BRICS&#8217; expansion with five new members, set against Argentina&#8217;s decision to decline, presents a nuanced challenge to US influence, markin a complex evolution in international dynamics. BRICS, the international governmental organization focused on bilateral relations, investment, and economic cooperation, has officially admitted five new member countries, effective from January 1, 2024. The inclusion of Saudi Arabia, the United Arab Emirates (UAE), Egypt, Iran, and Ethiopia effectively doubles the bloc&#8217;s membership to 10 nations, adding significant economic weight and potential. Notably, Argentina, one of the six countries invited to join BRICS, declined the offer under newly-elected President Javier Milei.



The formal admission of the new BRICS member countries follows last year’s summit in Johannesburg, South Africa, where the invitations were extended. South African President Cyril Ramaphosa, a proponent of the expansion, highlighted its importance for the Global South&#8217;s representation and the economic and trade development of member states.



“&#8230; South Africa stands to benefit from its relationship with these countries,” said Ramaphosa in a press release concluding the conference. “Together, these countries account for nearly a third of the global economy and are home to 46 percent of the world’s population.”



While the BRICS group (comprising of Brazil, Russia, India, China and South Africa) has long been viewed as an alternative to Western, particularly American, economic and geopolitical influence, independent risk and political analyst Marisa Lourenço in South Africa suggests that this expansion is unlikely to immediately disrupt the current economic order.



“The expansion of BRICS occurs in an era of multipolar politics, where countries can seek alternatives&#8230; and challenge US hegemony with different trading partners,” says Lourenço to FORBES AFRICA. “A BRICS currency seems highly unrealistic, and though trade between countries might increasingly use currencies other than the USD, it will take more to challenge the dominance of the USD in global trade.”



The entry of Saudi Arabia and the UAE is anticipated to significantly enhance the global influence of BRICS. Both countries bring substantial financial resources and geopolitical clout, especially as prominent members of the Organization of Petroleum Exporting Countries (OPEC).



The economic implications of BRICS&#8217; expansion are vast and varied. With the inclusion of major oil producers and emerging economies, the bloc is poised to redefine trade dynamics and create new investment opportunities. This could lead to a reshaping of global trade routes and partnerships, offering a diversification of economic alliances beyond the traditional power centers. As the bloc grows, so does its capacity to influence global economic policies, potentially leading to more equitable trade terms for emerging markets.



The addition of Ethiopia and Egypt marks a notable step in increasing African representation within the bloc, resonating with Ramaphosa’s remarks at the 2023 summit. However, Lourenço believes Africa will not likely dominate the BRICS agenda soon, with the strategies of larger member states expected to dictate overall direction.



Regionally, the impact of BRICS&#8217; expansion on African countries, both within and outside the bloc, deserves a closer examination. For countries like South Africa and Ethiopia, this could mean enhanced access to markets and capital, fostering development and economic growth. However, the challenge lies in ensuring that these benefits are equitably distributed and that the voices of smaller economies are heard within the bloc. As BRICS evolves, its ability to address these regional disparities will be crucial in determining its effectiveness and relevance.



“Africa has improved representation&#8230; but overall remains the weakest link, with the economic sizes of both countries overshadowed by their peers,” states Lourenço. “It will be interesting to observe how Saudi Arabia deepens ties with the continent&#8230; especially as the kingdom has recently increased its investments in numerous African countries, alongside other Middle Eastern powers like Turkey, the UAE, and Jordan.”



Lourenço argues that China is the primary beneficiary of the BRICS expansion, being the bloc&#8217;s most influential member and a direct competitor of the US in strategic areas such as East African infrastructure and access to raw minerals. “Politically, BRICS&#8217; expansion is particularly advantageous for China&#8230; The alignment of global powers like China, Iran, and Saudi Arabia within BRICS is likely to unsettle the US, which may perceive this as a direct challenge to its hegemony.”



The expansion of the bloc occurs at a critical juncture amid global economic and political tensions. BRICS faces the challenge of integrating member states engaged in conflicts with Western allies while maintaining relations with countries closely allied with the US. While BRICS has the potential to significantly expand its political and economic influence, Lourenço warns that this is not a foregone conclusion.



“If it can establish a formal institutional framework, it could become a powerful entity, but member disagreements make this unlikely in the next two to three years,” Lourenço notes. “Its role is likely to remain primarily political, considering the economic challenges of creating a common currency and the prevailing dominance of the US dollar in global trade.”



