Africa occupies a very different position today than it did in the period immediately following the decade of independence, when the majority of states on the continent transitioned from colonial rule to being sovereign, self-determining countries. While political independence stood as the primary marker of the post-colonial era, many newly independent African states were still precariously dependent on their former colonisers, barely achieving economic self-sufficiency. Sluggish economic growth and a lack of development informed the African condition and proved to be the pervasive image entrenched in the twentieth century African identity. Today however, the stark image of a poor and underdeveloped Africa is gradually being called into question, due in part to recurring trends of impressive economic growth, new consumer markets in areas such as banking and telecommunications and untapped market opportunities in a global economy that is becoming increasingly competitive and flooded.⁽²⁾

Major global events such as the September 11, 2001 terrorist attacks in the United States (US) as well as the international financial crisis from 2007 to 2009, have placed Africa in a strategic position within the current global arena. The formation of Brazil, Russia, India, China and South Africa (BRICS) as a regional coalition of what has been dubbed the world’s leading emerging economies has also played a crucial role in renewed political and economic attention on Africa. As such, African states and multilateral institutions will need to position themselves very cautiously if they are to stand a chance to accrue the benefits of what Andreasson refers to as “a gradual but steady shift in the centre of gravity of the global economy, away from the core regions of the developed world, eastward and southward towards the major emerging markets of the [BRICS] and others.”⁽³⁾

The notion of south-south solidarity which informed relations between individual BRICS countries during the post World War II era not only informs the manner in which the BRICS nations have positioned themselves today as significant players in a shifting world order, but has also directed their move towards a New Development Bank (NDB) that promotes both its own interests and those of other emerging economies and low income countries such as those in Africa. This paper assesses the expansion of BRICS’ relations with the African continent and reflects on the creation of the NDB for African countries.

Africa and the BRICS at the nexus of a shifting global order

Today, relations between BRICS and African states are buttressed by the same ideal of south-south cooperation that informed the nature of the political and economic relations during the post World War II era of the countries that now form the BRICS coalition.⁽⁴⁾ Over the past two decades south-south cooperation between the BRICS and Africa states, based on the principles of mutual benefit between cooperating countries, establishment of partnerships between equals, non-conditionality and non-interference in domestic affairs, has exceeded north-south cooperation between the US and European states and Africa. This is partly evidenced through the expansion of the BRICS’ sphere of influence on the African economic front. According to the African Development Bank (AfDB), the BRICS possess the largest share of trade in Africa, with a growth in trade of up to US$ 500 billion expected in 2015. The BRICS have also strengthened their presence with respect to foreign direct investment (FDI) on the continent in comparison to traditional trading partners like the US and European states.⁽⁵⁾ In 2011 the BRICS exported commodities worth US$ 111 billion to Africa, China accounting for 54% of these exports.⁽⁶⁾ In addition, patterns of official development aid (ODA) flows from BRICS to Africa reveal that, unlike traditional ODA partners such as the International Monetary Fund (IMF), World Bank (WB) and Organisation for Economic Cooperation and Development (OECD), BRICS ODA tends to target countries that are not reached by traditional development financing institutions.⁽⁷⁾

In addition to its economic ties with the continent, the BRICS sphere of influence in Africa is also reinforced by a global political economy which in the post Cold War era has been characterised by power shifts from US and Soviet dominance as seen in the period following World War II, to a multi-polar global order with more regional powers taking central stage.⁽⁸⁾ Indeed, the rhetoric of identifying global solutions to global problems has been fundamental to these shifts as global dialogues concerning crucial issues such as climate change, food security and health have seen the global south become more visible in identifying the solutions to address these challenges. In this instance the BRICS has at times played the role of being a collective voice for African countries and other developing states. BRICS has often served as a mouthpiece for the global south on the need to define their own terms of development, thus, to a certain extent, challenging the dominance of traditional international financial institutions and the models of development they have often dictated to developing countries.

BRICS-Africa agenda and the New Development Bank

From the onset of its establishment as a multilateral coalition of emerging economies in 2009, BRICS has expressed the need for a reform of the international financial architecture comprising the IMF, WB and OECD. At their first summit, held in Yekaterinberg, Russia, the BRICS stressed that “emerging and developing economies must have a greater voice and representation in international financial institutions.”⁽⁹⁾ In subsequent summits the BRICS stressed the need for these institutions to be reformed with the view that this would be a defining element of a more equitable international monetary system conducive to the development of low income countries, particularly African states. Drawing from the failure of structural adjustment programmes imposed on African countries, the BRICS have resolutely urged a relook at the stringent neo-liberal conditions that accompany IMF and WB loans to African states and other developing countries.

