DEVELOPMENT BANKS

COUNTRIES
IN THE BRICS
BRICS Policy Center
Development Banks in the BRICS Countries
Production: Instituto Brasileiro de Análises Sociais e Econômicas (IBASE) / BRICS Policy Center (BPC)
Authors: Iderley Colombini Neto, Geovana Zoccal and Manuela Trindade Viana
Coordinators: Sergio Veloso and Maria Elena Rodriguez
Layout Artist: Rafael Barreta Boza
Translator: Catalina Estrada and Peter Lenny
Support: OXFAM / Ford Fundation
Instituto Brasileiro de Análises Sociais e Econômicas (IBASE)
Avenida Rio Branco 124, 8º andar, Centro, RJ – TEL: 2509-0660 / CEP: 20040-001
www.ibase.br
BRICS Policy Center (BPC)
Rua Dona Mariana 63, Botafogo, RJ – TEL: (21) 2535-0447 / CEP: 22280-02
www.bricspolicycenter.org
DEVELOPMENT BANKS IN THE BRICS COUNTRIES
BRICS Policy Center
Introduction
Economic Growth and Development Banks
During the last decades, the world has gone through important economic changes, which are still
unprecedented. The financial crisis of 2008 is just one of its aspects. It also became prominent the appearance
in the political and economic scenario of the so-called emerging countries that maintained a high and continuous
growth, with a greater relevancy at world geopolitics. The group of the BRICS countries can be considered as one
of the big symbols of this new setting. If the group had had a timid beginning, during the last years the annual
summits have been an environment for economic and political reaffirmation, with new cooperation agreements
and strong intentions of asserting a place in world financial architecture, as it is revealed by the announcement of
the creation of a joint Development Bank of the BRICS.
Nevertheless, despite the importance of such an announcement, there are still lots of points to define, not
only about technical issues, but mainly regarding the guidelines and aims of the bank. How to start thinking about
an inclusive proposal that shall consider the necessities of the regions and the countries, that shall ensure a more
social model of development, that shall strengthen and deepen South-South cooperation? From our point of view,
we have to start from the national experiences of the National Development Banks and think of a wider proposal,
which shall translate local implications and, mainly, the needs of the still developing countries.
All BRICS countries have Development Banks, though they have different specificities and sizes, all of them
have experience in defining development policies, creating strategic lines of credit, project funding and namely a
long-run economic projection of the country. Those Banks have gained new significance and importance during the
last decade, having a much more active and relevant role for both local and regional economies. They have specific
guidelines and policies which already correspond to a certain development paradigm. This may help us reflect
about the course that has to be taken into consideration in the creation of a new Bank.
It is from that perspective that this study aims to comprehend the specificities of the National Development
Banks and to make an analysis of the experiences and strategies in each BRICS country. The intent is to analyze
how these Banks work – their history, objectives, structure and operations –, how and who they finance, in what
proportions and with which funds they do it; in order to understand which is the current conception of development
in each emerging country. We also propose to understand and dig for the best practices that could give the grounds
to the proposal of a BRICS Bank, contributing for the debate on its institutionalization and its possible unfolding.
The term “Development Bank” itself gained renown in the post-war years, mainly in underdeveloped
countries, which originated a series of theories and policies. The definition of this concept has a major debate, due
not only to theoretical and ideological divergences, but also to its own normative or analytic obliquity to be followed.
These Banks arise, generally speaking, as a willfulness of the countries to get around the aspects that hinder
development. This is why there are Public Banks, that is to say, created and coordinated by the State. However, they
are different from Commercial Public Banks, which are characterized by granting loans and bank deposits. As the
name itself suggests, they are Public Banks that have the function of leading the country to development, through
development loans and not just commercial loans.
But, what is development and how can it be reached? This question also arises a long and exasperated
debate. Strictly regarding the Banks, we can represent those diverging opinions by presenting the main or possible
lines of action of a Development Bank: support for small and medium businesses, combating poverty and social
inclusion, improvement of health and education systems, long-term loans for large enterprises and infrastructure
works, capitals market, financing of innovation, etc.
The difference in the policies implemented by the Banks lies in the conception of development adopted.
At present, as we will see in this paper, the notion of development adopted by these Banks is closely connected to
economic growth and the importance of seeking for alternatives to investments made by free market. These will
have an impact in the way of funding and acting of the Banks.
Despite the existing differences and singularities, the current role of these banks and its areas of activity
are very similar. All Development Banks countries had a strong growth during the last decade, having a great
participation in the economic growth process, through investing in the creation of large export enterprises and,
especially, in promoting infrastructure, highlighting the energy and highway sector.
In the Brazilian case, the National Bank of Social and Economic Development (BNDES in Portuguese)
was created in 1952 to support the development policies of the country and the industrialization process. In the
‘90s it served almost exclusively for the privatization of national companies, but over the 2000s became one of
the greatest tools of government promotion for large industries and internationalization of its businesses, from a
disbursement of US$ 16,8 billion in 2004 to US$ 65,8 billion in 2012 (with a peak of US$ 70,7 billion in 2010, an
increase of 320% in 6 years). In 2012, large enterprises received 58% of disbursements; and infrastructure, 34%
(according to BNDES 2012 reports), mainly electricity and transport connected to agro-industry production.
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Russia is not out of tune. Its Vnesheconombank (VEB) was reclassified in 1988 to perform international
transactions of the USSR during the process of political and economic reform in the transition to capitalism in the
‘90s. However, in recent years it has become one of the pillars of the Russian government strategic investment,
especially in infrastructure and large export-oriented enterprises. In 2002 it was restructured to reinforce its
characteristic of a state financial institution. In 2007 this bank was reclassified from “Strategic Economic Affairs”
to “Development Bank”, influenced by Brazilian BNDES, from a modest disbursement of US$ 4 billion in 2004 to
US$ 16 billion in 2011 (an increase of 300% in 7 years). In 2012, infrastructure received 45% of disbursements,
and 68% of the national projects funded by the Bank were oriented towards the agro-industrial sector (according
to VEB 2012 reports).
As expected, the Chinese case also gains prominence. In 1994 the Chinese State Council creates a set of Policy
State Banks, differentiating them from the four big Chinese Commercial Banks. Among those new Development
Banks, the ones that stand out are: the Chinese Development Bank (CDB), the Agricultural Development Bank of
China (ADBC) and the Exim Bank of China. While the last two remained timid until 2002, the CDB has performed
disbursements over US$ 100 billion in 1999, reaching in 2012 the value of US$ 1.03 trillion. As shown in the
previous cases, the main sectors of activity are infrastructure (56% in 2012) and strategic sectors mainly for
export (such as 17% for telecommunication).
Even though South Africa has a small development bank compared to the other countries of the group
(the Development Bank of Southern Africa – DBSA), it has shown a strong growth during the last decade in similar
investment areas. The DBSA was created in 1983 aiming to heal the lack of loans for the population and for small
entrepreneurs, as well as to develop the country’s infrastructure. However, as we can see in the Bank’s Annual
Report, its objective today is to finance, coordinate and implement big projects on infrastructure and export
production. In 2006, the bank’s disbursement was US$ 310 million, increasing to US$ 810 million in 2012, 161%
growth in 6 years. In 2012, energy received 49% of the disbursement; and mining, 31%.
During the postwar, India created a very fragmented Development Banks system in which the same banks
perform commercial and development funding. In the end of the ‘90s, India chose not to develop those institutions
strongly, which made their Development Banks invest in development, but still acting strongly as Commercial
Banks. Nonetheless, the existing Indian Development Banks, even being hybrid, are very important to Indian
economy, such as the Industrial Development Bank of India (IDBI), which only in 2012 performed US$ 70 billion
operations.