Furthermore, the global response to BRICS&#8217; expansion, especially from nations outside the traditional Western power bloc, will be an essential factor. Countries in Europe, Asia, and other regions will likely recalibrate their strategies in response to this new power alignment. The expansion of BRICS, thus, not only changes the dynamics within the bloc but also has far-reaching implications for global diplomacy and international relations.

Brics Summit in Johannesburg, South Africa August 22-24, 2023

New Members, Old Powers: BRICS’ New Year Expansion As 10-Country Bloc

At day three of the 15th BRICS Summit, the bloc’s expansion, welcoming Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, heralds a new phase of global collaboration and influence.



In a significant move that has captured global attention, the BRICS bloc is set to welcome new members for the first time since the adoption of South Africa in 2010, ushering in a chapter of expanded collaboration and shared markets. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE) are poised to become full members of the BRICS family, amplifying the possible leverage the bloc is able to implement globally, as well as increasing the entity’s capability as a counterbalance to the West.



“The world is changing,” commented South African President Cyril Ramaphosa in his closing remarks at the three-day BRICS Summit in Johannesburg. “New economic, political, social, and technological realities call for greater cooperation between nations. These realities call for a fundamental reform of the institutions of global governance, so that they may be more representative and better able to respond to the challenges that confront humanity.”



The expansion announcement was made by Ramaphosa, who chaired the summit. It represents a carefully deliberated and agreed-upon step signifying consensus among the existing BRICS members – Brazil, Russia, India, China, and South Africa – to broaden the bloc&#8217;s scope and deepen its collaborative efforts.



The BRICS grouping, which collectively represents a significant portion of the global economy, trade, and population, has garnered attention not only for its economic significance but also for its potential to shape international discourse and policy. The inclusion of Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE extends this influence to regions that bring unique perspectives, resources, and challenges.



The invitations to join the bloc are particularly significant given the close relationship between Saudi Arabia, the UAE, and the West, for which BRICS has increasingly come to counterbalance. The expansion indicates a clear view for a multipolar world order characterized by equitable development, sustainable growth, and collective security. It is a testament to the bloc&#8217;s commitment to fostering cooperation in areas such as trade, investment, technology exchange, and cultural understanding. By embracing these new members, BRICS solidifies its role as a platform for dialogue and collaboration, even as the global geopolitical landscape continues to evolve.



This multipolar support was no clearer than in the addresses of China’s President Xi Jinping, noting the event&#8217;s historic significance; “The expansion is also a new starting point for BRICS cooperation. It will bring new vigor to the BRICS cooperation mechanism and further strengthen the force for world peace and development.”



President Vladimir Putin too gave a closing address via video call.



Prime Minister Narendra Modi of India, a key player in the BRICS partnership, emphasized the expansion&#8217;s significance in his address; “India has always supported the expansion of BRICS. India has always believed that adding new members will strengthen BRICS as an organization.” Modi highlighted that the inclusion of these nations is a symbol of openness, inclusivity, and cooperation that extends beyond national boundaries. This sentiment resonates with the BRICS ethos of mutual respect and the pursuit of common goals for the betterment of all member nations.



The BRICS expansion holds the potential to foster economic growth, innovation, and the sharing of best practices among member nations. It is anticipated to enhance trade ties and investment opportunities. This enlargement positions the BRICS bloc as a resilient and collaborative force, capable of influencing economic outcomes and promoting stability.



Beyond the economic realm, the expansion offers an avenue for constructive dialogue on pressing global issues. By incorporating nations from different regions, the BRICS bloc can diversify its perspectives and responses to challenges such as climate change, cybersecurity, and geopolitical tensions. The inclusion of nations like Iran, Saudi Arabia, and the UAE brings a heightened focus on Middle East dynamics, allowing for enhanced dialogue and understanding.



Of note regarding the attempts at the bloc&#8217;s expansion are the inclusion of offerings of membership of the UAE and Saudi Arabia, which have long-established relationships with the West, with which the Russian Federation and China find themselves opposed with the war in Ukraine and trade conflicts, respectively.



As the world watches this expansion unfold, it&#8217;s worth noting that BRICS is not merely an economic or political grouping but a lever of global diplomatic influence.

New Name For BRICS? Summit In South Africa Unveils Newer Members In The Bloc

The BRICS Summit currently underway in Johannesburg explores expansion and a shared currency, challenging the US dollar&#8217;s dominance.



The annual BRICS Summit kicked off in Sandton, Johannesburg, today to rapt viewers around the world, as the economic and political bloc touched on critical developments such as the expansion of its membership as well as the possibility of implementing a shared currency.



