South-south funding with no strings attached

Development donors typically impose strict conditions on recipient countries. Now a different south-south approach to funding is taking shape through the India-Brazil-South Africa (Ibsa) Fund for Poverty and Hunger Alleviation.

“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,” says Fernando Sena from the Brazilian embassy in South Africa in an interview with IPS.

The Ibsa forum started in 2003 with a view to building co-operation between India, Brazil and South Africa. Trade flows between the three countries subsequently increased, reaching the $15bn mark in 2010 – up from $3.8bn in 2004.

The three member states established the Ibsa fund in 2004, with each contributing $1m per annum. The money is set aside to support development projects in low-income countries. As the fund does not have its own secretariat, it enlisted the United Nations Development Programme (UNDP) to handle the financial administration.

Flagship fund projects include a drive in Guinea-Bissau to improve agricultural practices and a project in Haiti to bring together members of conflicting factions in the violence-prone Carrefour Feuilles zone through a joint solid waste collection project.

Support from the Ibsa fund “is not a loan and we are not expecting them to pay us back”, explains Sena.

As emerging economies that still have their own development requirements, the Ibsa members are determined to distance themselves as far as possible from traditional donor-recipient relationships.

“We are talking about three developing countries [forming Ibsa]. We also have our own needs, but what drives us is to show solidarity with other countries. The idea is to support viable and replicable projects, based on capacities in the Ibsa countries and successes experienced in the Ibsa countries. The projects should be needs-driven, as well as locally owned and managed.

“We each bring our experience as a developing country. When we are talking about co-operating in another country, we are not trying to impose our views. It is a conversation. We are not trying to tell them what to do. We are not arrogant,” adds Sena.

During a speech in March, the Brazilian envoy to South Africa, Jose de Sá Pimentel, said the reasons for Ibsa’s establishment included a desire to operate “independently of developed countries’ preconceptions”. He added: “The war on Iraq and the economic collapse of 2008 eroded the international world order and made it clear that new rules and new political actors are needed if we want the system to work properly. So far, however, no adequate response has been given by the powers and organisations that should lead the way.

“The signs of something new are undisputable, but doubts remain about its scope, depth and direction. There is an ongoing shift in the economic balance, though a slow one, benefiting the countries of the south. But the main players do not seem to be at the driver’s seat.”

The Ibsa fund provides an opportunity to showcase a viable, even if limited, south-south development approach. It also provides a chance for new players to test their abilities in the “driver’s seat” that De Sá Pimentel mentioned.

“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,” notes Dr Petrus de Kock, senior researcher in the “Governance of Africa’s Resources” programme at the South African Institute of International Affairs, a research organisation in Johannesburg.

“It is an interesting indication that in 2008 alone India spent $547m on aid-related activities, either directly or indirectly linked to Ibsa. In 2008 India also extended $2.96m in lines of credit, mostly to sub-Saharan Africa. These don’t only link to Ibsa but shows India is becoming an important player in development aid,” says De Kock.

However, Dr Lyal White, director of the Centre for Dynamic Markets at the University of Pretoria’s Gordon Institute for Business Science, believes Brazil is the strongest political player within Ibsa.

“Brazil has the most vested interests,” says White. “India tends to focus on unilateral engagement and South Africa is part of Africa. Brazil uses the Ibsa platform more effectively as a political and diplomatic forum.”

While the three Ibsa members may individually have different priorities, their common ground as multicultural democracies with emerging economies provides the potential for a stronger future role on the global stage.

“The north’s economies are in perpetual crisis. The jury is still out on the long-term sustainability of their recovery. There is an ageing, shrinking population in Europe, with the consequence that the state has to support them. For a picture of future growth in the global economy, we need look no further than the Ibsas of the world,” argues De Kock.