At last, South-South Co-operation is no longer the empty rhetoric. The New Development Bank (NDB), known as the BRICS Bank, has held its fourth annual meeting in Cape Town. It has demonstrated its assertiveness in closing the infrastructure financing gap in developing countries.
Subhash Chandra Garg, India’s finance secretary, said, “The NDB was set up without capital from developed countries The time has come where NDB should not just be for BRICS, but for the world”.
Contrary to the controversial views propagated when the NDB was established - that it would replace the World Bank and International Monetary Fund - it has no intentions to do so. Nor does it have the capacity to achieve it.
But it is worrisome that the full operation of NDB shows the rise of South-South co-operation institutions operating parallel to the existing developed country-dominated institutions.
This further opens a huge gulf between developed and developing countries on key issues of infrastructure financing. It also makes it extremely difficult to come to any global consensus on how to develop the global economy.
As it stands, the NDB operates on a complete new set of norms and values on projects and loans. The World Bank and IMF adopt an intrusive and interventionist approach prescribing to countries policies to follow, but the NDB tends to steer clear of internal domestic affairs of countries. It prefers looking strictly at the developmental impact of the loans, and adherence to good finance governance.
This NDB’s meeting came against the backdrop of worrying global events such as Cyclone Idai in Mozambique, Brexit, US politics, and the waning of global institutions such the UN and World Bank.
BRICS countries - Brazil, Russia, India, China and South Africa - have successfully established a parallel development finance institution. There was no need for the NDB, but for the rigidities caused by developed countries; failing to accommodate developing countries’ concerns in management of global institutions.
To fully understand BRICS and its NDB, one has to go back to the Bandung Conference of 1955 where Asian and African countries met. The conference was attended by ANC representatives, Moses Kotane and Maulvi Cachalia. The issues raised - fairness in trade; development finance access; and management of the World Bank and IMF for developing countries - still remain.
South Africa’s participation in BRICS, NDB and potentially the Asia Infrastructure Investment Bank (AIIB) has a great chance to ease Africa’s ability to access more favourable infrastructure finance. It is imperative that South Africa promotes the inclusion of African countries in BRICS and the NDB. Lessons from Cyclone Idai underscore the fact that the lack of infrastructure in southern Africa impact adversely in times of disaster.
As South Africa benefits from its NDB membership it is important to ensure that Africa overcomes the infrastructure bottlenecks affecting continental integration. In this context, South Africa should join yet another important development bank, the AIIB.
The agreement for South Africa’s membership of the AIIB requires Parliament’s ratification. The AIIB is already bigger in size than the World Bank and poised to play a critical role in infrastructure financing in Asia and Africa. As the world changes as seen by the rise of the Global South institutions such the NDB, South Africa and Africa must ensure that the continent is not left behind in the global advancements, particularly in infrastructure.
The NDB and AIIB will be game-changers in developing Asia and Africa. The focus is on hard infrastructure, but it is important to consider funding soft infrastructure such schools and hospitals in Africa, prioritising the absorption of the youth in its operations.
* Monyae is a senior political analyst at the University of Johannesburg.
** The views expressed here are not necessarily those of Independent Media.