In August this year, the eyes of the world were focused on Africa; South Africa to be precise. For several days, leaders from various nations descended on Johannesburg for the 2023 BRICS Summit.
BRIC, an acronym coined in 2001 by economist Jim O’Neill, referred to Russia, India and China. These emerging economies entered an economic and trade agreement. South Africa joined later, adding the S in the current formulation.
Interestingly enough, these nations had a GDP which would surpass that of G7 countries — US, Canada, France, Germany, Italy, Japan and the UK.
CBS News reported that O’Neill found that, at the end of 2000, Brazil, Russia, India and China accounted for about 23% of the world’s GDP.
And that’s exactly when the G7 countries finally woke up and started taking note of BRIC and its ethos of wanting to establish their own economic and trade system. There was even talk of creating a new currency.
Winning formula
In the years following its inception, BRICS aimed to reshape the global political and economic landscape. Just as O’Neill predicted, in 2023, BRICS surpassed the global GDP contribution of the G7 countries, accounting for nearly a third of global economic activity.
At a meeting of BRICS foreign ministers in June, South Africa’s Naledi Pandor said the group’s New Development Bank will seek alternatives “to the current internationally traded currencies,” AP reported.
Others want to join
BRICS’ ideals drew lots of criticism from the Western world, but developing nations welcomed the idea of not having their economies influenced by the US dollar.
From 1999 to 2019, 96% of trade in the Americas was invoiced in dollars, 74% of trade in Asia and 79% everywhere else, outside of Europe.
As it stands, more than 40 countries have voiced their willingness to join BRICS.
At the 2023 summit, South African President Cyril Ramaphosa announced that Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates had been invited to join BRICS.
Full membership will take effect on 1 January 2024.
BRICS is definitely making its mark on the global stage. Here’s an overview of BRICS 2023:
Growing appeal
The appeal of BRICS has grown over the years, with more than 40 countries expressing their willingness to join. While critics have questioned its relevance, others point out that it is gradually chipping away at the existing dominant global order.
International law scholar Dr. Ilan Fuchs views BRICS as “an alternative to the world order that evolved after the collapse of the USSR in 1991 and the rise of U.S. dominance over other areas in the world.” As an example of this disruption, Fuchs cites the establishment of the BRICS Contingent Reserve Arrangement, which he argues “offers a way to circumvent a global financial system largely controlled by the U.S. and its banking system.”
Economic Milestones, Surpassing G7
BRICS nations showcased a remarkable GDP growth trajectory, which as predicted, surpassed the collective GDP of the G7 countries in 2023, accounting for nearly one-third of the world’s economic activity. The rise of the BRICS nations has led to “increased calls for more inclusive and representative global governance.”
BRICS Business Council
A platform to foster business, trade, and investment ties among BRICS nations. It was established during the BRICS Heads of State Summit in 2013 in Durban, South Africa. The Council consists of 25 leading entrepreneurs from Brazil, Russia, India, China and South Africa, who represent a variety of industries and sectors. At the BRICS Summit in August, the Business Council adopted a 10-year plan to boost trade through bilateral agreements and the exploration of value chain opportunities.
Contingent Reserve Agreement
Provides short-term liquidity support, safeguarding against global liquidity pressures. The CRA is a framework for provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures. It underscores the strengthening of the global financial safety net and the establishment of a financial defense mechanism for BRICS.
New Development Bank
Established in 2014 to finance development projects in BRICS countries, focusing on infrastructure and sustainable development. The NDB aims to support public or private projects through loans, guarantees, equity participation, and other financial instruments. It reflects BRICS’ commitment to support economic development and shows its ability to create new international institutions.
Cooperation on dollar, science, education, health, culture
BRICS has broadened its cooperative horizons to include areas like science and technology, education, health, and cultural exchanges. A key focus has been to reduce global reliance on the US dollar and explore alternatives to the current internationally traded currencies. This initiative aims to foster a diversified and balanced international monetary system. Efforts are under way to implement trade systems that are independent of US-led systems, promoting a more equitable global trade environment.
