The first regional centre of the New Development Bank, set up by India and other BRICS nations, was officially opened here today by South African President Jacob Zuma and the bank's Indian head K V Kamath.
The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS states (Brazil, Russia, India, China and South Africa) with an initial authorised capital of the bank is USD 100 billion.
The idea for setting up NDB was proposed by India at the 4th BRICS summit in 2012 held in New Delhi. The creation of a NDB was the main theme of the meeting.
"This is a turning point for Africa and its development," Zuma said as he opened Africa Regional Centre (ARC) and commented on how the idea of establishing a new bank with a new mission and orientation was first discussed at a BRICS forum in Durban in 2013.
"Our challenge is that Africa is largely under- industrialised, with the result that our economies are over- exposed to the winds of commodities markets," he said.
He said African countries generally did not have adequate infrastructure and interconnections which prevents them to maximise the benefits of regional trade.
"This new bank will enable continued fruitful cooperation with our global partners, which will help us promote sustainable development through integration, industrialisation and infrastructure development on the continent," Zuma said.
Veteran Indian banker Kamath said since the bank started its operations two years ago, it had approved 17 projects to the value of about USD 1.5 billion.
"In 2017, we expect to approve loans aggregating between USD 2.5 and USD 3 billion for about ten projects, and in 2018 we expect to present about 15 to 20 projects involving a total lending of about USD 4 billion for the board's consideration.
"Our target is to end 2018 with a total loan book of about USD 8 billion dollars for approximately 35 projects," he said.
"In 2018, we also plan to begin our private sector operations and explore investments in public-private partnership projects. We are working closely with the authorities in South Africa to identify a strong pipeline of projects that we can support," he said.
Kamath said he had told his teams at the Shanghai headquarters as well as the new ARC that South Africa should be prioritised for lending of USD 1.5 billion over the next 18 months.
"NDB thus far has received total capital contributions of about USD 2.6 billion, including advance payments from some of our member countries, in this instance China and Russia. We expect to receive another USD 900 million by January 2018," he said.
He said the timely and even advance receipt of contributions from all the members was a strong vote of confidence in the institution and sends a positive signal to the international community about the bank's founders.
"Because it is currently limited by its mandate to operate in its member countries only," Kamath said, adding that expanding its operations to other countries would mean admitting more members to the bank.
"In April 2017, the members of the bank took the first step towards this objectivewhen they approved the terms, conditions and procedures for admission of new members to the bank," he said.
Kamath said the bank was also looking at lending in local currencies in member countries to avoid the ravages of exchange fluctuations.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)