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BRICS in Africa: A Development Dream?

This week will see the fifth annual BRICS summit held in Durban. But while full of promise, the BRICS grouping and its relationship with Africa are more complex than they may seem.
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The BRICS Road Show in KwaZulu-Natal, 5 March 2013. Photograph by GovernmentZA.

On 26-27 March, representatives from Brazil, Russia, India and China will join their South African counterparts in Durban for the fifth annual BRICS summit. With the theme for this year’s summit being ‘BRICS and Africa: Partnerships for Integration and Industrialisation’, South African President Jacob Zuma will no doubt try to project his country as the fulcrum between the intercontinental powerhouses and an ascendant Africa.

For the powerful BRICS nations, Africa – touted by some as the final economic frontier due to its vast array of untapped resources – represents a great investment opportunity, and China’s economic forays into the continent are particularly well-known. For African nations, the BRICS countries offer attractive and competitive alternatives to their former colonial powers.

From many angles, this is a match made in heaven, but the relationship and narrative is more complex than it seems.

Africa: the final frontier

The positive narrative around the BRICS countries is simple. The BRICS is a grouping aiming to tilt the global economic balance in favour of developing economies and transcend geographical and ideological divisions in an increasingly complex and globalised world. As a platform for dialogue and cooperation, BRICS represents an impressive 43% of the world’s population.

These five countries have come together to work towards removing trade and customs barriers, and have also vowed to develop partnerships with relevant international organisations to combat illicit trade and fraud. Future initiatives to be discussed at the upcoming summit will seek to establish a BRICS Business Council, a BRICS think-tank, and a BRICS Development Bank which is expected to have a seed capital exceeding $50 billion.

For the BRICS nations, this African-hosted summit represents an opportunity to foster cooperation and deeper economic relations with Africa, where 60% of the world’s unused arable land and many untapped resources are located. In 2010, six of the fastest growing economies were from Africa, and the continent’s output is expected to expand by 50% over the next four years. Continent-wide economic growth is expected to expand by an average of 5.5% annually in the next five years. And this economic upturn is not merely the result of recent oil discoveries: the International Monetary Fund (IMF) has reported that real non-oil growth in sub-Saharan Africa has averaged 5.4% annually over the past five years.

The potential for cooperation between Africa and the BRICS is thus clear to see, according to this argument. Blade Nzimande, South Africa’s Higher Education and Training Minister, has claimed that his country’s economic future is tied to the development of Africa as a whole, and to the establishment of peace and stability throughout the continent. He believes the other BRICS countries can play an important role in achieving these goals and they in turn will benefit from the process.

On the eve of the summit, therefore, trade ministers from each of the five nations will hold a special joint session with business delegations. And this effort to improve business dynamics will be enhanced by the launch of a permanent BRICS Business Council.

BRICS built on sand?

Yet the future for BRICS-Africa cooperation is not as uncomplicated as it first seems, and grouping the five countries together in examining their relationships with Africa may not be as conceptually useful as the simple acronym implies.

To begin with, these five nations may be the economic powerhouses of their respective regions, but they also generate growth in very different and often competing ways. For example, Brazil and Russia are major energy producers and benefit from high energy prices, whereas India and China are major energy consumers, and therefore suffer from them. The BRICS countries also contain a great deal of diversity of political systems. India, Brazil and South Africa are democracies of varying shades, while Russia and China are autocracies. Meanwhile, outside the BRICS framework, their foreign policy goals do not tend to converge.

From an economic perspective, the BRICS countries’ statuses as the world’s emerging powerhouses may also be under question. Challenges, for example, are mounting from outside the BRICS grouping. The Boston Consulting Group (BCG) has been producing an annual study of the top 100 global companies from emerging markets since 2006. Compared to the initial 2006 study, the 2013 list is notable for its variety. In 2006, companies from 10 countries made the list; 84 of the 100 companies were from the four BRIC countries (before South Africa joined); and 44 were from China alone. In 2013, companies from 17 countries made the list; 69 were from the four BRIC countries; and 30 were from China alone. This suggests that even the mantle of being the largest emerging economies may be being weakened. Mexico, Indonesia, Poland, Nigeria and others have all been making economic strides. In fact, more Mexican companies than Russian or South African ones made it on BCG’s 2013 list.

Meanwhile, despite registering robust growth rates for many years, the BRICS countries’ growth rates are also slowing significantly. Chinese growth has slowed from double digits to 7% or less, and since 2008 Brazil’s growth has dropped from 4.5% to 2%, Russia’s from 7% to 3.5%, India’s from 9% to 6%, and South Africa’s from 5% to 2.7%.

From the opposite end, the Africa rising narrative too has been greatly misconstrued. High growth rates are not necessarily reflective of development, and much of Africa’s growth has been concentrated around a limited range of commodities and resources. Most disconcerting is the absence of a robust manufacturing sector. Meanwhile, jobless growth, inequality and poor living standards have debilitated many nations and iif left to stagnate, these problems can translate into dissent, possibly spiralling into rebellions, if not revolutions.

A complex relationship

The BRICS grouping and the BRICS-Africa relationship are thus far more complex, internally divergent, and perhaps precarious than they might seem. This does not necessarily take away from the fact that all five of the BRICS countries will increase in global influence and that partnerships with one another and African nations will be significant, but these dynamics will not be straightforward, and could become increasingly complex with the rise of other developing economies.

Nevertheless, it is important that the five nations themselves seem intent on cooperating to enhance their overall influence. And in this, the BRICS grouping is helpful in networking, developing direct linkages from government to government, from businesses to businesses, and from academics to academics.

Though it may not be the magic fix that many desire, and though it will not be the straightforward relationship sometimes suggested, the BRICS-Africa partnership provides the potential for positive cooperation between developing nations in the future. It is this potential that delegates from Brazil, Russia, India, China and South Africa will be trying to cultivate and deepen over the next couple of days in Durban.

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Comments

Well-balanced analysis of state of BRICS.  Let's hope the member countries get to accomplish and or set-up frameworks to strengthen the bloc and improve the livelihoods of their citizens via trade and investment.