Africa can engage with BRICS to achieve trade and sustainable development goals.

The rise of China and India as powerful economic powers in the world has rapidly transformed international relations in a significant way, resulting in a dramatic shift in the balance of power from the West to the East. Following closely behind have been Russia, buoyed by the ongoing commodities boom, and Brazil, reaping the rewards of pragmatic economic reform.

The BRICS (Brazil, Russia, India, China, and South Africa) have become an integral component in investment and global expansion for almost all serious Western multinationals. South Africa, the continent’s economic power house, has also deepened its economic engagement with China, India, and Brazil while expanding its own economic engagement with the rest of the continent. The emergence of these new ‘Southern powers’ to the world stage and their increasing engagement with the African continent is a clear indication that North-South relations are being superseded by South-East and even Africa-South East relations, with profound implications for Africa’s development. This evolution has placed special focus on trade and sustainable development issues of major significance for Africa, and these issues  can be seen  as important terrain for the practical implementation of BRICS cooperation in these two spheres.

Trade

The political and economic prominence of new emerging powers has coincided with major political and economic gains through much of  sub-Saharan Africa, as markets continue to open up to foreign competition, and  private capital flows pour into the continent. Spurred largely by China’s unprecedented foray into the continent, the BRICS have turned their gaze toward Africa as a significant component of future growth, due primarily to the continent’s largely untapped markets and huge natural resource wealth.

The successful experience of the BRICS and other emerging economies (Chile; China; Hong Kong, China; Malaysia; the Republic of Korea; Singapore; Taiwan, and Thailand) over the past half century has amply demonstrated that trade can be an important stimulus to growth. Africa’s trade response has been strong: trade with the BRICS has grown faster than with any other region in the world, doubling since 2007 to US$ 340 billion in 2012 and projected to reach US$ 500 billion by 2015, with China accounting for 60 percent. The BRICS are also becoming significant investors in Africa, especially in the manufacturing and service sectors. With respect to foreign direct investment (FDI), the BRICS have strengthened their presence on the continent compared with traditional partners, such as the United States and Europe. In 2010, for example, the BRICS’ share in FDI inward stock and FDI inflows to Africa reached 14 percent and 25 percent, respectively. The share of BRICS countries in the total value of African greenfield projects reached 25 percent in 2012 compared with 19 percent in 2003. Trade between the BRICS and Africa rose to as much as US$ 340 billion in 2012 – 10 times higher than the value recorded in 2002. Currently, the BRICS trade more with Africa than they do among themselves.

Africa must take into account several risks in its trade cooperation with the BRICS. First, trade-led growth of national output may have little impact on employment and development, particularly when most of the trade is in primary commodities with few linkages to the rest of the economy and when a significant portion of export earnings accrues to foreigners, which not only biases the economy in the wrong direction, but also reinforces internal and external dualities and inequalities. Second, the growth of China and other BRICS suggests that Africa may find it harder to break into exporting in non-primary commodity sectors as well. However, with wages rising in China – often steeply – new opportunities may emerge for African countries.

Note: Data on Africa generally exclude South Africa, for which data come under the BRICS.

Sustainable development

The BRICS position themselves as committed to strong, sustained, and balanced global economic growth supported by strong cooperation in economic, financial, and trade matters. They hold the view that such growth would need to support global development, enabling the world economy not only to recover, but also to evolve in a way that delivers prosperity for all. This is an economy that would overcome poverty, inequality, and underdevelopment in the developing world and in the periphery of the developed world. The BRICS have put forward specific proposals about how efforts aimed at strengthening international economic cooperation could make concrete and serious contributions toward the achievement of the Millennium Development Goals (MDGs) and sustainable development, climate change mitigation and adaptation, environmental protection, renewable energy development, and so forth. Frequently, the BRICS highlight issues of poverty, public health, youth development, gender equality, decent work, and social security as crucial indicators of the effect of global economic reforms.

Significant and visible commitments made by India, China, and South Africa to low-carbon development and by South Africa to a long-term development planning process that is green in many respects give reason for positive expectations while Europe and North America remain politically paralysed over the pursuit of green growth and renewable technologies. China has become the global lead investor in renewable energy, and India has seen the highest recent growth rate. The problem is that these countries have also become the main contributors to the recent increases in carbon emissions. So, there is no easy answer to the question of how the BRICS have affected the green transformation.

The United Nations Environment Programme is a good example of how the BRICS have played a leading role not only in sustainable development negotiations but also in providing monetary support. However, China and Brazil were the only two countries that announced the donation of concrete amounts to support the programme in promoting sustainable development at the Rio Earth Summit. The developed countries were reluctant to contribute against the backdrop of economic recession. The US$ 6 million donation from the Chinese government is expected to be distributed in three parts to the programme’s trust fund for projects and activities that help developing countries raise capacity for environmental management and sustainable development. The Brazilian government is expected to donate another US$ 6 million. China has declared that it will supply an additional US$ 31 million for a three-year project to help the least-developed countries, mainly in Africa, to address climate change.

Conclusion

The BRICS are not only becoming a larger feature on the global and African economic landscapes, but also their economic, political, and strategic position in global affairs is a manifestation of the potential for South-South cooperation. The BRICS show that development is possible even when the initial conditions appear to be unfavourable. Trade can be an important stimulus for rapid economic growth, and Africa’s response is particularly strong, reflecting the growing trade ties that these countries have forged with the BRICS in recent years.

For Africa, the increasing attention from the BRICS has generated a renewed interest from the continent’s traditional western trading partners out of fear of losing their long-held strategic and economic interests in Africa to the new rising Southern powers.

However, there exists a great deal of apprehension on the part of many Africans when it comes to the possible long-term implications of BRICS-Africa engagement for African development, and whether these new partnerships will result in the same unequal relationship that characterises the relationship between Africa and the West. There is also suspicion about why South Africa was invited to be the only African country member of the G-20, to the exclusion of other equally important countries, such as Egypt, Ethiopia, and Nigeria.

The BRICS can enhance the way African countries are financing their infrastructure. In fact, financing is usually available for projects in single countries rather than for those shared by a number of countries, such as intra-regional infrastructure. There has been a much-publicised slowdown in the defiant post-crisis advance of the BRICS economies individually, as well of their collective trade relations with Africa. For financing to be sustainable development financing, it will need to fund the strategies leading to a vision of what Africa should be in the next 10-20 years. Finance should follow, not lead.

Alexandra Arkhangelskaya is a researcher at the Centre of Southern African Studies, Institute for African Studies, and Russian Academy of Sciences. She is also a leading researcher, National Research University Higher School of Economics, Russia.

This article is published in Bridges Africa by the International Centre for Trade and Sustainable Development.