Funding Sources of Development Banks
The Development Banks of the BRICS countries raise funds in different ways. It is important to note the
implications that the different forms of the banks funds have on the economy. As it was seen in 2008, credit and
financial markets have uncertainties that can lead to a financial crisis, leading to a period of investment reductions.
Therefore, public banks should function as an anti-cyclical mechanism, against possible fluctuations and market
crises. In the specific case of Development Banks, they should continue with certain policies even in a fragility
period. While private banks raise in the private market being subject to variations and uncertainties, public banks
have an important portion of State Funds, which would guarantee its role in the economy. Thus, the Development
Banks would ensure economic policy funding, while the other Public Banks will ensure commercial funding.
However, as we can see in the BRICS countries, not all banks raise funds by the same means. Brazilian
BNDES and Russian Vnsheconombank (VEB) have very similar funding sources, with an important participation
of Pension Funds and through government bonds. Currently, about 52,6% of BNDES funds come from the
Treasury, and over 27,2% to the worker’s relief fund (Fundo de Amparo ao Trabalhador – FAT ). The Russian Bank,
Vnsheconombank, in 2011 had 73% of its funds coming from its Pension Funds, and the rest came from bond
emissions (7%) and from other banks (20%).
But the funding of the other countries of the group are much more dependent from private sectors, having
a great funding in capitals market, such as the Chinese Development Bank which raised, only in 2012, US$ 197
billion by emitting bonds. The South African Bank funding comes from domestic and foreign markets, in 2012
obtained 70% through domestic security markets. Indian Development Banks follow a similar structure, the IDBI
has 43% of its funding from bond emissions and 34% from short-term bank loans.
Currently, international capital flows for emerging countries are very elevated, but the dependence on this
type of funding source can risk the main functions of the bank: the continuity of investing even in crisis. In 2013,
that risk became evident with North American policies on dollar valuation and increase of the interest fee, which
affected emerging economies, such as Brazil and India who had strong exchange rate devaluation, resulting in the
reductions of foreign currency-exchange reserves.
Since 1988 Brazilian constitution, 40% of the worker’s relief fund (FAT) are to be destined to BNDES for application in economic development
programs.
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International Operations
Development Model.
Development Bank of the BRICS group
An important characteristic of these Banks is its international operations, increasing its foreign investment
rate in both their neighbor countries and distant regions, ensuring a bigger influence area. The bulk of the foreign
financial operations follow a very similar model to the one the Banks perform locally, highlighting investments in
big infrastructure works and large export enterprises.
China is the main example of this process. The biggest part of international loans in China is accomplished
by the CDB and by the Exim Bank of China. Those two banks follow different orientations. The CDB’s main strategic
aim is to deal with macroeconomic policies, established in the five-year plans. While the Exim is orientated to
promoting Chinese imports and exports. Despite certain differences in its aims, in both Banks international
operations are crucial. In 2012, the CDB performed international funding of US$ 224.5 billion, especially in
agriculture and infrastructure sectors, within Asian region and also being increasingly stronger in Africa and Latin
America. The Exim Bank, only in the area of export performed disbursements of US$ 35 billion in 2012. The available
data for the international investments of these Banks are scarce and imprecise, mainly for descriptive information
about those investments. But according to estimative information, since 2005 the CDB was responsible for 80% of
Latin America funding, whereas Exim had 10%.
The BNDES in 2012 invested only in infrastructure US$ 650 million in Africa and US$ 800 million in Latin
America. The main part of the works is destined for productive infrastructure and for natural resources production.
The Russian Bank has an analogical insertion, having important presence in Eastern Europe and North Asia, but
has increased its participation in Africa and Latin America, with international funding of US$ 2 billion, mainly in
energetic and transport infrastructure, besides industry promotion for export, with considerable weight in natural
resources-based products.
Even with its relative small size, South African Development Bank has an important role in Southern
Africa, performing investments of US$ 340 million, mainly in infrastructure, 56% in highways (according to DBSA
Annual Report 2012). The Indian Development Banks also have remarkable international operations, which can
be seen in both the IDBI and the Exim Bank. The latter, oriented to Indian international commerce, increased
its disbursement from US$ 1,1 billion in 2013 to US$ 6,5 billion in 2012, mainly focused on natural resources
production.
These banks present a similar approach regarding both international and national investments. Nowadays,
National Development Banks present a notion of development closely connected to economic growth, choosing
long-term loans policies for large enterprises and for infrastructure works linked to production and/or export.
There are other possible practices to be carried out by the Banks, but they are relegated to a secondary
position. Areas such as support for small and medium businesses, combating poverty and social inclusion,
improvement of health and education systems represent a minor role. Contrary to sectors with industry and
infrastructure, sectors of social and distributive nature do not have autonomous lines in banks, they depend on
punctual policies and circumstances. In spite of having specific characteristics in each country, these banks show a
common tendency, connected mainly to a certain type of economic development.
In the Durban Summit in South Africa in March 2013, the group of the BRICS countries announced the
creation of a joint Development Bank. Despite the importance of such an announcement, there has been little
progress regarding its configuration, its structure and how it will operate.
As we can see in this paper, BRICS countries already have Development Banks, with a vast experience in
financing the development of these countries, and differentiated development lines. But, which would be the line of
action of this new Bank and its attitude towards the other developing countries not belonging to the group? Would
it be mirrored in each country’s national practices, following the same lines of action? Or would it seek for other
development spheres, today relegated to a secondary position?
As we are talking about a joint bank, its capacity of putting together joint demands and necessities is still
uncertain. Would this new Bank emerge as a fundamental platform to support the emerging economic and political
world agenda, improving the integration and cohesion among its members?
It is also important for this debate that the Bank would not limit its agenda to merely economic issues,
in order to influence in the global dialogue about the urgent need of creating a more sustainable and just world
order. This would mean to deal with fundamental issues that affect the planet, such as climate change, food safety,
citizen’s safety, social inclusion and widening sustainable agriculture borders.
Nature and Purpose Capital Structure
Where do the funds come from?
BNDESPAR - How does it work?
The Portfolio Of Equity
Participations By Sector
Debenture Portfolio
By Sector
Funding Sources (in millions of dollars)
2012
Net Assets Other Liabilities
Source: BNDES Annual Report (2012)
Source: elaborated by the authors based on the BNDES Annual Report (2012)
Source: elaborated by the authors based on the BNDES Annual Report (2012)
Other Government Sources
National Treasury
National Treasury
FAT/PIS-Pasep
FAT/PIS-Pasep
Foreign Funding
• Public enterprise with legal personality in
private law and its own assets (Art. 1 of the Bank’s
articles of association).
• It supports programmes, projects, works
and services relating to Brazil’s economic and social
development (Arts. 3 and 4).
• The BNDES System is subject to supervision
by the Ministry of Development, Industry and Foreign
Trade, and it comprises four enterprises: BNDES,
FINAME, BNDESPAR and BNDES Limited.
• It currently has offices at four sites in Brazil
(Rio de Janeiro, São Paulo, Brasília and Recife) and two
abroad (Montevideo and London).
In the BNDES’ capital structure, the government is the
main source of funding.
• Under the 1988 Constitution, 40% of the
workers’ relief fund (Fundo de Amparo ao Trabalhador,
FAT) are to be destined to the BNDES for application in
economic development programmes.
• Since 2008 the National Treasury has also
injected funds into the bank in the form of government
bonds with costs tied to the official long-term interest
rate (Taxa de Juros de Longo Prazo, TJLP).
