Hot on the heels of the recent G20 summit in China, the 8th Brics summit will be held in India this weekend. When SA hosted the Brics summit in 2013, it emphasised that it needed to be relevant to Africa’s development priorities. Those ambitious intentions need to translate into action that deliver tangible outcomes. So what can Africa expect to derive from this year’s summit?
Trade and finance issues stand out. SA would like to address the trade imbalance between itself and some of the other Brics members. The considerable deficit between China and SA is especially relevant.
Most African countries have a trade deficit with Brics countries. How these Brics nations choose to tackle protectionism among themselves will offer important lessons on how to improve African countries’ access to Brics markets.
India has also prioritised the development of small and medium enterprises (SMEs). It is worth noting that the development of these businesses and their integration into global value chains were a priority on the G20 agenda. The Brics nations should draw linkages between proposals at the G20 and their own plans to develop SMEs.
As a prominent emerging market bloc, Brics should lead the global discussions by identifying practical solutions to fast-track integrating emerging market and developing countries’ SMEs into global value chains.
The AU could also influence global decisions by engaging the G20 and Brics on how SMEs can be used to industrialise, reduce poverty and upscale women-owned businesses in Africa.
The 2013 Brics summit in Durban focused largely on infrastructure financing. Africa’s infrastructure financing gap is sitting at around US$100bn.
Brics has established the New Development Bank (NDB), and following the approval of its first batch of energy projects in April 2016 (Eskom secured a $180m loan), the bank recently launched its first “green financial bond”. This could boost funding and expand the supply of renewable energy for member countries.
The bank is set to expand its membership to other developing countries, which may benefit more African countries. The Brics summit needs to clarify the bank’s role in the Africa Regional Centre (ARC). Since the bank has only a commercial lending window, more detail is required on how the ARC would lend assistance to African middle-income and low-income countries.
India has proposed the establishment of a new institution, the Brics ratings agency, which will be on the agenda at this summit. The hope is that such an agency would break the dominance of the top three developed-country credit rating agencies, Moody’s, Standard & Poor’s and Fitch.
With the objective of lowering borrowing costs for developing countries, they aim to create a rating company that is “less biased”. However, the feasibility of this agency is still up for discussion.
A key consideration for such a government-initiated rating agency would be how to address its contested legitimacy. The top three credit rating agencies have been criticised for lacking objectivity when reviewing the companies they rate, since they are also the source of revenue for these agencies.
India is also proposing the establishment of a Brics Railway Research Centre and a Brics Agricultural Research Centre. The development of transport (including railway systems in Africa) as well as agriculture development are touted as priorities for the continent.
Last year, Brics adopted a strategy for economic co-operation. It has eight priority areas: trade and investment; manufacturing and minerals processing; energy; agricultural co-operation; science; technology and innovation (STI); financial co-operation and connectivity; and information and communications technology co-operation.
Each Brics country will champion two areas and SA has selected mineral processing and STI. SA’s role in the STI discussion should be to examine practical steps for African countries to drive e-commerce.
The summit and the many discussions surrounding it lay a foundation for co-operation. SA has reiterated that its role in Brics should be relevant and beneficial for Africa as a whole. This commitment should be demonstrated by a clear articulation of the NDB’s planned engagement with Africa, concrete steps towards decreasing Africa’s trade deficit with Brics countries, and the development of sectors that are key to modernising African economies.
• Ngwenya is the project director for the Global Economic Governance Africa Programme at the SA Institute of International Affairs.