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 progressive Brics agenda has become far more relevant than the criticism from some quarters of civil society that Brics is pushing 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. These goals 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 (NDB), and its ability to fund large development projects.
The funding comes without the conditionalities of the traditional western donors, which left poor countries with unmanageable debts and ill-conceived development programmes. With $100billion (R1.28trillion) as a contingency reserve, the NDB is empowered to initiate significant projects that could change lives. It will ultimately manage to re-orientate development financing away from the clutches of the IMF and World Bank, which have been losing credibility for many years, and 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. 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 chief of the NDB, Kundapur Vaman Kamath, has said that he wants to ensure more local currency lending, which will significantly reduce the cost of borrowing. Even the Brics pundits 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, based in Johannesburg, 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 tax payers $35bn. 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 GDP more than double the other four Brics countries’ GDP combined, has proved its commitment to equality.
In the NDB, which is headquartered in Shanghai, China has insisted on equal voting shares among the five Brics members. 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.
* Ebrahim is Independent Media's Group Foreign Editor.