• Since 2010, the National Treasury is the
BNDES’ main creditor, responding for 52.6% of its total
liabilities at 31 December 2012.
27,2%
52,6%
3,3% 6,4%
3,3% 7,2%
2008
61.356
64.066
60.569
68.498
106.284
74.737
130.525
157.937
81.755
18.146
2009 2010 2011 2012
47,4%
14,3%
12,6%
12,0%
10,3%
9,9%
9,9%
6,0%
12,5%
15,2%
8,7%
1,7%
4,9%
6,6%
10,9%
19,8%
Oil and gas
Mining
Telecommunications
Services
Food
Metallurgy
Consumer goods
Oil and Gas
Others Electricity/Oil
and gas
Others
Telecommunications
Food
Paper and cellulose
Electricity
Mining
Wholly-owned subsidiary, BNDES Participações S.A. – BNDESPAR supports publicly listed or privately held Brazilian
firms that may join the capitals market, by subscribing shares, convertible or exchangeable debentures, investment
fund quotas and other securities.
• The portfolio of debentures, which comprises simple and convertible/exchangeable debentures,
totalled US$ 7,57 million in 2012.
• The portfolio of equity participations comprises mostly investments in affiliated companies, in
which the BNDES has the power to influence financial and operational decision making; and in non-affiliated
companies, where it has no such influence.
• The equity participations portfolio, net of provision for loss, totalled, US$ 39,644 million in 2012, of
which 84.6% represented investments in non-affiliate companies and 15.4% in affiliates.
DEVELOPMENT BANKS IN THE BRICS COUNTRIES
#1 | BRAZIL |BNDES
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BNDES - How does it work?
#1 | BRAZIL | BNDES
Direct
Indirect
Disbursement (in billions of dollars)
Disbursement Modality per Line of Operation (in millions of dollars)
• Operation performed with the BNDES
directly or through nominee (requires
submission of a Prior Consultation).
• Operation performed through an accredited
financial institution, which may be:
° Automatic
° Non-automatic (requiring submission of a
Prior Consultation)
° BNDES Card
Source: BNDES transparente
2010
2004
16,8
19,7
21,9
27,2
38,7
57,7
70,7
58,6
65,8
2005 2006 2007 2008 2009 2010 2011 2012
2011 2012
Direct Mode
BNDES Finem (for ventures worth R$ 10 million or more)
BNDES-Exim (for production and sale of Brazilian goods and services for export)
BNDES Non-reimbursable
BNDES Capitals Market
Indirect Mode
BNDES Finame (for production and procurement of new Brazilian-made plant and equipment)
BNDES Finem (for ventures worth R$ 10 million or more)
BNDES Automatic
BNDES Finame Agricultural
BNDES-Exim (for production and sale of Brazilian goods and services for export)
BNDES Leasing (for leasing companies for procurement of plant and equipment)
BNDES Card (for Brazilian-controlled micro, small and medium businesses)
Total
31.358,4
15.790,8
1.743,6
85,5
13.738,4
39.379,0
19.638,7
3.271,8
5.630,9
2.251,7
6.521,2
252,5
1.811,8
70.737,5
22.942,1
18.991,2
1.956,2
114,0
1.880,5
35.384,7
19.539,1
2.635,6
4.734,7
2.276,3
2.825,0
192,6
3.181,1
58.326,8
30.202,2
26.291,4
1.824,1
154,2
1.932,4
35.314,4
15.406,0
3.350,8
6.897,2
2.829,6
2.754,4
68,0
4.008,2
65.516,7
Net Profits (in millions of dollars)
Source: BNDES transparente
2004
629
2003
435
2005
1.344
2006
2.659
2007
3.071
2008
2.231
2009
2.828
2010
4.163
2011
3.780
2012
3.436
Did you know…?
Part of the BNDES profits is oriented to non-
refundable funds, such as the Amazon Fund,
BNDES Atlantic Forest, Technology Fund (BNDES
Funtec) and Social Fund. However, in 2012, the
non-refundable BNDES corresponded to US$
154.26 millions, in contrast to the amounts
of profit and disbursement, which accounted,
respectively, for US$ 3.44 billion and US$ 65.52
billion.
Modalities
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Source: elaborated by the authors based on the BNDES Annual Report (2012)
Source: elaborated by the authors based on the BNDES Annual Report (2012)
Source: elaborated by the authors based on the BNDES Annual Report (2012) Source: elaborated by the authors based on the BNDES Annual Report (2012)
Industry
Food and Beverage
Paper and Cellulose
Extractive
Transport
Mechanical
Basic metallurgy
Chem. and Petrochem.
Textile and Garment
Others
Infrastructure
Electricity
Transport
Telecommunications
Others
Health
Education
Productive Inclusion
Public Management
Urban and Regional Development
Corporate Social Responsibility
Others
Total
Renewable energy and energy efficiency
Hydroelectric plants (larger than 30 MW)
Public passenger transport
Cargo transport
Water and waste water management
Solid waste management
Forests
Agricultural development
Risk management and climate adaptation
Others
Total
22,2
7,9
11,0
2,0
1,2
555
217
56
42
2300
78
3934
7182
2,5
2,9
0,6
1,0
0,6
0,1
0,2
0,1
0,2
0,04
8,7
20,0
2,5
1,7
0,7
2,9
2,3
1,6
3,5
1,1
3,2
Industry Disbursement 2012
(in billions of dollars)
Infrastructure Disbursement 2012
(in billions of dollars)
Disbursements by Sector (2012)
What does the BNDES understand by:
Social Development Disbursement
(in millions of dollars) - 2012
Green Economy and Climate Change
Disbursement (in millions of dollars) - 2012
Disbursement by Company Size (2012)
31%
28%
7%
17%
9%
10%
6%
58%
34%
Industry
Trade/Services
Agriculture
and Livestock
Micro
Small
Medium
Large Medium
Large
Infrastructure
• Microenterprise: gross operating
revenue of USD 1 million or less.
• Small enterprise: greater than USD 1
million up to USD 6,72 million.
• Medium enterprise: greater than
USD 6, 72 million up to USD 37, 8
million.

• Large medium enterprise: greater than
USD 37,8 million up to USD 126 million.
• Large enterprise: greater than USD
126 million.
#1 | BRAZIL | BNDES BRICS Policy Center
BRICS Policy Center
0
2010 2011 2012
10
5
15
20
25
30
35
40
45
50
South
North
Midwest Southeast
Northeast
#1 | BRAZIL | BNDES
Disbursement by Region
(in billions of dollars)
Number of Operations in 2012 by
Region
51.486
138.451
427.210
100.104
311.189
United
States
Argentina
Spain
Chile
Bolivia
Peru
France
Italy
Ireland
Angola
China
Japan
Holland
Poland
United
Kingdom
Venezuela
Mexico
El
Salvador
Cayman
Islands
Ecuador
Dominican
Republic
Cuba
Paraguay
Uruguay
Canada
BNDES Abroad - How does it work?
• The bank was able to engage in financing for foreign direct investment projects only in 2002, when its
articles of association were altered. But only after 2005, when Foreign Direct Investment financing standards
were approved, has the bank become one of the major agents in the process of foreign direct investment for
the internationalisation of Brazilian corporations. Such operations of FDI are classified in the category of Post-
Shipment.
• BNDES support for Brazilian goods and service exports can be pursued through two of the bank’s
existing programmes: BNDES Exim Pre-Shipment consists in support for production of goods and services for
export, while BNDES Exim Post-Shipment supports the sale of Brazilian goods and services abroad.
