Brics bank more than a glint in the eye
ANKERS were pleasantly surprised that leaders of the Brics nations (Brazil, Russia, India, China and South Africa) this week gave the green light to establishing a development bank.
However, Patrick Dlamini, CEO of the Development Bank of South Africa (DBSA), said at the fifth Brics summit — which was concluded on Wednesday in Durban — that the bankers themselves did not discuss the setting up of the bank.
“It was actually the political principals [who] were dealing with that issue. We were waiting to hear how far they would go: [whether] there [was] going to be a green light or whether there would be more political challenges,” he said.
Dlamini deemed it encouraging that President Jacob Zuma said all five nations had decided to enter formal negotiations to establish a new, Brics-led development bank based on “our own considerable infrastructure needs”.
Most delegates embraced the idea of a Brics bank, but if they were expecting details they were disappointed. Instead, they were merely reassured that such a bank was “feasible and viable”, then were promised a further update in September.
Simon Freemantle, Standard Bank’s senior analyst in the African political economy unit, said it would have been a tremendous blow for the Brics group if the notion of a bank had been jettisoned. He said the formation of the institution would add concrete substance to what was otherwise a loose bloc of countries.
But Freemantle warned that the bank was still at least one year away from extending its first loan to any project.
Minister of Finance Pravin Gordhan said he and his peers were at an advanced stage in setting up the institution but he would not say how much each country would have to contribute.
However, he did say there was a great sense of urgency and that the bank would be established “as soon as possible”.
Talk on the sidelines of the summit was that reaching an agreement on how much each country would contribute was a point of contention.
People close to the talks told Business Times that Chinese delegates in particular had high demands. “They do not see why everyone should have equal voting rights while they [Chinese] contribute more,” a source said.
This is perhaps why Gordhan said “further discussions” still need to take place.
Another rumour among delegates was that South Africa, which has openly proclaimed its interest in hosting the bank, wants to turn the DBSA into the Brics bank.
Dlamini denied any knowledge of this possibility.
Gordhan said other finance ministers present did not discuss the issue of where the bank should be located, adding they have been mandated to look into such issues in greater detail.
He said the fact that, in one year, five nations had agreed that a Brics bank was feasible represented phenomenal progress.
Gordhan took the opportunity to needle the International Monetary Fund and the World Bank, saying the new Brics bank should be seen as the beginning of a new paradigm, given those two global financial institutions’ slow pace of transformation.
Some further details were, however, provided. The proposed bank’s contingent reserve arrangement would initially be set at $100-billion, the countries announced. This would represent only a small portion of what was needed, though. According to Zuma, the infrastructure needs of all five nations were estimated at $4.5-trillion over the next five years.
The Brics nations represent more than 40% of the global population and 17% of world trade. “SOMETHING familiar, something peculiar, something for everyone: a comedy tonight.”
The opening lyrics of the 1966 musical A Funny Thing Happened on the Way to the Forum seemed to sum up the opening of the Brics summit in Durban this week.
Dignitaries from member nations Brazil, Russia, India, China and South Africa and others were at Durban ’ s International Convention Centre hoping to see the birth of the Brics Development Bank. They were treated to something of a comedy of errors.
Organisers did not factor in the possibility of bad weather. As rain lashed Durban, delegates huddled at entrances or were trapped at the wrong conference halls, making a mad dash whenever the rain abated.
Organisers had only a few umbrellas. As the rain went on it appeared there were no contingency plans.
Staff shrugged and mumbled when a surprised businessman asked: ‘‘ What do you mean you don ’ t have enough umbrellas?’’
Not everyone appeared to mind. A drenched ANC spokesman Jackson Mthembu waltzed carefree through the rain.
But other delegates whined that ‘‘ my suit is getting ruined ’’ and ‘‘ eish, my hair ’’.
As at any government event, there were piles of the Gupta family ’ s New Age newspapers at the venue. They were a hit as make-do umbrellas. Those not lucky enough to find copies fended off the rain with cardboard boxes or sheets of plastic.
Standard Bank joint CEO Sim Tshabalala referred diplomatically to “logistical hitches and delays that regrettably took some of the lustre off what was otherwise an event of considerable majesty ”.
Hitches included queues at security checkpoints as zealous guards held things up. Delegates and journalists battled to get accreditation.
Some locals said they had not seen the programme until they got to the event.
One analyst said South Africa was ‘‘ unprepared ’’ to host the summit.
There were not enough translation headsets and some were faulty. Delegates were seen holding headsets over their heads, walking about trying to find the signal to hear speeches and glazing over, unable to understand a word.
Organisers searching frantically for missing headsets (said to cost R2 000 each) added a farcical touch.
Aptly, the ‘‘ something dramatic ’’ came when security barred Russian President Vladimir Putin ’ s bodyguards from the venue, despite accreditation cards.
Russian presidential spokesman Dmitry Peskov reportedly said South Africans organised football better. “There is a lot of confusion,” he said.
But President Jacob Zuma saw the summit as a roaring success, the cherry on the top being the bloc ’ s agreement that a Brics-led bank was feasible.