Global Courant
The leaders of the BRICS countries (Brazil, Russia, India, China and South Africa), meeting at a summit in Johannesburg, South Africa, have announced their decision to expand membership of the group of emerging economies. Two African countries – Egypt and Ethiopia – will be invited to join the group from 1 January 2024 along with Argentina, Iran, Saudi Arabia and the United Arab Emirates.
“This membership expansion is historic & shows the determination of BRICS for unity & cooperation of developing countries” tweeted the organisers of the summit.
The leaders also announced that BRICS finance ministers and central bank governors would be tasked to consider the issue of expanding the use of local currencies for international trade in an ongoing effort to challenge the dominance of the US dollar and improve the “stability, reliability and fairness of the global financial architecture”.
The summit has been hosted by President Cyril Ramaphosa of South Africa, who was joined by Brazil’s President Luiz Inácio Lula da Silva, President Xi Jinping of China and India’s prime minister, Narendra Modi. President Vladimir Putin of Russia, who risked arrest under an international warrant if he travelled to South Africa, addressed the summit in a video recording.
Africa to represent over 25% of BRICS membership
According to Statista, in 2020 the five current members of the BRICS surpassed the G7 in terms of combined GDP as measured in purchasing power parity. Their share of world GDP has risen from 16.9% in 1995 to 32.1% this year.
Expansion of the group, which has been meeting since 2009 and which admitted South Africa in 2010, has been mooted for some time, and membership offers African countries the chance to gain a louder voice on the world stage. The expansion raises the African presence in the bloc from one fifth to over a quarter of members.
Ramaphosa announced the news after a series of meetings of the leaders behind closed doors. He said that they had agreed on the “guiding principles, standards, criteria and procedures” of the expansion process and that further phases are envisaged.
Over 40 other countries are reported to have expressed interest in joining the group, including Algeria, Democratic Republic of Congo, Comoros and Gabon. A claim by South Africa’s minister of international relations and cooperation, Naledi Pandor, that Morocco had made a formal application to join was denied last weekend by the country’s state news agency.
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‘Geopolitical map is being redrawn before our eyes’
“The BRICS’ 15th summit will be one of the most consequential in the bloc’s history, if not in the history of the world economy – the geopolitical map is being redrawn before our eyes,” wrote Hippolyte Fofack, chief economist and director of research at the African Export-Import Bank (Afreximbank) in an article looking forward to the summit published by African Business this week.
Noting that the BRICS group is increasingly viewed by many countries in the Global South “as a more attractive agent of multilateralism than the Non-Aligned Movement”, he looked forward to expansion dramatically expanding the group’s consumption power, “with significant economic and geopolitical implications”.
For Fofack, such expansion promises to “create scale and enhance the transition from bilateral to multilateral clearing, and ultimately towards a common BRICS currency” which could “address one of the major challenges associated with the use of local currencies for bilateral trade payment settlement: the difficulty of deploying these currencies once imbalances arise”, although the question of building a BRICS currency was not on the table at the summit.
‘BRICS does little and always will’
In contrast, Charlie Robertson, head of macro strategy at emerging and frontier markets investment managers FIM Partners UK, dismissed the importance of the expansion of membership in itself, telling African Business that expansion does not warrant “the thousand articles that will be written about it”.
“The BRICS do little and always will,” he said.
What does matter, in his opinion, is expansion of membership of the New Development Bank, a multilateral development bank based in Shanghai that was founded by the bloc in 2014. In addition to the five existing BRICS countries, the UAE and Egypt are already members of the NDB.
“Whether it is Saudi or UAE injecting capital, or Egypt, Argentina, Ethiopia and probably Iran drawing on that capital, the bank has been a welcome addition to the global financial architecture,” says Robertson. “Taking surplus cash from high savings China, or current account surplus Gulf countries, to invest and lend to countries ranging from SA to India to Ethiopia should be a positive for both sides.”
But he nonetheless commented that “At present, there remains no multilateral alternative to the IMF. And the BRICS currency project warrants zero attention at all.”
Two more African countries to join BRICS as bloc announces expansion
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