When Goldman Sachs economist Jim O’Neill first coined the acronym ‘BRIC’ in 2001 — South Africa formally joined the grouping in 2011, converting the acronym to a pronounceable plural in the process — Brazil, Russia, India and China were just starting off on their transformational economic journeys. Today, the five economies have the potential to significantly reshape the global economic order. And the proposed BRICS bank — soon to be a functioning reality under the leadership of veteran banker Kundapur Vaman Kamath — may provide an alternative to the IMF-World Bank vision of conditionalities-driven funding. The BRICS Bank can help mould the discourse on development based on the concerns of emerging economies, something other developing countries are bound to welcome. Past attempts at presenting a coherent emerging economy world view on trade and development issues have foundered on the lack of economic muscle of most of the members. BRICS is significantly different in that respect, since its members are the largest economies across Asia, Africa and Latin America, with Russia as the European outlier. What’s more, they are both willing and able to flex their financial muscle, as exemplified by China launching its own development bank, a move viewed with trepidation in the West. With a starting capital of $50 billion and a currency exchange reserve of $100 billion, the BRICS Bank will undoubtedly be watched closely. But its size ensures it can address the pressing infrastructure issues of the member countries, as well as bail out other smaller economies facing currency turbulence.
For that to happen, the bank will first have to develop into an institution in the true sense of the word, with its own culture, values and independent voice. To do that, it would be arguably difficult to find a better choice than Kamath. Although the initial leadership of the bank was given to India as part of the founding agreement, the qualifications for being the right choice for the post go beyond the colour of the candidate’s passport. As the head of the old ICICI, and later, ICICI Bank, he has rich experience in both development finance and commercial banking. If ICICI Bank has grown to be the largest private sector lender in India by asset base, it is in no small measure due to his institution building, as well as Kamath’s ability to spot talent and groom leadership. He has also been a negotiator in some of India’s most fractious corporate disputes, skills which will no doubt come in handy while negotiating the minefield of nationalistic sub-agendas.
For India in particular, the BRICS Bank offers focused and informed attention on its infrastructure needs. More importantly, the currency exchange reserve offers, for the first time, an alternative to the IMF during times of crisis. And with the infrastructure investment needs of emerging economies alone running at over $1 trillion a year, Kamath will not have to look hard for business.