Areas of Cooperation

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Area of Cooperation

SAARC Development Fund (SDF)

In 1996, a first funding mechanism was created in SAARC, ‘South Asian Development Fund (SADF)‘, merging the SAARC Fund for Regional Projects (SFRP) and the SAARC Regional Fund. SADF objectives were to support industrial development, poverty alleviation, protection of environment, institutional/human resource development and promotion of social and infrastructure development projects in the SAARC region. SADF started with a resource base of US$5 million (contributed on pro-rata basis by SAARC Member States), and till its closure in June 2008, had funds amounting to approx. US$ 7.0 million. Till its closure, SADF completed techno-economic feasibility studies for sixteen project studies.

During 2002-2005, SAARC Member States considered instituting various sectoral funding mechanisms e.g. Poverty Alleviation Fund, Infrastructure Fund, South Asian Development Bank, Media Development Fund, Voluntary Fund for the Differently Able Persons. A primary reason was that the existing South Asian Development Fund (SADF) was found to be inadequate i.e. in terms of required quantum of funds and its limited scope of work. In order to avoid proliferation of funds, the SAARC Financial Experts (September 2005) looked at the entire gamut of issues relating to funding of SAARC projects and programmes; and, amongst others, agreed that in lieu of proliferating sectoral financing mechanisms, the SADF be reconstituted into the SAARC Development Fund (SDF). And, SDF would have a permanent Secretariat, with three Windows (Social, Economic, Infrastructure). The Thirteenth SAARC Summit (Dhaka, 12-13 November 2005) finally decided to reconstitute the SADF into SDF to serve as the “umbrella financial mechanism” for all SAARC projects and programmes.

The Social Window would primarily focus poverty alleviation and social development projects. The Infrastructure Window would cover projects in the areas namely energy, power, transportation, telecommunications, environment, tourism and other infrastructure areas. The Economic Window would primarily be devoted to non-infrastructural funding.

Following that, by March 2008, an Inter-Governmental process on SDF, concluded the work on the SDF legal architecture i.e. Charter, Bye laws. As it finalized the legal architecture, among others, it mandated the SAARC Secretariat to function as the interim Secretariat for the SDF to operationalise the Fund from available resources and to implement identified projects, till such time a Permanent Secretariat is established.

The SDF Charter was signed at the Fifteenth SAARC Summit (Colombo, 2–3 August 2008). The Summit also agreed that SDF Permanent Secretariat would be established in Thimphu. The Fifteenth Summit further decided that Member States would early ratify the SDF Charter.

Once the SDF inter-governmental process completed its work, SDF Board became functional and has been meeting periodically: Second Meeting (SAARC Secretariat, May 2008), Third Meeting (SAARC Secretariat, 21 July 2008), Fourth Meeting (Thinphu, 29-30 April 2009), Fifth Meeting (Kabul, 1-2 September 2009), Sixth Meeting (Thimphu, 25-26 November 2009), Seventh Meeting (SAARC Secretariat, 3-5 February 2009).

Two regional Projects have so far been underway: The first Project i.e. on Women Empowerment (since August 2008); and, the second Project on Maternal & Child Health (MCH) (since September 2009). Efforts are underway to initiate steps related to the Project on Teachers Training, as approved by the SAARC Finance Ministers (2007). At the last i.e. Seventh Meeting of the SDF Board, three more regional/sub-regional Projects were also taken up: on Zero Energy Cold Storage; on Post-harvest Management and Value addition of Fruits in Production Catchments in SAARC Countries; and, on Facilitating Access to Energy Efficient and Renewable Energy Technologies, with special focus on Women in selected SAARC Countries. 

A growing interest is evident among the SAARC inter-governmental bodies/mechanisms to draw up focused Projects – regional or sub-regional – and to seek funding from SDF.

Over the past two years (2008-’09), the SDF Operational Modalities, initial personnel structure of the Fund has been finalized to facilitate operationalisaiton of the SDF Permanent Secretariat in Thimphu. The Seventh Meeting of the Board recommended to the SDF Governing Council on appointment of the first CEO of the Fund. By early April 2010, the Members of the SDF Governing Council i.e. the SAARC Finance Ministers approved the CEO. Once approved by the Sixteenth SAARC Summit, the CEO would formally initiate the work of the SDF Secretariat. During the Summit, in presence of the heads of State/Government, the SDF Secretariat would be formally inaugurated.

By April 2010, all Member States have ratified the SDF Charter. On 15 April 2010, therefore, SAARC Secretary General issued the ‘notification’ on the Charter’s entry into force. This completed the entire legal process for the SDF.

Of the determined corpus i.e. Initial Paid-up Capital of SDR 200 million (approx. US$ 300 million), the Secretariat has so far received the full quantum of the assessed subscription from India and Bhutan. India has additionally sent US$ 100 million, as its voluntary contribution for Projects on Social Development. Other Member States are expected to forward respective subscription in due course.

SAARC Development Fund Charter