Two years ago in July 2014, BRICS states (Brazil, Russia, India, China and South Africa) came together in Fortaleza, Brazil to sign the NDB Brics bank treaty. The purpose of the bank is foster and encourage development projects within its member states with view of other developing and emerging countries. Its initial capitalization is $100 bln, with each member having equal shares and voting rights. Its existence has routinely been seen as a counter-weight to the International Monetary Fund and the World Bank in the multilateral development finance arena; as an organization developed and capitalized in the Global South for the Global South. Since 2014 however, there has been little public discourse about its planned structure. Two years later it’s way back on our radar, not with news coming from Shanghai where it is headquartered but from South Africa, its African regional branch.
The bank is meant to be opening its African branch in March 2016 however there has been some confusion as to whom is to lead the bank from South Africa. The Director- General post for South Africa has been ear marked for Nhlanhla Nene, the former Finance Minister of South Africa. The same Nhlanhla Nene who was fired from his post as Finance Minister in December 2015. The firing of the former Finance Minister has been associated with political manoeuvring by the President of South Africa, Jacob Zuma for views amid government spending. The firing therefore has supposedly strengthened President Zuma’s grip of power in cabinet. Nene, although confirmed for the post in December 2015 for the Director-General, four months later the post appears still to be open. President Zuma also has previously stated that his firing was due to his nomination to be the Director-General of the bank.
The lack of clarity in this regard, places a shadow on the BRICS NDP bank before it has officially opens its doors on the African continent. The firing of Nene in December is said to have also caused uncertainty in the South African financial markets, causing the South African rand to devalue against major currencies dramatically. The firing is also said to have reduced the reputational credibility of the South African treasury.
The placing of Nene in the BRICS bank therefore appears to be one of political intent away from South African politics rather than fostering integrity in an international organization. As there appears to be a rift between President Zuma and Nene, his placement if finalized highlights President Zuma’s perception of the BRICS bank, as a political entity of little consequence on a macro level. The implications for Zuma within the international arena as a ‘champion’ for African interests in international affairs is therefore increasingly being eroded, diminishing the ‘Africa rising’ narrative, the continent has enjoyed over the last decade. Its significance is highlighted by the general economic slowdown and social unrest within South Africa, the second largest economy on the continent.
This is a far cry from the objectives of the bank.
“Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way,” NDB President Kundapur Vaman Kamath said. Though a novel sentiment into disrupting international finance by ‘complimenting’ it, the bank in its ethos may fall prey to entrenching development finance practices by becoming another hegemonic actor in the decision making process.
By stating what it intends not to do, the bank is clearly participating in political dialogue as to address inequities in international finance. We find ourselves asking the question, what is the bank intending to do and how? At the moment it is very unclear as to what and how the bank is going to operate. Oxfam international in 2014, issued a policy brief, The BRICS Development bank: Why the world’s newest global bank adopt a pro-poor agenda, as to the challenges and opportunities of the incumbent bank. The brief highlights the lack of public documents which might clearly articulate the Bank’s mandate. Moreover, engagement with civil society has been low. The brief also highlights that as the bank makes opaque reference to making investments in infrastructure projects; the limitation in such investments highlighted by Oxfam is that the reference alludes to the export-orientated growth formula usually utilized by other development banks which would further embed the BRICS nations in unpredictable international markets. This, rather is an opportunity for the BRICS initiative to look beyond traditional notions of development banking. The Oxfam brief at its core found that having a focus on economic growth alone would not resolve the complex, socially determined inequalities both within States and internationally. The BRICS development bank initiative is an opportunity to turn the page on traditional North- South flows of development capital.
With such great potential to begin a new narrative in development banking and broadly international affairs, it would perhaps be a more auspicious sign of a brighter future in development banking if not for the lack of publically available information. The impending opening of the South African branch in March 2016 unfortunately brought to the fore the potentially highly politicized nature of the bank. This leaves us with the conclusion that if the bank develops in such a trajectory, the BRICS bank, will be nothing more than ineffectual platform for lofty ideas in a sea of uncertainty and an arena for political scoring.
Rather than allowing NDB bank to be perceived to be no more than a platform for political idealism, the bank could do something that has not been able to be done in the developing world in recent times, engage in a long-term transparent, transformational perspective of world politics and finance. Rather than operating in contrast to, the larger world banks operate as ideologically independent wishing, not to compete but foster greater comradery within the developing world. As the South African branch opens, it would be an opportunity to change dialogue and perceptions by not only speaking of developmental goals but implementing them effectively from its leadership to projects chosen and engagement with civil society in all member states. It is an opportunity to remove the perceived barriers between capital, poverty and rights, as separate issues and rather see them as ideals to enshrine within the bank with equal merit and importance in the developing world.
Chiziwiso Pswarayi is currently a Masters in International Relations candidate at the University of Cardiff. Chizi’s interests include Southern African politics and migration issues.
Cover image ‘BRICS Business Council, 20 Aug 2013‘ by GovernmentZA