BRICS to inject millions into Africa

International relations

Following the successful summit in Durban, KwaZulu-Natal recently - BRICS countries, Brazil, Russia, India, China and South Africa - look set to invest heavily in Africa.

BRICS leaders agreed to set up a Development Bank, which could help fund infrastructure in Africa.

“We have agreed to establish the new Development Bank. The initial capital contribution to the bank should be substantial and sufficient for the bank to be effective in financing infrastructure,” said President Jacob Zuma.

While certain issues still needed to be ironed out, such as the bank’s location, initial startup funds and voting rights, President Zuma said that following the report from finance ministers, the bloc was satisfied that the establishment of the new Development Bank to fund infrastructure was feasible and viable.

In addition, the leaders agreed on the establishment of the Contingent Reserve Arrangement (CRA) with an initial size of R900 billion.

This will be a fund managed by the central banks of the member countries to provide security and financial stability for the countries.

Each country’s central bank is supposed to keep the fund’s reserves as part of its own reserves.

The leaders also signed the Multilateral Infrastructure Co-Financing Agreement for Africa, which paves the way for the establishment of co-financing arrangements for infrastructure projects across the African continent.

Sustainable development and green economy projects will be financed through bilateral agreements to establish cooperation and co-financing under the BRICS Multilateral Cooperation and Co-Financing Agreement for Sustainable Development.

The BRICS Business Council

A BRICS Business Council, which was officially inaugurated at the summit, will also facilitate business and financial cooperation among BRICS countries. Chaired by South Africa mining magnate Patrice Motsepe, the council will bring together business associations from each of the BRICS countries and manage engagement between the business communities on an ongoing basis.

Transnet and the China Development Bank also signed a cooperation agreement to help finance the construction and upgrade of railway and port infrastructure. Transnet also announced a R300 billion investment programme, the Market Demand Strategy, to revamp and expand its ports, rail and pipelines infrastructure and equipment. About two-thirds of the required funding will be raised from internal resources, while the remainder will be raised through various sources in the debt capital markets.

The Department of Agriculture, Forestry and Fisheries also signed a statement of intent on cooperation in fisheries with Russia. This agreement will boost the skills of South Africans through training opportunities and help combat unregulated fishing.

Promoting a green economy

BRICS countries have pledged to support one another in their collective fight against global warming and climate change. Delegates signed a multilateral agreement on climate cooperation and the green economy, which will see the exchange of technical and financial support to address the dangers of climate change in developing nations. President Zuma also said South Africa would continue to work tirelessly to forge stronger ties with developing nations in promoting the green economy, the processing of minerals and infrastructure finance. The multilateral agreement on the green economy would not only benefit BRICS member states but the entire African continent.

eThekwini Declaration and Action Plan

The summit outcome documents known as the eThekwini Declaration and Action Plan were adopted. Human rights and gender were for the first time in the history of BRICS, included in the eThekwini Declaration.

Peace and security

All BRICS leaders also expressed their commitment to peace and security on the African continent and called on the United Nations (UN) to enhance cooperation with the African Union, and its Peace and Security Council, in support of UN Security Council resolutions.

Regarding the global economic situation, a strong commitment to foster growth and financial stability was articulated by the BRICS leaders in order to address unemployment.

The leaders reiterated their position that the reform of the International Monetary Fund should reflect the growing weight of BRICS and other developing countries.