0
2002
Infrastructure Works - Africa
Infrastructure Works - Latin America
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
200
400
600
800
1.000
1.200
BNDES Exim Post-Shipment in
Infrastructure (in millions of dollars)
BNDES Post-Shipment Disbursements By Destination (1998-2013)
Source: BNDES transparente Source: BNDES transparente
Source: elaborated by the authors based on BNDES transparente
Produced by: Support:
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Nature and Purpose
Where do the funds come from?
VEB - How does it work?
• The “Bank for Development and Foreign
Economic Affairs” (Vnesheconombank, VEB) and its
activities are regulated by the Federal Development Bank
Law (Federal Law No. 82-FZ, 17 May 2007).
• The VEB’s mains goals are: to diversify the
Russian economy; to improve competitiveness and
encourage investment activities; to invest and offer
consultancy to projects to develop infrastructure and
innovation in Russia and abroad; to promote Russian
commodity and service exports; and to support small and
medium industries.
• It has six representation offices in the Russian
Federation (St. Petersburg, Khabarovsk, Ekaterinburg,
Pyatigorsk, Krasnoyarsk and Rostov-on-Don) and ten
abroad (London, New Delhi, Mumbai, Milan, Beijing, New
York, Frankfurt, Paris, Johannesburg and Zurich).
• During the dissolution of the USSR, banking was
concentrated in imported goods purchasing, performed
with financing from European countries.
• In 2002, the VEB was restructured, and appointed
to invest pension fund in securities denominated in foreign
currency.
• In 2007, the VEB was recast as “Bank for
Development and Foreign Economic Affairs”. Its authorised
capital thus came to be a pool of funds from the former
USSR, federal government-owned shares in the Russian
Development Bank and the Roseximbank, as well as assets
to be transferred by the Russian government itself.
• In 2010, the VEB set up the Russian Direct
Investment Fund in order to raise capital abroad for the
Russian economy. The main aim of the fund is to raise long-
term foreign investments in Russia’s high-tech sectors.
Funding Sources (in billions of dollars)
Source: The authors with data from the Vnesheconombank Annual Report (2011)
2009 2010 2011
Pension Funds
Funds with Bonds Funds from Other Banks
#2 | RUSSIA | VEB
Total Assets (in billions of dollars)
2004 2005 2006 2007 2008 2009 2010 2011
80
60
40
20
0
Source: The authors with data from the Vnesheconombank Annual Report (2011)
20
15
10
5
0
VEB Subsidiaries
Created to participate in implementing
industrial and infrastructure projects
in the District’s territory.
Agent for VEB in implementing the
Program of Supporting Small and
Medium-Sized Enterprises.
It provides credit support to the real
economy and small and medium-
sized enterprises, tending to function
as a universal bank.
Renders assistance to small and medium
enterprises in funding the purchase of
automotive transport and special equip-
ment. The company has opened 78 region-
al subdivisions in Russia’s largest cities.
Set up in the Vnesheconombank Group
as a centre of competence in expert ex-
amination of technological engineering
solutions, monitoring and management
of national investment projects.
Agent for the Russian Government in
extending guarantees to exporters
and arranging syndicated loans for
importers of Russian products.
Involved in managing Vnesheconom-
bank Group assets, including real
property.
(BelVEB, Belarus; and Prominvest-
bank, Ukraine). It support exports of
Russian products and implementation
of large joint investment projects by
these countries.
North Caucasus Development
Corporation
OJSC SME Bank
GLOBEX Bank
VEB-Leasing
VEB-Engineering
Roseximbank
VEB-Capital
Foreign Vnesheconombank subsidiary banks
BRICS Policy Center
DEVELOPMENT BANKS IN THE BRICS COUNTRIES
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#2 | RUSSIA | VEB
VEB Capital – How does it work?
What is the developing disbursement?
VEB’s loans portfolio to non-bank lending institutions,
to executive public agencies and to municipalities for
investments in projects and for export support. It does
not include the purchase and participation in shares or
bonds, nor the expenses related to the former USSR’s
final stage, in which the implementation of market-
oriented reforms in the economy predominated
(which included reforms in the areas of trade and
finance).
Development Credit Disbursements
(in billions of dollars)
2007 2008 2009 2010 2011
0
5
10
15
20
Source: The authors with data from the Vnesheconombank Annual Report (2011)
VEB Capital is engaged in managing the assets of the Vnesheconombank Group, including real property assets, although
greater importance is given to operations with financial assets.
• The VEB’s loan portfolio includes roubles, dollars and Swiss francs, in addition to debt securities denominated
on national and foreign capitals markets.
Securities Portfolio by Instruments
(2012)
Source: The authors with data from the Vnesheconombank Annual Report (2011)
Corporate Debt Securities Of The Russian Federation Residents (Bonds,
Eurobonds and Promissory Notes)
Russian Federation Debt Securities
Other Debt Securities (Foreign Issuers’ Bonds and Credit Notes
“Linked” To Corporate and Sovereign Risk)
Shares and Depository Receipts
11%
36%
3%
50%
Equity investments
(in billions of dollars)
Source: The authors with data from the Vnesheconombank Annual Report (2011)
2011
102,53
506,23
243,50
115,34
224,28
173,02
724,10
272,34
Source: The authors with data from the Vnesheconombank Annual Report (2011)
District Subsidiaries
Far East Federal District
Privolzhsky Federal District
Northeast Federal District
North Caucasus Federal District
Siberia Federal District
Urals Federal District
Central Federal District
South Federal District
2010
28,84
27,55
128,16
28,84
112,14
83,30
31,40
128,16
Loans to SMEs through Regional
Subsidiaries
(in millions of dollars) - 2010/11
Vnesheconombank’s SME operations occur largely
through its subsidiaries: the bank’s penetration
throughout Russian territory is considerable, and
has grown greatly in recent years.
Did you know…?
2004 2005 2006 2007 2008 2009 2010 2011
8
6
4
2
0
BRICS Policy Center
11
Energy Infrastructure
Transport Infrastructure
Tourism Infrastructure
Engeneering
Aircraft Construction And Space-Rocket Complex
Shipbulding
Infrastructure Utilities
Other
Total
3.554,91
2.928,30
2.599,95
505,18
250,00
230,00
125,4
221,25

10.415,00
Infrastructure (in millions of dollars)
#2 | RUSSIA | VEB
The disbursement aimed at improving the energy
efficiency was oriented to the creation of industrial
grade foam glass Neoprom, in Vladimir. The foam
glass Neoprom is a thermal insulation material
used as a heat protection in industries, as well as a
protection from chemically aggressive environments.
The technology of production of foamed glass has a
Russian patent and it is the only domestic insulation
material.
of the national projects
financed by VEB are
oriented to agriculture
68%
Support for Export per Recipiente Country
(em milhões de dólares)
Source: The authors, http://veb.prognoz.ru/
Innovation development
(in millions of dollars)
Medical Equipment And Pharmaceuticals
Engineering
Aircraft Construction And Space-Rocket Complex
Strategic Technology And Computer Software
Total
Bosnia and Herzegovina
Republic of Kazakhstan
CFA, Moscow
Republic of Armenia
179,49
174,00
71,43
23,92
448,85
1430
360
163
29,25
Disbursements by Sector
Infrastructure
45%
Development of
Innovation
2%
Other
4%
Improving the Energy
Efficiency
1%
National
Projects
12%
Support for
Exports
8%
Improving
Natural Resources
Efficiency
28%
Source: The authors with data from the Vnesheconombank Annual Report (2011)
Improving the Energy Efficiency
Of the US$ 6,609.47 million spent on projects
to improve natural resource, US$ 3,401.78
million were directed to a wood processing
project in the Lower Angara (Siberian
Federal District).
