South Africa has received a loan worth $ 1 billion from the New Development Bank (NDB) created by the rising economies of the BRICS Plus nations. The NDB approved the loan for the South African government to support water and sanitation infrastructure. This finding, under South Africa’s Municipal Infrastructure Grant programme aims to address infrastructure gaps and provide essential services to impoverished communities. The NDB made the announcement at its annual meeting in Cape Town, where further discussion of Bloc’s expansion was taking place.
The New Development Bank, founded by the BRICS group of developing countries, approved a loan of as much as $1 billion to help develop water and sanitation infrastructure in South Africa. The funding will be provided under South Africa’s Municipal Infrastructure Grant program, which seeks to reduce infrastructure backlogs and ensure the provision of basic services to poor households, the multilateral lender said in a statement on Saturday. The funding was announced at the NDB’s annual general meeting in Cape Town. The lender was started in 2015 by BRICS members Brazil, Russia, India, China and South Africa, while the United Arab Emirates, Egypt, Bangladesh and Uruguay are also members.
The bank decided to authorize Algeria’s admission as a member, Dilma Rousseff, its president, told reporters after the meeting. She said while the bank’s policy was to expand its membership among countries of the Global South and that many of them had applied to join, she wasn’t authorized to name them, and an assessment of their eligibility needed to be undertaken before approval was granted.
The NDB is meant to serve as a pillar of finance to developing economies. Its purpose is to assist in financing entrepreneurs and infrastructure development so these countries can grow their economies. Its basis follows a “teach a man to fish rather than give a man a fish” wisdom. The NDB created by the BRICS founding members Brazil, Russia, India, China and South Africa is to serve the interests of member states both new and original in growing their economies. The purpose of the infrastructure loan for South Africa is to alleviate poverty and facilitate service delivery to the destitute. It is to renew hope in the government’s infrastructure if it used correctly.
The influx of new members to the bloc and the NDB shows that many countries of the global South like Algeria, Egypt, Ethiopia, Bangladesh have become disenchanted by status quo perpetuated by the International Monitory Fund (IMF) and the World Bank. There is a desire for a new rout to take by these nations that want to be treated fairer than their richer counterparts in the United States, Canada, and Europe.
Even Deputy President Paul Mashatile speaking on behalf of Pretoria has expressed the government’s gratitude to the NDB for its backing of the country’s infrastructure development.
“I want to express my gratitude once again for the bank’s pledge, and specifically for the promises made regarding the bank’s assistance for South African infrastructure investment. In this regard, we take note of the US$5.6 billion in loans extended to our country over the last eight years,” the Deputy President said. He was addressing the Energy Seminar convened by the BRICS New Development Bank at the Cape Town International Convention Centre on Saturday. The NDB has approved $2.3 billion for 10 renewable energy projects, including solar PV, wind, hydropower, biomass, and hybrid systems with storage. These projects aim to install a 2.8GW generation capacity, reducing over 4 million tonnes of CO2 emissions annually.
Given the impact climate change has had on South Africa and the world this would appear to be good news. Afterall for those of you who forget CO2 or Carbon Dioxide refers to greenhouse gas emissions from fossil fuels such as coal and gas that trap the sun’s heat in the atmosphere. This causes an imbalance in the earth’s climate. Hence the term climate change. The solution and alternative energy that has been proposed are the renewable energies such as solar and wind. Water (hydro) also has its role to play. The NDB by giving this loan is a hope that South Africa can wean itself from fossil-based energies such as coal and oil. The result is that the government can introduce minor but significant steps to implement cleaner energy for purer air and climate.
“We also appreciate the bank’s plans to assist Transnet in resolving the deficiencies in freight rail infrastructure. The Transnet project in particular is of utmost importance in guaranteeing a goods system that is internationally competitive, allowing for the continuous expansion and diversification of the country’s economy,” Mashatile said. He highlighted that during their discussions they had agreed that a challenge was the sluggish payment of authorised projects in South Africa. He discussed the matter with the Minister of Finance Enoch Godongwana and his team at National Treasury, who have promised to attend to it. “We are also impressed that the bank has appointed former National Treasury official Mr Monale Ratsoma as its Chief Financial Officer and Vice-President. We will work with you to ensure that the pledge that the bank made of US$3 billion at the BRICS Summit comes to reality because it is focused on supporting our energy strategy,” he said.
The result is that the loan of $1 billion will also encompass a new enhancement and massive upgrade for the railway network that will bring South Africa into the twenty first century to compete with other economic powers. The nation is still a major gateway to the continent to do business. This massive construction and upgrade of the rail way system will create millions in unskilled jobs. It will also provide a platform for education on the kinds of good and materials that could be transported on the trains. The role of NDB as a bank is to facilitate the process of development in BRICS Plus nations especially those who are new members. There can be no room for sluggish payments on projects on authorised projects by member states. South Africa’s payments on the new train network being a case in point.
It is interesting that a South African national Monale Ratsoma was chosen to be the second in command at the NDB. It shows that President Cyril Ramaphosa is lobbying for South Africa to have its influence in every aspect of the organization. The great giants who started the bloc (Brazil, Russia, India, and China,) need not complain as they need South Africa as a business centre. President Cyril Ramaphosa being a businessman knows this and is making the most of it.
Article written by:
Yacoob Cassim
Journalist at Radio Al Ansaar
