The New Development Bank (NDB) launched by the BRICS have been “welcomed by all”, South African President Jacob Zuma has asserted. The new lender is expected to strengthen the group’s ability to offer developing nations the support traditionally given by the US and Japan through organizations like the World Bank.
Preparations for the opening of the regional branch of the $100 billion NDB in Johannesburg is at an advanced stage, Zuma told South African lawmakers on Thursday in Cape Town.
“The next exciting initiative is the establishment of the African regional centre of the bank in Johannesburg. South Africa is proud to host the regional centre and preparations are at an advanced stage,” said Zuma.
“It (BRICS Bank) deals with anyone who comes to seek support from the bank. It has been welcomed by all, firstly, the big world banks have received the BRICS Development Bank very well. They see it as an important additional factor in the global financial transactions,” he added.
The New Development Bank came into existence after three years of negotiations among members of BRICS.
At the launch of the new lender earlier last month in Shanghai, China’s Finance Minister Lou Jiwei said the BRICS Bank will be global development partner to the established institutions.
“NDB’s support for infrastructure construction will effectively ease the bottleneck that has constrained emerging and developing nations for long and will offer support for their economies’ upgrade and growth. NDB is a new member and partner to the global development system,” said Lou.
Intra-BRICS trade has increased by 70 per cent between BRICS member countries since 2009 and South Africa stands to benefit from the new BRICS Development Bank, Zuma said in response to a query in the National Assembly in Cape Town on Thursday.
“The summit also affirmed the importance of BRICS in the global arena. BRICS presents an aggregate Growth Domestic Product (GDP) exceeding US$32-trillion. This marks a 60% growth since the formation of the grouping. BRICS also accounts almost 30% of the global GDP and produces a third of the world’s industrial products and half of agricultural goods,” he said.
Brazil, Russia, China, India and South Africa attracted 20.5 per cent of the global total direct investment in 2014, compared to only 16.9 per cent in 2009.
The share of the BRICS capital investment on the global market has also increased significantly, Zuma said, from 9.7 per cent to 14 per cent since 2009.
Zuma also praised his Russian counterpart Vladimir Putin’s economic partnership blueprint for the BRICS unveiled at a summit of the five countries in Russia last month.
“BRICS leaders also adopted as one of the key summit outcomes, a strategy for the BRICS economic partnership, aimed at further boosting trade and investment ties,” said Zuma.
“The seventh BRICS Summit in Ufa, Russia, registered substantive progress. The key achievement was entry into force of the BRICS financial institutions namely the New Development Bank and the contingency reserve arrangements.”
Two leading South African bankers have been appointed to the board of the BRICS bank.
The BRICS New Development Bank will name its first investment in April next year and the first loan will be issued in yuan not dollar, top officials confirmed.
The first president of the Bank, Kundapur Vaman Kamath said in Shanghai last month that the new lender will work closely with the China-led Asian Infrastructure Investment Bank.
“We have partnerships that we will forge with the AIIB, the national loan banks and indeed, the exiting market loan banks,” he said.
The bank has an initial authorized capital of $100 billion.
Its initial subscribed capital of $50 billion will be equally shared among the founding members.
It will have a three-tier governance structure — a board of governors, a board of directors, a president and vice presidents.
As agreed by the five countries, the first chair of the board of governors has been nominated by Russia, the first chair of the board of directors by Brazil, and the first president by India.
The paid-in reserves are planned to be denominated in each country’s currency. The Chinese renmimbi is also expected to replace the dollar at the BRICS Bank, especially for projects in Asia.
TBP and Agencies