the European Bank for Reconstruction and Development.”

A sense of urgency or priority can be interpreted from the words “strategic cooperation” in the title of the NDB-IIB MOU, and from the wording in the NDB-EDB MOU calling for cooperation on  "early identification, preparation, co-financing, and other forms of joint participation in financial assistance for sustainable development and infrastructure projects in countries of mutual interest." 


It could be argued that the signing of an MOU between the NDB and the EBRD was given a senior-level of priority by the NDB. The NDB-EBRD MOU was signed at the second Annual Meeting of the NDB in New Delhi, India by the Presidents of the two institutions.  The fact that the MOU was signed by the heads of the two Banks could be interpreted as signifying the high-level of importance the two institutions attached to their partnership.  In contrast, the other MOUs which the NDB signed the same day, including the NDB-EDB and NDB-IIB MOUs, were signed by its Vice President for Strategy and Partnership. 

Representing the NDB at the EBRD-NDB signing ceremony, President K.V. Kamath stated that the MOU "formalizes and deepens our [NDB-EBRD] partnership" and "further strengthens our [NDB-EBRD] cooperation, allows the NDB to tap into the expertise of the EBRD and strengthens the NDB’s capacity to assess and implement projects.”  Kamath added, the "EBRD has been working closely with the NDB during its establishment process."  The NDB President noted that it was the responsibility of the Bank to "provide the best possible products and services to our members”, and that “partnerships with key national and global institutions are essential."

EBRD President Suma Chakrabarti remarked that EBRD's assistance at the initial stages of establishing the NDB "came in the form of advice on strategies and policies, governance, business models, evaluation and procurement."  Chakrabarti added, "As one of the youngest and still growing development banks, the EBRD has always been eager to offer its expertise and support to new partners. With the NDB we share a vision not only of sustainable infrastructure, but also of green energy, which ultimately benefits the global economy."

According to the EBRD news release,  the two institutions also "agree[d] to maintain a continuous working relationship, including consultations on senior level, exchange of information and potentially staff swaps."  These institutional capacity-building partnership commitments build on the exchange of knowledge and information that the EBRD provided the NDB after the BRICS governments agreed to create the NDB in 2014.

In the MOU, the two Banks recorded that “the two institutions share the objectives of promoting sustainable development and investment in infrastructure in their countries of operation”, and acknowledged “the benefits for their countries of operations of investment and cofinancing by multilateral development banks and international financial institutions” (p. 2). They further emphasized their likemindedness by noting their shared belief on “the importance of establishing strong cooperation in common areas of interest and in common countries of operation”, and welcomed the “positive impact of developing a strategic framework for collaboration, knowledge sharing and for regular high-level consultations” (p. 2). The two Banks stated that they believe that “promoting cooperation” would “enhance each Party’s ability to achieve its purpose and carry out its functions” (pp. 2-3).  

As further stated in the MOU, the purpose for the EBRD-NDB partnership is to “promote collaboration in areas of mutual concern and common interest” (p. 3).

Despite the wording in the MOU that the two Banks are “determined to promote cooperation and in so doing, to enhance each Party’s ability to achieve its purpose and carry out its functions” (p. 3), the empirical reality is their lack of actual co-financing of projects, which leaves one to question whether the EBRD-NDB partnership actually lacks a determination or will to act. 

Regardless of their self-declared likemindedness, shared approaches, and pledges of cooperation, the NDB and EBRD have yet to work together on any projects in ‘common countries of operation.’ 

Geopolitics, specifically US and EU sanctions on Russia starting in 2014, would have put a damper on the ambitions of the EBRD in the partnership with the NDB, and the same sanctions would also have caused the NDB to proceed with caution if any potential project activity or investment touches US and EU sanctions.

This cautiousness appears to be reflected in the hedging language in the EBRD-NDB MOU such as “will endeavor to identify” and “could potentially” under the “areas of cooperation”: “The Parties will endeavor to identify projects and activities on which they could collaborate and which they could potentially co-finance in common countries of operation…” (p. 3)

In contrast, EBRD and the AIIB have partnered already on projects, starting in 2016, the AIIB’s first year of operation. EBRD and AIIB each co-financed US$27.5 million in 2016 in the Dushanbe-Uzbekistan Border Road Improvement Project in Tajikistan. This EBRD news release dated 24 June 2016 refers to the EBRD and AIIB considering other joint projects. In April 2021, the EBRD and AIIB entered into a new co-financing framework agreement, building on the previous EBRD-AIIB MOU in 2016, to streamline their cooperation to promote economic development and investment across countries where both institutions are active. Since the EBRD-AIIB MOU of 2016, both Banks have provided over US$2.4 billion of funding to common projects in the energy and transport sectors, as well as Covid-19 pandemic response. In June 2021, AIIB co-financed US$100 million in the Sirdarya 1,500MW Combined-Cycle Gas Turbine Power Project in Uzbekistan, which was also co-financed by EBRD by a loan of up to US$200 million.

Potential obstacles in the way of NDB and EBRD

In considering the potential obstacles that stand in the way of the NDB and the EBRD actually moving, operationally, to co-lending or working together on projects, we can start by considering the ‘common countries of operations’ of the two Banks. Three of the five NDB founding members are also member states of EBRD: Russia, since 1992, as a donor and borrower country; China, since January 2016, as a non-borrower; and India, since July 2018, also as a non-borrower.

Neither China nor India is looking to borrow from the EBRD. The EBRD website states that “China will not receive EBRD funding”, “but we [EBRD] encourage Chinese companies to become involved in our investments and to apply for procurement and consultancy opportunities associated with our projects.”  The EBRD also notes that Indian consultancies were awarded contracts worth more than Euro 15.2 million from 2015-2019.  So the non-borrower status of China and India is an obvious obstacle to NDB-EBRD co-financed or jointly financed project lending in China or India.

