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The NBD has the potential to reshape the world of development finance

 The New Development Bank has the potential to change the world of development finance, says Professor Karin Costa Vazquez, in an article on the Financial Express.

Prof. Vazquez is the Assistant Dean for Global Engagement, Executive Director, Center for African, Latin American and Caribbean Studies at School of International Affairs, O.P Jindal Global University.

The NDB has been in operation for less than four years, however, it has thus far received an AA+ rating international credit rating and built a portfolio of 35 projects worth USD 9.2 billion – nearly half the World Bank’s lending in 2018, reports the Financial Express.

READ MORE: S&P rates Brics New Development Bank AA+

The Professor outlined the key features that set the NBD part; the bank is committed to close the infrastructure gap in developing and emerging countries, it is focused on sustainable development and the bank’s equity in power-sharing.

 

By: Kgothatso Nkanyane

BRICS New Development Bank positive on Asian economies

Annual reports from the Boao Forum for Asia say that Asia remains competitive in creativity, tech innovation, and economic openness. Some are concerned whether Asia can keep its competitiveness in face of global volatility, but Leslie Maasdorp, vice president of the BRICS New Development Bank is bullish on the momentum of Asian economies.

“There is no question as the reports suggested. Asia right now is and will continue to be a significant growth engine in the world economy,” he told CGTN.

He mentioned that, in addition to traditional growth engines, the openness of the economy, application of new technology as well as innovation become the new sources of growth in Asia.

2018 witnessed some serious currency depreciation in emerging economies, between 10 and 40 percent against the U.S. dollar. Maasdorp said that it’s fundamentally because of a strong U.S. dollar, not a domestic problem.

“Emerging markets suffer from the direct impact of the movement in the U.S. interest rate. If the U.S. dollar rises, it directly leads to the reversing capital flows out of the emerging markets. So many of the emerging markets, like Brazil, South Africa, and Turkey, suffer from this,” he explained.

“Let’s take Turkey as an example. The impact of that significant depreciation in the Lira has taken huge and immediate effect on other emerging markets,” he added.

He noted that for Asian economies or any other emerging market, the key thing is to insulate from any extremeness of global volatility. “You can do this in a number of ways. One way is to have strong savings and investment rate, which is Asian economies have,” he said.

He also said that other emerging markets are not so fortunate as their investment flows are influenced by external volatility. And he thought commodity-based economies are more easily affected by external factors as they are pricing commodities in U.S. dollars.

As the U.S. Fed signals no rate hike for 2019, he believed that depreciation pressure would be absolutely eased. “A stable U.S. interest rate that is predictable for the future should provide a better environment for investment decision,” he stressed, projecting that emerging economies would develop in a more stable and predictable environment.

 

ISSUED BY: CGTN Global Business

 

OPINION| BRICS Credit Rating Agency can change the international capital market

BRICS Credit Rating Agency can change the dynamics of the global capital market. The global capital market is dominated by the top three credit rating agencies – S&P, Moody’s and Fitch. Emerging economies have had problems with Western credit rating agencies ‘politically biased’ decisions. The rating agency will further reduce the dependency of developing countries on the verdicts of the big three.

The bloc has grown at an increased rate over the past years. The grouping has successfully established a multilateral development bank, the New Development Bank (NDB) which has since its establishment in 2014 funded 27 projects in member states and has US$ 6.7 billion in lending amount.

India’s Economic Affairs Secretary, Subhash Chandra Garg during the first BRICS Finance Ministers and Central Bank Governors, in April 2018 urged members of the bloc to set up an independent rating agency of the five-member group. The BRICS rating agency was proposed during the 7th annual diplomatic Summit in the Russian city, Ufa in Bashkortostan. The proposal was affirmed during the 8th Summit in Xiamen.

Former Indian union commerce and home secretary G K Pillai had said earlier in 2012, that the control of intelligence in the world was biased and the bloc needed to set up its credit rating.

According to India having an independent agency would remedy impediments caused current and dominant rating agencies such as S&P, Moody’s and Fitch. These three western rating agencies hold over 90% of the sovereign rating market.

The BRICS Business Council Financial Services Working Group assessed the sustainability of establishing an independent credit rating agency in December 2016. In the global investor survey undertaken by the Russian chapter across 24 countries in 2016, 73% supported the idea of a BRICS Rating Agency, as reported by IOL.

Financial services company, Standard and Poor’s (S&P) has ascribed an ‘AA+’ long-term and ‘A-1+’ short-term issuer credit ratings on the New Development Bank (NDB) in 2018.

