Seven years on: BRICS delivers concrete beneﬁts to Africa
Seven years since joining the BRICS grouping, South Africa is benefiting from billions of
rands in loans from the New Devel- opment Bank (NDB), as it works to improve the quality of trade and to boost information–sharing on best practices with the bloc’s members. The group was organised in 2006 and held its first summit in Russia in 2009. South Africa – which chairs the bloc this year and which hosted the summit previously in Durban in 2013 –was invited to join the group in late 2010.
The New Development Bank – with its headquarters in Shanghai, China – was set up following a decision at the 2013 BRICS summit in Durban. It has made three loans to South Africa. The bank is capital- ised with US$100 billion and South Africa has pledged to contribute US$5 billion of this.
The bank’s first loan to South Africa was for US$180 million to Eskom, to connect independent renewable power-producing plants to the national grid.
In May, Finance Minister Nhlanhla Nene was elected as chairperson of the bank’s board of governors. Upon his election, the board ap- proved a US$200 million loan to finance the Durban container terminal reconstruction project.
The project is aimed at helping Transnet to enhance the capacity of its port in Durban.
In July, days before the summit, the bank’s board approved a third project for South Africa – a loan of US$300 million to the Development Bank of Southern Africa (DBSA).
The proceeds of the loan will be on-lent to sustainable development projects within the energy sector in South Africa that contribute to the reduction in carbon dioxide emissions, improvement of the energy sector mix and the increase of energy efficiency of the economy. The bank’s president KV Kamath told this year’s summit that the bank was “now fully operational and is in a rapid, though prudent, growth phase”. It has approved
loans for 23 projects for about US$5.7 billion to the five member countries. The bank plans to up this to some US$7.8 billion by the end of the year.
Following the opening of the bank’s first regional office in Johan- nesburg in August last year, to serve Africa, a second regional office will be established for the Americas in São Paulo, Brazil.
President Cyril Ramaphosa said at July’s BRICS summit that the estab- lishment of the bank is proof that BRICS is “not just a talk-shop”.
On the commerce front, things are also picking up. Intra-BRICS trade has grown from US$567 billion in 2010 to US$744 billion in 2017 – while South Africa–BRICS trade has grown from US$28 billion to US$35 billion over the same period.
However, much of South Africa’s exports to BRICS countries consist of raw materials, rather than fin- ished goods. South Africa is looking to change this and a review of the BRICS joint trade study is currently under way to promote value-added trade in raw materials between BRICS members.
In July, following a meeting of BRICS trade ministers in Magalies- burg in Gauteng, the Minister of Trade and Industry Rob Davies said member countries agreed to
update some work to identify areas where the countries are complementary in trade. Meanwhile, the member countries are cooperating on technical standards to support the exchange of information to facilitate international trade.
In addition, the BRICS leaders at this year’s summit noted the progress achieved on establishing a BRICS local currency bond fund. The fund will help BRICS countries to raise funds for development pro- jects from each other and further develop their local capital markets. It comes after BRICS leaders agreed in 2015 to set up the BRICS Contingent Reserve Arrangement. This will help provide member countries with protection against global liquidity pressures. South Africa contributed US$5 billion to the US$100 billion fund.
The BRICS countries are also currently cooperating on a number of other economic and trade-related issues. These include harmonis- ing customs standards, conducting research into e-commerce, strengthening cooperation on convergence of accounting standards and auditing oversight, exchanging information on how to better sup- port small businesses and intellec- tual property rules.
At this year’s summit the BRICS ministers of energy agreed to establish the BRICS Energy Research Cooperation Platform to develop its terms of reference, and to note the ongoing discussions for that purpose.
The BRICS countries at this year’s summit committed to step up intra-BRICS collaboration including within the frame of the Agriculture Research Platform and the Basic Agriculture Information Exchange System.
A report by Deloitte and the Department of Trade and Industry launched at this year’s BRICS sum- mit reveals that between 2003 and 2017, BRICS countries invested a total of US$17.8 billion in 189 projects in South Africa, creating almost
37 000 jobs.
South Africa held US$82 billion in foreign investments in BRICS in 2016, while BRICS countries held US$11 billion in foreign investments in South Africa. Investments from South Africa into BRICS countries have surged since South Africa became a BRICS member in 2010, reveals the report.
Deloitte attributed this to, among others,“an increased foreign expansion by South African firms and a considerable relaxation of exchange controls by monetary au- thorities in 2011 that allowed South African companies to invest much larger sums abroad”.
The BRICS countries are also cooperating to improve other issues, such as health and the environment.
To this end, President Cyril Ramaphosa announced at July’s BRICS summit that the BRICS Vaccine Centre would be set up in South Africa to promote the research and development of medicines and diagnostic tools to end epidemics.
The centre will be based at the Biovac Institute in Cape Town and will fall under the stewardship of both the Council for Scientific and Industrial Research and the Animal Research Centre. The Minister of International Relations Lindiwe Sisulu said in August that they plan to hold an international workshop before October to officially launch the centre.
This is the second major initia- tive in the health sector. The BRICS grouping last year mandated the setting up of a tuberculosis (TB) research network to develop ways to tackle TB.
The BRICS countries have so far carried out a landscaping analysis of potential indigenous vaccines, drug and diagnostic leads with a view to progressing further research on these leads. However, no joint projects have yet commenced.
Setting up the project protocols and seeking the necessary resources may take up to a year to finalise, according to the South African Medical Research Council.
Finally, the BRICS countries are also making progress in tackling environmental issues. The respec- tive BRICS ministers of environment signed an agreement which promotes continued closer collaboration in areas such as air quality, water, biodiversity, climate change, waste management and the imple- mentation of the 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals. The states will also collaborate in conducting joint research and capacity building.