BRICS Development Bank officially opens for business

8 March 2016

The National Treasury announced the official establishment of the New Development Bank (NDB) headquarters in Shanghai, China on 27 February, which marks the completion of legal procedures that will now allow the bank to begin its operations, in a statement released on 7 March 2016.

The headquarters was first opened in July 2015, following the formal agreement on the bank’s establishment between BRICS leaders at its fifth annual summit, held in South Africa in 2013.

The NDB is busy establishing its Africa Regional Centre in Johannesburg, as outlined by Finance Minister Pravin Gordhan in his 2016 Budget Speech.

The South African operation has started a national recruitment process, and the Treasury has encouraged South Africans with the necessary skills and qualifications to apply via its website for a variety of mid- and high-level positions at the institution.

South Africa’s first instalment of R2-billion was paid to the bank in December last year, according to the minister’s 2016 Budget Review, and the budget makes provision for further commitments over the medium term.

The NDB will begin operations with $50-billion (about R770-billion), which will expand to the full $100-billion in the next five to 10 years.

While China may have the largest share of voting rights in the bank with its $41-billion pledged contribution, the South African contribution and its work in the organisation will go a long way to developing the rest of the continent as an emerging economic power.

“This initiative,” Gordhan said his address to Parliament, “gives impetus to our role as a financial centre for Africa and will facilitate access to global finance by African investors and institutions.”

The bank will focus on lending money to developing countries to help finance infrastructure projects. Economists consider the NDB a viable and necessary alternative to the World Bank and the International Monetary Fund, one that will bring the focus back to developing the BRICS member nations as well as emerging nations on their respective continents.

To achieve this, the bank will support public and private projects through loans, guarantees, equity participation and other financial instruments.

This primary focus will complement BRICS’ existing efforts of multilateral and regional financial institutions for global growth and development. The NDB will also co-operate with international organisations and other financial entities, and provide technical assistance for projects to be supported by the bank.

The BRICS economies comprise more than 3 billion people – over 40% of the world’s population – and cover more than a quarter of the world’s land area and global gross domestic product.

Source: South African Government News Agency