The New Development Bank’s (NDB) annual meeting in Cape Town this weekend should provide comfort for us that there are global-scale development-funding institutions that understand the problems being experienced in developing countries in a fast-changing and tense global environment.
Developing countries, particularly in Africa, are struggling to repay debt in the high interest rate environment, and their commodity-extraction-focused economies are feeling the pinch of weaker global demand.
The rapidly rising costs of meeting the global energy and climate transition, and growing geopolitical tension, such as in the Middle East, has caused traditional multilateral infrastructure and development funding sources and aid to dry up, or at the least, become increasingly expensive and difficult to source.
In this context, the NDB, which has Brazil, Russia, India, China, South Africa, Uruguay, Iran, Ethiopia, Egypt and the United Arab Emirates as its members, is providing an increasingly important role in providing infrastructure funding in emerging markets. On Friday, for instance, the Bank signed its 14th deal in South Africa, a R5 billion loan to Transnet to fix its freight rail operations.
South Africa, like most other developing countries, does not have the immediate funds running into many billions of rand, available to get the railway system back into shape. Repairing it will allow mining and industrial companies to export more, thus creating additional employment and economic growth opportunities in the country.
BUSINESS REPORT