BRICS+ catalyst for Namibian economic development
By Josef Kefas Sheehama.
Based on 2023 population estimates, BRICS+ countries account for 46% of the global population. The International Monetary Fund forecasts show that BRICS+ will account for 38% while the G7 will account for 29% of global gross domestic product by 2026. The question we should ask ourselves is, what does BRICS+ mean for Africa and the AfCFTA? One possibility is that it could serve as an advocacy platform for the AfCFTA.
With three African members in the ‘plus’ mix, the continent gains a more influential voice to raise the interest as well as the push for Africa’s development in the bloc. Economically, African nations are eyeing opportunities for trade and investments with both traditional and new BRICS members. This is particularly appealing given strained relations with Western powers. For instance, Ethiopia’s suspension from the African Growth and Opportunity Act (AGOA) has prompted a search for alternative partnerships.
Furthermore, in the ever-evolving global economy, strategic partnerships and alliances play a crucial role in driving growth and prosperity for nations and businesses alike. BRICS represents a significant alliance of emerging economies that hold immense potential for fostering economic cooperation and mutual benefits. For small countries such as Namibia, and Namibian businesses, engaging with BRICS can open up new avenues for growth, expansion, and access to international markets.
But what does BRICS mean for the Namibian economy, the potential benefits and how can Namibia and the rest of the blocs effectively plug themselves into this dynamic framework. Hence, there is no doubt that the BRICS will benefit Namibia. The potential integration comes at an opportune time when Namibia is in the process of implementing the Sixth National Development Plan (NDP 6) and implementing structural reforms to make our economy globally competitive, reduce the cost of doing business, attract investment, and stimulate economic growth. NDP6 is expected to cover the period of the 2024/25 to 2030/31 financial years.
Namibia can expand its market access, stimulate industrialization, and amplify its contribution to BRICS+ through harmonized trade policies and market integration. Namibia’s role in close proximity to the BRICS network is not merely symbolic; it presents an opportunity for the nation to assert its presence on the global stage and contribute to reshaping the economic dynamics of emerging economies.
By fostering economic stability, investing in infrastructure, empowering human capital, promoting exports, and aligning regional and multilateral efforts, Namibia can carve a niche within BRICS that is both impactful and mutually beneficial. As Namibia embarks on this transformative journey, it is imperative that all stakeholders with an interest in the country recognize the immense potential of collaborative action and work collectively to position the nation as a driving force in the BRICS consortium.
Hence, Namibia must go beyond trade in raw materials and link its production and trade to the global economy to take advantage of the unlimited demand and innovation along the supply chain. This requires comprehensive and dynamic efforts that bolster Namibia’s exports and diversify its markets to new regions and new products while also strengthening regional trade. BRICS serves as a potential source of growth that Namibia cannot afford to ignore. The time is ripe for policymakers to expand their thinking beyond traditional approaches and traditional markets if they want to play an active role in international trade.
What potential effects can BRICS have on US-African relations?
The African countries will face a reduction in preferential access to American markets under the African Growth and Opportunity Act (AGOA) which would hurt African economies. Namibia’s exports under the AGOA programme, allow Namibia to export over 6,400 products tariff-free to the United States. Reduced trade opportunities, foreign direct investment, and economic aid, potentially lead to economic setbacks for the continent. The trick is for Africa to articulate its own interests and pursue them consistently.
The end of the dominance of the USD imminent?
The BRICS bloc agreed to admit Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates in a move to reshuffle a world order it sees as outdated. With the inclusion of oil exporters such as Saudi Arabia and the UAE, BRICS now commands 42% of the global oil supply. The economic prowess of BRICS is evident in its GDP, which stood at US$31.75 trillion as of August 2023. Bloomberg predicts that by 2050, the GDP of BRICS countries could reach 50% of the world economy, surpassing the current GDP of the United States, which stands at US$25.5 trillion.
Furthermore, according to a report by Eurizon SLJ Capital in 2022, the US dollar as global reserve currency fell ten times the average pace of the past 20 years. As it continued to lose purchasing power, several oil-producing countries began to question the wisdom of accepting increasingly worthless paper currency for their oil supplies. Additionally, other nations are choosing to use their own currencies for oil like China, Russia, and India, among others. As more countries continue to move away from the petrodollar system which uses the US dollar, we expect more inflation in the US economy. If BRICS member nations choose to settle their trades in a different currency, the dominance of the US dollar would decline, placing the US economy under pressure. The implications of such a shift could impact various sectors in the United States.
Moreover, it is beyond any doubt that the introduction of the New Development Bank BRICS implied a very important step in the long process of ending the dominance of the World Bank and the International Monetary Fund. The introduction of a BRICS single currency will halt the use of other currencies. Even though it is unlikely that the US dollar won’t be dethroned as the world’s reserve currency any time soon, I caution the world to be ready when the time comes. The availability of alternatives in currency and new technologies combined with the concerted actions among adversaries and allies alike, will contribute to establish alternative infrastructure and international financial arrangements.
BRICS can play an important stabilizing role in global affairs and can contribute significantly to maintaining international stability and ensuring global economic growth. To this end, Namibia cannot afford to distance itself from joining the BRICS bloc. These countries have a major impact on global trade, investment, and economic development. They have formed a strategic alliance to promote cooperation and support each other’s growth.
