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Friday, 30 March 2012 11:54

South Africa: Brics Summit Challenges Development Status Quo

By Lanre Akinola

Brics2012LAGOS, Nigeria, March 30, 2012 (This Is Africa) -The fourth annual Brics summit took place in the Indian capital, Delhi on March 29th. The leaders of Brazil, Russia, India, China and South Africa - which make up the grouping of major emerging economies- used the occasion to renew their calls for reform of international institutions to better reflect global economic and political shifts.

Everything from IMF reform to the selection of a new World Bank president and the ongoing crisis in Syria were included in a joint statement released after the summit, which reiterated mounting frustration amongst developing nations with western control of the Bretton Woods institutions that have been central to international development since the Second World War.

 

Expressing concern at the "slow pace of quota and governance reforms in the IMF", the summit communique asserts that more urgency behind such processes is "necessary to ensure the legitimacy and effectiveness of the Fund."

 

It also welcomes the candidatures from developing countries for the position of the president of the World Bank, but stops short of endorsing either Ngozi Okonjo-Iweala or José Antonio Ocampo, the two challengers to US nominee Jim Yong Kim. were of a sentiment that has become a familiar refrain for more equal representation and decision making power in global economic and political institutions.

 

The summit is, however, more than a mere talking shop for high minded ideals and intentions. Originally coined by Goldman Sachs Economist Jim O'neill in 2003 to denote those countries with the potential to become the leading economies in the 21st century, the Bric acronym has long outgrown its roots.

 

The grouping accounts for 40 percent of the world's population across four continents and a quarter of the global economy; China alone is the world's second largest economy. Since the 2008 - 2009 financial crisis and subsequent downturn in Europe and the US, they have been responsible for the bulk of GDP growth worldwide.

 

The Brics countries are also proving to be game changers in Africa. From a virtual standing start in 2000, China has become the continent's single largest trading partner, with annual trade now in excess of $160bn.

 

The Asian giant's growing influence in the region has become synonymous with infrastructure development, and China is expected to become Africa's largest export market in 2012. Brazil's annual trade with the region is close,to $30, while India's economic trade volumes have shot up from $5.4bn to over $40bn per year.

 

There are doubts about the coherence of the Brics grouping. South Africa, for example, does not meet the essential criteria - rapidly growing, large economy with a large population - laid out by Jim O'Neill. South Africa's GDP of less than a quarter the size of Russia's and the country is struggling to keep annual growth above 3 percent.

 

The Brics members also have significant political, economic and cultural differences, and do not always adopt a unanimous line in international issues. On the selection of a successor to Robert Zoellick as president of the World Bank for example, they were unable to reach a consensus about who should challenge the US's candidate, Jim Yong Kim.

 

Such considerations aside, their importance is likely to grow in the coming years, and there are signs that this loose coalition of emerging economies is beginning to develop the decision making mechanisms that could significantly impact international development.

 

Along with calls for reform of existing institutions, the five member states also held talks on the potential establishment of a new international development bank aimed at mobilizing resources for the financing of infrastructure and development projects in the Brics and other developing countries.

 

"We direct our Finance Ministers to examine the feasibility and viability of such an initiative, set up a joint working group for further study, and report back to us by the next Summit," the summit communique says.

 

This will be in South Africa, the Brics' youngest member, and will undoubtedly be an important occasion for a a continent that is fast gaining international attention for its economic and development potential in the 21st century. (END)

 

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