The New Development Bank (NDB) was established by the BRICS nations to support infrastructure and sustainable development projects in developing countries. Its mission is to complement existing institutions while encouraging cooperation among developing nations. Founded in 2015, the NDB has expanded its membership and opened regional offices. It works closely with the BRICS Business Council to pool financial resources and business knowledge for sustainable development within the BRICS community. The NDB also collaborates with other Multilateral Development Banks to address global issues.

A distinctive feature of the NDB is its leadership structure, with the presidency rotating annually among member countries, unlike institutions such as the World Bank. This approach aims to promote more equitable decision-making, although some critics argue that it may hinder long-term planning. The NDB’s Board of Governors and Directors have more equally distributed voting power compared to other institutions that BRICS nations have criticised. Membership is open to most UN members, and decisions are made by simple majority, avoiding vetoes by any single country.

From its inception, the NDB has focused on clean energy, approving renewable energy projects in all five founding countries in its first year. The bank emphasises clean energy and efficiency and has committed not to fund new coal plants. Its 2022-2026 strategy focuses on investments in transport infrastructure, water and sanitation, environmental protection, social infrastructure, and digital systems. To maximise its impact, the NDB supports projects that align with climate goals, integrate advanced technology, and encourage inclusive investment.

The NDB plays a vital role in aiding developing countries, as demonstrated by its loan to South Africa to support COVID-19 recovery. It is also working to increase local currency financing options for its members, helping reduce reliance on foreign exchange markets and addressing infrastructure needs. The NDB collaborates with a variety of partners to achieve its objectives, mobilising resources, sharing knowledge, and accelerating sustainable development across member nations. Key partnerships include national development banks, commercial banks, and NGOs, focusing on co-financing, information exchange, and expertise sharing to broaden the bank’s influence and capacity in development.
The NDB differentiates itself from traditional Multilateral Development Banks (MDBs) by prioritising the use of a country’s own financial systems and shifting its focus towards non-sovereign lending and local currency operations. This distinction extends to its agreement terms with countries requiring assistance, promoting global economic inclusion for developing nations and other marginalised groups. Many African countries face heavy debt burdens, with external debt soaring since the 1970s, restricting their capacity for growth and development. While programs like the HIPC have offered some debt relief, they have not fully resolved the issue. The IMF and World Bank provide loans to countries in economic crises, such as Argentina and Egypt, often requiring policy reforms. However, critics argue that these interventions serve US geopolitical interests, particularly when countries like Argentina explore joining institutions that are seen as rivals to the US, such as BRICS.

The Rise & Foundation of the NDB

The New Development Bank (NDB) was founded by the BRICS nations (Brazil, Russia, India, China, and South Africa) to finance infrastructure and sustainable development projects in developing countries. This institution reflects the desire of emerging markets to play a larger role on the global stage without excluding anyone. The NDB has three main goals: to provide BRICS members with development funding, to facilitate financial exchanges within BRICS such as currency swaps to strengthen their economies during global economic downturns, and to offer new financial avenues for developing countries both within and beyond BRICS.
Before the NDB, the Contingent Reserve Arrangement (CRA) was established as a financial safety net for BRICS nations. The CRA was developed in the mid-2000s, prior to the formalisation of the BRICS group in 2008. A key issue during the creation of the CRA was determining the level of contributions, as countries like South Africa could not contribute as much as China, which could have led to imbalances in power. Ultimately, contributions were set at $100 billion, with China contributing $41 billion, Brazil, India, and Russia each contributing $18 billion, and South Africa contributing $5 billion (Batista Jr., 2022: 13 & 22; NDB, 2024). The formation of the BRICS Business Council, two years before the NDB’s creation, helped pave the way for the idea of a BRICS development bank.

Despite its innovative approach, the NDB is often misunderstood. Some worry that it seeks to disrupt the US-dominated post-WWII financial system, but its objective is to complement, not replace, existing institutions. As the first development bank proposed by major developing nations since WWII, it champions “South-South cooperation,” a model that fosters collaboration among developing countries. The NDB aims to address the infrastructure and sustainable development needs of emerging economies, offering additional financing tools rather than competing with current multilateral institutions.
The NDB, also known as the BRICS Development Bank (BDB), was formally established in July 2015 by the BRICS countries. The decision followed the 2014 BRICS summit in Fortaleza, Brazil, where the agreement for the bank was signed, designating Shanghai as its headquarters and Johannesburg as the location for its regional office. Discussions about creating the NDB had begun as early as 2012. The bank held its inaugural Board of Governors meeting on July 7, 2015, and Mr. K.V. Kamath was appointed the first president. In 2016, the founding members paid their first capital instalments, allowing the NDB to become fully operational. Fitch and S&P assigned the NDB an AA+ credit rating, boosting its access to global financial markets.

On September 4, 2017, the NDB and the BRICS Business Council signed a Memorandum of Understanding on Strategic Cooperation during the 9th BRICS Summit in Xiamen, China. This agreement, witnessed by BRICS leaders, solidified the partnership between the two entities, aiming to enhance the development of BRICS countries through their combined resources and expertise. Key areas of collaboration include involving BRICS financial institutions in NDB projects, exploring the use of local BRICS currencies in NDB transactions to promote regional integration and stability, and fostering knowledge exchange through conferences and workshops. Additionally, joint research projects will address pressing issues faced by BRICS economies and other emerging markets from a business perspective.

In 2018, the NDB established its Americas Regional Office (ARO) in São Paulo, with a sub-office in Brasilia. The bank began approving loans in currencies like the euro, Chinese yuan, South African rand, and Swiss franc, signalling a shift away from the US dollar. By 2020, the NDB committed $10 billion to support COVID-19 relief efforts, providing immediate financial assistance. Mr. Marcos Prado Troyjo was elected as NDB’s president, and the bank later opened the Eurasian Regional Centre (ERC) in Moscow. In 2021, Bangladesh, Egypt, the UAE, and Uruguay were admitted as new members, and the NDB moved to its permanent headquarters in Shanghai. An Indian regional office was also established in Gujarat International Finance Tec-City. In 2023, H.E. Mrs. Dilma Rousseff was elected NDB president, and the bank partnered with other Multilateral Development Banks (MDBs) to contribute to the COP28 Agenda.