BRICS Bank’s a groundbreaking initiative-Zuma
July 24, 2014, 4:06 pm

Chinese President Xi Jinping (R, front) meets with South African President Jacob Zuma (L, front) in Fortaleza, Brazil, July 14, 2014 [Xinhua]

“You know that in the banks that we have, if you ask for help, you end up in more difficulty. That has been the history of countries, particularly developing countries,” Zuma said during his reply to the Budget Vote in the National Assembly in Cape Town on Thursday.

“The capital contributions to the New Development Bank will come from the fiscus. It is important to note that the benefitts of participating in the New Development Bank by far outweigh the costs of establishing it,” he said.

Initially, South Africa’s contribution is in the form of paid-in capital of $150 million.

After some tough rounds of negotiations, BRICS nations (Brazil, Russia, India, China and South Africa) have created not only a new $100 billion Development Bank, but also a $100 billion foreign currency reserves pool during the 6^th BRICS Summit in Brazil earlier this month.

Shanghai finally won the bid to host the Bank while India will get the presidency of the Bank for the first six years. The Bank will have a rotating chair. The Bank will also have a regional office in Johannesburg, South Africa. All the five countries will have equal shareholding in the BRICS Bank.

The Bank will have an authorised capital of $100 billion US dollars with $50 billion subscribed. All countries will contribute equal capital to the Bank.

Zuma told South African lawmakers the Bank was a “ground-breaking initiative by the developing world, the first of its kind”.

Zuma said all African heads of state were excited about the bank.

“They see this as an opportunity where we can develop Africa without too many strings attached, which has been with us in our history.

“We should be excited about this… it’s not a backward movement, it’s a forward movement,” he said.

Meanwhile, South African Trade and Industry Rob Davies said earlier this week that the BRICS Bank capital might not be held in US dollars.

“We want to move away from the same old, same old way of doing things. What currencies the capital will be held in is something that will be part of the Sherpa process with the pace set by Brazil, but we expect substantive progress by the time of the next BRICS summit in Russia in June 2015,” he said.

TBP