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In Durban, BRICS seek stronger ties with Africa
March 27, 2013, 8:29 am

The 5th BRICS Summit in Durban, to be held on March 26 and 27, will focus on what is currently seen to be the most exciting phenomenon in international affairs: The rise of Africa. Brazil, India, Russia, South Arica and China are rapidly increasing their presence in Africa, fundamentally altering the power dynamics on a continent that was once little more than a recipient of Western aid.

BRICS-Africa trade is set to increase more than threefold, from $150 billion in 2010 to $530 billion in 2015. In 2010, China overtook the United States as Africa’s largest trading partner, while Brazil and India currently rank as Africa’s sixth and 10th largest trading partners, respectively. “BRICS and Africa – partnerships for integration and industrialization” will be the theme of the 5th BRICS Summit. Furthermore, the promotion of African infrastructure development through the establishment of a BRICS-led development bank may provide the first step towards institutionalisation of the BRICS grouping.

The South African government will do whatever it can to present itself as a country capable of representing not only its own national interests, but also those of the entire continent. As Jim O’Neill recently argued, “South Africa could more than justify its presence if it helped Africa to fulfil its remarkable potential.” Yet at the same time, South African policy makers surely worry that if other nations such as Nigeria, Egypt, Ethiopia and Kenya reach South African GDP per capita levels, South Africa will no longer be able to claim a leadership position on the continent.

Putting such worries aside, the South African government has invited the African Union (AU) and African regional economies to participate in the talks – indeed a smart move considering that Nigeria has long dreamed of being part of the club.

BRICS in Africa-Need for new paradigms of engagement

Yet how exactly do today’s emerging powers plan to support Africa’s economic rise? It seems clear that emerging powers greatly benefit from their economic ties with African nations – since China took the lead, India’s presence has grown considerably. Brazil is seeking to establish stronger ties with non-Portuguese speaking African countries, and even Russia is keen on gaining greater visibility in Africa. Yet relations between Africa and emerging countries are far from problem-free. China’s reputation has suffered in several African countries (Thabo Mbeki, the former South African president, described China’s search for natural resources in Africa as a “new form of neo-colonialist adventure”), and both India and Brazil are increasingly aware that they, too, could soon be seen as the new colonisers in Africa.

While all the BRICS are beginning to position themselves as ‘emerging donors’ in Africa, how sustainable is the BRICS’ freewheeling and rather uncoordinated approach to promoting socio-economic development in Africa? When will they need to develop frameworks and paradigms, just like the West has done? Or should they attempt to work within the network of rules and development norms established by the West? Will they be able to avoid the fundamental mistakes the West made in Africa, causing lasting damage and economic distortions? It can only be hoped that such issues will be approached constructively at the 5th BRICS Summit in Africa, going beyond mere affirmations that the BRICS are committed to helping Africa advance.

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“Some say that the [BRICS] bank will avoid the conditionalities the World Bank and the IMF attach to their loans” [Getty Images]

BRICS Bank- An Alternative to Western dominated financial institutions

The BRICS Development Bank seems to be an ideal instrument to show African leaders and citizens that the BRICS seek to engage with Africa on a long-term basis, and not merely exploit the continent’s natural resources. Yet even if the Bank will be created at the 5th BRICS Summit in Durban, there is no guarantee that it will begin operating anytime soon.

Important questions are the location of headquarters, the administrative structure, lending practices and the leadership of the Bank remain to be answered. Will the bank invest only within BRICS countries or also outside, i.e., in Africa? India is said to prefer to former, as it requires massive infrastructure investment, and it would be far more comfortable taking loans from a BRICS Development Bank than a Chinese-controlled bank. Will the bank be controlled by emerging powers alone or will established powers be allowed to have a minority stake? Will each country contribute the same amount (the talk is currently of $10 billion) or will members contribute according to the size of their economy? South Africa is said to prefer the latter, India the former as it fears China’s dominance. Why, Indian policy makers ask, did South Africa seek to become a BRICS member if it is unwilling to make a serious commitment now? Brazilian, Chinese, Indian, Russian and Chinese policy makers are in for a formidable round of negotiations in what will be the first real test of whether the BRICS can cooperate.

Yet aside from the logistics, other key issues need to be solved. Will the bank develop lending paradigms that differ from those created by the World Bank and other established banks? Some say that the bank will avoid the conditionalities the World Bank and the IMF attach to their loans. This could lead Western observers to accuse the BRICS Development Bank of providing “rogue loans” and undermine the West’s attempts to promote good governance in the developing world.

This question points to a larger uncertainty about the future of global governance. Will emerging powers’ projects such as the BRICS Development undermine existing institutions and the principles that sustain them? BRICS policy makers go out of their way to point out that the BRICS Development Bank will “complement” existing institutions – yet why then, skeptics will ask, do they not hand over the money to the World Bank, the IMF or other institutions that are already in place? Why go through the hassle of creating a new institution?

The answer, clearly, is that while emerging powers seek a larger role within the existing framework, they do not feel established powers are willing to provide them with the adequate power and responsibility – reforms at the World Bank and the IMF have been too slow, and not far-reaching enough. The World Bank remains, despite its name, essentially a Western-dominated institution in the eyes of emerging powers. It is difficult to read the creation of the BRICS Development as anything other than that.

The views expressed in this article are the author's own and do not necessarily reflect the publisher's editorial policy.