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Mboweni wants to build on 'interconnectedness' of Southern Africa

Apr 01 2019 11:42
Carin Smith
Finance Minister Tito Mboweni during a media brief

Finance Minister Tito Mboweni during a media briefing after his first mid-term budget speech at Parliament on October 24, 2018 in Cape Town (Gallo Images / Times Live / Esa Alexander)

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Finance Minister Tito Mbownei emphasised the importance of fostering "interconnectedness" between Southern African countries during his short welcoming address at the opening of the 4th annual meeting of the New Development Bank (NBD) in Cape Town on Monday.

The bank was established as a developmental lender by the Brics states (Brazil, Russia, India, China, and South Africa). This is the first time South Africa is hosting the meeting. 

"We soon might have to say, as the NDB, that there are disasters in Mozambique due to lack of planning, and who gets the first phone call when that happens? South Africa," said Mboweni.

"Are we not better off saying: we are seeing in Mozambique the absence of an integrated system due to a lack of infrastructure systems? Should we not work with the Dutch, who are experts in water management, to cater in Mozambique for disasters? Maybe this is a thought the NDB could have."

After Mboweni's address, two loan agreements by the DNB were officially signed. The first is a two-step loan of up to $300m by the bank to the Development Bank of Southern Africa for greenhouse gas emission reduction and energy sector development. 

The second is a loan to power utility Eskom for renewable energy integration and transmission augmentation in the amount of $180m. This project will integrate a total of 670 MW of renewable energy into the Eskom’s grid, NDB and the power utility said in a joint statement. 

From talk to gains 

During his short address, Mboweni told delegates he basically endorsed everything Minister of Higher Education and Training Naledi Pandor said in her earlier opening address at the start of the meeting.

Pandor had said that policymakers need to foster improvements in the distribution of gains from growth.

"Policy makers need to identify synergies. This will require policies and initiatives that foster sustainability and foster growth and improvement in the distribution of gains from the growth," she said. 

"This is a very important annual meeting. We are looking for opportunities not only for the Brics group to interact with other countries, but for how to develop Africa."

The minister said she was optimistic about the meeting encouraging positive discussions on the role of the bank in both South Africa and Africa by investing in infrastructure. 

"We recognise that more needs to be done to ensure these talks translate into a direct and measurable impact on all citizens of our continent," she said. “Unfortunately, recent World Bank data shows the number of people living in extreme poverty is growing in sub-Saharan Africa."

Financing for sustainable development will require action by a diverse range of actors and governments fostering enabling environments for the private and public sector to work together. 

"Africa still needs to do a lot of development work. Africa can explore non-traditional ways of financing projects and to pool large financial resources in a less costly manner," she said.

"We need to look at traditional financing methods. We cannot expect donor countries to finance initiatives on their own without us trying to get our own domestic resources to complement that."

Capital flight 

Pandor said that there has already been a flight of capital to the value of an estimated $500bn from the continent over the past few years.  

"For us in SA, investment in infrastructure has been identified as a critical part of policy. We think there are exciting opportunities in SA. Sound feasibility studies are, however, important so we can make rational decisions," she said.

"We are fully aware that development is difficult to achieve and takes time. As South Africa we have set ourselves on a path of renewal and growth. We are determined to strengthen partnerships for inclusive economic growth and development."

"As SA and Africa are posed to enter a period of social and economic transformation, I believe the NDB and its partners will provide the infrastructure to help overcome the legacy of the past and enhance quality of life for all our people."

brics  |  naledi pandor  |  brics bank
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