Abstract
At the fifth BRICS summit in 2013, the BRICS countries (Brazil-Russia-India-China-South Africa) agreed to form new multi-lateral development financial institutions such as the New Development Bank and the Contingent Reserve Arrangement. These new institutions are intended to perform similar roles to that of previously established international development institutions, particularly the World Bank and the International Monetary Fund while avoiding their biases towards lending to de-veloping nations. This paper examines the role that these institutions play in chang-ing the international financial architecture of development finance, particularly infra-structure development in the BRICS countries for the purposes of stimulating further trade and investment opportunities. It argues that the New Development Bank and Contingent Reserve Arrangement faces many challenges, such as issues of govern-ance structures and decision making procedures which require integrity, transparen-cy and political immunity in making lending decisions. It will also examine the role of China as a key partner and major source of capital in these development projects and, as well as its interests in strengthening its political and economic ties with other developing countries.
Highlights
The association of five major emerging national economies, namely; Brazil, Russia, India, China and South Africa (BRICS) has a special agenda towards assisting the Global South achieving its objectives of eradicating extreme poverty, reducing inequality and achieving sustainable development
This paper explores the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) contribution to international development financial institutions’ reform
The establishment of BRICS development finance institutions provides an important platform for the advancement of the global financial systems reform
Summary
The association of five major emerging national economies, namely; Brazil, Russia, India, China and South Africa (BRICS) has a special agenda towards assisting the Global South achieving its objectives of eradicating extreme poverty, reducing inequality and achieving sustainable development. The NDB and CRA has given rise to structural changes in international development aid governance, there exist deep concerns about the operations of these institutions in BRICS countries regarding their ability to push towards inclusive and sustainable growth. Other observers have questioned the NDB’s capacity to finance small and medium enterprises (SMEs) Against this background, this paper explores the NDB and the CRA contribution to international development financial institutions’ reform. The present structure and operations of the NDB and the CRA alongside existing regional and international financial institutions in pursuit of the BRICS' economies development agenda is explored. Conclusions and policy recommendations are offered in the last section
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