To reconstruct and modernize a number of companies in the
refining industry, VEB disbursed US$ 1,430 million to the Republika
Srpska (one of the autonomous political entities of Bosnia and
Herzegovina). Focused on the development of the market for high-
quality oil produced in the Balkans, Southern and Central Europe, the
project was oriented towards the modernization of the production
and implementation of a large-scale distribution network under
management of Optima Groupa.
The construction of the third power unit GRE-2 (in Törtüy)
was co-financed by the Eurasian Development Bank. The
project aimed at implementing a 500MW power capacity to
the Republic of Kazakhstan, which would develop high-tech
manufacturing and engineering Russian companies that are
export-oriented.
Improving Natural Resources
Efficiency
Bosnia and Herzegovina
Republic of Kazakhstan
BRICS Policy Center
Projects by Region
Major Projects By Region
#2 | RUSSIA | VEB
Development of transport infrastructure towards Kuzbass, Far East. Value of the project: $ 194 million.
Construction of Urengoyskaya Power Plant with generating capacity of 450 MW. Value of the project: U.S. $ 657 million.
Construction of an automotive plant in Tikhvin, which is the first Russian industry to produce automobiles. Value of the
project: $ 300 million.
Construction of Thermoelectric Molzhaninovka in Northern Moscow. Value of the project: $ 670 million.
Creation of an automotive production line, with the aim of organizing an assembly plant in the territory of Primorye, in
order to export to the Republic of Tatarstan. Value of the project: $ 154 million.
Construction of factory for the production of high quality glass (clear glass, colored and reflective, manufactured by
thermoforming - technique used to melt tin) in the Republic of Dagestan. Project Value of the project: U.S. $ 218 million.
Construction of ski resort “Rose Farm” in the city of Sochi, Krasnodar region, as part of the installations of the XXII Olympic
Winter Games and XI Paralympic Winter Games in Sochi, to be held in 2014. Value of the project: U.S. $ 1.7 billion.
As part of the search strategy for the efficient use of natural resources, the main project in this area concerns the
construction of Wood Industries in the Lower Angara, aimed at exporting processed wood and cellulose. Value of the
project: $ 2.6 billion.
Far Eastern Federal District
Ural Federal District
Northwestern Federal District
Central Federal District
Volga Federal District
North Caucasian Federal District
Southern Federal District
Siberian Federal District
10 Projects
4 Projects 8 Projects
3 Projects
25 Projects
10 Projects
9 Projects
6 Projects
Total: US$ 4 billions
Total: US$ 492 millions Total: US$ 717 millions
Total: US$ 2 billions
Total: US$ 5,1 billions
Total: US$ 2 billions
Total: US$ 4,9 billions
Total: US$ 1,4 billion
Produced by: Support:
BRICS Policy Center
BRICS Policy Center
12
Nature and Purpose
The Industrial Development Bank of India (IDBI)
India’s Development Banks
Source: Developed by us based on the IDBI Annual Report (2012) Source: Developed by us based on the IDBI Annual Report (2012)
• Founded in 1964, it is today one of the main public banks in India, and the fourth largest in the general ranking.
• The IDBI underwent a deep restructuring in 2004, when it went from a financial institutions geared to industrial
development to a commercial bank. However, the IDBI’s mandate maintained the financing to the Indian industry. As
a public commercial bank, IDBI’s purpose is to provide short- and medium-term financing to the commerce, industry,
service companies, individuals, and third parties in general.
• The bank has 1,076 branches throughout India, in addition to an office in Dubai, and two others being opened
in Singapore and Shanghai.
#3 | INDIA | IDBI, SIDBI, NABARD, EXIM
Industry
The Industrial Development Bank of Indian
Small Industries Development Bank of India
Industrial Finance Corporation of India
Export-Import Bank of India
National Bank for Agriculture and Rural
Development
National Housing Bank
Foreign Trade
Agriculture
Housing
Total Value of Financial Activities
(in billions of dollars)
Net Profits
(in millions of dollars)
350
300
250
200
150
100
50
0
2009 2010 2011 2012
Where do the funds come from?
• Because it has been a commercial bank since 2004, the IDBI raises funds through deposits and investment
funds. In addition, the bank has specific governmental financing lines.

• The IDBI also raises funds abroad through banks, bilateral agreements, short-term loans, and bond emissions.
• In 2012, the IDBI raised approximately US$ 4.03 million abroad.
BRICS Policy Center
2009
80
70
60
50
40
30
20
10
0
2010 2011 2012
DEVELOPMENT BANKS IN THE BRICS COUNTRIES
13
14
How does it work?
#3 | INDIA | IDBI, SIDBI, NABARD, EXIM
• In addition to activities that are typical of a commercial bank, the IDBI has an operational line geared to
financing industrial sectors.
• In the last years, the bank has expanded its share in restoring direct retail credit to farmers involved in
cultivation and related activities. To increase its reach in the Indian territory, the IDBI appointed 30 business facilitators
and stimulates the creation of farmers’ clubs in villages where they have rural branches.
• The IDBI has cooperation arrangements with other development banks in India:
- IDBI-SIDBI: several Memoranda of Understanding geared to offer subsidized loan
services to micro, small, and medium enterprises (MSMEs).
- IDBI-Exim: signed a Memorandum of Cooperation to co-finance, co-organize, and
subsidize foreign currency loans to enterprises geared to exports, especially MSMEs.
Deposits Received (in millions of dollars) Funds in Foreign Currency (2012)
2009
18,294.43
27,289.54
29,375.97
34,259.92
2010 2011 2012
Source: Developed by us based on the IDBI Annual Report (2012) Source: Developed by us based on the IDBI Annual Report (2012)
Source: Developed by us based on the SIDBI Annual Report (2012) Source: Developed by us based on the SIDBI Annual Report (2012)
Bilateral Agreements
Short-Term Bank Loans
Banks Abroad
Bond Emissions
43%
16%
7%
34%
Nature and Purpose
Where do the funds come from?
Small Industries Development Bank of India (SIDBI)
• Created in 1990 by the IDBI, SIBDI is the main financial institution for promoting, financing, and
developing MSMEs.
• The SIDBI raised US$ 4.4 billion in 2012 – an 8% growth in relation to 2011. The bank has both foreign and
domestic funds. The latter represent around 90% of the total and are mostly originated in refinancing funds and bonds
issued by SIDBI.
Funding Sources (2012) SIDBI Capital
Life Insurance Corporation
of India
National Bank for
Agriculture and Rural
Development
Oriental Bank of Commerce
Other 22 banks
Punjab National Bank
State Bank of India
Canara Bank
Central Bank of India
Union Bank of India
IDBI
Baroda Bank
Bank of India
Commercial Papers
World Bank
French Development Agency (AFD)
Term Loans
Fixed Deposits
Japan International
Cooperation Agency (JICA)
Refinancing Funds
Nonguaranteed Bonds
43%
1%
20%
4%
23%
1% 3%
5%
15.5%
19.2%
24%
2.1%
2.1%
2.8%
3.3%
3.6%
3.7%
4.4%
4.7%
14.4%
BRICS Policy Center
15
#3 | INDIA | IDBI, SIDBI, NABARD, EXIM
How does it work?
• The SIDBI refinances banks and nonbanking financial companies (NBFC), in addition to providing training
to small commercial banks, regional rural banks (RRBs), urban cooperative banks (UCBs), and district cooperative
banks (DCBs).
• Direct financing to MSMEs is also carried out through specific financial products, such as venture capital,
sustainable financing, factoring, invoice discounting, and service sector financing.
