Talking to IPS, Edinger said that at least $15 trillion are required in the BRICS countries over the next 10 to 20 years to finance such projects, especially in India and South Africa.
At a recent press briefing, Lynette Chen, Chief Executive Officer of the New Partnership of Africa’s Development Business Foundation, estimated that there currently is a $480-billion deficit in funding for infrastructure in Africa, which the new BRICS bank should help to tackle.
“The BRICS Development Bank could become the lender of choice for Africa,” Chen said.
Other areas of finance include green technology projects, biofuels, dams and nuclear power plants in Africa, according to Edinger.
Yet, financing to the African continent is expected to be a smaller share of total financing extended to the BRICS.
While there will be some scope to fund environmentally friendly projects in Africa, this will not initially be the prime focus of the new bank, the strategist said.
Projects with a focus on sustainable development and climate change will be part of the mix, particularly where they concern larger and cross-border infrastructure-type projects in the transportation and power sectors, to promote regional integration and regional market building, according to Edinger.
While the upcoming BRICS Summit in Durban at the end of March will be the first to be hosted on African soil, officials have been holding a series of meetings in countries to ensure that the political club is given a real economic backbone.
Zungu predicted that the new bank would ‘cement’ the BRICS spirit of cooperation by giving a tangible institutional foundation.
Edinger agreed. The establishment of the BRICS Development Bank will be an important milestone for the BRICS grouping as it would add credibility, substance and ownership of the BRICS concept as the first institution coming out of this club.
She said that while a number of working groups and forums exist as part of the BRICS mechanism, the establishment of the bank would signal a move away from just being a political discussion forum that proposes reforming the international financial system, creating a vehicle that is more attuned with the interests of the BRICS emerging markets, as well as the interests of the greater Global South.
Experts at South Africa’s Standard Bank believe that the BRICS Development Bank will initially be capitalized at $50 billion, with $10 billion from each of the BRICS members.
The bank would also give a sense of assurance to private financiers, according to Chen. She agreed that many infrastructure projects in Africa would be cross-border, involving “development corridors”.
Eyes on Durban
Economist Jeremy Stevens of South Africa’s Standard Bank, who is based in China, told IPS that more clarity about the bank would emerge in Durban.
The main ambition of the bank is to direct development in a manner that reflects the BRICS’ priorities and competencies. Therefore, the bank will focus on infrastructure development and providing auxiliary support for project preparation, like feasibility studies, according to Stevens.
Later, the working group will establish technical commitments and governance structures.
“The BRICS Development Bank provides an institutional underpinning to the group,” Stevens said, while contributing constructively to the development of more robust and inter-dependent ties between the BRICS members.
He predicted that the scope of the bank’s activities might initially be limited, but could expand as it grows over time. He also asserted that its role would not be as a rival to existing development financing institutions, but as an auxiliary source of funding.
Symbolism of Shanghai
China is the largest economy in the BRICS and is expected to press for the new BRICS Development Bank to be headquartered in Shanghai, and for it to operate in the Chinese currency, the yuan.
“As part of its development process, China needs to deepen its financial markets,” John Cairns, currency strategist at South Africa’s Rand Merchant Bank, told IPS.
One part of this is to have a stronger and more flexible, market-determined, exchange rate. This, in turn, requires that the currency be traded openly like any other currency, and therefore be internationalized.
French Jobless Claims Hit 15-Year High
The number of people out of work in France shot up again in January after a smaller rise in December, piling new pressure on Socialist President Francois Hollande who has made tackling joblessness his top priority.
The number of jobseekers in mainland France jumped by 43,900 or 1.4 percent, signaling a return to the rapid pace of increase seen over 19 straight months to December--although half of the rise was due to a change in methodology in January, Reuters wrote.
Without the adjustment, the January increase would have been 22,800, still a much bigger jump than the 8,000 seen in December and dealing a blow to Hollande, who has promised to stem the rise in unemployment by the end of 2013.
After already backtracking in recent days on his growth and deficit targets for 2013, Hollande admitted at the weekend that weak growth would make his unemployment target, which is much closer to voters’ hearts, more difficult to reach.
The January jobless total of 3.17 million was the highest since July 1997 and close to the all-time high of 3.196 million, according to labor ministry.
Analysts polled by Reuters predict the unemployment rate, already above 10 percent, will keep rising until the start of next year.
The labor ministry data is the most frequently reported domestic jobs indicator for France, although it is not prepared according to International Labor Organization standards nor expressed as a percentage of job seekers in the work force.
In the change of methodology, the labor ministry on Jan. 1 pushed back the timeframe for when it removed people from its job seekers list. That means 21,100 people, who would have been struck off the roster in January, will now be removed in February, artificially inflating January’s data.
Egypt’s Car Sales in Fast Lane
Egyptian automobile sales rose by 43 percent to 17,463 vehicles in January 2013, the latest report from the Automotive Marketing Information Council (AMIC) shows.
Passenger car sales, the main component of the market, increased by 39 percent to exceed 12,000 vehicles in a month, Albawaba reported.
However, many producers and distributors are worried about the coming period and the whole year as January sales were affected, according to them, by the Egyptian currency devaluation.
Mena Sadek, director of corporate financial investment at Ghabbour Auto, adds that January 2012 car sales against which this year is being measured were low because of political events that seriously affected consumer appetites at the time.
The rise of the dollar by more than 10 percent since December resulted in an increase of car prices on the local market. According to distributors, the increase varied between LE5000 (around $750) and LE60,000 for some luxury cars.
The sales hike achieved during the first month of the year is not leaving market actors optimist about the year, however.
“The price hike combined with political and macroeconomic blurriness can be very discouraging for consumers,” said Effat Abdel-Atty, head of the cars division in Cairo Chambers of Commerce.
