The BRICS Development Bank, officially known as the New Development Bank (NDB), has announced plans to begin lending in South African and Brazilian currencies in order to reduce reliance on the US dollar.
The development bank was established in 2015 by the BRICS nations (Brazil, Russia, India, China and South Africa), as possible alternative to the World Bank and IMF.
Dilma Rousseff, the bank’s president who disclosed this in a recent interview with Financial Times, said the Shanghai-based lender was considering applications for membership from about 15 countries and was likely to approve the admission of four or five.
She declined to name the countries but said it was a priority for the NDB to diversify its geographic representation.
“We expect to lend between $8bn-$10bn this year,” Rousseff told the newspaper.
“Our aim is to reach about 30 per cent of everything we lend . . . in local currency.”
She said the NDB would issue debt in rand for lending in South Africa and do “the same thing in Brazil with the real. We’re going to try to either do a currency swap or issue debt. And also in rupees.”
Rousseff said lending in local currency would allow borrowers in member countries to avoid exchange rate risk and variations in US interest rates.
“Local currencies are not alternatives to the dollar,” she said.
“They’re alternatives to a system. So far the system has been unipolar . . . it’s going to be substituted by a more multipolar system.”
She said the bank has also tried to distinguish itself from the World Bank and the International Monetary Fund (IMF) by not setting lists of political conditions on loans.
“We repudiate any kind of conditionality,” Rousseff said.
“Often a loan is given upon the condition that certain policies are carried out. We don’t do that. We respect the policies of each country.”
Vice President Kashim Shettima is currently representing President Bola Tinubu at the 15th BRICS summit in South Africa, though Nigeria is not a member of the club.
The conference, which commenced in Johannesburg on August 22, will focus on issues of trade and investment facilitation, sustainable development, innovation, and global governance reform.
