Significance of SAARC Development Fund

Jagath C. SAVANADASA

Sri Lanka is hosting the 15 SAARC Summit from July 27 to August 3, 2008. Several key issues pertaining to the progress of members and the region are slated for deliberation and discussion. It is indeed a historic occasion for Sri Lanka.

It is important to look back on the 14 th Summit of the Heads of States of SAARC which was concluded on April 4, 2007.

At that vital gathering of the regions’ leaders an event of particular importance was the entry of the Islamic Republic of Afghanistan into SAARC. Afghanistan thus became the eighth and latest member of the fraternity of South Asian countries.

Yet another noteworthy aspect of the last Summit was the 30 point declaration made by the Heads of States which covered areas of crucial importance to the SAARC membership.

Some of the important areas of the declaration have a bearing on key connective instruments of SAARC. This is inevitable since there has to be back up organs not only to formulate particular policies based on the decisions taken by the leaders but also to implement such policy.

A regional grouping that has as many ramifications as SAARC and also extensive concerns of common interest needs to inevitably devolve tasks to be carried out through various functional arms.

Let us first look at the SAARC Development Fund (SDF) that was established way back in 1996. It was formed with the merger of the SAARC Fund for Regional Project (SFRP) and the SAARC Regional Fund (SRF). The SDF has already conducted extensive studies on different economic aspects of value to the region.

There has also been allocation of resources both funding and in other respects to facilitate the implementation of the different proposals evolved by the specialist groups of SDF. However, the progress from that point onwards in other words the implementation of the different proposals is what is most relevant and practical to SAARC.

Financial commitment

A sum of US$ 300 million had been recommended in respect of the ‘social window’ of the SAARC Fund. At this stage it is relevant to mention that the Indian Council of World Affairs conducted a conference following last year’s Heads of States’ Meeting which was aptly named ‘SAARC the 14 Summit and Beyond’.

At this gathering there emerged some useful views. On the other hand several participants felt the needs to proceed beyond the discussion stage and get on to the next stage of implementation of plans and strategies.

But let us first look at some of the key tasks to be carried out by the subsidiary organs of SAARC.

Physical and economic connectivity

One of the points at the conclusion of the 14th Summit should have been highlighted since it is of particular relevance and a matter of urgent concern.

This relates to connectivity. The Heads of States agreed to improve inter regional connectivity. Particularly economic and people-to-people connectivity. They also agreed to the vision of a South Asian Community where there was a smooth flow of goods, services, peoples, technologies, knowledge, capital and ideas in the region.

The concept of physical and economic connectivity as embodied in the above declaration is undoubtedly a much needed element of South Asian regional growth. It has however been achieved to a great extent by the rest of the world already.

The two buzz words of the post globalisation era were connectivity and integration.

That era began in the 1970s and accelerated in pace towards the end of the last century.

A look at the international economic scenario would show that world trade expanded by more than 25 per cent during the last two decades. Behind this sparkling growth process were factors like dismantling of trade barriers, liberalisation of economies, advancement in communications etc.

Such global growth should be of particular interest to SAARC and its different arms since as a region it has lagged behind primarily on account of the fact that there is inadequate connectivity and integration within the group.

It is on account of this reality that the SAARC Development Fund needs to intensify efforts to facilitate physical connectivity within the member nations as also inter-country and intra regional connectivity.

Sri Lanka’s own experience in this regard as much as some of the other SAARC nation shows that connectivity and access to rural districts needs improvement.

It is good to remember that connectivity is a two-way street. Whilst on the one hand it would promote communication and access to markets in particular to the SMI’s they would also be exposed to the world at large.

Exposure in many ways equates experience and access to knowledge. If we examine for example Sri Lanka a little more in this regard our greatest need seems to be the upgrading and improvement on a sustained basis of the nation’s roadways especially in the districts.

Though annual estimates and budgetary allocations are made, with good intentions to improve roads our main problem is the cost overruns which are sometimes brought about by external developments for example the steep rise in petroleum prices which prevents the country from utilising financial resources allocated for infrastructure development.

Perhaps a similar situation has been the experience of at least some of the other SAARC members especially the smaller countries.

Infrastructure Development Fund

It is on account of the above factors that an Infrastructure Development Fund (IDF) is practical and logical. Hopefully this proposal will become a reality and perhaps considered in a favourable light at the Colombo Summit of the leaders of SAARC.

Creation of opportunity

The creation of opportunity is yet another area that could help realise the ideals not only propounded by the contemporary leaders of SAARC but also by its founders.

How could this be done and what role could the SAARC Development Fund play in this regard?

Perhaps the SDF could launch on a programme to support those groups or individuals within each of the member nations to come up with ideas that generate opportunities for the mass of the people.

What comes to mind in this regard is social uplift. Expansion of opportunities opens the doors for the masses to emerge from their existing ways of life and livelihood.

A classic example of an idea that powered opportunity and paved the way for a mass movement in economic regeneration of people on an unprecedented scale is the concept of micro-credit pioneered by one of SAARC’s greatest sons Dr. Mohamed Unus.

The concept has not only gained worldwide acclaim and a Nobel Prize for Dr. Unus but has also been emulated widely.

Yet another vital clause of the declaration at the 14th Summit is also of paramount importance for the region.

This stages that SAARC is in its “Third decade of existence”. “There was an urgent need to move SAARC from declaratory to implementation phase” and they added that the “focus of SAARC should be implementing collaborative projects that are concrete and effective”.

Referring to the SAARC Development Fund the declaration observed “that it would bring benefits to the people of the region”. They directed that SDF be made operational at the earliest. They agreed that funds could be mobilised from within and outside the region.

They stressed the importance of decision making and working of the SDF to be consistent with the SAARC charter.

That particular declaration of the SAARC leaders made last year should rekindle those who are associated with the SDF.

Energy

The SAARC region is constantly affected by energy problems especially its costs. This is rather strange and some even consider it unnecessary in view of the reality of the situation taking into to account the resources of the region. Such resources are plentiful for the generation of hydro driven electric energy.

Of course the world’s overwhelming dependence on fossil oil in other words petroleum has not diminished in the manner anticipated inspire of the great deal of research that has been conducted by especially the industrialised world.

The availability within the SAARC group of nations of great resources like the huge water basin in Nepal could generate hydro driven electric power and at least partly help eliminate the problem of energy costs in South Asia.

What comes to the mind in this regard is the concept of the SAARC grid that was to be implemented some years ago and was to be a collaborative endeavour.

Could it be revived especially considering the fact that political stability is returning to Nepal now. Of course it also depends on economic policies that would be adopted by the new regime in Nepal and whether large foreign investments that would be necessary to generate electricity on the scale required for distribution in South Asia.

Environment

The SAARC Development Fund is also expected to focus on environmental issues that are of serious concern to the Member countries.

One of particular concern to Sri Lanka and the Maldives is Coastal Zone Management. Sri Lanka’s maritime economy was devastated by the tsunami. In case of the Maldives the rising seas has been an area of special concern.

On the other hand since environment and tourism are inter-related a cross fertilization process of these two areas may be feasible and should be of interest to SDF.

Perhaps the idea of a permanent SAARC body principally engaged in environmental protection and safeguarding the natural habitat in the course of promoting tourism should also fall within the purview of SDF.

All in all the SDF and other instruments of SAARC are important components of the treaty. Ten years is a long period and its time that the fund activates itself.

It certainly has vision and guidance and it is our hope that it will have the will and vigor to proceed beyond to the stage of implementation of the projects formulated.

The writer is Senior Consultant, Economic Affairs, Federation of Chamber of Commerce and Industry of Sri Lanka