Source: DNA India
BRICS’ growing influence: A panacea for Africa’s past developmental predicament
Will the rise of emerging economies and the formation of BRICS herald any significant paradigm model for the sustainable development of Africa? Or it is the simple expansion of “great game” in Africa that western writers would want us to believe? The importance of these questions has grown considerably because they are often raised in various platforms since the time BRICS countries emerged as a formidable alternative for Africa’s developmental paradigm vis-à-vis traditional powers like Europe and USA.
Now the question arises as to why BRICS countries are engaging in Africa so extensively. In other words, why does Africa remain a pivot in BRICS’ strategy to enhance its influence in the developing world? There are several reasons for this. Firstly, BRICS countries need Africa’s natural resources like oil, gold, precious metals, coal and vast markets, all of which are crucial for their emerging economies. For example, India wants to diversify the source of its oil imports and is, therefore, looking towards African oil. Presently, India imports 20% of its oil from oil-rich African countries. The same reasons hold for China, Brazil, South Africa and Russia. Secondly, notwithstanding sceptics, Africa’s rise over the past decade has been real, as is evident from the continent’s clear progress. During this period, African economies have grown at high and sustained rates, so much so that, despite the impact of the ongoing global economic situation, the size of the African economy has more than tripled since 2000. In fact, Africa exhibits substantial prospects across multiple sectors — with US$2.6 trillion of revenue expected by 2020 across resources, agriculture, consumer industries and infrastructure, of which US$1.4 trillion will be in consumer industries alone. The rapid rise of the African middle class, already equal in size to India, makes consumption a major driver of economic growth across the region, and is one of the most interesting yet less explored opportunities across Africa.
It is against the backdrop of the above perceptions that BRICS continues to priortise Africa. The largest increase in FDI to Africa in recent years has come from BRICS countries, who in turn are becoming important actors in development aid to Africa. India, China and Brazil have significant assistance programmes ranging from aid, export and investment opportunities to debt cancellation in Least Developed Countries (LDCs) in Africa. China and India are providing project aid to expand and improve African infrastructure. A visit to many African countries shows roads, flyovers, stadiums, railways, airports that have been built by either Chinese or Indian engineers and technocrats. Trade between Africa and the BRICS countries has grown so fast that it now even exceeds trade among BRICS countries themselves. Estimates suggest that the total trade of BRICS with Africa reached US$340bn in recent years and will touch the US$500bn mark by 2015. Roughly 60% of this (US$300bn) will comprise China-Africa trade. In reality, there exists competition among the BRICS member states with regard to investments in lucrative sectors, more so because they have yet to carve out a collective agenda. The solution lies in creating areas of collaboration and commonality which can serve as learning exercises for the BRICS countries’ respective national and regional interests.
Africa has also significantly benefited from investments by emerging economies in terms of trade, as the prices of primary commodities have risen significantly. Gross domestic products of most African countries have improved, and the continent which the World Bank and IMF once called the ‘hopeless continent’ is now being perceived as ‘Africa Rising’ or ‘Lions on the Move’. A World Bank report, published in March 2011, stated that: ‘Africa could be on the brink of an economic take-off, much like China was 30 years ago, and India 20 years ago’.
The establishment of the New Development Bank (NDB; erstwhile BRICS Development Bank) at the BRICS Summit in Fortaleza, Brazil in July, 2014 and the creation of the Contingency Reserve Arrangement (CRA) have been largely welcomed by most African countries. This is because NDB has the potential to break the established dominance of the World Bank and IMF in financial affairs across the continent. African countries are in urgent need of reliable and cheaper long-term development finance, without restrictive World Bank and IMF conditions. NDB could also be a vital source of finance for infrastructure projects that African countries need, besides finance for expansion of manufacturing sectors in African countries – so crucial for the creation of jobs and the elimination of poverty. The mere presence of a BRICS bank that does not adhere to the structural adjustment philosophy of the World Bank and IMF heavily challenges US dominance within the international system, and the institutionalisation of the BRICS bank signals a new phase in international relations.
The NDB can also unlock immense opportunities for India’s private companies in Africa. The absence of a strong and widespread Indian financial network across the African continent has proved extremely detrimental to prospective Indian investments in Africa, both public and private. NDB provides an opportunity for India to strengthen its footprint across the continent.
In sum, BRICS engagement in Africa has brought a new hope for the continent by way of an alternative development paradigm which would be more responsive to their needs. There may be some apprehension about the possible role of the BRICS countries towards Africa. However, it is a truism that current emerging powers have articulated their desire for greater cooperation with African countries on the basis of mutual interest and respect. Ultimately, the challenge that today’s emerging powers pose to global governance is qualitatively different in nature to that of previous years.