The long-awaited acceptance of six new member states to join the BRICS marks a new era in the evolution of the geo-economic bloc into a multilateral grouping that unequivocally advances the interests of developing nations.
At the conclusion of the successful three-day BRICS summit, held in Johannesburg from 22 to 24 August, BRICS chair and South African President Cyril Ramaphosa announced that Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and United Arab Emirates (UAE) will officially become full members of BRICS from 1 January 2024.
The welcoming of the new members into BRICS is a first phase in a series of planned expansions of the bloc, which will result in the restructuring and rebalancing of the existing global economic and monetary system into a one that is equitable, fair, inclusive, and transparent.
Since most of the new members are mainly oil, gas, and food producers, they will help ensure energy and food security for BRICS member states and countries of the global south.
Currently BRICS is a bloc of fast-growing developing economies, namely Brazil, Russia, India, China, and South Africa (BRICS), representing 42% of the world’s population and 32 % of the world’s gross domestic product (GDP). The enlarged BRICS will represent 46% of the world population and 37% of global GDP, thereby eclipsing the total GDP of G7 economies which currently account for 30% of the world’s GDP.
BRICS also strengthened the New Development Bank (NDB), also known as BRICS Bank, by extending membership to the bank to Bangladesh, Egypt, and UAE. The expansion of the multilateral financial institution, seen by many people as a BRICS’ version of the World Bank, will increase the number of NDB’s members to nine. The other members are Uruguay and the five BRICS member states.
In a 26-page official announcement, known as Johannesburg II Declaration, issued by BRICS states on the last day of the summit, the bloc also pledged to continue strengthening the BRICS Contingent Reserve Arrangement (CRA), an IMF-like mechanism established in 2015. The CRA was capitalised with an initial funding of $81 billion to provide protection to BRICS states in times of liquidity crises.
This rapid institutionalisation of BRICS is contributing to growing interest in the multilateral bloc. More than 20 countries knocked on its doors to apply join it prior to the Johannesburg summit. The enlargement of the bloc will no doubt give impetus to the growth in its global stature and status.
The bloc’s expansion will boost global trade and diversify supply chains of member states, benefitting the economies of the developing world, particularly Africa.
Africa is yearning to forge a fruitful and beneficial relationship with BRICS. It is for this reason that about 30 African heads of state were invited to attend the summit by President Ramaphosa under the auspices of the BRICS-Africa Outreach and BRICS Plus Dialogue.
The continent, led by South Africa, is keen to collaborate with BRICS to unlock trade and investment opportunities that will be facilitated by the African Continental Free Trade Area (AfCFTA), which is being implemented by 47 African countries.
The AfCFTA is the world’s largest free trade area that will consolidate fragmented African markets into a single market consisting of resource-rich countries with combined GDP valued at around $3.4 trillion and a population of 1.3 billion people that includes 300 million middle-class consumers.
AfCFTA will eliminate import tariffs on 88.3% of 5,000 products currently being traded on the continent.
The BRICS countries already a have strong relationship with the continent, but this relationship must be expanded to address the uneven trade patterns that exists between the continent and the bloc to ensure a win-win partnership.
For instance, the value of trade between China and Africa increased from $10 billion in 2000 to $282 billion in 2022 while India has been significantly promoting the development of small- and medium-scale enterprises on the continent. On the other hand, Brazil and Russia have been heavily involved in the mining and energy sectors in Africa.
However, African countries mostly export unprocessed minerals while they buy high-value manufactured imports. For the relationship to be truly beneficial to both parties, the composition of trade between BRICS and Africa must be altered to ensure that the continent is assisted to diversify its economy to add value to its minerals.
South Africa, as the most industrialised country on the continent, is best placed to serve as an entry point for the bloc’s members that want to beneficiate minerals in Africa.
The balancing of trade patterns will also require transfer of skills and technology to African countries to ensure that they transform their economies into industrial exporters.
The continent also noted the announcement by BRICS countries that they have tasked their Finance Ministers and Central Bank Governors to explore use of local currencies and alternative payment instruments to facilitate trade and investment transactions.
A report will be tabled at next year’s BRICS summit in Russia, where more light will be shed on the matter. This will be a further step in the institutional development of BRICS and many countries will be watching this development with keen interest including further expansion of BRICS.