The summit is being attended by Brazil’s Lula da Silva, South Africa’s Cyril Ramaphosa, China’s Xi Jinping, India’s Narendra Modi, and notably Sergey Lavrov in place of Russian President Vladimir Putin. Clear in a number of speeches, including those of presidents Jinping and Ramaphosa, was a definite willingness for the expansion of the bloc, which is increasingly being seen as a counterweight to global Western influence and more representative of the interests of the Global South.



Critical to this shift is a move away from what is seen as the hegemony of the United States dollar in global exchanges, which has seen both China and Russia suffer due to ongoing trade disputes and the war in Ukraine respectively. Moves towards stronger ties with BRICS-aligned nations were previously noted by President Ramaphosa on Sunday.



“We have steadily strengthened trade and investment ties with other BRICS countries alongside collaboration in areas like development, skills, technology, security, and innovation…” said Ramaphosa in a press release. “South Africa has benefited from the New Development Bank, which was established by the BRICS countries in 2015.”



These increased economic ties are what South Africa, the BRICS bloc, and possible future member states stand to benefit from should a shared currency be implemented, with the African Continental Free Trade Area (AfCFTA) being highlighted as a stepping stone towards this.



“As we speak, there are 47 countries that have ratified the agreement establishing the AfCFTA… only one country is yet to sign. All of these countries that have ratified have accepted the legal obligations, commitments to significantly reduce barriers to intra-Africa trade… estimated at only 18%, which is very low,” said the AfCFTA’s Secretary-General, Wamkele Mene, during a plenary discussion at the BRICS Business Forum today.



Using the example of a Kenyan businessman trading in the Republic of Djibouti, Mene continued; “Why is the dollar involved? Two African countries trading using a third currency.”



Mene further highlighted the introduction of the Pan African Payments and Settlements System (PAPSS), a SWIFT competitor estimated to save $5 billion annually in fees on payments on the continent.



“We’ve introduced the Pan African Payments System… you will no longer have to rely on a third currency, you will no longer have to buy a third currency, to trade in Africa,” said Mene to applause from the room. “We want to move beyond the trade agreement but introduce tools that will enable the trade to happen.”



Much of the conversation around consolidation of the solidarity of existing BRICS member countries, the bloc’s willingness to accept new memberships, and its successes in establishing both ease of trade and cost-saving initiatives appeared to be a possible preparation of the ground for the introduction of a BRICS-wide currency, which, while previously posited, has not until recently offered the level of advantage it might to countries such as Russia and China.



Nations in the bloc have long discussed the possibility of BRICS Pay, aimed at allowing for seamless, decentralized digital payments between member countries. As recently as last month, Brazil’s President Lula also highlighted the impact of US dollar dependence. With Russia reeling from US-based sanctions due to the war in Ukraine, the country too has been vocal about lessening dollar-based dependence.



However, a realistic and technically viable plan as to how a multinational currency would work for the bloc has yet to have been posited, despite several speakers at the conference discussing it during the opening day.



In attendance were dozens of world leaders from across the African continent, either considering the possibility of joining the bloc or being courted for membership – and as talks proceed over the next few days of the summit, considerations around new membership and realistic postulations around the implementation of a BRICS currency will play a major focus, watched not just by the member countries themselves but also by many in the West.



As if to underline this point, said Ramaphosa: “BRICS has a vitally important role to play in the reform of global governance and in the promotion of multilateralism and cooperation throughout the world.”

Opening Day of The 15th BRICS Summit

BRICS Summit: Paving The Way For Shared Currency And Economic Expansion

South Africa grapples with a diplomatic quandary as it hosts this year&#8217;s BRICS summit amidst legal and trade tensions involving Russia, the US, and the International Criminal Court.



South Africa appears to be considering the possibility of transferring its role as the host of this year&#8217;s BRICS (Brazil, Russia, India, China and South Africa) summit. This effort emerges from a need to avoid enforcing an arrest warrant against the Russian Federation&#8217;s President Vladimir Putin.



The upcoming summit, slated for August, has thrown into relief South Africa’s non-aligned status in the con-flict between Russia and Ukraine. South African President Cyril Ramaphosa has been engaged in talks with China&#8217;s President Xi Jinping, showcasing the country&#8217;s active diplomacy in this delicate situation.



The historical relationship between South Africa and Russia is noteworthy in understanding the current sce-nario. The ruling party of South Africa, the African National Congress (ANC), has had long-standing ties with Russia due to Russia&#8217;s support of the ANC against the previous apartheid government. This shared history of resistance against Western hegemony, economic ties, and shared stances on global issues have deepened their bond over the years.



“I do think that there’s a certain puzzlement regarding South Africa’s position,” says Ivor Chipkin, analyst and Executive Director of the New South Institute, a policy think-tank based in Johannesburg, to FORBES AFRICA. “It places us in an awkward position economically… That said, Russia too is placing us in an awk-ward position by very boldly and very loudly proclaiming this relationship.”



Many South African signatories including the commander of the military’s ground forces as well as multiple senior government ministers have visited Russia in recent months.



As a signatory to the Rome Statute, South Africa is obligated to follow the rulings of the International Crimi-nal Court (ICC). The ICC has issued an arrest warrant for the Russian President, who is expected to attend the BRICS summit in Johannesburg. Should Putin attend, it is possible that opposition parties in South Af-rica might seek legal means to compel the South African government to arrest him, thereby further compli-cating the situation.



A failure to arrest President Putin would not only be a breach of the ICC mandate but could also strain the already tense relations between South Africa and the United States (US). Despite these complexities, the practicalities of enforcing such an arrest remain elusive, adding another layer to the diplomatic conundrum.



In response to this diplomatic quandary, the South African government has taken a flurry of diplomatic ac-tions in recent weeks. The ANC sent a delegation to China last week, reportedly to discuss a possible change of venue for the summit.



President Ramaphosa also hosted talks with President Xi Jinping. The discussions included an African-led peace proposal between Russia and Ukraine, as well as the upcoming BRICS summit.



The BRICS alliance is particularly beneficial to South Africa. It fosters further investment and economic co-operation and provides financing through the New Development Bank. However, maintaining good relations with the US is also a priority, given that the country benefits from tariff-free trade under the African Growth and Opportunity Act (AGOA), valued at more than $2.58 billion in annual revenue.



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(From R) Brazilian President Jair Bolsonaro, Russian President Vladimir Putin, Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and South African President Cyril Ramaphosa wave at the press corps during the BRICS summit in Brasilia on Nov. 14, 2019. 
<cite>(Photo by Kyodo News via Getty Images)</cite></blockquote>
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However, this agreement is under pressure due to allegations of arms sales by South Africa to Russia after the secretive docking of the Russian Lady R vessel at a South African naval base last year. These allegations, if proven, could have serious domestic implications. For instance, should South Africa take any action that frustrates the US, it could suffer massive financial losses if AGOA is overturned, or if the Rand value drops significantly.



“South Africa’s position here is not clear to me at all,” continues Chipkin. “Other than a general suspicion of Western motives on the one hand… and then a historical relationship–not with Russia, but with the Soviet Union… It might well be that in order to placate some of the opposition to himself within the ANC, President Ramaphosa is making concessions on this front in order to stabilize and strengthen this position.”



South Africa’s Minister of Trade, Industry and Competition, as well as its Finance Minister, have expressed concern over the potential risk to the AGOA agreement. They have noted the damage these allegations could inflict on the South African economy. &#8220;It strengthens the position of South African exporters in the US mar-ket and, of course, helps create more jobs locally,&#8221; said Minister Ebrahim Patel during a press briefing ahead of his budget vote last month.



Discussing the prospect of President Putin attending the upcoming BRICS conference, US Ambassador Reu-ben Brigety noted South Africa’s obligations during a media briefing last month, stating that the US did not understand why “the government of South Africa will not publicly and fulsomely commit to the obligations that it has voluntarily taken upon itself”.



Looking ahead, South Africa finds itself at a crossroads. Its commitment to the principles of international justice as embodied by the ICC, its long-standing relationship with Russia, its membership in BRICS, and its trade ties with the US are all at play, with the decisions to be made in the weeks ahead likely to have far-reaching implications for both the country’s global standing and economy.

Russian President Vladimir Putin and Chinese President Xi Jinping attend the BRICS Summit in Brasilia

South Africa At Crossroads As It Attempts To Navigate Hosting BRICS Summit Amid Global Tensions

Busi Mabuza, the Chairperson of the Board of the Industrial Development Corporation, on the BRICS summit and why we need to start talking as an African bloc.

