The South African government has welcomed the idea of establishing a development bank tended by the Brics bloc with palpable excitement, as it may come to fill a critical gap in Africa’s development aspirations.
The idea of establishing such a development bank is one of the critical outcomes of the fourth Brics summit attended by President Jacob Zuma and leading members of his cabinet.
The Brics bloc, made up of Brazil, Russia, India, China and South Africa, is emerging as a powerful economic and diplomatic force.
A Brics development bank comes with a potential counterweight to other multilateral lenders such as the World Bank and International Monetary Fund.
Emerging economies have been making a push to democratise the constitution and functioning of these multilateral institutions.
A Brics bank would be more efficient in serving both the political and economic agendas of emerging nations.
Addressing the Brics summit in New Delhi, India, Zuma said: “The bank will reinforce the Brics grouping by utilising surplus reserves.
It will also encourage investment in a more sustainable and productive manner for the financing of infrastructure.”
Minister of Trade and Industry Rob Davies said the establishment of the Brics development bank would certainly cement the partnership of member countries, making trade between Brics countries flow more easily.
He added that South Africa had worked up “a massive” infrastructure plan and was in a much better position to bid for finance for it.
“It would be a very powerful financial tool to improve trade opportunities,” Brazil’s Trade Minister Fernando Pimentel told a session on Wednesday ahead of the summit.
Zuma told his counterparts during the Leaders’ Summit session to focus on a partnership for global stability, security and prosperity. He said that South Africa was on course to spend more than R860bn on infrastructure by March 2014.
“We invite you, as the business community of Brics, to collaborate with us to explore these infrastructure opportunities.“South Africa and Africa in general are convinced that we can negotiate new types of mutually beneficial developmental agreements with Brics countries on infrastructure development,” Zuma said.
The Brics summit also expressed concern over excess liquidity in the global financial system caused by the policies of the rich world.
The central banks of the developed economies have slashed interest rates and pumped billions of dollars into the banking system to try to stimulate lending and economic growth.
“Excessive liquidity from the aggressive policy actions taken by central banks to stabilise their domestic economies have been spilling over into emerging market economies,” the emerging bloc declared after the summit.
“We believe it is critical for advanced economies to adopt responsible macroeconomic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs,” they added. “We draw attention to the risks of large and volatile cross-border capital flows being faced by the emerging economies.”
via Emerging economy boost | The New Age Online.