This leaves Russia as the other “common country of operations.”  

Interestingly, as stated above, the NDB's first project in Russia, in 2016 – the construction of two hydropower plants in Karelia – included partnering with, and assistance from the IIB and EDB.  NDB agreed to on-lend US$100 million for the Nord-Hydro Project to increase energy supply in Karelia region through renewable energy projects, specifically the construction of a small dam, two hydroelectric generation plants and 10-km of power transmission lines.  Under this project, the NDB provided $50 million each to IIB and EDB.

But the biggest obstacle to the EBRD and NDB working together on projects in Russia appears to be the US and EU sanctions.  Russia appears to be a non-starter for the EBRD, which has made no new investments in Russia since 2014, in response to the ‘annexation’ of Crimea.  Due to conflict with the Ukraine, starting in 2014, Russia was cut-off from access to prominent global and regional external sources of long-term multilateral financing, including the EBRD and the World Bank.[i]

The last EBRD Strategy for the Russian Federation for 2013-15 (Russia) that was approved by the EBRD's Board of Directors in December 2012, noted that EBRD was a strong and longstanding partner for Russia, and that Russia was the largest country of operations for the Bank since its inception in 1991. The 2013-15 Strategy further recorded that Russia continued to be the largest country of EBRD's operations accounting for 32 percent of the Bank's annual business volume in 2011. By the end of June 2012, Russia accounted for 31 percent of the Bank's operating assets and 28 percent of its portfolio.

With the war in Ukraine as of February 2022, EBRD and NDB formally suspended existing and potential operations in Russia.  In March 2022, the EBRD Board of Directors recommended that the Bank suspend all operations in Russia (and Belarus).  In April 2022, the EBRD Board of Governors decided to suspend Russia’s access to the Bank's resources under article 8.3 of the EBRD Charter, though Russia could continue to be a shareholder.  EBRD closed its offices in Moscow and Minsk.

In March 2022, the NDB similarly issued the following statement, under Article 21 of the NDB Charter, Operational Principles: "In light of unfolding uncertainties and restrictions, NDB has put new transactions in Russia on hold. NDB will continue to conduct business in full conformity with the highest compliance standards as an international institution." The “statement” is couched in somewhat cryptic terms referring to “unfolding uncertainties and restrictions” in contradistinction to the EBRD’s definitive decisions by invoking its charter provision of suspension of Russia’s access to the Bank’s resources, and closing its offices in Russia.

Looking ahead

The preliminary codification of the partnership between the NDB and the EBRD has been put in place, but it must be acknowledged that the existence of the MOU has not yet led to any co-financing arrangements between the NDB and the EBRD or partnering on a project – unlike the case of the NDB and the IIB and EDB.  A contrast can also be drawn with the EBRD and AIIB partnership which moved onto co-financing projects as early as mid-2016, during the first year of the AIIB, and the level of partnership is described by AIIB as “exemplary.”   

The preference instead, initially, for the NDB was to co-finance or partner projects with national development banks and national commercial banks. 

As the NDB turns to working more on co-financed projects with other MDBs, one wonders what stands in the way of such initiatives, especially in the area of renewable energy projects in the NDB member countries?

There is little doubt that the current situation of Russia's invasion of Ukraine starting in February 2022 further hinders any plans for co-financing projects in Russia for the NDB and the EBRD.

In terms of other possibilities for NDB-EBRD co-financing, it is useful to note that in late 2021, the NDB admitted new members, Bangladesh, the UAE, Uruguay, and Egypt. Among these countries, Egypt is the lone "common country of operations" for the NDB and the EBRD.  In other words, Egypt’s new membership in the NDB could open the way for the first NDB-EBRD co-financed projects in the future.

There is evidence for the NDB co-financing or partnering projects in India, together with the ADB and the AIIB.  Although India is not an EBRD “country of operations”, it has a long history of borrowing from ADB, and is the leading country-borrower from the AIIB.  It appears that India could be the ‘comfortable zone’ for the NDB to work together with other MDBs from within the Asian region to pursue co-financing. This has so far been demonstrated with NDB co-financing with ADB in the Mumbai Metro Rail Systems Project in 2019 (NDB financing US$260 million and ADB financing US$926 million) and NDB co-financing with ADB and AIIB in the Delhi-Meerut Regional Rapid Transit System Investment Project in 2020 (NDB financing US$500 million, ADB financing US$1,049 million, and AIIB financing US$500 million).

In summary, these two possibilities are worth tracking for future research on the NDB’s strategic partnerships, and as the Bank moves more into co-financing of projects with other multilateral lenders.



Suresh Nanwani is Professor in Practice at Durham University, United Kingdom and Honorary Research Fellow at Birkbeck University of London. He is also subject expert consultant for environmental and international law in the Green Climate Fund's Independent Redress Mechanism. He holds a PhD in Organization Development from SAIDI Graduate School of Organization Development, Philippines. He is coeditor of The Practice of Independent Accountability Mechanisms: Towards Good Governance in Development Finance (Brill Nijhoff, 2019) and author of Organization and Education Development: Reflecting and Transforming in a Self-Discovery Journey (Routledge, 2022, Open Access). He publishes extensively on international governance and accountability.

Photo by Cytonn Photography


[i] Paulo Nogueira Batista Jr. The BRICS and The Financing Mechanism They Created: Progress and Shortcomings (London: Anthem, 2022) (p. 54)

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