The field of lenders to foster development worldwide is getting more crowded and the new institutions work differently – namely faster.
That’s the message from K.V. Kamath, who heads the New Development Bank, founded by the BRICS grouping of emerging nations: Brazil, Russia, India, China and South Africa. Mr. Kamath was formerly head of software giant Infosys and previously non-executive chairman of Indian bank ICICI.
In an interview with Handelsblatt, Mr. Kamath explained how his bank is different from western lending institutions like the Washington-based World Bank, and where the West has gone wrong in its approach to development. He also outlined how his bank will distinguish itself from the Chinese-led Asian Infrastructure Investment Bank, and why even Asia is looking anxiously to the British vote on whether or not stay in the European Union.
Mr. Kamath said he was confident that NDB’s new approach to development will serve rising economies better, and laid out where growth will come from in the next 25 years.
Handelsblatt: Mr. Kamath, what’s new about the New Development Bank?
K.V. Kamath: We are an institution of the new century. This is what the five founding countries wanted to stress. It is the first time that developing countries came together to set up a global financial institution. That applies to us as well as to the Asian Infrastructure Investment Bank. We want to build a case not only for best practice in development assistance but for next practice.
What do you mean by next practice?
In the past 70 years multilateral banks have established patterns. But things have changed. The size of challenges has increased dramatically. A number frequently mentioned is a gap of a trillion dollar investment in infrastructure every year. All multilateral development banks combined can only provide on tenth of that. Our role has to change. We cannot be the prime source to solve the problems. I call this time a time of impatience. Countries and people do not want to wait years for development. They want it faster. Without compromising quality, we try to meet the needs in less time.
Are the International Monetary Fund IMF and the World Bank too slow?
I am not the right person to comment on that. Their approach is to take more time to look at proposals. Our approach is different. I think we are able to come to decisions in a much faster time frame.
Besides speed, what makes the NDB special?
We have a different mindset. Historically, developed countries have told other countries what they thought to be right and wrong. But the rise of some developing countries has shown that we ourselves also understand how things work. As an institution we listen to our partners, rather than telling others how to do things. Traditionally the term donor was being used a lot in the multilateral development world. In our institution we will not use this word. We see partners with needs and provide them with loans. We see opportunities that are economically worthwhile for which we can take an interest over time.
Don’t the IMF and the World Bank listen enough to countries’ needs?
Historically policies have been set and then directions have been taken. We have decided not to be in the policy space but to have a dialogue with our partners.