The path ahead for Brics member countries to grow

BRICS is an acronym for the international economic umbrella programme which links the five countries of Brazil, Russia, India, China and South Africa, all classified as emerging markets.

It was initiated in 2006, with South Africa joining the inaugural group of four countries in 2010.

It is akin to other economic cooperation agreements binding diverse countries with regional or sectoral interests such as the European Economic Community.

The North American Free Trade Agreement binds the United States of America, Canada and Mexico.

Brics does not yet provide for trade that is free of tariffs between the participating countries.

However, economic cooperation agreements within Brics are widely regarded as critical to growing the participating developing countries’ economies.

South Africa – by far the smallest economy within Brics – will host its partners at the 10th annual Brics summit in Gauteng at the end of July.

One of the criticisms of Brics is that it is such a disparate grouping of countries in terms of wealth and resources, as well as political and economic values, despite its constituents all falling under the “developing nations” rubric.

However, the South African government is hopeful that its Brics partners can learn from this country’s journey “as a new democracy that is still fighting the legacy and backlogs of the past”, as deputy minister of cooperative governance and traditional affairs Andries Nel said yesterday.

While Brics is intended to promote mutually beneficial trade and investment relations between the member countries, more expansionary objectives such as the New Development Bank are also being pursued to offset the dominance of the Western-oriented World Bank and International Monetary Fund.

With startup capital of R685-billion, the bank will have the capacity to fund infrastructure projects in its member countries and, eventually, in countries outside Brics.

The group has also established a Contingency Reserve Arrangement to provide a bailout in the face of global financial liquidity pressures.

Talks are under way about a Brics credit rating agency.