Many hope the summer will give a boost to the industry, but say they are unable to make clear provisions political turmoil continues and is unpredictable.
“The best time for automobile sales since the January 25 Revolution was just after the presidential elections,” said Mohamed Gamal, branch director of Al-Kersh Auto.
Japan’s Industrial Output Rises Again
Japan’s industrial production rose for a second month, highlighting an improved economic outlook, as the government nominated Asian Development Bank President Haruhiko Kuroda to be its new central bank chief.
Output climbed 1 percent from December, when it rose 2.4 percent, the Trade Ministry said in Tokyo. The median estimate of 27 economists was for a 1.5 percent gain. Production fell 5.1 percent from the previous year, Bloomberg wrote.
The yen’s more than 11 percent fall against the dollar in the past three months is improving the outlook for exporters, as Prime Minister Shinzo Abe calls for more monetary stimulus to end deflation.
JPMorgan Chase & Co. said Abe’s proposed new BOJ new leadership team, announced by parliament, could implement further easing as early as April.
Japan’s recovery is underway, said Naoki Iizuka, an economist at Citigroup Inc. in Tokyo, which accurately predicted the 1 percent rise.
Data confirm that Japan’s economy is picking up and the pace of recovery in coming quarters will probably accelerate, helped by the global recovery and Abe’s stimulus.
The yen was 0.2 percent weaker at 92.39 per dollar at 12:203 p.m. in Tokyo. The Nikkei 225 Stock Average rose 1.9 percent in the morning session.
The ministry said that increases in production of cars and memory chips contributed to the overall gain in the month. A decline in production of electronic parts and devices capped the rise, it said.
Of the 138 companies on the Nikkei 225 Stock Average for which Bloomberg News has estimates, almost 64 percent beat earnings estimates for the most recent quarter, as a weaker yen pushes up profits.
Iranian Company to Build IP Gas Pipeline
An Iranian company is due to begin construction work on the Pakistani side of the multibillion-dollar Iran-Pakistan (IP) gas pipeline soon, the Pakistani media reported.
‘Express Tribune’ reported on Thursday that ‘Tadbir Energy’ has been awarded the contract to construct Pakistan’s portion of the gas pipeline, FNA wrote.
It said the contract was signed during the recent visit of a Pakistani delegation to Tehran. The pipeline’s construction will be formally launched on March 4 on the Pak-Iran border.
The Pakistani Cabinet has already approved a waiver of the Public Procurement Regulatory Authority rules in order to award the contract directly to Tadbir Energy.
Sources added that the Pakistani public sector firm Interstate Gas Systems (ISGS) and Tadbir Energy initially signed the contract in Tehran and now the ISGS board will endorse it.
Tadbir Energy will work on the project for which Tehran is also extending a $500 million loan.
The firm is controlled by the Imam Khomeini Relief Foundation, one of Iran’s largest charitable group.
Sources added that Tadbir Energy will undertake the engineering, procurement and construction of the first phase starting from the border at a cost of around $250 million.
Tadbir Energy will also undertake the second phase of the project and will increase the financing by allocating a further $250 million to the pipeline project, subject to discussions regarding its involvement in the distribution of gas in Pakistan later.
It has also agreed to assist in arranging $250 million as the supplier’s credit and any additional financing for the second phase. The firm will act as the lead contractor along with the nominated local subcontractor.
The total cost of the project is expected to be around $1.5 billion.
Pak Gas Demand Rising
Demand for natural gas in Pakistan has outstripped supply in recent years, putting existing reserves under immense pressure.
The total consumption of natural gas in the country stands at 3,480 MMCFD million cubic feet per day, of which the power sector consumes 959 mmcfd, with 747 mmcdf being consumed in the domestic sector.
Meanwhile, 578 mmcfd of gas are consumed by the fertilizer industry and 4 mmcfd by the cement industry. While 107 mmcfd are consumed commercially, 327 mmcfd are consumed by CNG cylinders, which are widely installed in locally manufactured vehicles in Pakistan.
The 2,700-kilometer-long pipeline was to supply gas for Pakistan and India, which are suffering a lack of energy sources but India has evaded talks.
Last year, Iran and Pakistan declared they would finalize the agreement bilaterally, if India continued to abstain from the meetings.
According to the project proposal, the pipeline will begin from Iran’s Assalouyeh Energy Zone in the south and stretch over 1,100 km through Iran. In Pakistan, it will pass through Balochestan and Sindh, but officials now say the route may be changed if China agrees to join the project.
The gas will be supplied from the South Pars gas field in the Iranian southern province of Bushehr. The initial capacity of the pipeline will be 22 billion cubic meters of natural gas per annum, which is expected to be later raised to 55 billion cubic meters. It is expected to cost $7.4 billion.
Iran has already built more than 900 kilometers of the pipeline on its soil.
Last week, Managing Director of the National Iranian Gas Company (NIGC) Javad Oji said the construction of the IP gas pipeline is slated to be completed in less than two years.
“The peace pipeline is slated to be constructed with Iran’s cooperation on Pakistan’s soil within 22 months,” he said.
He added that the construction work is proceeding well and nothing can stop the project.
The IP gas pipeline stretches from the Iran-Pakistan border to Navabshah region in Pakistan and covers 781 km of the total 1,881 km of the pipeline.
Apart from it, both countries also discussed the finances involved in the project. The interest rate for Iran’s 500-million-dollar loan to Pakistan and the date for the start of the repayment of the loan by Pakistan were among other topics discussed.
Bankia Record Loss
Spain’s troubled Bankia--formed from the merger of seven floundering savings banks--has reported a record loss of $25.2 billion for 2012.