As such, the BRICS have clearly expressed their ongoing support to “African countries in their industrialisation process through stimulating foreign direct investment, knowledge exchange, capacity-building and diversification of imports from Africa.”⁽¹⁰⁾ The BRICS have also maintained their position on the need to “stimulate infrastructure investment on the basis of mutual benefit to support...job-creation...food and nutrition security and poverty eradication” in Africa.⁽¹¹⁾ Dissatisfied with the slow and virtually non-existent commitment from key Western states to reform the international financial architecture, the heads of the BRICS countries at their fourth summit in 2012 began to explore the feasibility of a New Development Bank (NDB). The primary objective of this bank would be to “mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.”⁽¹²⁾ An initial authorised capital amount of US$ 100 billion was committed by the five BRICS countries at the Sixth BRICS Summit in Fortaleza, Brazil in 2014, when plans to implement the NDB were officially unveiled. Each country also committed an additional US$ 10 billion to make a total of US$ 50 billion worth of subscribed capital.⁽¹³⁾

Redefining African futures through the New Development Bank

Although the interests of the BRICS countries stand at the helm of the coalition’s creation, African states need to strategically consider the opportunities that may be presented by a development financing institution like the NDB, which emphasises south-south cooperation and south-led development paradigms. For African states the NDB could further prove to be an alternative financial institution to those which have traditionally dictated and defined the terms of their development. With the increased prominence that Africa has gained within the coalition, as seen at the 2013 Fifth BRICS Summit themed on the notion of a partnership between BRICS and Africa, states on the continent may be well positioned to leverage the renewed interest in their investment markets; to influence and shape the terms of development partnership and investment presented by the NDB.

Recognised as a key area of investment for the BRICS in Africa as discussed above, the infrastructure deficits in the majority of African states are undeniable. However, if African governments are to benefit from infrastructure investment from the NDB, there is a need to ensure that conditions attached to such development financing are aligned with their national priorities. African governments need to ensure that the emphasis on infrastructure investment from the NDB serves to address their long term socio-economic development needs. In this instance, be it investment in infrastructure to improve healthcare systems, expand transportation networks or strengthen information and communication technologies for example, African governments must ensure that such investment results in the kind of economic growth that addresses their societal challenges.

Moreover, in order to maximise BRICS’ investment in African infrastructure deficits, African governments may need to strongly consider cultivating the necessary skills and technical expertise that are not only required to erect infrastructure but also to maintain it. As such, African governments will also need to ensure that infrastructure investment integrates the efforts of local businesses and, where possible, the informal sector which contains 80% of the labour force in Sub-Saharan Africa.⁽¹⁴⁾

Conclusion

Growing interest in African investment opportunities by the BRICS coalition may enable African governments to define their development trajectories. Traditional international financial institutions, such as the World Bank and IMF, often require recipients of their development aid to institute stringent political and economic policies as a condition to grant aid. More often than not these conditions have adversely affected low income countries, particularly African states. In this regard, the BRICS — which has emerged as an influential multilateral coalition within a shifting world order — has not shied away from opposing the inequities of the above donor-recipient approach and has continuously called for a more equal economic world order. The creation of the NDB may provide a platform for low income countries such as those in Africa to explore development models underpinned by principles of mutual benefit between equal partners, non-conditionality in cooperation and non-interference in domestic affairs. More specifically, African states need to capitalise on the NDB’s commitment to stimulate infrastructure development by ensuring that the gains accrued from investment in their infrastructure addresses their short and long term socio-economic challenges.

Written by Tinyiko Mushwana ⁽¹⁾

NOTES:

(1) Tinyiko Mushwana is a Research Associate with CAI. Contact Tinyiko through Consultancy Africa Intelligence's Africa Watch unit ( africa.watch@consultancyafrica.com). Edited by Nicky Berg. Research Manager: Claire Furphy.
(2) Andreasson, S., 2011. Africa’s prospects and South Africa’s leadership potential in the emerging markets century. Third World Quarterly, 32(6), pp. 1165-1181.
(3) Ibid.
(4) The BRICS have maintained historically established and dynamic relations with African states long before their official recognition as a political grouping. These historical bonds with Africa can somewhat be understood within the paradigm of south-south solidarity and cooperation that grew as countries within the global south expressed, through various forums such as the Bandung Conference of 1955, the Non-Aligned Movement established in 1961, and the G7 and China in 1964, their discontent with a world system that upheld the dominance of the West at the expense of the developing world. See Mielniczuk, F., 2013. BRICS in the contemporary world: Changing identities, converging interests. Third World Quarterly, 34(6), pp. 1075-1090; Zuma, J., 2013. South Africa in the BRICS: Evolving international engagement and development. Harvard International Review, 35(2), pp. 17-21.
(5) Ncube, M., ‘Africa and the BRICS: A win-win partnership?’, African Development Bank Group, 10 July 2013, http://www.afdb.org.
(6) ‘Africa – BRICS Cooperation: Implications for growth, employment and structural transformation in Africa’, UNECA, 2013, http://www.uneca.org.
(7) Ibid.
(8) Petropoulos, S., 2013. The emergence of the BRICS – implications for global governance. Journal of International and Global Studies, 4(2), pp. 37-51.
(9) ‘First Summit: Joint statement of the BRIC Countries’ Leaders’, BRIC, 16 June 2009, http://www.brics5.co.za.
(10) Ibid.
(11) Ibid.
(12) Desai, R.M. and Vreeland, J.R., ‘What the new bank of BRICS is all about’, Washington Post, 17 July 2014, http://www.washingtonpost.com.|
(13) Lewis, J.T. and Trevisani, P., ‘BRICS agree to base Development Bank in Shanghai’, Wall Street Journal, 15 July 2014, http://online.wsj.com.
(14) Ncube, M., ‘Recognizing Africa’s informal sector’, African Development Bank, 27 March 2013, http://www.afdb.org.