The regional development banks (RDBs) are international institutions which were founded in the 1960s. The aim of the RDBs is to help countries promote economic growth and reduce poverty by providing low interest loans, grants and expert advice for development projects. The regional development banks (RDBs) are international development finance institutions whose mission is to help developing member countries reduce poverty and improve the quality of life of their populations. They were founded in the 1960s with the aim of promoting development and growth in their respective regions. The UK is a shareholder of all four banks and contributed some £98 million to them in 2007.
The RDBs play a vital role in poverty reduction. They focus on the Millennium Development Goals and provide support in a wide range of areas including healthcare, education, infrastructure, agriculture and energy. The RDBs are owned by member countries which include donor countries and borrowing countries. A key feature of the RDBs is that they are majority owned and staffed by regional countries. This means that countries in the region have the strongest influence over how the bank’s money would best be spent for the overall benefit of people in the region. The RDBs played a crucial role during the economic downturn. By providing financial support and increasing lending, they helped to maintain economic stability in the world’s poorest countries. This prevented more people from falling into poverty, and enabled these countries to continue their efforts to achieve the Millennium Development Goals.
DFID primarily works with the “concessional lending arms” of the RDBs, generally referred to as Funds. These are the parts of the banks which provide grants and loans to the regions’ poorest countries. (Concessional loans are loans that are provided at low interest rates and which countries have a long time to repay.) DFID’s aim is to ensure that grants and loans from the banks’ concessional lending arms genuinely reach the poorest and assist the primary millennium development goal of eradicating poverty. The concessional lending arms of each bank are: The African Development Fund (ADF) The Asian Development Fund (ADF) The Special Development Fund (SDF) of the Caribbean Development Bank, and The Fund for Special Operations (FSO), the concessional lending arm of the IADB.
DFID’s financial support to the RDBs takes place within fixed periods called “replenishments”. In the lead-up to these three or four year agreements DFID helps negotiate the poverty reduction targets which the banks set for themselves. The most recent replenishment of the African Development Fund took place in 2007. The UK contributed £417 million over the 3 years 2008- 2010. ADF 11 Replenishment The most recent replenishment of the Asian Development Fund took place in 2008. The UK contributed £109 million over the 4 years 2009- 2012. ADF 10 Replenishment The Fund for Special Operations of the Inter-America Development Bank is not replenished in the same way as the Africa and Asia banks. The SDF’s replenishment will be finalised in December 2008.
Each donor to each bank has the right to nominate a governor to the bank’s board. The Secretary of State for International Development is the UK Governor for each of the banks. He contributes to oversight of the banks’ activities and is responsible for ensuring the banks fulfil their remits in line with their stated aims. DFID has published strategy papers for working with the two largest development banks, the Asian and African ones: Joint institutional strategy - Asian Development Bank (237kb) Joint institutional strategy - African Development Bank (268kb).