Brics bank could be more like World Bank

The terms of the New Development Bank’s (NDB’s) articles of agreement lay down the principles of transparency and accountability in its operations, and its interim information disclosure policy provides a framework for engagement with stakeholders.

Furthermore, the NDB says it is guided across all its operations by the principles of promoting transparency, enhancing accountability and protecting confidentiality.

I raise the issue of the NDB’s claim of transparency and accountability after attempting to get a breakdown of the $200m loan the bank approved in May for the expansion of Transnet’s Durban Container Terminal, including the drawdown schedules. At the back of my mind was the rigour of the process followed by the World Bank in extending facilities to member countries.

For example, a previous $30m World Bank loan to Eskom for generation, transmission and distribution was preceded by a comprehensive technical report on the company. By digging around inside the company, stakeholders are able to understand and appreciate the reasons for the approval. This is important for researchers, funders and customers, since it provides another perspective on how the company is managed, as reflected by the tenure of the facility, any guarantees from the sovereign and probable future tariff increases.

However, despite searching the NDB’s online project database, I could not find any mention of the Transnet facility. There is one for Eskom, though. The power utility has an undrawn $180m facility with the NDB relating to a 670MW renewable project.

South Africans have experienced enough poor governance and a lack of accountability with the corrupt Zuma-led ANC administration, including malfeasance at Transnet. If the NDB was as transparent and accountable as it claims, it would have known that the borrower has a record of squandering funds and breaking regulations. For example, a report by Werksmans Attorneys in December 2017 revealed that in 2014 the Transnet board agreed to pay a total of R38.6bn for locomotives from China South Rail, China North Rail, General Electric and Bombardier, yet the bill rose to R54.5bn after the seven-year delivery period was accelerated.

Finding myself in the dark about the $200m NDB facility for Transnet due to the bank’s lack of transparency and accountability, I was left to make my own deductions. Did the approval have conditionalities, including participation in the tender process or a share of the Transnet tenders going to women-owned businesses and black entrepreneurs? Was a social and environmental impact study done? If it was done, what conditions or mitigations did the audit and risk committee recommend?

So many questions, and very few answers.

I made the following observations: President Cyril Ramaphosa’s ‘new dawn’ requires support from all stakeholders, particularly with growth as measured by GDP having declined by 2.2% in the first quarter. Encouraging new investments in the economy, such as the $200m NDB facility to Transnet, could assist in the achievement of sustainable inclusive growth, the creation of jobs, reducing poverty and transforming the economy.

Attempts by Public Enterprises Minister Pravin Gordhan to recapture Transnet by putting in place a strong and ethical board might have had a hand in the NDB’s positive decision, but the bank’s commitment to enhancing its accountability means regular communication with stakeholders and information disclosure are critical.

If it continues to fail in that department, it will be perceived as a political experiment forever in the shadows of the Bretton Woods institutions.