From Tuesday, August 22 to Thursday, August 24, the eyes of the world will be focused on South Africa for the 2023 BRICS Summit.
The theme for the congregation is: “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development and Inclusive Multilateralism”.
But why has the group garnered so much attention across the globe?
The formation
Well, the acronym “BRIC” was coined in 2001 by economist Jim O’Neill to call attention to the high growth rates in Brazil, Russia, India and China.
It has come a long way from then. According to Bloomberg, the four countries proceeded with O’Neill’s idea and built on it. Because of their fast growth at the period, they shared interests and faced similar obstacles.
They were repeatedly already working in organisations like the International Trade Organization, and they believed that combining their voices would increase their influence in an international system controlled by the United States.
Russia hosted the inaugural meeting of BRIC foreign ministers on the margins of the United Nations General Assembly in 2006. In 2009, the association hosted its inaugural leaders’ conference.
Expansion
At the end of 2010, South Africa was asked to join, bringing membership to another continent.
According to the United Nations Conference on Trade and Development, BRICS now form one of the world’s most important economic blocs as they represent more than one quarter of global GDP, and 42 percent of the world’s population.
“Foreign investment has played an important role in the growth of BRICS economies since 2001, with annual FDI (foreign direct investment) inflows to the bloc more than quadrupling from 2001 to 2021 and contributing significantly to gross fixed capital formation.
“To deal with the challenging global investment environment, and also in response to the need to leverage foreign investment for sustainable development, the BRICS economies continued moving in the general direction of a more open and supportive investment policy environment,” said the organisation.
Mission
Cointelegraph stated that the BRICS countries “support a system of global governance that is more inclusive and egalitarian. It aims to improve global financial institutions and advance a multipolar world order (distribution of power in which more than two states have similar amounts of power) that more accurately represents the objectives and ambitions of developing nations.”
Further growth
SA’s BRICS ambassador Anil Sooklal declared that 40 more countries have shown interest in joining the group. Among these countries are Argentina, Iran, Saudi Arabia and the UAE.
“Twenty-two countries have formally approached BRICS countries to become full members. There’s an equal number of countries that has been informally asking about becoming BRICS members.”
Currency
There has been a great debate on whether this economic bloc could be capable of creating its own currency. This form of currency would allow these countries to trade with each other.
Adriaan Pask, Chief Investment Officer at PSG Wealth, told IOL that settling on and establishing a BRICS reserve currency was far from simple.
“The BRICS countries exhibit notable variations in their policy deployment, GDP generation, currency management, interest rates, and inflation policies. Achieving the required level of integration would be exceedingly complex,” Pask said.
“Furthermore, it is necessary to evaluate whether the effort invested in creating a BRICS reserve currency is even worthwhile. One could simply opt to hold the individual BRICS currencies as reserves if needed.”
IOL