READ MORE:S&P rates Brics New Development Bank AA+

 

 

By: Kgothatso Nkanyane

NDB and FAO co-host Workshop on Development Impact and SDGs

The New Development Bank (NDB) and the Food and Agriculture Organization of the United Nations (FAO) co-hosted a workshop on Development Impact and the Sustainable Development Goals (SDGs) focused on the sectors of Irrigation, Water Resource Management & Water, Sanitation and Hygiene (WASH) on 20-21 February 2019 in Shanghai.

In the spirit of SDG 17, the workshop sought to share technical knowledge among a range of development actors on how to better integrate the SDGs into the design and implementation of infrastructure and sustainable development projects related to water. Among the participants were government representatives from BRICS countries, specialized United Nations (UN) Agencies and programmes (FAO, UNDP, UN-Water), multilateral development banks (ADB, AIIB, NDB) and national financial institutions (BNDES, CDB, DBSA), in addition to think-tanks and sector experts (Bill & Melinda Gates Foundation, IMWI).

The workshop initiated a community of practice that will continue working on the links of investments in the water sector and their contribution to the achievement of SDG 6 and SDG 17.

 

ISSUED BY: NEW DEVELOPMENT BANK (NDB)

NDB put down sucessfully $ 448 million of RMB-denominated bonds in the China Inter-bank Bond Market

The New Development Bank (NDB) put down successfully $ 448 million of RMB-denominated bonds in the China Interbank Bond Market on Monday. The NDB is a multilateral development bank established by the BRICS (Brazil, Russia, India, China & South Africa) states.

The NDB placed two positions with maturities of 3 years (2 billion yuan) and 5 years (1 billion yuan) and was priced at the lower end of the announced pricing range with coupon rates of 3 percent and 3.32 percent respectively.

“The NDB successfully raised 3 billion yuan at very attractive price levels, which marks another formidable milestone for the bank. Pricing of the bond is a good reflection of the NDB’s high credit quality,” said Leslie Maasdorp, NDB VP & CFO, “In line with the NDB’s General Strategy, the bank intends to become a regular issuer in local currency markets of its member countries. The bank is currently awaiting regulatory approvals to issue local currency debt in a number of markets of its member countries.” – reported China.org.cn.

 

Source: China.org.cn

NDB’S LENDING COMMITMENT IN 2018 INCREASED BY 167%, BRINGING AGGREGATE APPROVAL VOLUME TO USD 8 BILLION

The year 2018 was the third full year of the NDB’s operation and it was marked by the approval of USD 4.8 billion in loans — a 167 % increase over that of 2017, which brings the Bank’s total lending volume since its establishment in 2015 to approximately USD 8 billion. Till date, the NDB has approved 30 infrastructure and sustainable development projects. In 2018 alone, the Bank has approved 17 projects. This is a clear demonstration of the NDB’s strong commitment to its mandate of supporting infrastructure and sustainable development of its member countries.

In 2018, the NDB has continued to focus its efforts on the most pressing needs of infrastructure development in its member countries, covering the sectors of transport, energy, urban, environment, and water. The Bank’s 2018 lending portfolio is well balanced across the five sectors, with eight projects in transport sector, three projects in energy sector, two projects in environment sector, three projects in urban sector and one project in water sector.

The Bank’s infrastructure and sustainable development operations also highlight value addition apart from providing financing. For example, the NDB provided an international expertise pool of offshore wind power to advise technical solutions and to share successful country lessons to the Guangdong Offshore Wind Power Project.

The NDB also supported member country’s efforts aimed at the preservation of cultural heritage assets. Through the Small Historic Cities Development Project, the Bank supported infrastructure development in nine competitively selected Russian small historic cities with a focus on the preservation and development of cultural heritage.

Through the Mumbai Metro Project, the NDB is helping the second most densely populated city in the world to tackle the most pressing challenges of traffic congestions and pollutions in the transport sector and to sustain Mumbai’s economic and social development momentum.

