In July 2014, the BRICS grouping (Brazil, Russia, India, China and South Africa), announced the creation of a new, US$100 billion New Development Bank to lend money to developing nations for investments. There is much speculation about the role the Bank might play, and the motivations of the BRICS members in establishing it.
We spoke to Kathryn Hochstetler from the Centre for International Governance Innovation about the new Bank and the possible implications for the developing world. We asked her:
- Despite the vast differences amongst individual BRICS member countries, we have seen a high level of coordination in the formation of the BRICS New Development Bank. What do you think the motivation is for the formation of this Bank?
- Many hope the Bank will represent an ideological counterpoint to traditional development finance institutions, such as the IMF and World Bank, both in terms of the projects they might finance, and in terms of fostering alternative development philosophies and financing models. Do you think this is the case?
- There is of course already an existing network of development banks in the developing world. What impact will the new Bank have on these banks?
- Looking at Africa specially, what impact will the Bank have on the urgent need here for finance for infrastructure development?
On 24 November, SAIIA and the Graduate Schoool of Business at the University of Cape Town co-hosted a conference on Development Banks of the Developing World: Regional Roles, Governance, and Sustainability.
Read a recent article by Christopher Wood, ‘The way forward for the BRICS New Development Bank’.