• The SIDBI Venture Capital Ltd. was created in 1999. It provides assistance to specific industrial areas,
focusing on biotechnology, pharmaceutical products, information technology (IT), and engineering. Funding from
SIDBI Venture Capital is distributed through three funds: Fund for the IT Industry, Fund for MSMEs, and Fund for
Innovation.

Nature and Purpose
National Bank for Agriculture and Rural Development (NABARD)
• The NABARD was created in 1982 to increase credit flows for agricultural and rural projects.
• The bank’s operations seek to develop agriculture, small-scale industries, cottage and local industries, arts
and crafts and other economic activities related to rural areas.
• Headquartered in Mumbai, it has 30 regional offices and 395 development managers in districts.
Where do the funds come from?
• Investments are focused on micro and small irrigation projects, equipment to save and store water,
implementation and acquisition of small agricultural machinery, development of arable land, production in dry lands,
seed production, animal husbandry, fishing, and nonconventional sources of energy.
• The Rural Infrastructure Development Fund (RIDF) was implemented by the Indian government in 1995,
with US$ 320 million to finance rural infrastructure projects. Its total capital reached US$ 16 billion in 2009-2010.
• It also operates through subsidiaries: NABCONS, ADFT, ABFL, and NABFINS.
• NABARD’s disbursements totaled US$ 4.65 billion in 2008. In the 2010-2011 period, this amount was US$
2.16 billion.
Disbursements by Region
(in millions of dollars) 2010/11
Disbursements by Sector
(2010/11)
North
449.71
42.53
931.47
224.85
308.58
200.58
Northeast South East Central West
Source: Developed by us based on the NABARD Annual Report (2011) Source: Developed by us based on the NABARD Annual Report (2011)
Farm Mechanization
Small Grants Program
(Sgp)/Animal Husbandry
Storage and Market
Nonagricultural Sector
Small Irrigation Projects
Plantation And Gardens
Swarnjayanti Gram Swarozgar
Yojana
Fishing / Forestry / Caste Action
Dairy Development
Agrarian Development
15%
18.9%
25.6%
0.6%
1.3%
1.7%
2.1%
3%
5.2%
6.8%
6.8%
13%
BRICS Policy Center
Other
Self-Help Group
Nature and Purpose
Export-Import Bank of India (Eximbank of India)
• Created in 1982, it is the main coordinating agent for institutions financing the export/import of goods and
services.
• Its objective is to promote the country’s international trade.

• It is headquartered in Mumbai, and it has other nine domestic offices (Ahmedabad, Chandigarh, Bangalore,
Chennai, Guwahati, Hyderabad, Kolkata, New Delhi, and Pune). Abroad, it operates in 8 countries through its London
branch and other 7 offices (Singapore, Washington, Addis Ababa, Dakar, Dubai, Johannesburg, and Yangoz).
How does it work?
• It extends lines of credit to overseas financial institutions, foreign governments and agencies, enabling them
to finance the import of Indian goods and services. In addition, it has partnerships with small and medium-sized Indian
companies.
• It has a program for rural initiatives, with the aim of linking India’s rural industry to the global market.
• Throughout 2012, the bank supported 85 export-contract projects executed by 47 companies in 23 countries.
In addition, it extended credit to buyers for 28 foreign companies, in order to facilitate exports to India.
Total Funds (in billions of dollars) Disbursements (in billions of dollars)
Credit Exposure of the Five Largest Industrial Sectors
2009 2008 2007 2006 2005 2004 2003 2010 2011 2012
1.11
1.82
2.40
3.53
4.34
4.62
5.31
5.50
5.92
6.50
2009 2008 2007 2006 2005 2004 2003 2010 2011 2012
Source: Developed by us based on the Exim Bank of India Annual
Report (2013)
Source: Developed by us based on the Exim Bank of India Annual
Report (2013)
Source: Developed by us based on the Exim Bank of India Annual Report (2013)
0% 2% 4% 6% 8% 10% 12%
Cars And Automobile Parts
Drugs And Pharmaceutical Products
Textiles And Clothes
Promoting Capital Exports
Ferrous Metals And Metal Processing
#3 | INDIA | IDBI, SIDBI, NABARD, EXIM
Produced by: Support:
BRICS Policy Center
BRICS Policy Center
2.48 2.51
3.22
4.19
5.96
7.07
7.53
8.76
10.18
12.17
16
Nature and Purpose Total Assets (in billions of dollars)
Where do the funds come from?
Source: The authors, from data in the CDB Annual Report (2012)
• The China Development Bank (CDB) was set up
in 1994. That same year, another two public banks were
set up: the Eximbank and the Agricultural Development
Bank of China.
• The CDB provides medium- to long-term
financing facilities that assist in the development of
the Chinese economy, with a focus on the following
areas: national infrastructure, basic industry, regional
development and urbanisation, mainly by financing small
business, rural investment and environment initiatives.
• The CDB is a wholly state-owned bank under the
responsibility of the State Council of the People’s Republic
of China (PRC).
• The bank has 38 branches (including its Hong
Kong branch) and 3 overseas offices: 2 operating in Cairo
and Moscow; and one being installed in Rio de Janeiro.
• The Ministry of Finance, a unit of the State
Council, is the administrative and regulatory body
responsible for management of fiscal revenues and
expenditures. Its activities include fiscal and taxation
policymaking and financial supervision.
• Huijin is a wholly State-owned limited liability
company incorporated in accordance with the Company
Law of the PRC. With the State Council’s authorisation,
Huijin invests in key state-owned financial institutions,
within the limits of its contributions and in compliance
with applicable laws and regulations of the State.
• The National Council for Social Security Fund is
a government agency responsible for the management
and operation of the National Social Security Fund. It
is under the direct leadership and supervision of the
State Council or the authorised department of the State
Council
Funding raised by the bank derives largely from issues of debt securities, Treasury bonds and the bank’s own
bonds. In 2012, the bank launched a number of new bond products.
#4 | CHINA | CDB
2008
1400
1200
1000
800
600
400
200
0
2009 2010 2011 2012
CDB Equity (2012)
Source: The authors from data in the CDB Annual Report (2012)
Ministry of Finance Central Huijin Investment Ltd.
National Council for Social Security Fund
50% 48%
2%
Debt Issued by Market Share - 2012 Debt Issued - Current Year
(in billions of dollars)
Source: The authors, from data in the CDB Annual Report (2012) Source: The authors from data in the CDB Annual Report (2012)
2008 2007 2006 2005 2004
57.6 58.4
100.8
109.61
99.2
107.68
136.8
185.6
196.96
2009 2010 2011 2012
31%
20%
10%
9%
3%
5%
6%
4%
12%
Treasury Bonds
CDB Bonds
Medium-term Bonds
Corporate Bonds
Short-term Commercial Papers
Bank Bonds: Commercial Banks
Others
Bank bonds: Exim Bank of China
Bank Bonds: Agricultural
Development Bank of China
BRICS Policy Center
DEVELOPMENT BANKS IN THE BRICS COUNTRIES
17
18
#4 | CHINA | CDB
CDB – How does it work?
Founded in 2009, to support its business development in
the four specialty areas of urban development, industrial
investment, overseas investment and funds management.
In 2012, its capital rose to US$7.6 billion. One of the main
component funds of this subsidiary is the CDB Development
Fund, which raised US$2.8 billion in 2012 alone.
One of the main funds that is part of this subsidiary is the
Development Fund, which collected US$2.8 billions only in
2012.
Established in 2010, its activities concern mergers
and acquisitions, and securities underwriting,
brokerage and asset management. It has a Social
Capital of US$ 1.2 billion. In 2012, CDB Securities
underwrote 62 securities, raising a total of US$
42.4 billions.
