BRICS presents its new bank at the AfDB Annual Meetings
The New Development Bank (NDB) launched by the five BRICS member countries (Brazil, Russia, India, China and South Africa) was the subject of a presentation on Tuesday, May 24, 2016, the second day of the Annual Meetings of the African Development Bank (AfDB), which opened Monday in Lusaka.
The NDB vice-president, Leslie Maasdorp, emphasized that the new institutions does not intend to compete with the African Development Bank, and said that the NDB will work hand-in-hand with the AfDB to implement development projects on the African continent. South Africa, which is one of the founders of the NDB, is a member of both BRICS and the AfDB.
"We have a substantial pipeline of projects," said Leslie Maasdorp, "and their implementation will support the work of the AfDB in regional member countries." The first NDB regional office will open "very soon" in South Africa with just such a mission of collaboration, operating as a platform to develop regional projects on the continent. Each BRICS country will eventually have an NDB regional office.
The task of the new BRICS development bank is to evade the political and economic weight of major industrialized countries. The NDB will therefore finance projects using the financial markets of its member countries, raising funds in local currencies (a strategy also used by the AfDB) in order to minimize financial risk and reduce costs. The NDB also expects to use flexible funding procedures.
The Bank will launch its first fundraising effort next week, issuing bonds on the Chinese financial market in the local currency, the Yuan, in accordance with the financial architecture of the new institution.
The statutes of the NDB envisage opening its capital to countries that are not BRICS members, but the BRICS countries will retain a majority stake of 55%.The Bank will invest 80% of its assets in emerging markets, including the BRICS.
All NDB members are equal in the process of decision making by the Bank.
The NDB started operations in July 2015 with initial capital of USD 1 billion. Member States will each contribute USD 2 billion in coming years with the goal of building capital of USD 40 billion.