South Africa was well positioned to become the home of the Brics development bank because of its solid financial legal framework, auditing abilities and concrete international financial connections, Standard Bank joint chief executive Sim Tshabalala said in a panel discussion in Durban yesterday.
Speaking at the curtain raiser hosted by Standard Bank for the fifth Brics summit, Tshabalala said South Africa had what it took to host such a bank. “We have one of the most highly ranked financial systems globally,” he said.
South Africa ranks first out of 144 countries for the strength of its auditing and reporting standards and the efficacy of corporate boards, according to the World Economic Forum’s Global Competitiveness Report 2012-2013. This puts it well ahead of its Brics counterparts, namely Brazil, Russia, India and China.
In terms of the soundness of banks, South Africa comes in second (with Canada in first place), while Brazil is ranked 14, India 38 and Russia 132.
Finance ministers from the five Brics countries were expected to table their country reports on the feasibility of the development bank, media reports said at the weekend. The bank was expected to start with capital of $50 billion (about R465bn), with each country contributing $10 billion.
President Jacob Zuma said in Pretoria yesterday that the major output for the Brics summit would be the establishment of the development bank, which would assist in mobilising resources for infrastructure and sustainable development projects in the Brics bloc and other emerging economies.
Trade unionists welcomed the idea of a development bank but said it should “primarily be developmental in character”.
In a declaration released yesterday by the second Brics trade union forum in Durban, the trade unionists said: “We envisage the Brics development bank solely owned by Brics, publicly funded, taking all decisions on consensus, promoting trade based on own currencies of its member countries, with a core focus on infrastructure and development in consultation and approval by all stakeholders, inclusive of the community and trade unions.”
They added that unions should be represented at the highest levels.
Tshabalala said Standard Bank was looking forward to discussions and decisions around the development of the institution.
Local banks would get involved only once all policies and the framework had been put in place, he said.
“It is too early for us to deliberate on the actual set-up of this bank,” Tshabalala said.
“We hope that the decision regarding this financial institution would be one of the outcomes of the summit.”
Tshabalala added that although discussions about the bank were at an early stage, its impact on the rand would depend on various issues. These included the structure of the bank’s balance sheet, how it was capitalised and where the bank raised its capital.
“It would also depend on how much South Africa contributes to the bank.”
Tshabalala said policymakers would engage the commercial banks as soon as it was appropriate.
As part of engaging other African leaders, Zuma will host the Brics Leaders Africa Dialogue Forum Retreat.
The retreat will reflect on infrastructure development, as well as integration and industrialisation, which are aligned to Africa’s own priorities, for the mutual benefit of Brics countries and the continent.
Zuma said Brics fitted well with the country’s National Development Plan objectives of raising employment through faster economic growth, improving the quality of education, and skills development.
In 2012, South Africa’s total trade with the other Brics countries was R294bn, which was 11 percent higher than the 2011 figure of R264bn.