SONGWEIWEIAwindprojectinsoutheastChina鈥檚FujianProvince.ThesecondphaseoftheprojectwasfinancedbytheNewDevelopmentBankAsoneofthemajorsupportingfacilitiesoftheBRICScooperation,theNewDevelopmentBank(NDB),headquarteredinShanghai,China,formallycameintoexistenceasalegalentityin2015toprovidemuchneededfundingtoassistinfrastructuredevelopment.
ChinAfricaspoketoLeslieMaasdorp,VicePresidentandChiefFinancialOfficerofNDB,tofindoutmoreaboutthebank鈥檚operationanditsplansgoingforward.Aneditedexcerptofhisviewsfollows:
ChinAfrica:WhatistheroleoftheNDBintheBRICSgroup?
LeslieMaasdorp:TheNDBwasestablishedtofinancelong-terminfrastructure,especiallysustainableinfrastructure,inBrazil,Russia,India,ChinaandSouthAfrica.Thereisahugeneedtofinancethebuildingofports,roadsandrailways,andpowerallkindsofbiginfrastructuresoastocontinuetheprocessofindustrializationandtheeconomicgrowthoftheseeconomies.AlloftheBRICSeconomiesareemergingmarketsandinneedofsomeneweconomicinfrastructure.Thereisahugefinancinggapinthebuildingofthisinfrastructure.
Thereareexistingfinancialinstitutionsthatalsofinanceinfrastructureconstruction.Wewerestartedbythesefivecountriestocomplement,[and]tobeanadditionalresourcetohelpthemwithinfrastructureroll-out.
WhatachievementshastheNDBmadeuptodate?
ThebankwasstartedinJuly2015.Sincethen,wehavecompletedloanstothetuneof$5.1billion.ThoseloansareforprojectsinallofthesectorsthatI鈥檝ementioned:ports,airportsandrailways,[andwitha]strongfocusinrenewableenergy,somefocusonwaterandurbaninfrastructure-sothebankhasinaveryshortspaceoftimeestablisheditselfandhas120professionalsworkingfortheinstitution.AsImentioned,wehavecompletedabout16projectsinthefivecountries.
HowdoestheNDBcreateabalanceoffundingamongitsmembercountries?
ThebankfirstlyisuniqueinthesensethatitisownedinequalshareholdingbythefiveBRICScountries;soeachcountryholds20percentoftheshares.Eachofthefivecountriesputin$2billionofequity,andwehavealsowhat鈥檚calledcallablecapitalof$40billion.Sothetotalsubscribedcapitalbaseofthebankis$50billion.Thebankisfocusedonamodelofequalparticipationbythefivemembers.Sothefivecountriesarealsorepresentedequallyintheformoftopmanagement.Eachcountryhasonerepresentative;therefore,nocountryhasvetopowerinthebankorcontrolsthebank.It鈥檚runequallybytheBRICScountries.
HowdoestheNDBworkinharmonywithotherinternationalfinancialinstitutions?
TheNDBwascreatedasavoiceoftheemergingmarkets.AllofthesefiveBRICSmembersaredevelopingcountries;howeverwedefinitelyworkinacomplementaryfashionwithotherfinancialinstitutionsliketheWorldBank,theAsianDevelopmentBankandtheAfricanDevelopmentBank.Thereasonforthatisthelargedemandforinfrastructurefunding.
Theamountofinfrastructurefundingneededtobuildallthenewroads,ports,airportsandpowerstationsrequiredisverylarge.Eachofthesebankscontributestothateffortandthereisstillamassivegapoffundingneeded.Sothereisnorealcompetitionamongthesebanks.Weareallownedbythegovernment,sowethereforehaveapublicpolicymandate.Weallfocusonfinancinginfrastructure.
Infact,weareworkingrightnowonprojectswherewecooperatedirectlywiththeWorldBankandAsianDevelopmentBank,andwearefundingtheseprojectstogether.WhatisuniqueabouttheNDBisthatourfocusismuchmoreonthedemandandtheneedsofdevelopingcountriesandemergingmarkets.
WhatinnovativeapproachestodevelopmentwilltheNDBpursue?
Sofirst,asIhavealreadymentioned,theoverwhelmingmajorityofourprojectsarefocusingonsustainability.Sowhateverwedo,wearegoingtobuilditinsuchawaythatwearefocusingonthelong-termneedsofthefivecountries,[and]onhowtoreducecarbonemissionsintheseeconomies.Wewillcontributetocleanandgreenenergyinthesecountries.Sothat鈥檚thefirstdifferentiator.Second,wewanttoleveloffnewtechnology[as]therehasbeensignificantadvancesintechnologyinthewayinfrastructureisbuilttoday.Thekindofworldwelivein20or30yearsfromnowisgoingtobeverydifferentfromtheworldweliveintoday.Sowearetryingtolookatallthewaysinwhichwecanusethebestthattechnologyoffers.
Thethirdaspectofimportanceininnovativeapproachesisthatinthepast,multilateralbanksmainlyadvancedloansintheU.S.dollars,[but]wewillalsolendtocountriesintheirlocalcurrencieswhichthenenablesthecountriestoavoidforeignexchangerisk.Thebankwillalsopursuelocalcurrencyfinancing,whichisalsoaformofinnovation.
Fourth,wewillalsolookatnewformsoffinancingwiththeprivatesector.Sothebankwillnotonlylendtothegovernmentandstate-runenterprises,butwillalsolendtotheprivatesectortobringinmoreprivatesourcesofcapitaltofinancetheseinfrastructures.
InwhatwaycantheNDBbeofhelptoAfrica鈥檚developmentasawhole?
First,thebankisfocusedonlendingmainlytotheBRICScountries;soinAfrica,SouthAfricaistheonlymembercountryfornow.However,wewillputspecificemphasisonprojectsthatadvanceandenhanceregionalconnectivityandregionalintegration.SoinSouthAfrica,wewilllookatprojectsthatcanbenefittheregion.That鈥檚thefirstwaytheAfricancontinentwillbenefit.
Thesecondwayisthatthebankwill,inthenextyearorso,openupitsmembershiptonewcountriestojoinandweanticipatethatotherAfricancountrieswilljointhebankandthenwillbeabletodirectlyapplyforloans.Thereasonwhycountrieswillbequiteinterested[inthis]isbecausethecostofcapitalorinterestrateoftheloanswillbeverycompetitive.Wewillbeabletogivebetterratescomparedtowhattheygetfromcommercialbanks.SowewillbeabletohelptheadvancementanddevelopmentofAfricabygrantingloansforinfrastructureconstructioninthesecountries.
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