SUMMIT
The benefits of a BRICS bank lie in the
unity of the governments of Brazil, Russia,
India, China and South Africa in coming
together and forming a bank that will
benefit each participant, and developing
countries outside of the BRICS fold.
was required. This can potentially shift the decision-making power
within the bank to the highest contributors.
‘It will be important for South Africa to play an assertive role and
to manage the power and strength of the other partners as they rally
international decision-makers for their mutual benefit,’ Jordaan says.
‘The BRICS bank shareholders will need to get their heads around the
need to make development of these five nations a priority, over and
above being highly profitable. The goal here must be the benefit of
each country, rather than purely a profit motive,’ he says.
Adrian Cloete, an equity analyst at Cape Town-based Cadiz Asset
Management says a BRICS development bank is required because
the bloc’s member countries and other emerging economies still
require significant amounts of development capital.
He notes that global sources of capital, particularly for longterm capital projects, are becoming more difficult to find owing to
the impact of the last global financial crisis which has sapped the
appetite for lenders to provide funding.
This has been worsened by demands by regulators for banks to
hold additional capital buffers against loans under Basel III, which
became effective from January 2013 and will be implemented in
phases until 2019.
Cloete says one can argue that the development bank is necessary
as demand for funding in BRICS countries and other emerging
economies will continue to be high, as these countries have pent-up
demand to rehabilitate and build new infrastructure, such as roads,
power and water utilities.
‘BRICS member countries will require development capital for
long-term projects like infrastructure projects in the power, water,
utilities and transport infra