The southern African region could benefit from funding from Brics bank and it was important for bank’s projects to consider the intertwined nature of the countries in the region, Finance Minister Tito Mboweni said on Monday.
The Brics bank is formally known as the New Development Bank.
Mboweni said that the bank, which focuses on financing infrastructure development, needed to look at funding projects in the broader southern African regional context.
“When you are looking at projects in the southern African region – look at them in the southern African context because of the intertwined nature of the countries,” he told delegates at the Cape Town International Convention Centre where the bank is holdings its fourth annual meeting of its member countries, which are Brazil, Russia, India, China and South Africa.
Up to now, it has largely funded projects in South Africa or projects with a significant South African interest such as the Lesotho Highlands Water Project.
The projects that Mboweni identified that could benefit from funding included fixing the Kariba dam wall between Zimbabwe and Zambia as well as the Iga hydroelectric project in the Democratic Republic of Congo.
Mboweni, who is also chairperson of the bank’s board of governors, said the lack of infrastructure in Mozambique was reflected by the way disaster management, as a result of Cyclone Idai, was being dealt with in the country.
Two of the five countries that make up the Brics bank on Monday called for an expansion of the bank’s membership beyond its existing five founder members.
India’s finance secretary Subhash Chandra Garg said during the opening ceremony that the bank “has come of age”.
He called for the bank to move from financing its’ five members to financing the world.
“It is now the Brics’ role and responsibility to finance and contribute to the development of the entire world. The Group of Seven countries played this role for many years. I think the time has come for the Brics to play that role for the development of the world. Therefore, I think we should expand our membership going forward.”
Marcos Troyjo, Brazil’s deputy minister for foreign trade and international affairs, also backed the idea of expanding the membership of the bank beyond the existing five members: Brazil, Russia, India, China and South Africa.
The bank, which is headquartered in Shanghai, has opened a regional office in Johannesburg to access South Africa and Africa as a whole.
Garg said additional regional offices were set to be opened in Brazil, Russia and India. Troyjo said that the Brazil office was likely to be opened in the city of Sao Paulo.
As part of the opening ceremony, loan agreements were signed with the Development Bank of Southern Africa for greenhouse gas emissions reduction and energy sector development and also signed loan agreements with Eskom for a renewable energy and transmission project.
The bank agreed to loan Eskom $180 million (about R2.5 billion) to connect 670MW of renewable energy projects to the national grid.
The New Development Bank’s president Kundapur Vaman Kamath said that the bank had loaned South Africa $680 million and on Sunday the bank approved more loans for South Africa totalling $790 million.
The bank expected loans to South Africa to grow to $2.3 billion, he said.
In 2018, the bank funded 17 projects via loans to its member countries to bring the total amount loaned to $8 billion covering 30 projects.
Kamath said the bank was looking to double its total amount loaned to $16 billion.
He said that 80% of the bank’s lending focused on transport, green energy as well as water and sanitation.
Minister of Higher Education and Training Naledi Pandor, who delivered the opening address at the bank’s annual meeting, said that African economic growth had lagged its recent high levels due to the commodity downswing.
“African remains the second fastest growing region in the world after developing Asia. Consequently, the continent is attracting increasing interest and investment from the international financial community,” she said.
However, despite this interest, nine out of 10 of the world’s extremely poor lived in sub-Saharan Africa, Pandor said.
“We need to start thinking about what it will take for Africa to improve its odds of overcoming poverty much faster in the next decade.”
Pandor said that African needed to improve its domestic resource mobilisation.
“It makes no sense for us to expect that donor countries will find our initiatives interesting without us increasing our efforts to secure resources in our own environment.”
To attract more investment, Pandor suggested that local tax law and other financial regulation needed to be improved.
“Being overly reliant on financial aid from developed countries – places the continent development agenda at the mercy of business cycles.”
However, Pandor also raised the issue of capital flight eroding Africa’s ability to improve the lot of the people of the continent.
Between 2000 and 2010, the continent is reported to have lost $510.9 billion through capital flight, she said.
“For us as in South Africa, investment in infrastructure and infrastructure projects have been identified as critical areas of policy action.”
The bank is holding its annual meeting in Cape Town on Monday and Tuesday.
This is the first time that the bank is holding its annual meeting in South Africa. Previous meetings were held in Shanghai and New Delhi.