By Rachel GYABAAH
In 2012, as I sat in class discussing global financial systems, the concept of BRICS (i.e Brazil, Russia, India, China and South Africa) was introduced as a counterweight to the Western-dominated international monetary system.
I examined the International Monitoring Fund’s Working Paper on BRICS’ Development Philosophies (2012) and the European Parliament’s Report on BRICS in the Developing World, which outlined BRICS as an emerging bloc with the potential to reshape global finance architecture through alternative development models (IMF, 2012; European Parliament, 2012). However, at the time, many of those goals seemed overly-ambitious.
Fast forward to 2024 and BRICS has transformed into a powerful force, confirmed by its latest summit held between 22nd-24th October 2024 at Kazan in Russia – which coincided with the World Bank and IMF annual meetings – an alignment many see as a symbolic challenge to traditional Western power and a clear message of their expanding influence.
The 16th BRICS summit drew significant attention, with prominent leaders and economists attending. The simultaneous meetings, I believe, signalled BRICS’ readiness to present itself as a viable alternative to Western financial institutions, especially in Africa where debt relief and sustainable economic partnerships are crucial.
On the 26th of October, I participated in the 2024 Per Jacobsson Lecture that took place at the IMF via LinkedIn – titled ‘Delivering on New Global Challenges: How Can We Re-Imagine the Multilateral Trading System?’. Ngozi Okonjo-Iweala, Director-General of the World Trade Organisation (WTO), addressed evolving trade dynamics, pointing to the influence of BRICS and similar alliances in reshaping global trade.
Her lecture highlighted the fact that these alliances are crucial and pivotal yet navigate complex roles in promoting a more inclusive global trade framework. In summary, it’s much like trying to organise a pot-luck dinner with each guest bringing their own dish. Everyone has something to contribute, but coordination is critical while traversing competing interests.
I have been keenly following BRICS’ developments since 2012 and below are my reflections on the 2024 BRICS summit.
The Financial Muscle of BRICS
BRICS commands substantial economic influence. With China as the world’s second-largest economy and India rapidly growing, the BRICS bloc accounts for roughly 25% of global GDP and over 40% of the world’s population (World Bank, 2024). Its New Development Bank (NDB), established in 2014, has positioned itself as a parallel to the World Bank and IMF – focusing on infrastructure and sustainable development projects, particularly in the Global South.
Unlike conditionality-heavy loans of the IMF, the NDB’s loans have fewer political strings attached….making them more appealing to African nations with pressing development needs (NDB, 2023).
For countries like Ghana, which is navigating high debt levels, BRICS provides an opportunity for infrastructure financing to support long-term growth free from the austerity conditions often tied to Western loans. BRICS’ role can be compared to finding a friend willing to lend you her car without asking for a down payment, unlike another friend who will do otherwise.
Opportunities for Africa: Development Financing window and a Potential New Currency
The NDB and BRICS financing model could empower African nations like Ghana to tackle their debt sustainability with a possibility of receiving more favourable loan terms than those offered by the IMF. This flexibility has a tendency of enabling African nations to focus on long-term infrastructure and energy investments.
BRICS’ signal of creating a new currency for trade, separate from the US dollar, could stabilise African economies over-reliant on dollar-denominated trade. For example, if Ghana could trade cocoa using a BRICS currency, that might reduce its exchange rate volatility, lower trade costs and shield against inflationary pressures tied to US monetary policy.
However, the risk is a that new currency requires strong financial backing and agreement among BRICS nations, which is no small feat given their diverse economic priorities. Think of it like trying to get a group of friends to agree on a movie for a night out. It takes time, negotiation and sometimes a little sacrifice and compromise.
The Influence of Russia and China: Balancing Opportunities with Dependency Risks
China and Russia are pivotal players in BRICS, each with distinct motivations. China has heavily invested in African infrastructure under the so-called Belt and Road Initiative, with substantial loans to countries like Ghana, Kenya and Zambia (Chinese Ministry of Commerce, 2024).
