Daily Maverick
Dailymaverick logo

Opinionistas

This is an opinion piece. The views expressed are not that of Daily Maverick.....

BRICS is rapidly becoming a powerful instrument for Africa and SA’s development

Stevens Mokgalapa
By Stevens Mokgalapa
21 Apr 2023
Facebook
9
Global economic power is shifting and will further shift from the traditional ‘West’ towards the multifaceted BRICS bloc. Why are South Africans having frighteningly little conversation around this geopolitical transition — and the opportunity it presents our country for growth?

The upcoming BRICS Summit to be hosted by South Africa in August 2023 has raised the ire of many, and places the BRICS bloc back in the spotlight and under scrutiny. This time, the controversy involves the International Criminal Court’s (ICC's) arrest warrant issued against long-serving Russian president, Vladimir Putin.

By incorporating the Rome Statute into domestic law 21 years ago through the Rome Statute Implementation Act, South Africa is obliged to arrest Mr Putin once he sets foot on South African soil in August and hand him over to the ICC. Precedent suggests this is unlikely to happen.

In July 2017, the ICC found that South Africa had failed in its duty to arrest Sudanese president Omar al-Bashir when he was in the country two years prior, stating SA had a duty to arrest Omar and surrender him to the courts.

There are at least two indicators that the ANC government will again breach both domestic and international law when Putin arrives for August’s BRICS summit.

One, through historical ties to modern-day Russia’s predecessor, the USSR, an important ally of the ANC and the Struggle against apartheid. Though symbolic and ideological, it remains important for both camps.

The second, arguably more significant, is about each country’s economic future. Since its creation in 2009, BRICS has grown in strength and influence globally. While starting off with a cumulative GDP of $16.09-trillion, it has reportedly overtaken the G7 with a global share of 31.5% of global GDP (compared with the G7’s 30.07%).

It boasts the largest foreign currency reserves of $4.4-trillion, making up 17% of all global trade. On this trajectory, it is estimated that BRICS will account for 50% of global GDP by 2030.

Economic growth is mirrored by population growth. BRICS now accounts for 40% of global population, with over 3 billion people. With this, it is prudent for South Africa to consider in real terms the geopolitical influence that can be harnessed based on our strategic positioning gained from BRICS.

Here’s a tangible example: BRICS established the New Development Bank (NDB) in 2015 to counter the Bretton Woods financial institutions’ (World Bank, IMF, WTO, etc) dominance and to provide alternative financing to promote trade and investment. It also serves to provide financial impetus for integrating BRICS economies.

This has opened up large trade markets for South Africa, as the NDB has financed more than 80 investment projects worth $180-billion. In SA alone, projects worth $30-billion have been approved for implementation.

This is a huge boost considering that South Africa is in dire need of infrastructure upgrade projects to solve the problems of decaying infrastructure, growing population and economic demand.

We have to remain vigilant that this money is put to productive use and does not constitute a new form of corrupt, captured pillaging of funds.

Currency coalition?


BRICS nations are now reported to be working on a plan to develop a new currency that will replace the dollar in international transactions. Already China, Russia and Brazil have an agreement to use the Chinese yuan for trade among themselves.

These agreements between BRICS countries represent a significant threat to the dollar because of the size of their combined populations and the economic scale they represent. Both the South African Treasury and Reserve Bank need to develop appropriate strategies for the looming impact on global trade.

To add, BRICS has lofty ambitions to expand, with Argentina, Iran, Indonesia, Turkey and Saudi Arabia being considered for membership. Already Egypt, Bangladesh and the UAE are contributing capital to the NDB, making it an even more significant player in global trade and the world economy.

This new BRICS currency will be backed by gold, which is of huge benefit for South Africa because of its superior gold reserves. This necessitates a complete rethink of how South Africa trades gold to preserve long-term capacity and increase the likelihood that South Africa remains a central, indispensable player in this group.

Global economic power is shifting and will further shift from the traditional “West” towards the multifaceted BRICS bloc. Given this, why are South Africans having frighteningly little conversation around this geopolitical transition — and the opportunity it presents our country for growth?

Pursued properly, BRICS participation can position South Africa and other African countries as being among the world’s fastest-growing economies, simultaneously addressing pressing domestic issues of poverty, unemployment and inequality.

The NDB is the most viable solution for the lack of private sector investment on the African continent, making it a perfect option to raise resources and funding for the continent’s immediate needs. The funding for the NDB comes at an important time, just as the Africa Continental Free Trade Area (AfCFTA) is taking off.

South Africa should spearhead a strategy for AfCFTA to partner and work with the NDB to unlock financing and infrastructure development funding and ensure that there is mutually beneficial trade between Africa, Asia, the Middle East and South America.

Striking a balance


Does the new, rapidly growing influence of BRICS and NDB mean South Africa and Africa should abandon the traditional historical partners within Europe and the G7? Certainly not.

The answer is to strike a balancing act to benefit from both sets of relations. In truth, AfCFTA needs both the BRICS and G7 in order to succeed. Africa needs foreign direct investment (FDI) urgently to survive and both BRICS and the G7 are critical counterbalances for Africa’s ambitious development goals.

This geopolitical balance is critical, in particular to keep the powerful China honest by dissuading it from becoming a new imperialist actor on the continent by leveraging its economic global power base. China should be a development partner to Africa that treats its partners with equal respect and mutual benefit.

This confluence of geopolitical dynamics requires young, dynamic political leaders to comprehend the technological, financial and socioeconomic opportunities and risks. It is with these international challenges in mind that Build One South Africa puts its hand up as a new custodian for the aspirations of South Africa. DM

Categories:

Tags: