BRICS bank should help the poor

At their summit in Fortaleza, Brazil, last week, the leaders of BRICS (Brazil, Russia, India, China and South Africa) announced the details of the much anticipated "New Development Bank", which will be headquartered in Shanghai and have an initial subscribed capital of $50 billion, and the $100-billion Currency Reserve Arrangement.

The idea of a BRICS development bank, to serve as a counterweight to the traditional donor countries and the US-EU led financial institutions like the World Bank and the International Monetary Fund, was first mooted at the 2012 BRICS summit in New Delhi.

At the Durban summit in South Africa last year, the BRICS member states announced their intent to launch the bank in 2014. Little else was revealed to the international community other than an agreed focus on "mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries", and in a manner that will "supplement the existing efforts of multilateral and regional financial institutions for global growth and development".

This matters. The BRICS bloc has a special responsibility to help the world achieve its goal of ending extreme poverty, reducing inequality and achieving sustainable development, as its member states collectively face some of the world's greatest challenges and have made great achievements in these areas. Despite the remarkable strides taken by China, Brazil and India to reduce poverty, BRICS countries are home to nearly half the world's poor and, with the exception of Brazil, have experienced a rise in inequality in recent years.

Oxfam believes that the creation of a development bank offers a real and concrete opportunity for the governments of BRICS countries to ensure that development financing is sensitive to the needs of the poorest and the most marginalized. Besides the potential for extra resources for development financing, the new bank could pave the way for a more democratic global development architecture.

Yet details of what is planned are sketchy, and little is in the public domain. This needs to change. It is time for the discussion to move beyond the BRICS governments' current focus on technicalities around capital contribution and governance, and instead provide a solid vision for its mandate, the principles, priorities and objectives on which the new bank's activities and operations should be premised. BRICS countries should seize the opportunity to go beyond the growth-oriented development agenda toward more inclusive and sustainable solutions to end extreme poverty.