Cape Town - Parliament is set to sign on the dotted line ratifying a treaty to establish the Brazil, Russia, India, China and South Africa (Brics) bloc’s New Development Bank – and a $2bn (R24bn) capital commitment from South Africa over seven years – but MPs first wanted to know how much bang this country would get for its buck and what could be done to ensure the bank operated responsibly.
“We would like to see this bank not be another IMF and World Bank Mark II,” said standing committee on finance chairman and ANC MP Yunus Carrim.
On the face of it, these questions are entirely academic because, as Carrim said, there was no question of Parliament rejecting the treaty.
Responding to the debate on his Budget vote speech this week, President Jacob Zuma said all the Brics countries were expected to complete the ratification process by the end of next month, with the inaugural meeting of the board of governors set to take place at the 7th Brics summit in Russia in July.
This would require the appointment of the president and four vice-presidents, one each per country, before the summit, so the bank could open its doors in the second half of the year.
A technical secretariat would begin the work of getting the bank up and running and the African Regional Centre, to be based in South Africa, would open immediately to consider projects, Zuma said.
All this has happened with remarkable speed since the Brics countries committed to the project at the Fortaleza summit in Brazil in July last year.
Along with the $100bn bank, the countries agreed to set up a $100bn currency reserve pool, for which South Africa must hold $5bn in foreign reserves, invested in one of the partner countries.
Treasury director-general Lungisa Fuzile told the joint meeting of the standing and select committees on finance three countries had already ratified the treaty, so “the scope to change things is almost zero”.
“In fact, it is zero,” Fuzile said.
He was responding to a call from the Centre for Applied Legal Studies (Cals) for the committees to put pressure on the Treasury to make sure the bank had a human rights policy, a grievance mechanism for communities affected by projects funded by the bank, a remediation process for those who suffered damages and the inclusion of environmental protection in the bank’s policies.
Presenting the Cals submission, attorney Nomonde Nyembe cited examples of projects supported by the World Bank that had resulted in harm to communities.
These included the oil industry in the Niger Delta, which had caused severe environmental degradation and violence, palm oil farming in Honduras, which had resulted in the forced resettlement of people, disappearances and killings, as well as the first phase of the Inga project in the Democratic Republic of Congo (DRC), in which people were forced off land adjacent to the river and deprived of access to water.
“Development is not supposed to be just for corporations. It’s actually supposed to be for the people living in a country. They are the people who are supposed to benefit from projects,” Nyembe said.
Carrim said the values expressed by Cals were consistent with those traditionally held by the governing ANC, but “when we’re in government we have to be pragmatic – how do we conform to those values”. “That’s the issue,” Carrim said.
This was after Fuzile had explained that while South Africa would be able to lobby for such mechanisms, it had to remember it was the last country to join Brics and, apart from per-capita GDP, ranked lowest by most other measures.” We can’t punch above our weight,” Fuzile said.
However, he said South Africa’s representative on the board would be in a position to influence the bank’s policies.
The bank’s policies for the selection of projects and the principles underpinning these would be created only after it was established, Fuzile said.
He said included in the treaty was a provision that only UN member countries would be able to join the bank, so a state that behaved badly enough to be excluded from the UN would also be barred from the bank.
Parliament would also have to pass the Treasury’s request for funding to pay the seven instalments every year and could, in theory at least, reject it.
Carrim pointed out that the Money Bills Amendment Procedure Act, which empowers Parliament to change or reject aspects of the budget, had never been used.
But he said the committee would, over time, incorporate the issues raised by Cals in its oversight work.
“We will monitor whether you have been campaigning on these issues,” he told Fuzile.
The committee would vote on the treaty this week and the item would be inserted in the next plenary session of the National Assembly.
Political Bureau