Five giants of the developing world have in principle agreed to create a development bank to provide initial funding for infrastructure projects worth $4.5tn (£3tn), in a potentially historic challenge to western-dominated financial institutions.

The leaders of Brazil, Russia, India, China and South Africa – known as the Brics – sat together on stage in a highly symbolic show of unity in Durban, South Africa. The keynote phrase was “new paradigm” – and western politicians were conspicuously absent.

But the gang of five, holding a summit on African soil for the first time, disappointed some by admitting that they have not yet resolved differences over how much seed capital the bank will start with or where it will be headquartered. Various technical details also remain to be agreed.

The Brics bank will potentially rival the World Bank, where Africa holds only three seats on the 25-seat board and where Nigeria’s Ngozi Okonjo-Iweala was defeated for the presidency last year. The World Bank and IMF continue to be dominated by America and Europe.

Pravin Gordhan, South Africa’s finance minister, said: “The roots of the World Bank and IMF still lie in the post-world war two environment. The reforms that have taken place are still inadequate in terms of addressing the current environment. We still have a situation where certain parts of the world are over-represented.”

He added: “We should see the Brics bank as part of a new paradigm to share resources and, as the Chinese minister said, achieve a win-win outcome.”

Click here for the rest of the article from The Guardian

Click here for the Fifth BRICS Summit Declaration

Click here for a presentation from GGGI, LSE, and G-24 on the case for the new development bank

Click here for The Policy Brief Infrastructure for development: Meeting the challenge By GGGI Deputy Director-General Mattia Romani, Lord Nicholas Stern and Amar Bhattacharya