Inside track on BRICS future
The fifth BRICS summit was held in Durban, South Africa, last week. I attended the session as part of the Old Mutual business delegation and wish to reflect on an alliance that promises a new dawn, though it is yet to be substantially defined.
The BRICS (which is a block of five emerging countries, namely Brazil, Russia, India, China and South Africa) account for 15% of global trade, 25% of the world’s GDP and about 40% of all people on planet earth. It is an alliance that is difficult to ignore and whose genesis can be traced back to the fact that the global geopolitical architecture is skewed and is not reflective of the importance and influence of the emerging powers.
Yes, BRICS remains largely as an undefined entity, but it provides choices and options to the developing world. Strategically, it is a no-brainer for emerging global powers to diversify links and relationships without pushing the traditional Western partners and in some instances, colonial powers, aside. BRICS is an alliance purporting to project the voice of the poor people and regions of the world at a time when some of the well established global institutions appear to be reluctant to reform or to make themselves relevant.
As part of the summit, business people met in Durban, they networked and many deals were negotiated. I understand that a South African developer and a Brazilian construction firm discussed power generation projects in Namibia.
For me, there are three key highlights from the summit:
* The BRICS Business Council, made up of five top business leaders from each of the member states, was launched. The objectives of the Council are to strengthen trade relations, promote business relations and technology and to boost intra-BRICS trade which reached US$350 billion in 2012. This is estimated to be a ten-fold increase in trade among the five member countries.
* Member states agreed to establish the BRICS Development Bank – also referred to as the New Development Bank – to provide long-term financing for infrastructure development. The expectation is to capitalize the Bank initially with about US$50 billion.
* Member states agreed to trade in their currencies for some transactions and to create a US$100 billion Reserve Fund to help member states prevent short-term liquidity pressures and strengthen financial stability.
The key question to ask is: Is this just another alliance whose relevance will diminish with time? I don’t think so. The fact that 17 African leaders were invited and attended the summit, to some extent demonstrates the importance of the alliance for socio-economic development on the African continent.
It is still formative days for BRICS. We haven’t seen its full shape yet but there is no doubt that with BRICS, we are witnessing a new dawn which offers a refreshing alternative to complement traditional partnerships.