Since the agreement to establish the bank during the 5th BRICS summit held in Durban in March 2013, a common position on the location of the bank is yet to be discussed or agreed upon by the BRICS nations. This is one of the challenges that lie ahead before the launch of this new institution. This article looks at South Africa's interest to host the BRICS banks and how it would benefit the African continent?
The idea of the creation of the BRICS Development Bank was to benefit the BRICS nations and other emerging economies and developing countries by focusing on mobilizing resources for infrastructure and sustainable development projects. Although the launch of a BRICS Development Bank wasmuch anticipated prior to the Durban summit, this was postponed to the summit in Brazil next year in order to allow the member states to flash out the modalities for the bank.
Currently there are on-going consultations and discussions between the BRICS nations about the operational processes of the Bank including the decision of where the headquarters would be located. There has been much speculation about South Africa's interest in hosting the bank because of the fact that the Bank is expected to invest significantly in Africa and due to the fund banking system in the country. But whether South Africa should host the institution depends on considerations that are not yet clear
So far, as it seems, South Africa aspires to have the Bank hosted in Africa. According to the statement by the South African President Jacob Zuma during the World Economic Forum (WEF) plenary session on Africa that took place in Cape Town in May 2013, the location of the Bank should be Africa. He argued that given Africa's greater need it was appropriate to locate the bank in Africa' as it would respond to the challenges of the developing world
This issue of location was not on the agenda when the BRICS leaders met recently on the side lines of the G20 summit in St Pietersburg. They discussed the capital structure of the bank including the commitment of a $100bn BRICS contingent reserve arrangement (CRA) with China committing $41bn, Brazil, India, Russia $18bn each and South Africa $5bn. It is important to see if this contribution will play a role in influencing the location of the bank and if it will have implications on the structure of decision making and voting process of the bank.
It remains to be seen whether President Zuma's aspirations will be supported by his BRICS counterparts.The fact that South Africa is considered to be a gateway to Africa provides it with the ability to play a bridge building role between Africa and BRICS. By locating the bank in South Africa, BRICS would be showing commitment to Africa's development, as envisaged in Durban where the theme of the summit was 'BRICS and Africa: partnership for Development, Integration and Industrialisation'.
Lastly, since the BRICS have styled themselves as partners for African countries, with extensive common interests, for operational purposes it will be ideal to have the bank in Africa. The reason is to strengthen the relations of Africa's Regional Economic Communities and BRICS nations in terms of access and communication. But it must be noted that locating the bank in South Africa will not go without challenges from other BRICS members who are also eager to host it. There are also arguments that China likely to be the largest contributor of bank's finances, may also want to host. Finding common position around this issue will be one of the challenging tasks for thegroup to go through.
Mr. Kenny Dlamini holds a BA Hons in Politics from the Rhodes University and is a research assistant at the IGD. His views do not necessarily reflect those of the IGD