Picture: REUTERS
Picture: REUTERS

THE New Development Bank is formally "open for business," the Treasury said on Monday.

This follows the signature of an agreement late in February between China and the New Development Bank regarding the bank’s headquarters in Shanghai. The agreement completed all the necessary legal procedures for the bank to begin operations.

It is preparing for its first batch of projects, which could be launched in April. According to the bank’s media statements from Shanghai, it aims to lend up to $2bn this year.

The bank would place a lot of emphasis on the speed of its financing, the bank’s president, Indian banker KV Kamath said.

He said the first projects would be green energy ventures and infrastructure projects in member countries.

The Treasury said the bank was in the process of establishing its African regional centre in Johannesburg and had begun the process of recruiting staff. Former finance minister Nhlanhla Nene said on Monday that he had not received any further clarity about his position at the bank in SA, the reason given by President Jacob Zuma for his sudden removal from office in December. The president said Mr Nene had been removed as finance minister so he could head the regional centre in SA.

The 2016-17 budget review noted that SA’s first instalment of R2bn to the bank was paid in 2015 and made provision for further commitments of R11.8bn over the next three years (R3.75bn this year) to fulfil SA’s obligations to the bank.

Given the government’s straitened fiscal circumstances, this commitment has required the reprioritisation of spending in other areas.

With India providing the bank’s president, the bank’s four vice-president’s come from each of the other Brics member countries (Brazil, Russia China and SA). SA’s vice-president is Leslie Maasdorp, who, as chief financial officer, will be responsible for treasury and portfolio management as well as the finance, budgeting and accounting functions.

The bank was set up by Brics members with the aim of financing infrastructure and sustainable initiatives. It has been estimated that developing countries will need additional spending of almost $1-trillion a year for the next 20 years to meet their infrastructure requirements. It will have total capital of $100bn, 12.5% of which is to be paid in by the members in the first seven years, and a starting capital of $50bn, with each member country contributing $10bn.

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