DURBAN, SOUTH AFRICA—
Leaders of the five nations that make up the BRICS bloc
say they are ready to lay the foundation for a new international development bank.
Their countries' economies account for more than 25 percent of the world’s GDP, but lag far behind developed nations in terms of infrastructure. Africa lags even further behind, and could need up to $200 billion worth of infrastructure over the next two decades.
That is what has prompted the leaders of Brazil, Russia, India, China and South Africa to call for a new development bank.
"It's an opportunity for, not just South Africa, but all of the BRICS countries, to try to cover the deficit between huge demands for infrastructure financing on the one hand and adequacy of funds that can be invested in infrastructure," said South Africa's finance minister, Pravin Gordhan, during a speech in Durban Tuesday night. " If we probably take all of our needs and take the African continent as well, we're probably talking about 2 trillion rand - dollars, over a period of time."
The nations have also said that they hope the BRICS development bank will serve as a counterweight to powerful international lenders like the World Bank and the International Monetary Fund. Officials have estimated the bank will start with coffers of about $50 billion.
South African President Jacob Zuma did not release many details about the bank, as expected. Instead he said the group had decided to "enter formal negotiations" to establish the bank.
That does not surprise financial analysts like Simon Freemantle of South Africa's Standard Bank - who says there are many issues to be sorted out over time - such as location of the bank.
"I don't think it's going to imminently be set up, headquartered in one of the countries, start extending loans - I think we're some way off that," he said.
Steve Price-Thomas, a strategy manager for humanitarian group Oxfam, says he hopes the development bank remembers the poor. More than half of the world’s poor, he said, live in BRICS countries.
"It’s absolutely essential that the BRICS bank put poverty reduction and inequality reduction at the center of its mission. So it’s a welcome development, but we’ll be looking to make sure that it has that clear poverty focus," he said.
Bloc members also agreed to push for domestic and international reforms - but fell short of releasing a strong statement on the violence in Syria.
South African billionaire Patrice Motsepe was also on Wednesday appointed chairman of the BRICS Business Council, and said he was excited about the possibility of using the council to champion small business.