While these projects fuel growth, they also contribute to Africa’s mounting debt burden – often tied to resource-based repayment conditions such as payments in minerals or agricultural goods. Under President Putin, Russia sees BRICS as a strategic counterbalance to Western isolation, with ambitions to expand ties with African countries as allies in global geopolitics.
The ongoing Russia-Ukraine conflict complicates BRICS’ positioning. Western sanctions on Russia have strained its economy, limiting its engagement in global markets. However, Putin’s commitment to BRICS reflects Russia’s intent to use the bloc for maintaining influence through non-Western alliances, particularly with African nations. China, on the other hand, remains an economic anchor for BRICS, driving initiatives like the proposed BRICS currency to reduce reliance on the US dollar.
This reliance on China and Russia raises the risks for African nations. African economies that deepen ties with BRICS may become overly-dependent on these influential members, with a tendency to align with BRICS financing terms that reflect the political ambitions of China or Russia. Should the bloc adopt policies overly aligned with Russian or Chinese interests, Africa’s sovereignty could be compromised; a concern echoed by experts at the recent summit.
However, South Africa and other African countries’ dealings with BRICS should at all times come from an informed position hinged on existing continental policies such as the AfCFTA Agenda 2063; and the African Mining Vision among others. In effect, Africa, whether resorting to BRICS, IMF the World Bank or other looming economic bloc(s), should be assertive and negotiate better deals to drive the sustainable development it aspires to.
The Risks of Debt and Dependency
While BRICS provides attractive alternatives to IMF and World Bank financing, its model isn’t without risk. China’s growing financial influence in Africa has raised concerns that BRICS could replace one dependency with another. African nations already indebted to Chinese lenders risk deepening this dependency if BRICS financing mirrors China’s influence (African Development Bank, 2024).
The Power Dynamics: Is This a Challenge to the West?
The BRICS summit’s simultaneous timing with the IMF and World Bank meetings has sparked conversations about a growing power struggle. BRICS appears to be positioning itself as a counterweight to Western dominance, potentially providing Africa with a more balanced set of global partnerships. However, this positioning is not without complications.
As Africa navigates relationships with both Western and Eastern powers, it must weigh short-term benefits against long-term risks to their sovereignty. For African nations, particularly those like Ghana facing significant economic challenges, this balancing act is critical; much like walking a tightrope while juggling flaming torches.
The Emerging MINT Bloc: A Third Force?
While BRICS grows as a significant force, another group – MINT (Mexico, Indonesia, Nigeria and Turkey) – is positioning itself as a potential third power bloc. With Nigeria representing Africa, MINT provides an intriguing alternative that could allow African nations to diversify alliances.
Furthermore, engaging with other influential economies may offer more flexible financing terms than BRICS. However, MINT lacks the institutional structure as compared to BRICS, raising questions about its ability to present a united front. For Ghana and other African nations, the rise of MINT could mean access to diversified sources of trade and investment, reducing reliance on either BRICS or Western institutions.
However, MINT’s loose organisation structure is likely to limits its influence; and its impact will depend on whether the bloc can create cohesive and sustainable policies while dealing with related risks that may arise
What to Watch For: Africa’s Strategic Role in a Multi-polar World
Ultimately, Africa stands at a pivotal crossroads with the potential to redefine its place within the global financial system. As BRICS rises alongside established Western powers and emerging blocs like MINT, Africa nations must navigate these alliances carefully. African leaders are tasked with a delicate balancing act, one that if managed wisely can transform Africa into a central player in a multi-polar world order – ensuring that the continent’s sustainable development, stability and autonomy are protected.
In all of these efforts, citizens’ active engagement and participation must be upheld, coupled with enhanced transparency, accountability and sustained anti-corruption measures.
In conclusion, it’s a bit like being a chef in a multicultural kitchen where each ingredient brings its unique flavour and the key to a successful dish lies in the balance and harmony of these diverse elements. Thus, just like the chef, African leaders must exhibit the requisite leadership that indeed puts Africa on the path to becoming a beacon of hope for its citizenry.
Rachel is a Development practitioner/public financial management expert.
Email: [email protected]
