BRICS bank to unlock Africa’s economic potential

by Nyarai Kampilipili in Pretoria, South Africa
The launch of a regional development bank by the BRICS countries to service the African continent is a positive development that is expected to unlock the continent’s socio-economic potential.

    South African President Jacob Zuma said this on 17 August at the launch of the Africa Regional Centre of the New Development Bank (NDB) in Johannesburg, South Africa.

The NDB, formerly known as the BRICS Development Bank, is a multilateral development bank established by the BRICS countries, comprising Brazil, Russia, India, China and South Africa.

With its headquarters in the Chinese city of Shanghai, the bank was established in February 2016 to mobilize resources for infrastructure and sustainable development projects in BRICS member states and other emerging economies, as well as in developing countries.

The Africa Regional Centre of the NDB will exclusively cater for the developmental needs of the continent.

“The launch of the Africa Regional Centre of the New Development Bank is a historic occasion as it marks the strengthening of the BRICS formation and also underlines the BRICS commitment to the development of the African continent and emerging markets,” Zuma said

Zuma, who is the incoming chairperson of the Southern African Development Community (SADC), said this development is not only a “critical milestone” for South Africa, but “for the entire African continent,” and should, therefore, be celebrated as a shared achievement.

“The launch of the centre is testament to our commitment that BRICS and the New Development Bank should benefit not only BRICS countries, but should also benefit the whole of Africa and the developing world as a whole,” Zuma said.

He added: “This is, therefore, truly a proud moment, which points to a brighter future for the people of our continent and the developing world in general.”

Zuma said Africa has “great expectations” for the new bank to unlock the socio-economic potential of the continent.

“We expect that the bank, through the Africa Regional Centre, will contribute to accelerating infrastructure investment in energy, transport, water and other productive sectors,” he said.

Plans to establish the NDB were strengthened in July 2014 when the BRICS countries signed the Agreement establishing the New Development Bank at their 6th Summit held in Brazil.

The BRICS leaders stressed that the NDB would strengthen cooperation among BRICS and would supplement the efforts of multilateral and regional financial institutions for global development.

According to the Fortaleza Declaration signed at the 6th BRICS Summit, “the bank shall have an initial authorized capital of US$100 billion.”

The initial subscribed capital was US$50 billion, equally shared among founding members.

Since establishment of the bank in 2016, notable achievements have been realized, including the issuance of the first set of loans amounting to US$1.5 billion in total to fund renewable energy projects in member countries.

The bank issued its first green bonds in the Chinese capital market in 2016, mobilising about US$450 million in the process.

The BRICS is growing as an emerging global economy. According to recent studies, the combined economies of the BRICS could eclipse the combined economies of the current richest countries of the world by the year 2050, hence the need for Africa to take advantage of its close ties with BRICS to strengthen socio-economic development on the continent.

The BRICS mechanism aims to achieve peace, security, development and cooperation. It seeks to contribute significantly to the development of humanity and establish a more equitable and fair world.