The recent BRICS summit, according to its original members- Brazil, India, China, and South Africa-had a happy ending. The well-orchestrated agenda, expanding the base of the group, has become a reality by inducting six more members, such as Egypt, Ethiopia, Saudi Arabia, United Arab Emirates, Argentina, and Iran, carefully selected from the list of 20 odd countries aspiring to become part of the bloc. With the joining of more countries, the combined GDP of the bloc would surge past 36% of the combined world GDP and more than 47% of the world population. By any standard, the vectors are formidable.
Coming specifically to Africa, the takeaway is largely the induction of two countries; Ethiopia and Egypt, taking the total number of members of the region to three, including South Africa. But the expectation of the African continent as a whole had gone unaddressed at the summit. The resumption of the Black Sea Grain Initiative was put on the back burner. The tough stand taken by Russia is that it can consider relaunching the Initiative only after the sanctions imposed by the West on it are lifted, particularly on the movement of food and fertilizers. Sanctions also crippled banking operations in Russia. The continuing war will further affect the food supply to the African region although Putin had spelled out in his virtual address at the Summit that the region had a special position in overall Russian diplomacy. Such assurances are more coated in diplomatic niceties rather than a commitment to address the situation head-on.
Will expansion of the membership base help the continent? Opinions differ. The newly inducted countries though can be categorized as emerging economies, they are heterogeneous in nature. For instance, Saudi Arabia and UAE have rich assets and capital to invest. However, they have only a limited market for absorbing goods and services from Africa. For Middle Eastern countries, there should be a meeting point in Africa other than buying land for agriculture or for real estate purposes. Also, geopolitical issues come to the fore, when Ethiopia deals with Egypt or India deals with China.
The peculiar nature of the group, particularly the distances that separate each country from the other, can play a spoilsport in promoting trade and investment. Except for China, and to a lesser extent, in the case of India and Russia, none of the countries has the financial muscle power to invest in the group countries. The bloated GDP and population are contributed by China and India. AfCFTA can be an effective framework that can spur growth in investment and trade between Africa as a region with BRICS. But available data proves otherwise. So far, AfCFTA, despite its huge perceived spin-offs, is a non-starter. With the wide disparity in the pace of growth, economic parameters, demographic attributes, and skill sets, the situation may continue unabated. A more coordinated and cohesive approach has to be adopted by the world’s largest trading bloc consisting of 54 sovereign countries to tap its potential and build synergies with other countries in the bloc.
There is a growing debate on the efficacy of free trade arrangements in the light of new shreds of evidence. There are economic analysts who hold the view that free trade can kill the competitive spirit because of an assured market. When BRICS members can think of lowering trade barriers for member countries, it can help the contracting parties to penetrate into each other’s market. But that assured market can kill the competitive spirit and urge to innovate and capture the world market. There can be uneven advantages for countries in the group while lowering the trade barriers. China followed by India and Russia will have the maximum advantage if checks and balances are not strictly followed.
The immediate advantage for Africa is the decision to expand the operations of the BRICS Bank. While a common currency is a far-fetched idea, the BRICS Bank should increasingly focus on promoting projects in smaller African countries. This would also mean an additional window for African countries to mobilize resources, at least to reduce their debt burden.
The real test for Africa is to get permanent membership in the G-20, which is scheduled to meet in New Delhi a few days from now. Indian Prime Minister Narendra Modi, the chair of the G-20 has assured Africa a full-fledged membership. If that comes true, it will reinforce the Brand Africa, since G20 is a much broader and wider entity than BRICS in its scope and range.
