A new path to economic power is imminent through BRICS
“OKUNGAPHELI kuyahlola” is what we say to emphasise that nothing is permanent in life.
Observing the buzz around the BRICS currency lately amid the 15th annual summit, which is scheduled for the 22nd to the 24th of August brings this phrase home.
South Africa will be chairing the BRICS group of countries under the theme, “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism”.
A theme that could not have come at a better time, especially after the war between Russia and Ukraine has put pressure on prices of goods and energy and changing the status quo in global trade dynamics.
The buzz also comes after some advice to developing countries to promote and use their national currency when trading, investing and other transactions. A way in which a single BRICS currency can be created.
China is already making use of the timeline by trading using the Chinese yuan. The Chinese yuan is reported to be the most traded currency in Russia overtaking the US dollar in quarter one 2023.
Additionally, France settled an LNG gas trade with China by paying in the Chinese yuan, ending the reliance on the dollar.
Furthermore, India has also asked developing countries to settle trade in the rupee instead of the dollar and has allowed 18 countries to pay with the rupee instead of the dollar.
These moves are not only game-changers but an indication that nations want to move away from the dollar and end American financial supremacy.
The launching of the BRICS currency has seen a total of 19 countries currently interested in accepting and trading with BRICS currency.
Among the countries expressing interest are Arab countries that are rich in oil and gold reserves, making the alliance of nations stronger, posing a threat to the G7 global order, and therefore challenging the G7 countries.
Saudi Arabia, as the world's largest oil exporter, could force Europe to trade in the BRICS currency as they depend on their oil exports, another step of the dollar losing its strength.
It should be noted that the G7 countries comprise of advanced economies such as the US, Canada, France, Germany, Italy, Japan, and the UK.
BRICS on the other hand is an acronym denoting the emerging economies of Brazil, Russia, India, China and South Africa.
Originally coined in 2001 as BRIC by the Goldman Sachs economist, Jim O'Neill, claimed that the global economy will be dominated by the four BRIC economies by 2050.
South Africa was then added in 2010 and it became BRICS.
Jim O'Neill was not too far off with his claims as recent reports suggest that BRICS has surpassed the G7 by contributing the world's largest gross domestic product of 31.5% while the G7 bloc contributed 30.7%.
BRICS is a home to 41% of the world's population accounting to 16% of global trade. Meaning that the launching of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) by BRICS was a strategic step towards greater integration and a practical step towards challenging the dominance of the West.
Both the NDB and CRA are contributing substantially to the process of accelerating economic growth resulting in socio-economic progress in the member countries.
We have all come to know how the invasion by Russia of Ukraine affected the food and energy markets. This was a global economic meltdown post Covid-19 pandemic, hurting growth and raising prices.
Sanctions were put on Russia to weaken its ability to finance the war and to target the political, military, and economic elite responsible for the invasion.
These restrictive measures have since shrunk Russia's trade in goods and services significantly, putting pressure on oil, natural gas, and wheat as their major export commodities.
As such, according to Naledi Pandor, Minister of International Relations, BRICS is looking to “ensure that we do not become victims to sanctions that have secondary effects on countries that have no involvement in issues that have led to those unilateral sanctions”.
Additionally, BRICS wants to expand its membership base while maintaining its current growth as well as helping new members maintain economic and political independence.
As BRICS strengthens, it will have the potential to help poorer countries emerge without pushing a self-serving political agenda and controlling local economies.
Essentially, this suggests that a new path to global economic power is being created, giving inspiration to the transformation agenda desperately needed in South Africa to create a new path to economic emancipation for the majority.
The South African economy must fundamentally change to accommodate the majority and the BRICS currency conversations and moves are clearest evidence that power does shift eventually, and when the time for the shift has come, nothing will stop the wave.