The African Regional Centre of the New Development Bank (NDB) was launched by South African President Jacob Zuma on Thursday in Johannesburg.

The African Regional Center will allow countries in the continent to have access to the $100 billion NDB.

“This is a critical milestone not only for South Africa but the African continent as a whole,” Zuma said adding that “the NDB will grow from strength to strength”.

“We expect the NDB through the Regional Centre to contribute to energy and other productive sectors,” Zuma added.

The NDB headquarters were officially opened in Shanghai, China in February 2016.

The new lender is expected to strengthen the group’s ability to offer developing nations the support traditionally given by the US and Japan through organizations like the World Bank.

On Thursday, the African unit of the BRICS Bank was launched with President of the NDB, Kundapur Vaman Kamath, members of the South African cabinet, including Finance Minister Malusi Gigaba and South African Foreign Minister Maite Nkoana-Mashabane in attendance.

The President of the NDB said the “establishment of the African regional centre is a milestone for the NDB”.

“In 2018, the NDB expects to present about 20 projects,” Kamath said in Johannesburg on Thursday.

The BRICS’ increasing projection of influence in Africa is reconfiguring global geopolitics, aiding south-south cooperation, which seeks to achieve greater autonomy from the west. BRICS members China and India have strong economic and trade ties with the African continent. China-Africa trade, for instance, grew from $10 billion in 2000 to $220 billion in 2014.

On Thursday, South Africa’s Science and Technology Minister Naledi Pandor said South Africa has worked with BRICS partners in support of the continental agenda.

Last week, former governor of the South African Reserve Bank Tito Mboweni was removed as a non-executive director of the BRICS New Development Bank after serving a two-year term. Mboweni was replaced by South Africa’s National Treasury director-general, Dondo Mogajane.

The New Development Bank came into existence after three years of negotiations among members of BRICS.

The BRICS Bank has 23 projects at various stages of preparation for 2017 to 2018, with a total lending amount of $6 billion, NDB President K.V. Kamath said at a press conference last month in Shanghai.

In 2016, the bank granted $1.5 billion in loans to seven projects.

The bank has an initial authorized capital of $100 billion.

Its initial subscribed capital of $50 billion will be equally shared among the founding members.

It has a three-tier governance structure – a board of governors, a board of directors, a president and vice presidents.

The new lender hopes to get rated by international rating companies by the end of the year. According to the NDB, Standard Chartered and Goldman Sachs have been chosen to be bank’s advisers for international ratings.

A recent Bloomberg report said emerging-market investors are again piling into the BRICS markets, pushing monthly inflows and stock prices to nearly two-year highs.

Non-resident portfolio flows into BRIC nations rose to $166.5 billion in May, up from $28.3 billion in outflows 12 months prior, according to data compiled by the Institute of International Finance and EPFR Global.

Financing sustainable development and infrastructure projects and local currency financing remain the focus of the New Development Bank launched by the BRICS countries, according to a new policy document for the next five years.

The new lender has said it plans to expand membership gradually.

“NDB signifies developing countries’ coming of age and reflects their aspirations to stand on their own feet,” according to the 2017-2021 strategy document.

BRICS members, China, India and Russia are also the three largest shareholders in the China-led Asian Infrastructure Investment Bank (AIIB).

Both the BRICS Bank and the AIIB will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan.

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Remarks by President Jacob Zuma on the occasion of the launch of the New Development Bank (NDB) Africa Regional Centre

Sandton, Johannesburg, 17 August 2017

Good day to you all.

We are truly delighted to share this extremely important occasion with you.

The launch of the Africa Regional Centre of the New Development Bank is a historic occasion as it marks the strengthening of the BRICS formation and also underlines the BRICS commitment to the development of the African continent and emerging markets.

This is a critical milestone not only for South Africa, but for the African continent as a whole. We are thus celebrating it as a shared achievement.

The idea of establishing a new Bank with a new mission and orientation was first discussed in Durban in 2013, when we had the honour of hosting the BRICS forum.

We later agreed to establish a centre in Africa to take care of the important developmental needs of this continent.

The launch of the Africa Regional Centre is testament to our commitment that BRICS and the New Development Bank should benefit not only BRICS countries, but should also benefit the whole of Africa and the developing world as a whole.

This is therefore truly a proud moment which points to a brighter future for the people of our continent and the developing world in general.

