17 July 2014
South African President Jacob Zuma has hailed the establishment of a Brics development bank as “an everlasting legacy that will change the face of global economics and the face of all the developing world for the better”.
The leaders of the Brics emerging market bloc, at their meeting in Fortaleza, Brazil on Tuesday, nnounced the signing of an agreement that paves the way for the establishment of a New Development Bank, to be headquartered in Shanghai, China, as well as an African regional centre of the bank, to be located in South Africa.
“Although we wanted to have the headquarters in our country, I think South Africa, on behalf of the continent of Africa, got a good deal out of the decision about the bank,” Zuma said on his return to South Africa on Thursday.
He added that the decision had been reached through consensus, looking at the advantages and resource positions of the five Brics member states.
The Brics grouping, he said, had added a refreshing and enlightening dimension to the management and direction of the affairs of the world for the benefit of developing countries.
According to the Fortaleza Declaration, the Brics bank will have an initial authorised capital of US$100-billion, and its initial subscribed capital of $50-billion will be equally shared among the five founding members.
The bank is aimed at mobilising resources for infrastructure and sustainable development projects in Brics and other emerging and developing economies that continue to face financing constraints to address infrastructure gaps and sustainable development needs.
The bank, the declaration stated, is aimed at “mobilising resources for infrastructure and sustainable development projects in Brics and other emerging and developing economies”.
“Based on sound banking principles, the New Development Bank will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional financial institutions for global development, thus contributing to our collective commitments for achieving the goal of strong, sustainable and balanced growth.”
The first chair of the bank’s board of governors will be from Russia, the first chair of its board of directors from Brazil, and the first president of the bank from India. The Brics finance ministers have been directed to work out the modalities for its operationalisation.