 

Projects approved by the NDB Board of Directors in 2017:

PROJECT LOAN AMOUNT
Development of Water Supply and Sanitation Systems Project (Russia) USD 320 million
Small Historic Cities Development Project (Russia) USD 220 million
Durban Container Terminal Berth Reconstruction Project (South Africa) USD 200 million
Pará Sustainable Municipalities Project (Brazil) USD 50 million
Maranhão Road Corridor – South North Integration (Brazil) USD 71 million
Chongqing Small Cities Sustainable Development Project (China) USD 300 million
Bihar Rural Roads Project (India) USD 350 million
Luoyang Metro Project (China) USD 300 million
Greenhouse Gas Emissions Reduction and Energy Sector Development Project

(South Africa)

USD 300 million
Environmental Protection Project (Brazil) USD 200 million
Madhya Pradesh Bridges Project (India) USD 175 million
Madhya Pradesh Major District Roads II Project (India) USD 350 million
Sustainable Infrastructure in relation to “ZapSibNefteKhim” Project (Russia) USD 300 million
Guangdong Yudean Yangjiang Shapa Offshore Wind Power Project (China) RMB 2 billion
Hohhot New Airport Project (China) RMB 4.2 billion
Jiangxi Natural Gas Transmission System Development Project (China) USD 400 million
Mumbai Metro Rail Project (India) USD 260 million

 

ISSUED BY THE NEW DEVELOPMENT BANK

 

NDB is aiming at a loan book approximating $40 billion by 2027

The New Development Bank (NDB) is aiming at a loan book approximating $40 billion by 2027 and is looking to enter the masala bond market by 2019.

Chief Financial Officer (CFO) and Vice President of the NDB, Leslie Maasdorp highlighted the bank’s achievements – the bank is three and half years old and has already approved projects cumulatively amount to 7.9 billion.

The BRICS (Brazil, Russia, India, China and  South Africa) multilateral bank has already achieved an asset under management of $8 billion. The bank has financed a lot of environmental projects and has recently taken a step to fund the private sector.

 

Source: CNBC

 

The BRICS flourishing partnership

Coined by then-chairman of Goldman Sachs Assets, Jim O’Neill in 2001 – BRIC. At its initial formal meeting in 2009 [BRIC] emphasised the improvement of global economic situations and reforming financial institutions. South Africa in 2010 was then formally invited to join the group of the world’s fast growing in emerging economies – the group was renamed BRICS.

The grouping is celebrating a decade of formal meetings and the partnership continues to flourish. Brazil, Russia, India, China, South Africa relations have moved from just economic collaborations. The collation has over the years accumulated achievements that  are not only for the benefit of member countries.

BRICS in 2014 Created a development bank [New Development Bank], raising $50 billion to start it from the ground. The bank has funded development in member countries and is now funding non-member countries and private. The NDB will in the future fund Arts and Culture – South Africa’s Minister of Arts and Culture Mr Nathi Mthethwa hosted BRICS Ministers of culture and it was agreed that the NDB should fund culture and the arts.

According to thesouthafrica.com the grouping achieved also, a decentralised the economic clout of traditional Western powers, ensured trade benefits for South Africa and gave Africa a greater access to the global stage.

 

By: Kgothatso Nkanyane

New Development Director General to partake in the 2019 World Ocean Summit

The New Development Bank is to part take in the 2019 World Ocean Summit. Director general of front office of the president, New Development Bank, Subrahmanya Pulle Srinivas is one the speakers of the summit aiming at achieving world and regional  connections.

The summit will for the first be held in the Middle East [Abu Dhabi – United Arab Emirates] in March 2019. This meeting will bring together, political leaders and policymakers, heads of global business, scientists, NGOs and multilaterals from across the globe.

According the World Ocean Summit website, the summit will focus on three topics;

  • Finance: the role of sovereign wealth funds; blue carbon systems; insurance; Islamic finance and the ocean
  • Technology and innovation: aquaculture; a focus on cities and waste management
  • Governance: illegal fishing; lessons from land economies

 

By : Kgothatso Nkanyane

 

BRICS New Development Bank and Brazil Development Bank invest in Brazil renewable energy projects

The Brazil Development Bank (BNDES) announced that it has has raised USD 156 million together with the BRICS New Development Bank (NDB) to back renewable energy project investments.

The NDB and the BNDES signed a USD 300 million agreement in 2017 and this a final part of the signed agreement.  This final fund is meant for two projects – the 326.7- MW Campo Largo I wind complex and the 120-MW Pirapora I solar complex.

Cargo Largo received USD 190 million from each institution , for the implementation of 11 wind farms in Bahia state.

The photovoltaic (PV) project received USD 163 million from the two banks to develop four solar farms in Minas Gerais state, reports renewablesnow.com. The New development has invested USD 61 million in the projects. 

 

source: Renewablesnow.com