Significance of SAARC Development Fund
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.
Heads of State at the 14th SAARC Summit in New Delhi
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.
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
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
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
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
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
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
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
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.
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
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
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
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.
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
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