Building capacity to help Africa trade better

The BRICS 2012 Summit: taking bold steps as the global economy is set to restructure


The BRICS 2012 Summit: taking bold steps as the global economy is set to restructure

Taku Fundira, tralac Researcher, discusses the BRICS 2012 Summit

The countries of Brazil, Russia, India, China and South Africa commonly referred to as the BRICS recently concluded the 4th BRICS Summit held in New Delhi. This was the second summit for South Africa since its admission to the forum in 2011 and marks the full cycle of hosting the Forum amongst the original members. The summit held under the theme “BRICS Partnership for Global Stability, Security and Prosperity” resulted in some bold measures which may pave way for some structural changes in world trade and finance.

From an economic point of view, the BRICS account for 40% of the global GDP (US$18.49 trillion), 26% of the world’s landmass and 42% of the global population (BRICS, 2012a). Forecasts predict that the BRICS’ total GDP will exceed that of the United States within three years and is expected to make up to 50% of the global GDP in the next eight years making this group the principal driver of global economic development. China is expected to overtake the US economy by 2027 (Srinath, 2012).

It should be noted that in its current form, the BRICS configuration is a forum which provides, on an ad hoc basis, opportunities for the members to liaise with each other and to develop joint policy positions which can be taken into other fora such as the WTO. Therefore, the BRICS cannot take formally binding decisions and there are also limits to their ability to formulate joint positions. In some areas the members have different interests. China and India are potential competitors when it comes to access to African markets and supplies of raw materials. However, they have been looking at ways to increase their trade links and decrease dependency on the developed world through bilateral interactions. These and other efforts have kept them together and following the recent Delhi Summit, there seems to be some concrete proposals emanating from their discussions.

At the Delhi summit, the BRICS nations in their Declaration identified several issues which needed to be addressed and had serious implications to the global economy. These included among others (Delhi Declaration, 2012b):

  • The need to address challenges associated with the global recovery made more complex by the situation in the euro zone; concerns of sustainable development and climate change, in a responsible and constructive manner;

  • The promotion of peace, security and development in a multi-polar, inter-dependent and increasingly complex, globalizing world;

  • The need to work with the international community to ensure international policy coordination to maintain macroeconomic stability conducive to the healthy recovery of the global economy;

  • A call for a more representative international financial architecture, with an increase in the voice and representation of developing countries and the establishment and improvement of a just international monetary system that can serve the interests of all countries and support the development of emerging and developing economies; and

  • The possibility of setting up a new Development Bank for mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, to supplement the existing efforts of multilateral and regional financial institutions for global growth and development.

Among the issues discussed at the summit, capital was identified as the one requiring immediate attention and the BRICS felt that there was need to expand the capital base of the World Bank and other multinational development banks to enable them perform their appropriate role in financing structural development.

Some measures discussed that may affect the global financial system; include a potential BRICS “basket currency” that could serve as an alternative to the US dollar and euro. An agreement was signed at the summit by all the leaders to give out loans in their local currencies thus moving away from the US dollar and euro. According to Srinath (2012), this is a significant move that would redefine the global exchange architecture and further widen “External Commercial Borrowing mechanism”. Furthermore the possibility of a “BRICS bank” to serve as an alternative to the Western-led traditional institutions like the World Bank and the IMF would allow the member countries to pool resources for infrastructure improvements and could be used in the long term as counter balancing vehicle of lending during global financial crisis such as the euro sovereign debt crisis.

These and other wide ranging measures are quite ambitious and would take time and political will to ensure successful implementation. However, what the summit has done as a first is to show how serious they are and demonstrate that the BRICS as a Southern Bloc is aiming for a major role in balancing the structure of global economic governance. For Africa, the story of the BRICS and Africa has only just begun and the future is exceedingly bright for the BRICS and Africa. Africa must seize the moment to ensure it benefits proportionately from relations with the BRICS.



BRICS, 2012a. BRICS Joint Statistical Publication 2012. [Online] Available: http://mospi.nic.in/mospi_new/upload/bricks_2012_24aug12/htm/index1.html

BRICS, 2012b. Delhi Summit Declaration. [Online] Available: http://www.tralac.org/images/Resources/BRICS/Fourth%20Summit%20Delhi%20Declaration%20and%20Action%20Plan.pdf

Srinath, S. 2012. The BRICS Summit 2012 – Is an architectural change in world trade and finance in the offing? [Online] Available: http://www.ghanabusinessnews.com/2012/04/03/the-brics-summit-2012-is-an-architectural-change-in-world-trade-and-finance-in-the-offing/


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