Following the announcement by the BRICS Summit (between Brazil, Russia, India, China and South Africa), that a deal has been reached to establish a development bank that will rival Western-backed institutions, the questions now turn to where the bank's headquarters will be located, how the funding will work, and from which country its chief executive officer will come. It is imperative, however, that these questions do not overshadow the critically required conversation on the role that the development bank will play in stimulating infrastructure projects on the continent.
If winning the rights to host or run the bank is a key feature of South Africa's strategy ahead of the summit – as articulated very recently by South African minister of international relations and co-operation, Maite Nkoana-Mashabane – the warning signs are there in terms of the degree to which the infrastructure focus will materialise and the degree to which Africa will feature on this agenda point.
According to work published by John Kirton and Caroline Bracht in the BRICS Research Group, there are some very specific views on how the planned BRICS Development Bank could challenge or complement the established International Monetary Fund World Bank in the domain of conditions and interest rates each has set for loans. It is their opinion – and this has direct bearing on the infrastructure conversation – that a BRICS Development Bank could dispense with many of the conditions for ecological protection, local participation, transparency and accountability that have now become mainstream in many ways for the World Bank.
This is a scenario that the African continent can ill afford as it drives for sustainable improvement into the future.
Although Kirton and Bracht state that it is unlikely for the World Bank's standards to be pulled down, there is a risk that clients may defect to the BRICS Development Bank with its potentially lighter touch and fewer questions asked. This could possibly result in the BRICS Development Bank specialising in high-risk, high-cost, lumpy capital physical infrastructure projects, while the World Bank continues to move toward safer, less expensive social investments in soft human capital infrastructure such as education and health.
It should be remembered that there is a large need for infrastructure investment in India and Brazil as part of the BRICS community. It is thus highly unlikely that the infrastructure conversation will have a focus limited to Africa.
In an interview with President Vladimir Putin of Russia by Aleksander Netsjaef of the Russian news agency, ITAR-TAS, in preparation for the summit, it is clear that Putin's view of the role of the BRICS countries is focused on higher prominence in world politics – not one mention or use of the word ‘infrastructure’. This does not bode well for the infrastructure pillar conversation.
Sufficient evidence exists globally that not enough thinking is applied by business management and decision-making authorities at and during the front end of capital projects to ensure the money invested meets the critical objectives of budget, schedule and operability requirements as promised to the decision-making authorities at the time of capital appropriation.
It should be a significant concern and very high on the agenda of the BRICS Development Bank to ensure the business skills mentioned (particularly for Africa) are improved. In this context, I completely support the initiative by the Pan-African Capacity Building Programme to address the skills challenge associated with infrastructure development in Africa through the offering of short courses, exposure to young professionals who are employed at municipalities and utilities as well as the obtaining of a master’s degree in public administration.
Within the broader context of business management and decision making on capital investments by the private, state-owned enterprise and public sectors, the Centre for Business Management of Projects within the University of Stellenbosch Business School Executive Development has committed itself to assisting organisations and individuals throughout Africa to deliver better project results. The centre achieves this through focused training modular training programmes (with its flagships being a postgraduate diploma in Project Management and an international programme in Business Management of Projects), research and coaching by placing particular emphasis on the critical interface between business and project teams during the development and implementation of capital projects.
The development of an action plan addressing the specifics of infrastructure development and its broader application will unfortunately not be sufficiently done at this year’s BRICS Summit, even with the establishment of the BRICS Development Bank. The consequence of this is that the time horizon for infrastructure development will continue to shift to the disadvantage of the capital investment opportunities and growth projects required for the sustainable economic improvement of the African continent.
Louw is a director at the Centre for Business Management of Projects at the University of Stellenbosch Business School Executive Development