CDB Capital Co., Ltd.
CDB Subsidiaries
CDB Securities Co., Ltd.
Established in 2008 with registered capital
of US$ 1.25 billion, engages in leasing in
aviation, shipbuilding/shipping, commercial
vehicles, engineering equipment, basic
infrastructure and SMEs. Assets were US$
22.5 billion in 2012.
Launched in 2007 to offer investment
and advisory services to Chinese
enterprises in Africa.
Operations concentrate on the rural economy
in China, and served the national strategies
in agricultural and rural development. At
year-end 2012, total assets reached US$
1.72 billion. Of the banks’ total loan portfolio
of US$ 700 millions, plus US$ 500 million
oriented to agriculture projects and US$ 400
millions lent to microbusinesses.
CDB Leasing Co., Ltd.
China-Africa Development Fund
Village Banks
Loans (in billions of dollars) Net Profit (in billions of dollars)
Loans by Region (2012)
Eastern China Outside Mainland China
Central China Western China
19%
24% 16%
40%
Source: The authors from data in the CDB Annual Report (2012)
Source: The authors from data in the CDB Annual Report (2012) Source: The authors from data in the CDB Annual Report (2012)
2008 2008
464
593
722
884
1,027
2009 2009 2010 2010 2011 2011 2012 2012
Increased investments in our regional
portfolios were seen most clearly in central
and western China, up to US$ 55.21 billion in
2012, and in northeast China, up to US$ 11.24
billion. The mais focus of the support was in
Xinjiang and ethnically Tibetan regions. These
investments aimed to reduce the unbalance in
regional development.
BRICS Policy Center
3.3
5.1
5.9
7.3
10.1
19
#4 | CHINA | CDB
Source: Sekine, Eiichi. The International Operations and Future Governance of China Development Bank. In: Nomura Journal of Capital Markets, Vol. 2, No. 2, Nov. 2010, p. 8.
Lending by Public Banks of China (in billions of dollars)
CDB China Exim Bank Agricultural Development Bank of China
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2009
640
560
480
400
320
240
160
80
0
Rural Development Loans
(in billions of dollars)
Source: The authors from data in the CDB Annual Report (2012)
2008
51,6
75,66
92,38
97,21
108,27
2009 2010 2011 2012
Loans by Industry (2012)
Petrochemical
Electric Power
Coal
Railways
Public Highways
Telecommunication
Public Infrastructure
Agriculture And Related
Industries
Source: The authors, from data in the CDB Annual Report (2012)
21%
32%
11%
17%
7%
7%
1%
1%
2%
Besides the operations carried out by the
Village Banks and partnerships between the
CDB and the Agricultural Development Bank
of China (ADBC), the CDB also has agricultural
and rural projects with other partners (such
as ministries and regional governments).
In partnership with the Ministry of Water
Resources, CDB’s loans to the agricultural
resources, forest and water sectors reached
US$ 22 billions, in 2012. In Guizhou Province,
the Bank has developed together with the
local government a project to promote the tea
industry and its production, disbursing a total
amount of US$ 10.2 millions.
During 2012, loans to social housing projects
grew 60%, reaching US$ 18.65 billions. Rural
communities benefitted from US$ 25 billion
to modernize agriculture and to improve
rural infrastructure. SME sector received in
that year US$ 42.32 billion from CDB. US$
10.59 billion were set to the Ministry of Water
Resources, and student loans worth US$ 1.92
billions over the year.
BRICS Policy Center
Other
#4 | CHINA | CDB
Source: The authors, based on China Eximbank Annual Report (2012)
Source: The authors, based on China Eximbank Annual Report (2012)
Nature and Purpose
• The Export-Import Bank (Eximbank) of China,
founded in 1994, operates under direct leadership by
the State Council.
• Its operations are directed to supporting
exportation and importation of Chinese mechanical
and electronic products, equipment and new- and
high-tech products.
• It has head offices in Beijing, 21 national
branches and 3 overseas representation offices
(Southern and Eastern Africa, Paris and St. Petersburg).
Export-Import Bank
(Eximbank)
Disbursement (in billions of dollars)
Disbursement of Export Seller’
Credit by Sector (2012)
2008 2009 2010 2011 2012
40
35
30
25
20
15
10
5
0
Export-seller’s credit Export-buyer’s credit
New and High-Tech Products
Agricultural Products
Export
General Mechanical and
Electronic Products
Others
Overseas Investment
Overseas Project
Contracting
Equipment Exports
Ship Exports
11%
35% 15%
1%
15%
4%
7% 7%
Source: The authors, based on ADBC Annual Report (2012)
Source: The authors, based on ADBC Annual Report (2012)
Nature and Purpose
Agricultural Development
Bank of China (ADBC)
• The Agricultural Development Bank of China
(ADBC) is a state agricultural policy bank founded
by State Council Circular No. 25, of 1994, and under
direct administration by the State Council. The bank’s
operations are regulated by the China Banking
Regulatory Commission.
• The ADBC’s purpose is to foster development
of agriculture and rural areas by: raising funds for
agricultural policy enterprises; support agricultural
policy credit enterprises specified by the central
government; and foster commercial agriculture-
related enterprises.
• The ADBC has offices in Beijing, and branches
and sub-branches around China.
Disbursement (in billions of dollars)
Main Lines of Disbursement
(in billions of dollars) - 2012
2008 2007 2006 2005 2004 2009 2010 2011 2012
400
350
300
250
200
150
100
50
0
Other Rural Infrastructure Constructions
Water Conservation
New Countryside Construction
Sugar Reserves
Purchase Of National Cotton Reserves
Purchase Of Grain And Edible Oil
Agricultural Input (including fertilizer reserves)
54.5
6.8
7.5
27.3
3.4
4.1
13.4
Produced by: Support:
BRICS Policy Center
BRICS Policy Center
20
Nature and Purpose Total Assets (in millions of dollars) - 2012
Where do the funds come from? Funding Sources (2012)
Source: Elaborated by the authors based on the DBSA Annual Report (2012)
Source: Elaborated by the authors based on data from the AfDB (2012)
• The Development Bank of Southern Africa
(DBSA) has been operating since 1983. The composition
and conduct of the DBSA board are governed by the
Development Bank of Southern Africa Act, No. 13 of 1997;
by the Public Finance Management Act No. 1 of 1999; and
by the Companies Act, No. 71 of 2008.
• Note that, not being a deposit-taking institution,
the DBSA’s operations are not subject to the Banks Act, nor
to the Basel Accords.
• The DBSA is wholly owned by the South African
government and reports to the Minister of Finance.
• The bank’s investments are concentrated in
“socioeconomic infrastructure”, both in South Africa and
in Southern Africa.
• Currently, the DBSA has only an office in Midrand
(in the City of Johannesburg Metropolitan Municipality).
• The DBSA is a self-funded institution with
funds stemming from domestic and international
capital markets and from bilateral and multilateral
institutions. The bank has access to US$ 484 million in
callable capital as part of its capital structure.
• In 2002, the DBSA set up the Agency
Management Services Unit in order to improve its
capacity to implement and manage programmes in
the country and Southern Africa. In 2012, the unit
attracted 10 new agencies, with US$ 54 million in new
funds. Currently, the DBSA manages 38 agencies with
US$ 160 million cumulative funds under management.
• From 1997 to 2012, the African Development
Bank (AfDB) granted the DBSA five lines of credit to
finance infrastructure projects in South Africa and the
Southern Africa region.
