The largest emerging markets are uniting to form their own development bank, and South African Finance Minister Pravin Gordhan says details about its structure could emerge this year.
“A number of technical areas have been canvassed, and in the course of the next six months we’ll begin to answer more clearly questions like what capital do you want to start with? How much will be callable?” Gordhan said in Washington at an event hosted by the Brookings Institutions’ Africa Growth Initiative. “It’s going to be an interesting project if we can pull it off.”
The leaders of the so-called BRICS nations -- Brazil, Russia, India, China and South Africa -- have been studying the feasibility of a new development bank over the past year. They agreed to create such an institution at a summit last month in the South African city of Durban, yet didn’t decide how to finance it.
Developing nations have criticized the World Bank and International Monetary Fund for failing to adequately address underdevelopment.
“It lends greater diversity to the kind of institutions that can be involved in both marshaling capital on the one hand, packaging it in a particular way that meets our own requirements, and ensuring that we get long-term investment,” Gordhan said.
Deciding how loans are to be distributed and location of the bank’s headquarters are among issues still to be decided, Gordhan said.
The BRICS countries are home to 43 percent of the world’s population, and the nations are seeking greater financial influence as their economic power swells.
Sub-Saharan Africa’s economy will expand faster than previously forecast next year, driven partly by activity in South Africa, the IMF said in its World Economic Outlook released yesterday.
For the entire region, the economy will grow 6.1 percent in 2014, more than the previous estimate of 5.7 percent and the 5.6 percent projected for this year, the Washington-based group said.
South Africa’s economy will probably accelerate to 3.3 percent growth next year from 2.8 percent this year as mining production rebounds, the IMF said.
“Africa is at the beginning, I think, of an important growth trend,” Gordhan said. He said he sees growth shifting from Asia to the continent in the coming decades. “It is that transition that will begin to place Africa at the center of the global stage.”