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.

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

 The Fund is to serve as the umbrella financial institution for SAARC projects and programs which are in fulfillment of the objectives of the SAARC Charter. 

SDF has three funding windows viz. Social, Economic and Infrastructure

Social Window primarily funds projects, inter alia, on poverty alleviation, social development focusing on education; health; human resources development; support to vulnerable/disadvantaged segments of the society; funding needs of communities, mircoenterprises, rural infrastructure development.

SDF is currently implementing ten regional projects with 62 implementing and lead implementing agencies covering all the eight Member States under the Social Window funding. The SDF Secretariat has already committed USD 70.27 million for social window projects as of date out of which it has disbursed USD 38.38 million to the Member States as of 19th April 2016

SDF intend to operationalize Economic and Infrastructure windows by lending/co lending for significant projects of the region which would benefit two or more countries of the SAARC region and meet the goals of regional integration and cooperation. In this direction SDF is in process of evaluating bankable projects which meet the requirements specified by SDF charter and will help in achieving/improving regional integration, economic cooperation and connectivity.

SDF plans to increase its engagements for cooperation and international collaboration with other financial institutions, multilateral organizations and Banks in an effort to make SDF a vibrant and more effective funding institution across the SAARC region.

 The objective of this exercise is to implement a comprehensive strategy for the SDF to

• Lend to significant projects which meet the requirements of SAARC region. This would include various steps like co financing, refinancing, investments etc.
• Mobilization of funds-SDF also simultaneously plans to raise funds so that its lending strength is in a position to meet the infrastructure, economic and social needs of the region.
• Fund deployment for achieving results in all the three windowsEconomic, Infrastructure and Social.
• International collaborations with other Multilateral institutions , Development organizations and Banks to ensure that programmes and projects achieve significant impact
• Activate and operationalize
  • Social Enterprises Development Programme –
    Funding to Social Enterprises vide Social Enterprises Development Programme (SEDP) – proposed scheme is to fund 10 enterprises in each SAARC member State and
  • Line of Credit to Financial Institutions for Medium and Small Scale Enterprises
    Providing Lines of credit to Financial Institutions for meeting the fund requirements of Medium and Small Scale Enterprises requirements vide the MSME scheme
  • Project Development Facility Setting up Project Development Facility in SDF for identifying and developing priority projects

SDF has also taken a number of initiatives for strategic growth of South Asian region. Important among these is to forge relationships with multilateral and domestic institutions in SAARC Member States for taking up joint initiative and also cofunding of projects.