The fourth annual BRICS summit is scheduled to be held in New Delhi, India on the 29th of March. Originally comprising of Brazil, Russia, India and China also known as BRIC an acronymn that was coined by Jim O’Neill from Goldman Sachs in 2001. It was only in 2008 that the BRIC was formally embraced by the four countries after which the first BRIC summit was held in 2009 at Yekaterinburg, Russia. The March 29th BRICS summit is the 4th summit. The previous BRICS summit were held in 2010 in Brasilia, Brazil; and Sanya, China in 2011.
South Africa became the latest entrant to what we know today as BRICS. The BRIC bloc was formed as a growing acknowledgement of the shift of the global economy. It is learnt that BRICS account for over 26% of the world’s landmass, 42% of the world’s population and about 40% of the global GDP, which is about $18.486 trillion. What made people to take notice of BRICS was their contribution to the gobal economic growth which was at 50% in the last decade alone.
The BRICs bloc was formed as a basis of a logical conclusion; where in India and China would become the most dominant global suppliers of manufactures goods and services whereas Russia and Brazil would be dominant in supplying raw materials, thus in recognition of this potential economic bloc, the BRICs was formed.
South Africa was formally invited in late 2010 when Chinese Premier Hu Jintao wrote an invitate to his South African counterpart Jacon Zuma. South Africa, recognized as the African continent’s biggest economy although not as big when compared to the BRIC didn’t make much sense although their inclusion is mostly attributed to the heavy lobbying done by Prez. Zuma.
The 4th BRICS Summit – What’s on the Agenda
The 4th BRICS summit promises to discuss a lot of topics, which could determine perhaps its coming of age. Of the many topics on the agenda, below are the highlights.
- To create a framework in order to respond to any economic downturns in the global economy.
- Create institutions that offer alternatives for enhancing socio-economic development both within and outside the BRICS.
- To study the establishment and the operational issues of setting up financial cooperation among the BRICS bloc with the local development banks, taking this further from what was previously discussed in the BRICS 2011 summit.
- Increase the intra BRICS cooperation to provide stable economic anchors for price volatility as the bloc is vulnerable to food and commodities price fluctuations.
- Double the intra BRICS trade to $500 billion by 2015. The previous recorded trade was at $230 billion in 2011.
[pullquote_left]It was learnt that South Africa will lobby for the Chinese Renminbi as the preferred currency for BRICS.[/pullquote_left] Perhaps what stands out from the agenda is the decision of the BRICS banks who will sign a pact on Thursday, 29th March to facilitate local currency lending. This agreement was initially discussed in the 2011 BRICS summit in China. Under this agreement, the BRICS banks can issue loans and settle payments in their own currency; an effort to reduce their exposure to the the global exchange rate fluctuations and also to lessen their (BRICS) dependence on third party currencies (read as USD).
South Africa has been lobbying hard to make the Chinese Renminbi as the BRICS preferred currency and for obvious reasons, considering that such as move would vastly help African businesses as most of their trade is done with the BRICS.
Does BRICS have the potential to be a global player?
In terms of statistics, the BRICS amount for almost three billion people with some of the fastest growing economies in the world. BRICS also brings an enormous global workforce and natural resources. Financial analysts note that the proposal to set up the local lending infrastucture is to be seen as a way for the BRICS to show off their economic independance and also to shrug off the western monopoly. True, considering that BRICS have already contributed a lot to the IMF and its about time to re-think their share in the structure. However, competing against the US dominance is something that will take a lot. Especially considering the geo political and socio economic differences. These diversities are just one of the few things that critics say will hinder the growth, while some beg to differ.
BRICS is still in its infancy. What was formed as a lose amalgamation of four countries has become what we know today as BRICS. The 4th Annual BRICS Summit sure seems to offer a lot for analysts to ponder upon.
BRICS: Young and ambitious is all that we can certainly say for now!