Emerging market leaders want their Brazil, Russia, India, China and South Africa club to be taken seriously, and next month [Mar 2013] they are expected to make a decisive move towards setting up a development bank to give it real substance and credibility.<\/i><\/p>\n
\u201cThere is no doubt that the BRICS<\/a> Development Bank will be a welcome development,\u201d Sandile Zungu, the Secretary of South Africa\u2019s Black Business Council, told IPS.<\/p>\n \u201cThe need for the bank is fairly obvious if you look at the growing trade among the BRICS countries and the frustrations these countries have had with existing development financing institutions like the World Bank and the IMF,\u201d\u00a0 he said.<\/p>\n Zungu particularly pointed to existing bureaucracy, the criteria for lending, the conditions attached to loans and the slow pace in processing applications.<\/p>\n \u201cThen there\u2019s the fact these countries have such massive infrastructure roll-out programmes, which gives all the more reason to create this bank \u2013 the need is there.\u201d<\/p>\n Infrastructure financing within BRICS will indeed be a key focus of the bank, along with alternative models of cooperation to finance such projects, according to Hannah Edinger, head of Research and Strategy at emerging-markets consultancy group Frontier Advisory.<\/p>\n South African Finance Minister Pravin Gordhan earlier this week told parliament that the the bank\u2019s establishment is \u201cintended to mobilise domestic savings\u201d\u00a0 to co-fund these infrastructure projects in developing regions.<\/p>\n Talking to IPS, Edinger said that at least 15 trillion dollars is required in the BRICS countries over the next 10 to 20 years to finance such projects, especially in India and South Africa.<\/p>\n At a recent press briefing, Lynette Chen, Chief Executive Officer of the New Partnership of Africa\u2019s Development Business Foundation, estimated that there cirrently is a 480-billion-dollar deficit in funding for infrastructure in Africa, which the new BRICS bank should help to tackle.<\/p>\n \u201cThe BRICS Development Bank could become the lender of choice for Africa,\u201d Chen said.<\/p>\n \u201cOther areas of finance include green technology projects, biofuels, dams and nuclear power plants in Africa,\u201d according to Edinger. \u201cYet, financing to the African continent is expected to be a smaller share of total financing extended to the BRICS.\u201d<\/p>\n While there will be some scope to fund environmentally friendly projects in Africa,\u00a0 this will not initially be the prime focus of the new Bank, the strategist said.<\/p>\n Projects with a focus on sustainable development and climate change will be part of the mix particularly where they concern \u201clarger and cross-border infrastructure-type projects in the transportation and power sectors, to promote regional integration and regional market building,\u201d according to Edinger.<\/p>\n While the upcoming BRICS Summit in Durban at the end of March will be the first to be hosted on African soil,\u00a0 officials have been holding a series of meetings in countries to ensure that the political club is given a real economic backbone.<\/p>\n Zungu predicted that the new bank would \u201ccement\u201d the BRICS spirit of co-operation by giving a tangible institutional foundation.<\/p>\n Edinger agreed. \u201cThe establishment of the BRICS Development Bank will be an important milestone for the BRICS grouping as it would add credibility, substance and ownership of the BRICS concept as the first institution coming out of this club.\u201d<\/p>\n She said that while a number of working groups and forums exist as part of the BRICS mechanism, the establishment of the bank would signal a move away from just being a political discussion forum that proposes reforming the international financial system, creating a vehicle that is more attuned with the interests of the BRICS emerging markets, as well as the interests of the greater Global South.<\/p>\n Experts at South Africa\u2019s Standard Bank believe that the BRICS Development Bank will initially be capitalised at 50 billion dollars, with 10 billion dollars from each of the BRICS members.<\/p>\n \u201cThe bank would also give a sense of assurance to private financiers,\u201d according to Chen. She agreed that many infrastructure projects in Africa would be cross-border, involving \u201cdevelopment corridors.\u201d<\/p>\n Eyes on Durban<\/b><\/p>\n