The theme for the Summit is “Building Responsive, Inclusive and Collective Solutions”. India has chosen to guide the Summit by emphasising BRICS institutionalisation, implementing decisions from previous summits, integrating existing mechanisms, innovation and continuity. India has a loaded agenda for the Summit, however, some trade and finance issues stand out as particularly important for African countries.
The overall G20 Summit as well as the 2015 BRICS Summit Communique, the Ufa Declaration, emphasize an “anti-protectionism” stance toward trade. South Africa, in particular, would like to address the trade imbalance between itself and some of the other BRICS members – the considerable deficit between China and South Africa is especially relevant in this regard. Most African countries also maintain a trade deficit with BRICS countries and how the BRICS 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 SMEs and their integration into global value chains (GVCs) was one of the priority areas on the G20 agenda. The BRICS should draw linkages between proposals at the G20 and their own plans to develop SMEs. As a prominent emerging market bloc, the BRICS should lead the global discussions by identifying practical solutions to fast-track integrating emerging market and developing countries’ SMEs into GVCs. The African Union 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, sitting at around $100 billion, remains large. A concrete institution established by BRICS is the New Development Bank (NDB). Following the approval of its first batch of energy projects to BRICS countries in April 2016, where 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. Furthermore, with the bank set to expand membership to other developing countries, there may be opportunities for more African countries to benefit. The BRICS Summit needs to clarify the bank’s operationalisation of the Africa Regional Centre (ARC). Since the bank only has a commercial lending window, more detail is required on how the ARC would lend assistance to African middle-income countries, as well as to low-income countries who would normally borrow from concessional windows.
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 and Poor’s and Fitch. With the objective of lowering borrowing costs for developing countries in mind, they aim to create a rating company that is less biased against developing countries. However, discussions are still in progress to consider the feasibility of creating such an agency. A key consideration for the government-initiated rating agency would is 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 (and building railway systems in Africa) as well as agriculture development are touted as priorities for Africa. Africa’s Agenda 2063 also gives voice to these priorities. The Summit would have to provide greater clarity on the role that these research centres would play beyond sharing information among BRICS countries.
The environment and sustainable development
The environment ministers of BRICS countries agreed on an MoU this September, agreeing to set up a joint working group institutionalising mutual cooperation on environment-related issues. BRICS ministers have also managed to reach some conclusions for consideration for the UNFCCC and Paris Agreement. The Summit in Goa will look into sharing advanced technologies in sustainable development and climate change. Clearer definitions and scope of sustainable development projects would allow African countries to align their needs in sustainable development and energy projects with the NDB’s funding opportunities.
The BRICS Strategy for Economic Partnership
Last year, the BRICS adopted the Strategy for Economic Co-operation. The Strategy focuses on eight priority areas for BRICS cooperation; trade and investment, manufacturing and minerals processing, energy, agricultural cooperation, science, technology and innovation (STI), financial cooperation, connectivity and ICT cooperation. Each BRICS country is to champion two of these specific areas and South Africa has chosen mineral processing and STI. Discussions emanating from South Africa and other BRICS countries on mineral beneficiations and manufacturing could inform broader discussions on industrialisation within the SADC region as well as continental agendas such as Agenda 2063. South Africa’s championing of STI should examine practical steps for African countries to take for e-commerce (involving dimensions of trade, technology, ICT development and innovation) to take off in Africa.
The upcoming BRICS Summit and the discussions surrounding the Summit lay a foundation for cooperation on many levels. South Africa has reiterated its commitment for BRICS to 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.
Nomfundo Xenia Ngwenya is the Project Director and Rebecca Ramsamy is a Researcher for the Global Economic Governance Africa Programme. This article was first published by the Financial Mail.