South African’s influence in BRICS Bank not lesser, say Analysts

Thursday, 23 July,Johannesburg :South Africa’s influence in the newly-formed New Development Bank (NDB) will not be marginalised by the fact that it has made the smallest contribution to the initial capital among the BRICS countries, an analyst said here on Thursday.

Saijjil Singh, lead analyst at the South African office of international credit insurer Coface, told the daily the New Age that concerns over South Africa’s contribution to the NDB would also not affect the country’s financial standing.

South Africa has pledged US $5 billion of the initial US $100 billion capital, with China’s US $41 billion being the largest contribution, while Brazil, Russia and India will provide US $18 billion each.

“The South African component is understandably lower due to the size of its economy, but with a rotational governor system, it does not marginalise South Africa’s input or influence,” Singh said.

Reacting to such concerns after the launch of the NDB earlier this week, Singh said there was no harm in asking questions about whether the investment was a good one or not.

“The obvious concern comes in questioning whether or not this money is well spent, or whether participation at a governance level is necessary for South Africa,” Singh said.

“We must not ignore the strategic benefit to funding access and the global image of South Africa,” he added.

Critics of the South African involvement in the NDB have pointed out that the funds could be better used in addressing some of the basic challenges facing the country, such as education, skills development and poverty alleviation, which President Jacob Zuma has identified as priorities for his government.

“South Africa’s political influence is on a steady upward trend on the African continent and the BRICS Bank presents the country on a favourable platform to the emerging markets in the East,” Singh said.

“It also reaffirms South Africa’s strength with western economies, since it is the only African nation represented.

The BRICS Bank may be the push to reignite South Africa’s business confidence and in turn attract that much needed foreign investment,” Singh said.