'Brics won’t fix poverty’

2013-03-28 00:00

HOPES that the leaders of Brics would agree on details for a development bank were dashed yesterday when the fifth summit in Durban fizzled to a close.

What the annual gathering of Brazil, Russia, India, China and South Africa got instead were two agreements, essentially commitments to work closely, first on co-financing a “green” economy and, secondly, on infrastructure in Africa.

A business council was formed to formalise business and trade ties between the members. South African billionaire Patrice Motsepe was elected head. A separate think-tank formed earlier this month was also announced.

In the summit’s aftermath, Durban Chamber of Commerce and Industry CEO Andrew Layman said: “The person in the street will not see any benefit in the short term, and Brics will not address our problems related to poverty. Poverty will be addressed by employment opportunities and these will emanate from economic growth — more contracts, more trading, more, and better, businesses.

“Membership of Brics is a means whereby the country has a better chance of achieving these things.”

During an open session at the International Convention Centre, President Jacob Zuma confirmed what many already knew — that the five nations wanted the proposed bank as an alternative source for development funding.

Zuma, in a statement to the media yesterday, said the participating countries had agreed the development bank was a feasible project.

“The initial capital contribution to the bank should be substantial and sufficient for the bank to be effective in financing infrastructure,” said Zuma.

The four other leaders, China’s Xi Jinping, Brazil’s president Dilma Rousseff, India’s Prime Minister Manmohan Singh and Russian head Vladimir Putin, made cursory references in favour of the bank.

The other major announcement that fell short of expectations was the financial safety net, in the form of a reserve fund, meant to cushion the blow of tough economic times.

Zuma said the leaders had agreed the fund should begin with $100 billion (about R928 billion), guarded by certain protocols, and that their finance ministers were given the green light to establish it.

There were no deadlines suggested for either project.

Shortly after the session wrapped up, Finance Minister Pravin Gordhan said of the development bank: “The fact that in one year you can initiate an idea and bring it to a point where you have five countries say ‘let’s agree to establish its feasibility’ is phenomenal progress.

“There is a sense of urgency to establish the institution as quickly as possible. We recognise that each country will have its own sovereign requirements, whether legislative or others. We hope that by the time of the Brics summit in Brazil [2014], we will significantly make progress.”

Gordhan said the “necessary technical” work needed to be done before the matter of contributions to the development bank could be determined. The bank’s location was also an outstanding matter.

Trade and Industry Minister Rob Davies was equally upbeat, saying all that was left was the finalisation of a few “details”.

He said the business council would help with enterprise development and boost small- and medium-sized businesses.

Already, he said, there were about 31 projects from 25 Brics companies in South Africa with an investment value of R12,6 billion.

Anthony Thunstrom, chief operating officer of KPMG Global Africa Practice, said the bank would make it easier to access development funding.

But another cautious note came from African policy commentator Dr Greg Mills, who said Brics had to be more than an annual meeting of leaders. He also questioned whether South Africa could claim to be the voice of the continent.

“Can the [Brics] relationship help to facilitate investment in services and industry in Africa? That’s the million-dollar question.”

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