New Development Bank to extend loans to Brics countries' private sector
The New Development Bank announced on Monday that it would begin to extend loans to the private sector in Brics countries as it enters another phase of its growth prospects.
The New Development Bank was established in 2014 following the sixth Brics Summit, with capitalisation from Brazil, Russia, India, China and South Africa.
Leslie Maasdorp, vice president and chief financial officer of the New Development Bank, said that the bank will now be working to expand its activities within the five countries in the Brics bloc in a bid to have a bigger impact.
"We are now looking at deepening that collaboration with the five countries to go beyond the distributional infrastructure work we have done so far. The most important part of our next phase would be to provide loans to the private sector. Before, we mainly provided loans to governments and to State-owned enterprises," Maasdorp said.
"Now we can provide loans to the private sector because the private sector can play a big role in stimulating investments. Also, we want to crowd in and bring more private sector investment, together with our funds, so we can have a bigger impact."
Maasdorp was speaking on the sidelines of the New Development Bank working breakfast during the Brics Business Council which ends on Monday in Durban.
He said that the bank already had strong capitalisation with US$10-billion of equity, adding that the cost of capital for the bank would be much cheaper and it would be able to offer loans at cheaper interest rates.
"We don't need more capital. We just now need anchorable projects, meaning projects that will have commercial returns, that are ready for funding, and be bankable for us to be able to fund them," Maasdorp said.
"We are not aiming to replace or substitute other financial institutions, we will work with them. But we will have a higher credit rating than all of the banks in South Africa because of the strong financial metrix of the bank, high capitalisation, very low leverage, very high liqiudity. We don't have an international credit rating yet, but I can guarantee you that our rating will be better than the local bank."
Maasdorp also said that the bank could easily lend up to between US$70-billion and US$80-billion in the next five years in South Africa.
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