The occasion was peddled as a winner as the heads of states of Brazil, Russia, India, China and South Africa left the port city of Durban’s International Convention Centre yesterday.

President Jacob Zuma told guests at the centre that the leaders of these five nations had agreed to discuss the formation of Brics-led new development bank.

“Following the report from our finance ministers, we are satisfied that the establishment of a New Development Bank is feasible and viable,” leaders said in a joint statement. “We have agreed to establish the New Development Bank.”

According to Sapa, Russian finance minister Anton Silaunov, said agreement still had to be reached on the financial contributions each member state would make.

South Africa’s finance minister, Pravin Gordhan, could not give the exact time frame as how long it would take to launch the bank. But he said this should be within 10 years.

Pacts signed on Wednesday included a multilateral agreement on infrastructure co-financing for Africa and a multilateral agreement on green economy co-operation co-financing.

Details of the two agreements were not immediately available.

The Brics Business Council was also launched but it turned out this Brics Think Tank had apparently been already agreed on March 11 this year.

South Africa’s billionaire businessman, Patrice Motsepe, will chair the council, which would drive partnerships between all the governments and the private sector.

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At a meeting of the ANC’s Progressive Business Forum, Mashabane said that the economic group, BRICS, is keenly watching the possibility that the BRICS Development Bank will be established in 2012.

BRICS is an association of the world’s leading emerging economies, it arose out of the inclusion of South Africa to the BRIC group in 2010. The group consists: Brazil, Russia, India, China and South Africa, which add up to form the acronym BRICS.

The idea to establish a Development Bank by the group was first conceived at the last BRICS summit in India this year March.

The proposed financial establishment will serve as an alternative to the International Monetary Fund (IMF) while helping its member countries pool resources for infrastructure development and lend among themselves during difficult financial times.

It will be funded and managed by the BRICS and other developing countries.

According to South Africa.info, BRICS country leaders met on the sideline at the G20 summit to discuss the group’s financial safety net. The leaders discussed the possibilities of setting up a currency swap arrangement and a foreign exchange reserve pool within the five-member framework which could be used by any members of the group in time of financial crisis.
Chief executive of Business Unity SA (BUSA), Nomaxabiso Majokweni, asserted at a meeting of the ANC’s Progressive Business Forum, that the BRICS Development Bank would help South Africa speed up its multibillion-rand infrastructure programme.

She believes that South Africa stands to benefit a lot from the proposed Development Bank as it would help the country finance its state-led infrastructure drive.
“An immediate benefit for South Africa will be a massive injection in our infrastructure development plan, which could help government to meet some of its very ambitious growth targets,” Majokweni said.

She added that “The BRICS bank will promote growth and investment in its member states and other emerging markets, and will be a strong voice in the lobbying for the reform of international financial institutions.”

According to Business Live, South Africa also stands the chance to double her trade with Brazil, Russia, India, and China to $500 billion by 2015, if barriers to trade and investment within the bloc were addressed.

“The balancing act is to ease business transactions while protecting the interests of industry and manufacturing. We are not seeking preferential or free trade agreements. Rather, we should be driving for more transparency from our partners, especially on tariff schedules and hidden internal taxes,” Majokweni said.
Other barriers that may be faced include onerous labelling requirements and sanitary provisions.
To overcome these challenges, Majokweni, however, advised South Africa to lobby for a permanent business structure that can help to simplify, clarify and overcome these trading obstacles.
According to her, South Africa has to “bring down the cost and complexity of doing business in the BRICS countries”.

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South Africa, alongside other BRICS (Brazil, Russia, India and China) nations are planning to build a new Development Bank. The economic group says the creation of the Development Bank will supplement the existing efforts of multilateral and regional financial institutions for global growth and development. It will also mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.
To ensure the fulfilment of establishing a Development Bank, BRICS nations have directed their finance ministers to work towards forming the institution that would cater for the needs of developing countries. They have already appointed five leaders in their declaration and mandated their finance ministers to examine the feasibility and viability of the program.
In her address, Nkoana-Mashabane also posited that South Africa would use its cooperation agreements with BRICS and IBSA (India, Brazil and SA) countries to highlight the development opportunities that is viable not only to South Africa but to other countries in the African continent.
South Africa also plans to use its position as part of the G20 to promote and strengthen the interests of Africa and of the South. It plans to nurture and deepen its ties with nation-member of the G20 to take full advantage of the trade, investment and human resource development opportunities provided for South Africa and countries in the G20.

Nkoana-Mashabane also revealed that South Africa would take full advantage of the African Diaspora Summit, which will take place next month. The meeting is expected to create sustainable partnerships between the African Diaspora; promote South-South cooperation in the betterment of the African continent and the Diaspora and the African continent through a realisable Programme of Action.
She is hopeful that despite the economic challenge in the Euro Zone, South Africa may continue to consolidate relations with some of its key strategic partners in the region and tap into other areas of cooperation such as skills development, science, technology and agriculture.

The declaration to establish a Development Bank was issued after the group’s fourth summit in India. According to a report, the summit came at a critical time when economic recovery struggling against fragile financial systems, high public and private debt, unemployment, the rising price of oil and food; and economies have to adopt responsible macroeconomic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs.
The declaration, issued in New Delhi, also included a range of international issues such as stability, security and prosperity. “We call for further international financial regulatory oversight and reform, strengthening policy coordination and financial regulation and supervision cooperation, and promoting the sound development of global financial markets and banking systems.” They have also been requested to set up a joint working group for further study, which would be reported back in the next summit.

The BRICS-planned Development Bank would not only reinforce the grouping’s stature, but also encourage investment in a more sustainable and productive manner for the financing of infrastructure. The plan is also seen as a potential counterbalance to other multilateral lenders such as the World Bank and Asian Development Bank.

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According to the leaders of the world’s top emerging economies, the bank could one day serve as an alternative to World Bank.

CNN reports that the leaders of Brazil, Russia, India, China and South Africa (collectively referred to as BRICS) “agreed to examine in greater detail a proposal to set up a BRICS-led South-South Development Bank, funded and managed by the BRICS and other developing countries.”

In their meeting on Thursday, Finance ministers from the five countries looked into the idea of the development bank with aim to examine its possibilities. The leaders also demanded better representation for developing countries in the governance of the International Monetary Fund.

The BRICS nations make up more than 40 percent of the world population and one-fifth of the global its economy.

Call for Peace

Besides the IMF and economic issues, BRICS leaders also urged the United Nations and other international bodies for a larger voice for the developing world.

They called for peaceful resolutions of the Syria and Iranian crises.

According to Prime Minister Manmohan Singh of India said, “We agreed that a lasting solution to the problems in Syria and Iran can only be found through dialogue.”

“Institutions of global political and economic governance created more than six decades ago have not kept pace with the changing world. While some progress has been made in international financial institutions, there is lack of movement on the political side,” Singh added.

BRICS nations are increasingly gaining influence as their economic potential positions them favourably in world affairs.

Image via www.wikipedia.com

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