THE NEW DEVELOPMENT BANK: MOVING THE BRICS FROM AN ACRONYM TO AN INSTITUTION

The New Development Bank (NDB) was established by the BRICS nations to address infrastructure funding deficits in emerging economies and to challenge the dominance of traditional international financial institutions. With an initial subscribed capital of $50 billion and a maximum authorised capital of $100 billion, the bank aims to provide a more equitable alternative to the World Bank and IMF. Initial lending, starting in the second quarter of 2016, is expected to focus on renewable energy projects, including wind, solar, and hydro power, while excluding nuclear energy. The NDB intends to distinguish itself through faster project approval cycles, lending in local currencies to mitigate exchange risks, and a commitment to avoid political conditions on its loans.

• The NDB was established partly due to the BRICS nations' frustration with the slow pace of reform in traditional international financial institutions, which they believe no longer reflect current political and economic realities.
• The bank's financial structure includes a maximum authorised capital of $100 billion and an initial subscribed capital of $50 billion, with the five founding BRICS members contributing $10 billion each.
• The NDB aims to maintain majority control among the founding members, ensuring they never hold less than 55% of the total voting share, while non-borrowing members outside the founding five are capped at 20%.
• Initial lending projects, expected to begin in the second quarter of 2016, will focus on sustainable energy such as wind, solar, and hydro power, but will explicitly exclude nuclear energy.
• To differentiate itself from traditional development finance institutions, the NDB intends to reduce project approval cycles from approximately 30 months to six months by utilizing the procurement processes of the borrowing countries.
• The NDB plans to lend in local currencies to reduce exchange rate risks and currency fluctuations, despite the potential for marginally higher interest rates.
• The bank intends to operate without placing political conditions on its lending and is willing to support projects that are often controversial for other institutions, such as coal-fired power stations and large hydroelectric dams.
• While the NDB's capital is significant, it remains substantially smaller than the World Bank, and its ability to close the infrastructure gap in Africa—estimated at nearly $100 billion annually—is limited by its authorised capital.

APA

Bertelsmann-Scott, T., Prinsloo, C., Sidiropoulos, E., Wentworth, L., & Wood, C. (2016). THE NEW DEVELOPMENT BANK: MOVING THE BRICS FROM AN ACRONYM TO AN INSTITUTION. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2016/06/Occasional-Paper-233.pdf

Chicago

Bertelsmann-Scott, Talitha, Cyril Prinsloo, Elizabeth Sidiropoulos, Lesley Wentworth, and Christopher Wood. THE NEW DEVELOPMENT BANK: MOVING THE BRICS FROM AN ACRONYM TO AN INSTITUTION. South African Institute of International Affairs, 2016. https://saiia.org.za/wp-content/uploads/2016/06/Occasional-Paper-233.pdf.

Wikipedia

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BibTeX

@techreport{bertelsmannscott2016new, author = {Bertelsmann-Scott, Talitha and Prinsloo, Cyril and Sidiropoulos, Elizabeth and Wentworth, Lesley and Wood, Christopher}, title = {{THE NEW DEVELOPMENT BANK: MOVING THE BRICS FROM AN ACRONYM TO AN INSTITUTION}}, institution = {South African Institute of International Affairs}, year = {2016}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2016/06/Occasional-Paper-233.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }