By Thomas Lethoba
The 15th BRICS Summit saw leaders of Brazil, Russia, India, China and South Africa reach a consensus to ramp up efforts of expanding the bloc of nations, with the announcement of six additional countries.
In a move aimed at changing the world order, a five-nation group of emerging economies known as BRICS, converged in Johannesburg, the economic hub of South Africa, from 22 to 24 August 2023 and extended invitations to MENA countries (Middle East and North Africa) namely Egypt, Iran, Saudi Arabia and the United Arab Emirates as well as Argentina and the African continent’s landlocked country Ethiopia, which has become one of the fastest-growing economies in the world.
A key shift at the summit was to broaden the bloc of major developing economies, that account for nearly 40% of the global population and a quarter of the global Gross Domestic Product (GDP) – set to grow by 37% following this expansion.
Briefing the media at the Sandton Convention Centre in Johannesburg, South Africa’s President Cyril Ramaphosa announced six new entrants will usher into the BRICS-oriented group with effect from 1 January 2024.
The five leaders of BRICS have reached a consensus to admit new full members into the BRICS family, as BRICS is a diverse group that shares the same vision for a better world,” said Ramaphosa.
“This summit reaffirmed the importance of BRICS people-to-people exchanges and enhancing mutual understanding friendship and cooperation. We adopted the Johannesburg II Declaration which reflects key BRICS messages on matters of global economic, financial and political importance,” adds Ramaphosa highlighting the shared values and common interests that underpin mutual cooperation benefiting the five BRICS countries.
Shedding light on the expansion, Sanusha Naidu, a Senior Research Fellow at the Institute for Global Dialogue, said that there are several factors of what the BRICS now represents following the expansion.
“There have been a number of different angles to expansion, is it now declaring itself [BRICS] as the formalized institution, or will it create the identity of countries that necessary share an anchor around values and human rights in the international system – where BRICS doesn’t represent that as the West does, and there’s another debate on whether the BRICS are essentially fomenting itself in a way that is seen as it trying to create an alternative world order to challenge the status quo, do they actually have to reshape and reconfigure the international system – that’s the question,” she said.
Naidu said BRICS nations are prone to embrace a more inclusive system of global governance but have vulnerabilities in upholding civic freedoms enshrined in the international human rights framework.
The significant role of China within the BRICS has been another commonly raised matter.
“There’s also a perspective around that the expansion seems to be much more about China’s cohesiveness and powerful influence in the BRICS, similarly to the US’s dominance in the G7 and now you have China which has prevailed with its dominance for the BRICS expansion,” said Naidu.
“China has long called for an expansion of BRICS as it seeks to challenge Western dominance, a strategy shared by Russia which has called for the creation of a multi-polar global order.
Naidu noted further that there are competing apprehensions around whether the BRICS expansion is going to be the extension that will see the BRICS consolidate and become a veritable bloc in the international system.
Meanwhile, Chinese President Xi Jinping through Chinese Commerce Minister Wang Wentao, refuted claims made that China is at hegemony of the BRICS. “Hegemonism is not in China’s DNA,” said Xi in a statement read by Wentao. “China stands firmly on the right side of history and believes a just cause should be pursued for the common good.”
Xi Jinping, the President of China made the following remarks on hegemony without mentioning any specific country: “Everything we do [referring to China] is to deliver better lives to our people. But some country obsessed with maintaining its hegemony has gone out of its way to cripple the emerging markets and developing countries.
Whoever is developing fast, becomes its target of containment, whoever is catching up becomes its target of obstruction. But this is futile,” Chinese Commerce Minister Wang Wentao read out the remarks on behalf of Chinese President Xi Jinping.
BRICS Countries consider local currency to strengthen the security, dependability, and equity of the global financial system
The local currency became top of the agenda at the Summit with Russian President Vladimir Putin hailing the fast-growing BRICS economy in global trade, as BRICS has surpassed the G7 in terms of their contribution to global GDP, with the group now expected to account for 32.1% of GDP, while the G7 share has fallen to 30%, according to the International Monetary Fund (IMF) 2023 report.
“A share of US dollar export and import transactions within the BRICS is declining. Last year it was only 28,7% and indeed this summit will discuss in detail the whole range of issues related to the transition to national currencies in all areas of economic cooperation between our five nations,” said Putin during the BRICS Summit, who described that irreversible process of de-dollarisation of bloc’s economic ties is gaining momentum.
At the summit, Brazilian President Luiz Inacio Lula da Silva called on BRICS to step up efforts to find a common currency to reduce the dominance of the US dollar for trade and investment.
“Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries? Who decided that the dollar was the [trade] currency after the end of gold parity?” Lula asked.
As there are high expectations with the five nations having the ambition to introduce a common currency to reduce the Western economic dominance in the global world order, financial analysts and economists have warned that this move will need careful consideration.
“Breaking away from the tradition of trading in the US Dollar will have to include financial sectors comprising of financial advisors, finance ministers and central bank governors to overlook that and harmonizing systems and getting the buy-in from the financial sector which might not be an easy thing to do, as developing countries in the Global South rely on European and the United States in terms of the financial systems,” said the senior expert at Geopolitical Intelligence Services and political analyst, Dr Ralph Mathekga. If BRICS members shift away from reliance on the US dollar and begin trading fully in their own currencies, the expanded group might have a significant impact on the energy markets,” adds Mathekga.
Meanwhile, South Africa’s Finance Minister Enoch Godongwana stated that it is still a premature move to consider de-dollarisation and local currency. Godongwana told media, ahead of the BRICS Summit and on the sidelines of the state visit to SA by China’s President Xi Jinping, that it was too early for the BRICS bloc to adopt an alternative payment system to the Society for Worldwide Interbank Financial Telecommunications (SWIFT).
“It is too early for the BRICS bloc to adopt to discuss swift alternative and de-dollarisation at this stage,” said Godongwana.
Expanded membership for inclusivity and diversity
With the BRICS group having expanded its membership to six countries, the bloc seeks to reshape the global World Order and contribute to the economic and social development of BRICS countries, sustain global economic growth and strengthen the bloc for the long-term functioning of the group.
This is in accordance with remarks made by Brazilian President Luiz Inacio Lula da Silva at the BRICS Summit. Brazilian President Luiz Inacio Lula da Silva’s remarks at the BRICS Summit, where he expressed support for the accession of more countries to the BRICS grouping, “BRICS now has a unique opportunity to shape the path of global development. Entry of new full members will strengthen the bloc and dialogue partners,” said Lula at the Summit.
Johannesburg II Declaration, a BRICS document that incorporates BRICS perspectives on global economic, financial, and political issues, stated that BRICS has increased its engagement with countries in the Global South, based on its core values of solidarity, inclusivity, and a shared future. With these core values, the BRICS leaders have reaffirmed their commitment to expanding the bloc with the addition of six countries, from Africa: Egypt and Ethiopia, three Middle Eastern countries, Iran, Saudi Arabia and the United Arab Emirates as well as the South America’s second-largest country, Argentina.
Ethiopia became a surprise pick for many to be amongst a list of invited countries to join the BRICS. Being the second most populous nation in Africa with phenomenal growth in the economy after Nigeria, Ethiopia has emerged as one of the fastest-growing economies in the globe and in Sub-Saharan Africa, with an estimated 6.4% growth in FY2021/22 of the African Economic Outlook 2022.
Weighing in on Ethiopia’s inclusion into BRICS, Sanusha Naidu held that the country is renowned as a key player on the African continent, with the potential to contribute to the strengthening of BRICS’ influence and cooperation within the continent.
“One of the interesting spinoffs that China, India, or any of the members of the BRICS countries will have is to be able to bring their companies into Ethiopia”, she said, extending that due to the African Continental Free Trade Area (AfCFTA) countries will be able to produce and export goods duty-free into other African markets.
“Ethiopia plays a significant role in regional and global politics, and with their inclusion to BRICS, they will shift their focus on fostering multipolar international relations and reducing dependency on the US currency,” said the international relations expert.
Egypt’s inclusion into BRICS is in line with the country’s foreign policy to strengthen South-South cooperation.
According to Dr Levy Ndou, the country has been vocal over the promotion of South-South Cooperation on the prospects, the basis of mutual interests and effective solutions to address economic challenges facing Egypt and countries in the Global South.
“During the high-level United Nations conference on South-South Cooperation held in 2019, in Argentina, Egypt’s Sahar Nasr, Minister of Investment and International Cooperation, significantly highlighted that Egypt is open to boosting South-South cooperation in order to apply Egyptian expertise to support developing countries and emerging economies,” said Dr Ndou. The political analyst and public policy lecturer at the Tshwane University of Technology added that Egypt’s keen interest in joining the economic association of emerging countries has long been in the discussion.
Prior to the BRICS Summit, Brazilian President Luiz Inacio Lula da Silva said he had vocally lobbied for neighbour Argentina’s inclusion into the bloc, as the Latin-American country is facing economic hardships, where the climate for business and investment has weakened due to high inflation rate, recession and debts.
Lula da Silva addressed that Argentina, the second-largest country in South America is a trade partner of Brazil, and the decision to push for Argentina to join BRICS comes at a critical time when the country’s economy is dwindling.
“It’s very important for Argentina to be in BRICS, we want BRICS to be a multilateral institution, not an exclusive club,” said Lula da Silva, adding that he is in favour of his counterpart country joining the bloc.
In 2020, during the hard times of the COVID-19 pandemic, Argentina’s foreign investment dropped to US$4.1 billion, after several foreign investors opted to leave the country due to Argentina’s persistent recession.
Argentina is facing financial constraints and struggling with a debt amounting to US$44 billion to the International Monetary Fund (IMF), as reported by the IMF earlier this year in April 2023.
Prior to the Summit, Lula da Silva said the IMF’s loans as “suffocating” and suggested that the BRICS bank (The New Development Bank) may potentially rescue other countries with loans to stimulate their economies.
United Arab Emirates
The United Arab Emirates (UAE) is the third-largest economy in the Middle East and is one of the wealthiest countries in the region in terms of per capita income. Its GDP in 2021 was estimated at US$410.2 billion, a real GDP growth rate of around 2.2 percent. According to the Embassy of the United Arab Emirates, the UAE has six percent of the world’s proven oil reserves and the seventh largest proven natural gas reserves.
Joining the BRICS, UAE was among the list of 23 countries that expressed to interest to become full-time BRICS member and was successfully admitted alongside the six countries to join the bloc by January 2024.
UAE’s invitation to join BRICS takes cognizance of the country’s contribution to shaping the socio-economic regeneration of the UAE, as well as to solidify its economic relationships with China and India.
Like many observers, Senior expert at Geopolitical Intelligence Services and political analyst, Dr Ralph Mathekga says the UAE will elevate the BRICS bloc and will yield great benefits as the West Asia country is one of the major oil producers around the world.
“The move for the UAE, which is one of the three OPEC+ group members to join the bloc indicates a significant step away from the US and furthermore, UAE is keen to strengthen ties with China and the Global South,” Mathekga said.
The entrance of the UAE in BICRS is aimed at furthering the country’s economic interests and contributing significantly to BRICS as the Middle Eastern country has been a member of the BRICS’ multilateral development institution, New Development Bank since 2021.
Saudi Arabia’s inclusion in the BRICS group came as no surprise as the Middle Eastern country has previously expressed its interest in joining the BRICS Bank, the New Development Bank. For it to join the political formation of the bloc, is a confirmation of an existing relationship.
Being one of the leading oil exporters, Saudi Arabia holds a significant position in the Islamic and Arab worlds, and according to the U.S. Energy Information Administration International Energy Statistics, Saudi Arabia is the world’s second-largest crude oil producer, world’s largest energy market participant, with 19% of worldwide oil reserves – roughly 267 billion barrels of proven oil reserves, 12% of global production, and more than 20% of global oil exports.
Analysts have stated that its inclusion in the BRICS is crucial and will bring a paradigm shift and accelerate economic, trade, and investment opportunities, as the Middle Eastern country with a large sum of money.
“The inclusion of Saudi Arabia in the BRICS will benefit the participating nations and boost BRICS’ prominence on the global scene. It will also benefit from the BRICS countries’ markets, possibilities, and resources,” said Sanusha Naidu, a senior research fellow at the Institute for Global Dialogue.
“The Middle Eastern country comes to BRICS with a lot of oil money that they’re trying to spend in various ways in various places,” Naidu added.
Iran which applied for the BRICS’ full membership in June last year,2023, has been vying for being in the bloc to bolster cooperation with BRICS member states.
According to the U.S. Energy Information Administration International Energy Statistics, Iran ranks ninth-largest oil producer in the world, at nearly 3.4 million barrels per day, and seeks to be an influential partner in BRICS for its large energy reserves, especially in oil and gas.
Iran President Ebrahim Raisi hailed the invitation extended to Iran to join the bloc in the wake of sanctions re-imposed by the United States of America in 2018 on the nuclear programme and the Council of the European Union where the Council UN accused Iran of extending its military support of Russia’s war of aggression against Ukraine.
“The benefits of Iran joining BRICS as a member will make a new chapter and a new step towards justice, fairness, morality and lasting peace in the international arena,” said Raisi.
“Iran aims to strengthen its economic and political ties with non-western powers through BRICS as BRICS has remarkable members in different parts of the globe that have a significant share of the world’s entire population and gross domestic product,” Raisi said in his overall observation of the extension of the bloc and inclusion of Iran.
What does the BRICS expansion mean for the African continent?
Centered on the theme: ‘BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism, BRICS will play a significant role in the African continent to unlock investment opportunities for African nations in terms of economic development prospects.
Analysts have said that the expansion network and Africa’s representation in the bloc will be the beginning of multilateralism as Africa is trying to go all-out into the African Continental Free Trade Area (AfCFTA) and that African countries could benefit from trade and investment opportunities.
Weighing in on BRICS expansion, political analyst and public policy lecturer at the Tshwane University of Technology, Dr Levy Ndou said that with Egypt and Ethiopia’s entries, the bloc will now boast three African states, and this gives Africa a stronger representation, voice and bargaining power on the bloc.
“The new world order is multilateralism, this means Africa will have the option to do business with whoever wants to do business with Africa. Having more African presentations on the bloc becomes more Pan-African and takes into account the interest of more than just three African countries with a unified approach to international relations to benefit the AfCFTA.
BRICS will not deliver bread and butter issues to underprivileged people but is the creation of the new world order that will ensure that developing countries have a collective bargaining voice, Africa must collectively consider its interests at first sight and not rely heavily on BRICS or the Western regime, said Ndou.
For Ndou, countries in the Global South view the BRICS group as “an attractive agent of multilateralism than the Non-Aligned Movement”.
“We need to also view this as a strategic move by BRICS countries that expansion of BRICS is set to forge stronger financial cooperation between Global South nations in order to counterbalance the Western economic dominance,” says Dr Ndou.
According to a senior expert at Geopolitical Intelligence Services and political analyst, Dr Ralph Mathekga, BRICS was formed as an institutional system to accelerate economic transformation and to reflect the development interests of poor countries, many of which are in Africa.
“Since its inception in 2009, the BRICS bloc has been vocal about the under-representation of developing and poor countries in the global financial system. Dr Mathekga further added that the 15th BRICS Summit focused on how the bloc can better cooperate with African states.
According to him South Africa, the first entry point to BRICS was at the forefront of the global financial architecture for the needs of Africa and was shaped to be the representative of many African nations, “It became a critical hub for intra-African trade and this resulted in the formation of the National Development Bank which supports infrastructure development in the continent and furthermore,” said Dr Mathekga, adding that South Africa played a pivotal role in the establishment of the African Continental Free Trade Area (AfCFTA) that has enabled a market of 1.4 billion consumers throughout the whole continent with a GDP that amounts to US$ 2.6 trillion.
In order to advance toward a “pluriverse” world, BRICS has stepped up its efforts to broaden the bloc. The word “pluriverse,” refers to a world that is more multipolar, inclusive, and diverse. It is a term coined by Colombian American anthropologist Arturo Escobar in a 2018 book titled ‘Designs for the Pluriverse’.
The expansion seeks to strengthen the BRICS economies and strive for peace and development. This is in accordance with remarks made by Chinese President Xi Jinping at the last session of the BRICS Summit when he emphasised that, the enlargement of BRICS is a new “starting point” for emerging economies and a “historic” step.
“This membership expansion is historic, and it shows the determination of the bloc for unity and cooperation,” Xi asserted while emphasizing that the conclusion of the expansion was achieved “unanimously”.
The broadened bloc will have shared needs for beneficial economic growth and reform of multilateral systems for stronger relations, and this includes African countries especially 47 countries in the African Continental Free Trade Agreement (AfCFTA). This means that, through BRICS, the African continent is boundless, and might contribute to a more balanced and equitable world trade.
The BRICS’ Johannesburg II Declaration simply states that “the African Continental Free Trade Agreement (AfCFTA) and BRICS cooperation presents opportunities for the continent to transition away from its historic role as a commodity exporter towards higher productivity value addition.
Thomas Lethoba is the Digital Media and Project Assistant to the Africa-China Reporting Project hosted by the Wits Centre for Journalism at the University of the Witwatersrand, Johannesburg.
He has a decorated history of working in different newsrooms as a journalist at Sunday World Newspaper, Pretoria Rekord, Voce of Wits FM and TUT FM. He is also the founder of Kasi Voice News (Pty) Ltd.