In the two years of the Bank’s existence, I have been most pleased at the progress made.

Notable achievement in this regard includes the signing the founding agreement of the New Development Bank, which paved the way for the opening of the Bank’s head office in Shanghai, China. The issuance of the first set of loans – amounting to 1,5 billion dollars (approximately 20 billion rands) in total – to fund renewable energy projects in member countries is a significant step forward.

The Bank’s very first green bond issuance in the Chinese capital market, mobilising about 450 million dollars in the process is also noteworthy.

And most recently, the approval of a general strategy that will guide the Bank’s operations in the next five years demonstrates that we are on the right path.

Today we gather to celebrate yet another milestone, the launch of the Africa Regional Centre. I wish to thank The New Development Bank President, Mr Kamath and his team for the excellent work over the years, which has brought us to this momentous occasion.

We are confident that the Bank will build on these achievements and grow from strength to strength.

Next, the Bank will start the process to consider new members and finalise the project pipeline for the second batch of loans to be offered in the 2017/2018 financial year. We wish the Bank well in these endeavors.

The biggest challenge is that Africa remains largely un-industrialized with the result that our economies are over exposed to the whims of commodities’ markets.

African countries generally do not have adequate infrastructure interconnections. As a result, we cannot maximize the benefits of regional trade. Worse still, the continent does not have adequate social infrastructure for the provision of basic services such as health and education, and we therefore are not able to significantly improve the living standards of our people.

Indeed, due to this infrastructure gap, Africa has been unable to unlock its growth potential, and bring prosperity to her people.

Given these challenges, the African continent has great expectations for the New Development Bank.

We expect that the Bank, through the Africa Regional Centre, will contribute to accelerating infrastructure investment in energy, transport, water and other productive sectors.

South Africa, since its joining of BRICS in 2011, has advocated for inclusivity of the Global South, especially the African continent.

We are therefore happy to know that the Bank is working on expanding its membership to other countries beyond BRICS. We certainly trust that African countries will be among the first to take up membership at the New Development Bank.

Seventy years after the end of the Second World War, the world continues to be plagued by the endemic problems of poverty and human suffering, more so in the African continent. The recent bout of violence and military confrontation in some countries in the Middle East and Africa has notably exacerbated this problem.

These tragic realities highlight the need for new and sustainable solutions. We therefore call on the New Development Bank and like-minded institutions to test new boundaries, explore new possibilities and deliver sustainable solutions that will better serve humanity. 

I am encouraged by the recent announcement made at the Second Annual Meeting of the New Development Bank Board of Governors in New Delhi to increase the Bank’s lending to 2,5 billion dollars in the 2017/2018 financial year. This announcement has come at an opportune time for South Africa as we need more projects.

We have great expectations for this regional office.

We would like to see an office that is geared towards fulfilling the New Development Bank’s founding objectives. These are to foster the development of member countries, support economic growth, promote and facilitate job creation and to build a knowledge sharing platform among developing countries.

The regional office will have to extend its core focus beyond project identification and preparation if it wants to truly realise these objectives. The office should in time be given the autonomy to extend loans to qualifying countries in the continent, whilst also serving as a node for capacity building and knowledge sharing.

However, the Bank is still in its infancy stage and understandably, such an expansion would be carried out in phases.

It is fitting that we celebrate this launch in the same year that we celebrate the centenary of one of our founding fathers, Isithalandwe Oliver Reginald Tambo.

This giant of our liberation struggle envisioned an Africa that was at peace with itself and the world. He also envisaged one in which all its citizens enjoyed unlimited economic prosperity through cooperation and shared ideas.

The launch of the New Development Bank’s first regional office is a major step towards the realisation of OR Tambo’s vision for our country and indeed our continent. 

Indeed, this is a turning point for Africa and its development.

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.

The launch takes place during the week in which we are hosting the 37th Southern African Development Community Heads of State and Government Summit in our country.

The Summit takes place under the theme: “Partnering with the Private Sector in Developing Industry and Regional Value Chains”.

SADC celebrates 25 years of existence this year and membership has grown to 15 countries. The combined population is about 300 million people.

South Africa will assume the chair of SADC this week and projects such as the New Development Bank will be supported and promoted in earnest as part of advancing Africa’s development agenda.

It is my pleasure and honour to declare the Africa Regional Centre of the New Development Bank officially open for business!

I thank you.