Kamath said the multilateral development bank, which was established in 2014, had so far this year extended lending of approximately $500million to South Africa, versus total loans of approximately $5.1bn. “South Africa will clearly be a focal area for us. We recognise that there is more that we can do in South Africa,” he said.
Kamath said, for the rest of the year, the bank planned to approve another $2.4bn, taking the total approved loan book to $7.5bn. He said the bank was targeting an equitable distribution of the loans across the five member countries.
He said the Shanghai, China-based bank should aim to lend approximately $1.5bn to South African projects this year. But the institution was unlikely to meet that target. “Clearly with the opening of the African Regional Centre (ARC), we get a huge momentum and the ability to understand opportunities. The last two years have been a learning experience,” said Kamath.
The ARC, which opened its doors in Johannesburg last year, is expected to fast-track project identification, preparation and implementation in South Africa. This could see South Africa catch up with fellow BRICS members in terms of its share of financed projects.
Former National Treasury deputy director-general for economic policy, Monale Ratsoma, in April became the centre’s head.
Kamath said the bank had the capacity “and we would like to fund to South Africa, both to the government and non-governmental sectors”. In May the bank announced a $200m loan to Transnet to rehabilitate container terminals in Durban.
He said the bank was considering two “fairly large” projects to finance in South Africa this year in addition to the Transnet loan.
The two projects were worth a total of approximately $500m. Kamath, however, declined to give further details of the mooted loans.
He said the bank was taking steps to lend in local currencies to counter risk of foreign exchange volatility. “We are one of the first institutions to openly come out and say we would like to lend in local currencies. We have commenced lending in China, using local currency. This year we will definitely look at raising funds in China to lend in local currency.
Funding in rands
He said there was demand from South Africa for funding in rands. The bank was working with interested parties, such as the banks, on the implementation of local currency funding.
“I am hopeful that we can raise local currency in South Africa at a very attractive rate and on-lend it also at an attractive rate. That should happen in the second half of this year. There is interest from other countries as well, but it looks like after China, it is South Africa that will take the lead in borrowing (from the bank) in local currency,” said Kamath.
He said this week’s 10th BRICS Summit in Johannesburg was an opportunity for the BRICS member countries to give the bank guidance. “It also gives us a good opportunity to share with the leaders the progress that we have made and the path that we intend to take in the coming year,” said Kamath.