By John Chimunhu. (News Of The South)
South African president Jacob Zuma has defended the controversial move to have the New Development Bank (NDB) set up Wednesday by the BRICS grouping located in China.
The BRICS group of Brazi, Russia, India, China and South Africa announced they had set up the NDB alongside a $100 billion development fund during a summit attended by all the countries’ leaders in Fortaleza, Brazil this week.
Media and social commentators in Africa blasted Zuma for ‘allowing’ the bank to be headquartered in Shanghai, China.
Zuma reacted furiously to the allegations.
“In the discussions, we finally all agreed that the headquarters should be in Shanghai, but Africa will have a regional centre which is going to be very active,” Zuma told journalists in Brasilia, the Brazilian capital Thursday.
“We are trying to cut the cloth according to our size, all of us. It’s operating from Shanghai and serving all of us. We’re not looking at Africa or Latin America only but looking at it globally. Its global. There are all the reasons why it should be there. Also, Africa has got a bigger office (than the other regions).
We’ve started on something very positive, something very serious.”
BRICS launched two international financial institutions: the NDB, capitalised at $50 billion, and the $100 billion Contingent Reserve Arrangement (CRA). Analysts said the set-up was likely to rival the International Monetary Fund if it succeeded. BRICS countries hold the world’s largest foreign currency reserves. Analysts say the bank offers the bloc an opportunity to invest in developing countries at a profit and to counter the West’s hold on global finances.
Brazilian president, Dilma Roussef downplayed suggestions the new institutions wanted to compete with IMF and World Bank, saying they only wanted to complement them.
Chinese president, Xi Jinping was more radical.
“We’re helping democratize international relations,” Xi said.
According to the Fortaleza Declaration, the BRICS group was driven by lack of progress in reforming the IMF, whose powerful councils have been dominated by the United States and Europe since its formation at the end of World War II. The U.S. Congress has repeatedly rejected the IMF reform proposals presented in 2010.
“We remain disappointed and seriously concerned with the current non-implementation of the 2010 IMF reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness,” says the joint Fortaleza Declaration. “We call for an international financial architecture that is more conducive in overcoming development challenges.”
China contributed $41 billion to the CRA fund, Russia, Brazil and India, $18 billion each and South Africa, $5 billion. Each country contributed $10 billion to the NDB.
Zuma, however, noted that the presidency of the bank was rotated every five years, meaning South Africa would get a chance to influence developments. India is the first president.
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