Parliament set to approve membership following Council of Ministers endorsement
Ethiopia will purchase 2,945 shares in the BRICS New Development Bank (NDB) at a par value 100,000 USD per share pending parliamentary approval of a proclamation that would make the country an official member of the NDB.
A week ago, the Council of Ministers approved a draft proclamation that would see Ethiopia become a member of the New Development Bank, which was established as the BRICS Development Bank in 2015.
Headquartered in Shanghai, it was founded with an initial subscribed capital of USD 50 billion, and an initial authorized capital of USD 100 billion divided into one million shares.
Back then, members included Brazil, China, Russia, India, and South Africa. However, the bank has expanded its membership steadily since 2021, with Algeria, Bangladesh, Egypt, the United Arab Emirates, and Uzbekistan joining over the past five years.
NDB membership marks a milestone in Ethiopia’s pursuit of integration into South-South financial mechanisms to secure alternative avenues for development financing, infrastructure support, and macroeconomic stabilization.
“The membership will elevate Ethiopia’s financing aspirations, infrastructure expansion, and macroeconomic stability and secure alternative financing sources. It will also boost Ethiopia’s financial alignments with South-South cooperation frameworks,” reads a statement issued by the Council.
The proclamation has been forwarded to Parliament for final approval. The Reporter reviewed the legislation and other related documents.
The Ethiopian government initially placed a request for NDB membership a year ago, and has since garnered support from other BRICS nations. In the time since, officials (primarily from the Ministry of Finance) have been engaged in negotiations and the finalization of legal frameworks.
Following parliamentary approval, Ethiopia will have to file an Instrument of Accession with the Brazilian government as the final step for attaining membership.
The membership agreement will grant the bank legal recognition and the right to enter agreements, own property, and engage in legal affairs within member jurisdiction. The bank would also enjoy tax and customs exemptions and other legal protections.
According to the proposal, Ethiopia would pay 20 percent of its share purchase (USD 58.9 million) up front, while the remainder is slated to be paid off in 14 instalments over a period of 13-and-a-half years.
Ethiopia’s accession would see it hold a seat on the NDB board, which does not abide by veto laws. The bank’s bylaws limit voting power to below 55 percent of founding members’ capital, while countries who do not receive credit from the bank can vote over 20 percent. Non-founding members can hold voting shares of less than seven percent.
Officials say Ethiopia’s priority projects in agriculture, energy, and industry will receive priority attention by the bank’s funding systems. Climate finance and projects related to renewable energy will also get special attention.
Through NDB, Ethiopia will be able to transact with BRICS members through local currencies. NBD’s five-year strategy aims at providing 30 percent of its loans to members in local currencies.
By the end of 2024, NDB had approved a cumulative USD 39 billion for 120 projects in member countries, according to the bank’s website.
Each of BRICS (Brazil, Russia, India, China and South Africa) has subscribed USD10 billion in capital and each of them possess 18.98 percent voting power. Egypt subscribed USD1.196 billion and possesses 2.27 percent voting power, Bangladesh subscribed USD942 million and possesses 1.79 percent voting power, UAE subscribed USD556 million and possesses 1.06 percent voting power. The Reporter
