JOHANNESBURG (miningweekly.com) – The only way for South Africa to propel the South African economy forward is to invest further in productive infrastructure, New Development Bank VP Leslie Maasdorp said on Tuesday.

Maasdorp was speaking during a virtual Sustainable Infrastructure Development Symposium of South Africa (Sidssa), which was chaired by Bruce Whitfield and in which Ninety One deputy MD Nasmeera Moola, Sygnia CEO Magda Wierzycka, Office of the Presidency Investment and Infrastructure head Dr Kgosientsho Ramokgopa, Deputy Finance Minister David Masondo and Development Bank of Southern Africa CEO Patrick Dlamini took part.

The five-year-old New Development Bank, of which South Africa is a member, is in a position to provide $2-billion to South Africa in 2020. It approved $1-billion a week ago, which will be dispersed in a bullet payment in 12 weeks and which has been earmarked specifically for the Covid-19 public health pandemic.

Traditionally, multilateral banks focus on bricks and mortar infrastructure for the building of roads, ports, power stations and the like.

But as the pandemic hit the Brics countries of Brazil, Russia, India, China and South Africa, the New Development Bank put a $10-billion emergency assistance programme in place for 2020, which is roughly $2-billion each for the five member countries.

“We’ve already provided $1-billion to China, $1-billion to India, South Africa we’ve just approved and shortly we’ll be approving a $1-billion loan to Brazil,” Maasdorp told the Sidssa symposium covered by Mining Weekly.

“However, this is short-term. It’s crisis-related. It’s much more important to spend time on designing the appropriate economic interventions, which are more medium-term in character because we’ve got to get the economy to grow again,” he added.

Absolute transparency was needed about the difficult times ahead as the country entered its most severe economic crisis and to make the right choice and trade-offs.

There are already 88 bankable projects that need to be prioritised.

“However, 88 is a very large number and it’s so important for us to prioritise the critical economic infrastructure that will add to the productive base of the economy and that will lay the foundations for future economic growth.

“Now is the time also to look at our debt profile and to make sure it is sustainable. We cannot continue to borrow at the rate that we have before. We have to look or the cheapest forms of financing.

“Multilateral banks play a very important role during crises. The private sector is very pro-cyclical. When times are good, the banking sector is there to provide to the economy. During times of crisis is when multilateral banks have a very unique role to play because our mandate is in fact a counter-cyclical one. We’ve got to step in and increase lending during moments of economic distress.

“This year, we’ll more than double our lending advances to the Brics countries relative to last year. So, it’s very important that we look at the cost of funding because every basis point matters. It is very important that we prioritise those funding sources that are relatively competitive because the biggest risk we face now is to be in an unsustainable debt trap,” Maasdorp said.