Brics has become a forum to fight for greater global economic equality
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The ultra-leftist pundits who have tried to paint the Brazil, Russia, India, China and South Africa (Brics) combined economies as a neocolonial vehicle of sub-imperialism may need to rethink that position following the Brics Summit in Xiamen this week.
If anything Brics has become a forum to fight for greater global equality and to push forward the developmental agenda of the global South.
Ever since the Bandung conference of 1955 which hosted representatives of 29 African and Asian countries to discuss greater global equality and South-South co-operation, the South has been yearning for tangible ways to turn its rhetoric into action.
For years it has scorned the double standards and Western agenda of the Bretton Woods institutions, and advocated for self-reliance and viable developmental programmes and funding.
But the dream has been largely elusive until now. What Brics has started to do is operationalise some of these dreams and put significant amounts of money behind the developmental agenda of the global South.
The remarkably progressive Brics agenda has become far more relevant than the criticism from some quarters of civil society that Brics is pushing for global capitalism, is only interested in resource extraction, corporate investment and market access.
Brics as a collective is pushing for the industrialisation of the developing South, agricultural diversification, beneficiation, infrastructure investment, and digitisation.
None of these goals are new, they have long been what developing countries have aspired to achieve, but without the necessary funding and development of South-South institutions, their realisation has been difficult.
For Africa in particular, due to the infrastructure gap, it has been largely unable to unlock its growth potential.
One of the most remarkable achievements of Brics to date has been the establishment of the New Development Bank and its ability to fund large development projects that will empower countries of the South and spur economic growth.
The funding comes without the conditionalities of the traditional Western donors, which left poor countries with unmanageable debts and ill-conceived development programmes. With $100 billion as a contingency reserve, the NDB is empowered to initiate significant projects that could change lives.
The NDB will ultimately manage to re-orient development financing away from the clutches of the International Monetary Fund and the World Bank, which have been losing credibility for many years.
It will enable the global South to finance development projects on their own terms.
One of the primary goals is to accelerate infrastructure investment in the energy and transport sectors, which will be key in unlocking the South’s growth potential.
Perhaps most significantly, development finance will not necessarily have to be dollar based, which makes repayments a huge struggle in developing countries.
If loans are made to member countries in their local currency it avoids exchange rate risks.
If loans are made in dollars, when a currency depreciates, the loan becomes more expensive.
The president of the NDB Kundapur Vaman Kamath said he wanted to ensure more local currency lending, which will significantly reduce the cost of borrowing. Even the Brics critics have had to admit this is an important and positive move.
Within just the last year the NDB has approved seven projects in the area of sustainable infrastructure worth $1.5bn. This year loans are expected to be approved for an additional 10 projects worth $3bn.
The establishment of the African Regional Centre of the NDB last month, which is based in Joburg, is also a significant step forward as it will play a major role in identifying and preparing sustainable development projects.
The whole notion of South-South development and collaboration is now a tangible reality, and this comes at a time when the US and the UK are in retreat and less willing to provide development financing.
It is estimated that Brexit will cost British taxpayers $35bn, which is likely see the British aid budget deflated.
Europe as a whole is consumed with its own problems of monetary reform, the fight against terrorism, and the relentless influx of migrants and refugees.
These issues will determine their spending priorities in the medium- to long-term future.
The US specifically is retreating from the multilateral order and its international obligations, and the core responsibility for global governance is now shifting to the East and the South.
This new global reality should be seen as an opportunity for the developing South more than a challenge, as it has more freedom and flexibility to determine its own future development path.
China, which is by far the most economically influential Brics member with a gross domestic product of more than double the other four Brics countries’ combined, has proved its commitment to equality.
China has insisted on equal voting shares among the five Brics members in the NDB.
This is an important precedent which bodes well for a new and equitable system of global governance in what is becoming a rapidly transforming global system.