SABC News reports that the Brazil, Russia, India, China and South Africa (BRICS members) New Development Bank (NDB) has its sights on raising 2.5 billion US Dollars within the next year, to put money behind infrastructure projects.
The 8th BRICS Leaders Summit took place at the Indian south west resort of Goa this past weekend (12-14 October) where President Jacob Zuma joined leaders of India (Prime Minister Narendra Modi), Brazil (President Dilma Rousseff), Russia (President Vladimir Putin) and China (President Xi Jinping) for the gathering.
The main aim behind the establishment of The BRICS New Development Bank was to assemble resources that would enable infrastructure for development projects in BRICS member countries.
The BRICS New Development Bank has been described by economists as a “game changer” in the evolution of financing, as well as a tool to “rebalance the global order with respect to development finance”. The bank’s founding members have pledged to sow 100 billion US dollar capital base into the bank, China being the single largest contributor.
While many eyebrows have been raised about its existence, the bank believes that it is not a substitute for the established multinational institutions, e.g the World Bank, African Development Bank, Asian Development Bank or the Development Bank of Latin America. Instead, Leslie Maasdorp, Deputy Chairperson of the New Development Bank says the NDB will work hand in hand with institutions already established.
“So we have got structured partnership with multinational banks and there is so much we can learn from these institutions. We were not set up to compete with these institutions but we can learn from them. It has been an exciting year but there are challenges ahead,” Maasdorp told SABC News.
The bank (headquartered in Shanghai, China) has already secured a rating from local rating agencies in addition to raising capital through the bond market and will also look to the private sector for resources into infrastructure development. The Chairperson of the Indian Chapter of the BRICS Business Council, Onkar Kanwar said: “Agriculture and energy are priority area of cooperation of our economies. We should also collaborate in developing energy efficiency technologies.”
The bank’s Africa Regional Centre will be headquartered in Johannesburg within the first quarter of 2017. “Our Africa Regional Centre is expected to open this quarter and I assure President Zuma that it will work with the objectives he articulated. We are targeting lending of about 2-point-5 billion US dollars for the next year. Providing local currency financing minimises currency risk for our members,” says President of the BRICS New Development Bank Kundapur Kamath.
All the BRICS leaders are in full support of the bank, looking at it as a reliable tool to strengthen business opportunities, build investments and promote innovation and growth.