2009 2008
3352
4072
4543
4779
5277
2010 2011 2012
#5 | SOUTH AFRICA | DBSA
2008 2009 2010 2011 2012
40 180
35
160
30
140
25
120
20
100
15
80
10
60
5
40
0
20
0
1997
85
70
100 100
300
1999 2003 2006 2011
African Development Bank (AfDB)
Lines of Credit (in millions of dollars) Funds Under DBSA Management
Source: Elaborated by the authors based on data from the AfDB (2012)
Source: Elaborated by the authors based on the DBSA Annual Report (2012)
70%
6%
4%
8%
11%
1%
Domestic Securities Market Bilateral Agreements
Supranational Agreements
Others
Foreign Lines Of Credit
Commercial Banks
US$ Million Number Of Agencies
BRICS Policy Center
DEVELOPMENT BANKS IN THE BRICS COUNTRIES
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22
DBSA – How does it work?
• The DBSA is divided into four clusters: three are tasked with originating and packaging viable infrastructure
projects for financing and provision of technical assistance; the fourth is responsible for coordinating activities relating to
divisional portfolio planning, risk monitoring and reporting.
• The South Africa Operations Division (SA Ops) focuses on integration in the private and public sector markets,
concentrating on infrastructure projects, which are carried out primarily through municipalities.
• The Investment Operations Division encompasses mainly private sector firms, state-owned enterprises and
public-private partnerships.
• The International Division is responsible for DBSA operations across the whole African continent and for the
African Development Bank (AfDB) funds.
Source: DBSA Annual Report – 2012 (p. 33)
24%
Composition of Operations by Type
of Entity (2012)

Metropolitan Regions
State-Owned And Other Public Enterprises
Under-Resourced Municipalities Secondary Municipalities
Non-Government And Private Sector Intermediaries
Source: Elaborated by the authors based on the DBSA Annual Report (2012)
54%
4% 5%
13%
Intermediaries
Municipalities
• Energy
• Water
• Sanitation
• Drainage
• Operation and
Maintenance
• Education
• Energy
• Roads
• Housing
• Health
• Water
• Agriculture
• Education
Project Development and
Preparation
Planning, Advisory
Services, Project Resources
Mobilisation, Management
and Monitoring
Provinces Provincial
Entities
Educational
Institutions
The Division Supports
Project Planning and
Preparation Interventions
The Division Provides Investiment Support Through Intermediaries
Sectors/Areas
of Support
Current Portfolio
Composition
18% 82%
Did you know…?
In South Africa, the local government is
organized in municipalities of three kinds.
According to the Municipal Structures Act
(1998), the largest metropolitan areas are
governed by metropolitan municipalities
(Category A), and the remaining part of the
country is divided into district municipalities
(Category C), each of which is constituted by
several local municipalities (Category B).
In May 2011, there were 8 metropolitan
municipalities, 44 district municipalities
and 226 local municipalities in South Africa.
The Greater Johannesburg Metropolitan
Area, for instance, is circumscribed by
three municipalities: the Johannesburg
Metropolitan Municipality, the Ekurhuleni
Metropolitan Municipality and the West
Rand District Municipality.
DBSA Support For Socio-Economic Infrastructure Projects
#5 | SOUTH AFRICA | DBSA BRICS Policy Center
23
Disbursements
(in millions of dollars)
Disbursements by Sector (2011/12)
Investment in Development Activities
(in millions of dollars)
#5 | SOUTH AFRICA | DBSA
2007/08 2008
2554
3226
3643
4166
4480
2009 2010 2011 2012
616
930,6
825,7
833,6
803,4
2008/09 2009/10 2010/11 2011/12
Source: Elaborated by the authors based on the DBSA Annual Report (2012)
Source: Elaborated by the authors based on the DBSA Annual Report (2012)
Source: Elaborated by the authors based on the DBSA Annual Report (2012)
The disbursements are DBSA expenditures in project financing operations; the bank’s investments also include DBSA
capital assets.
Energy
Mining
Funds Housing
IT and Communication
49% 31%
14%
4%
2%
The National Treasury and the
DBSA support the Department of
Energy in promoting private sector
investment in energy generation,
with special attention to renewable
sources. Through the Renewable
Energy Independent Power Pro-
ducers Programme (REIPPP), the
DBSA has supported 12 projects
in 2011, in the first phase of the
program, with a share estimated
at $ 1.3 billion. The 2011/12 re-
port underlines the potential for
investments of $ 1.1 billion in the
second phase of the REIPPP. The
private sector makes up 87.5% of
total loans approved by DBSA; the
REIPPP covers 53% of that amount.
According to the DBSA, the
mass infrastructure is a major
obstacle to development, es-
pecially at the level of munici-
palities. The housing sector
is the second sector in terms
of financing from the DBSA.
Launched in the second half of
2010, the Old Mutual Housing
Impact Fund had, until the be-
ginning of 2012, $ 1.17 billion
in projects approved. Of this
amount, $ 110 million was fi-
nanced by DBSA.
2.984 technical infrastructure projects approved in 2010/2011
2.244 technical infrastructure projects approved in 2011/2012 = US$ 1,38 bilhão
511 in water and sanitation
162 in roads
141 in operations and maintenance
AMONG WHICH
BRICS Policy Center
Renewable Energy
Independent Power
Producers Programme
Housing Impact Fund
for South Africa
DBSA Abroad - How does it work?
• DBSA operations outside South Africa are
undertaken by the bank’s International Division. It is
noteworthy that the division’s mandate provides for
operations on the African continent only.
• The main areas of DBSA International Division
operations include technical assistance in finance
project preparation, in addition to direct disbursements
and lines of credit.
• The DBSA International Division also extends
lines of credit to other financial institutions. In 2011,
a US$ 150-million line of credit was approved for the
African Investment Bank, for a special loans programme
for small and medium enterprises in Angola. The
programme aims to facilitate diversification of the
predominantly oil-based economy.
• The DBSA also disbursed US$ 75 million to PTA
Bank, the trade and development finance institution
of the Common Market for East and Southern Africa.
Other development banks supported by the DBSA are
the Development Bank of Zambia, the Infrastructure
Development Bank of Zimbabwe, the Tanzania
Investment Bank and the East African Development
Bank.
#5 | SOUTH AFRICA | DBSA
International Disbursements by
Sector (2011/12)
Source: Elaborated by the authors based on the DBSA Annual Report (2012)
17%
13%
5%
1%
1%2%
56%
5%
Roads
Funds
Health
Transport IT and Communication
Agribusiness
Financial services
Energy
International Disbursements by Country (2011/12)
Zambia
Namibia
Mauritius
Lesotho
South Africa
Zimbabwe
50%
4%
15%
27%
3%
1%
The International Divi-
sion has disbursed US$
170 million to Zambia
during 2011/12. The
amount was invested in
the recovery of five prior-
ity roads along the North-
South Corridor, managed
by the National Road
Fund Agency of Zambia.
Three of these roads are
part of the Trans-African
Highway route running
from Cape Town to the
DRC’s Katanga Province
and to Kinshasa.
In the program developed
in cooperation with the
Zimbabwe National Road
Administration (ZINARA),
the DBSA has disbursed
US$ 206 million during
2011/12. More than
25% of this amount was
invested in the recovery
of roads, especially on
the Harare-Plumtree and
Harare-Mutare road links.
Zambia Zimbabwe
Source: Elaborated by the authors based on the DBSA Annual Report (2012)
Produced by: Support:
BRICS Policy Center
BRICS Policy Center
24
Produced by:
The contents of the publication do not necessarily represent the views of Oxfam or the Ford Foundation.
Support:
BRICS Policy Center