SA scores R17b COVID-19 loan from BRICS New Development Bank

Finance Minister Tito Mboweni. Image credit: Twitter/GCIS

South Africa has secured a $1 billion (around R17 billion) emergency loan from the New Development Bank (NDB) to help fund the government’s response to COVID-19.

The NDB was established by the Brazil, Russia, India, China and South Africa (BRICS) formation to mobilise resources for infrastructure and other development projects.

In a statement on Saturday, NDB’s Vice President and Chief Operations Officer, Xian Zhu, said, “The COVID-19 Emergency Program Loan to South Africa will be provided in response to the urgent request and immediate financing needs of the South African Government.

“NDB’s assistance will address urgent health needs in South Africa to overcome the COVID-19 pandemic and help mitigate socioeconomic impacts on the most vulnerable populations.”

The loan is more specifically aimed at funding the government’s healthcare response and providing a social safety net for the most vulnerable groups through social grants, the Bank said.

National Treasury welcomes loan

In a statement issued shortly afterwards, the National Treasury welcomed the loan and said it was working on the final technical and administrative requirements. “Final details on the loan will be published once all processes have been concluded,” it added.

This is the third emergency loan the NDB has provided to BRICS member states following similar approvals to India and China earlier this year.

South Africa is also seeking as much as $4.2 billion (around R72 billion) from the International Monetary Fund (IMF) as part of its R500 billion COVID-19 response package. The country could also secure a further $1 billion from the World Bank.

However, there has been some resistance to IMF and World Bank loans from some within the African National Congress (ANC) and its alliance partners – the SA Communist Party (SACP) and COSATU.

‘National sovereignty’

They raised concerns of losing “national democratic sovereignty” should the government accept loans from these institutions. In April, ANC Treasurer-General Paul Mashatile said the party will ensure that such loans do not compromise South Africa’s sovereignty.

He said, “Our approach as the ANC is that our team in government will negotiate the loan conditions because in any bank where you get loans, there will be conditions.

“Our team will look at whether those conditions are not heartless to our situation, particularly one of the things we are trying to avoid is structural adjustments which can basically compromise our developmental agenda.

“Our Treasury team is busy negotiating, so we will hear from [Finance Minister] Tito [Mboweni] what the conditions are, but we felt that we should not exclude these institutions because we know that historically there have been problems.”

Earlier this month, the ANC tripartite alliance proposed that the ANC’s top six officials should scrutinise all COVID-19 loans to safeguard against conditions that could compromise sovereignty.

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