The New Development Bank has played a key role in supporting Brazil, Russia, India, China and South Africa (Brics) through the pandemic.
It is also expected to continue playing an integral role in helping to resolve the economic challenges arising from the Covid-19 pandemic and other developmental challenges in the Global South, speakers noted during the Human Sciences Research Council’s Brics Research Centre webinar on July 7.
The webinar looked at the role of the bank and how it finances development in a post-Covid-19 world.
The New Development Bank, formerly referred to as the Brics Development Bank, is a multilateral development bank established by the Brics States, which aims to mobilise resources for development projects in these States, as well as in other emerging and developing countries.
The Bank provides loans for infrastructure projects as well as investment and economic stimulus packages to the Brics member States and its regional partners.
University of Johannesburg Politics and International Relations professor Siphamandla Zondi said that, since the establishment of the bank in 2015, Brics has positioned itself to lead in the use of development finance as an instrument for harnessing new economic production, new value chains and new role-players.
This included the use of new technologies to achieve higher and more inclusive levels of growth.
However, despite its critical role, the bank was under strain from the economic impacts of the Covid-19 pandemic and there was a need to strengthen its resilience, so that it could continue to drive economic growth in the Global South and beyond, speakers emphasised.
Zhejiang University international business School visiting professor Dr Jaya Josie said the key questions now was how the bank contributed to resolving economic challenges resulting from the pandemic and other constraints on development in the Global South to fulfil its developmental mandate, especially its contribution in Africa and other regions in the Global South.
For example, in South Africa, this would entail funding projects that tackle that country’s issues of unemployment, inequality and poverty, with the latest Covid-19 update this year putting these three at unprecedented high levels, he said.
He emphasised, however, that these projects must be aligned to the country’s own development objectives and strategies.
Josie indicated that the bank showed its strength to come through in a crisis. Owing to the pandemic, the bank repurposed its lending programme and responded swiftly to help Brics bolster its defence against the pandemic, he noted.
After the outbreak, Josie said the bank announced a $10-billion Emergency Assistance Programme with a more flexible and streamlined process for processing and disbursing loans.
Disbursements for Covid-19-related assistance were made as bullet payments within three to four weeks after the loans were approved.
To date, the bank has approved and disbursed $4-billion, which comprised of $1-billion loans each to China, Brazil, India and South Africa.
Josie noted that the full $10-billion for 2020 represented additional development assistance which would not have been viable if the bank was not created five years ago.
Following on from this was the bank’s board decision on post-Covid-19 loans for Brics, in December 2020.
For South Africa, this entailed $1-billion for the improvement of transport infrastructure for the non-toll roads management programme.
Centre for Brics Studies scholar Karin Costa Vazquez indicated that the six years of learnings, and the pandemic, presented a chance now for the bank to improve its operations and therefore help countries build forward better.
She said the core elements of the bank’s mandate of infrastructure and sustainable development must now meet in a practical way.
She highlighted the considerable role played by the bank in supporting Brics countries’ recovery from the pandemic, and now, focus must be on how to help them build forward better and prepare for transformations happening globally, such as the digital economy, the redesign of value chains and the transition to a low-carbon economy.
She suggested that the bank could therefore focus on supporting sustainable infrastructure projects and ensuring that these generate long-term, meaningful impacts.
Moreover, it could support resurgence dialogues that help countries on this path, and help design programmes that prepare them for the changing future.
Lastly, she said, the bank could incentivise projects that were based on sustainability.