If there’s one person who knows what’s good for investment, it’s Busi Mabuza, the Chairperson of the
Industrial Development Corporation (IDC), a national development finance institution promoting economic growth and industrial development in South Africa.
Exactly a month after the BRICS Summit, which brought together Brazil, Russia, India and China to South Africa in July, we met with Mabuza for her views on why such forums are key for Africa:
What, according to you, was the biggest outcome of the BRICS Summit?
The countries’ focus was on attracting investment, so we had presidents of the BRICS countries coming with goody bags to the country, especially President Xi Jinping who made quite a substantial commitment to investment in South Africa. What I liked most though was the ‘BRICS Plus’ approach. The invite to other African countries to be part of some of the sessions of BRICS, because with the Continental Free Trade Area Agreement, I think we need to start talking as an African bloc.
South Africa has a minute population compared to the other BRICS countries for us to be an attractive preposition to those large economies….we have to speak with the voice that talks for the rest of Africa as well. I also liked the fact that there was conversation in a concerted [way] at a BRICS women’s forum…I didn’t see the evidence of it taking shape yet, but the fact that it was a topic of discussion, that there were initiatives around it…I think is very promising and exciting.
One of the conversations at the conference was the focus on an open economy, what would that mean for South Africa and the rest of Africa?
We should have free trade between the BRICS partners and South Africa, precisely because South Africa is quite a small economy compared to the BRICS partners.
We export raw material to those countries, they export into South Africa finished goods. So the trade still needs to be developed. We need to migrate upwards in terms of our trade mix and portfolio mix, so that if the economies are open, if the trade is open and the tariff barriers are done away with, then it shouldn’t be to the detriment of one economy. There has to be a win-win complementarity.
The other aspect I think very important is the movement of people. We have visa requirements sometimes which are quite onerous and I think there was a lot of time dedicated to talking about those obstacles. People find that when they have investments in South Africa and bring professionals to the country, they can’t stay for a long enough period for them to actually get the business up and going before they go back in order to meet the visa requirements. I think the government is making a concerted effort on that front in trying to make sure visa requirements are not as stringent and do not become an obstacle for our trading partners.
As African countries, we now need to start working towards bringing down all the tariffs, trade tariffs and the non-tariff barriers between exchanging goods and services amongst the different African countries. It’s going to take long because some of the issues are quite complex…So that would be my understanding of opening up the economy. I think there are risks on the one side and opportunities on the other side. What’s important is we move in an orderly fashion and ensure that as we do so, there is a win-win proposition for all countries.
How important are summits such as BRICS for South Africa?
It feels as though we are reintegrating into the rest of the world. I think we were almost at some stage a pariah state but I think the fact that we have been received so warmly since the new president [Cyril Ramaphosa] early this year is a great positive because it means there’s a lot of goodwill in the rest of the world for us.
South Africa’s economy has been sluggish, mainly because of lack of investment. There are other challenges. Our unemployment rates are shocking. I was looking at the statistics compared to our BRICS partners – we are at 27% officially…The need is for us to attract not just the political goodwill of the BRICS partners, but their hard cash into the economy. Not just the portfolio flow – we are not looking for people who are going to buy shares on the stock exchange and sell them as quickly as they bought them if things go wrong – we are looking for people who will bring projects into South Africa, people who will create jobs for South Africans.
[For example], the Chinese, are known for bringing their local projects that they build in countries. But I think as long as the balance is a significant majority – South Africans employed in those projects – then it will be to our benefit. Then there are opportunities for us to show them a thing or two. We do well as far as women’s representation is concerned, not in the private sector, but in the public sector; we are still ahead of our BRICS partners.
You will be amazed that our rail and road infrastructure in terms of area is way ahead of the other countries. So there are opportunities for us to see whether our skill is taken to those countries.
At the IDC, how do you promote women in business and youth?
In the recent past, we have realized something we should have known a long time ago. People focus on what is measured, and we have therefore started measuring the amounts that are collected and dispersed to youth-owned and women-owned businesses and that has done wonders for us. Four years ago, we didn’t know how much of our funding was being dispersed to companies owned by women or was being dispersed to companies owned by young people.
Now, because management is incentivized to disperse a certain percentage of our funding to women-owned and youth-owned businesses, we are seeing more and more. There are years when – I think it was the previous financial year – we overshot our targets in terms of the amounts dispersed to youth-owned and women-owned businesses. We of course pay attention to our employment equity profile within but we also look at the employment equity performance of the businesses we invest in. That’s a space where we have seen sluggish progress but I think now that we are focusing on it, when people come and look for investment, we probe their employment equity profile. We see male management teams and we ask them why and how long it’s going to take them to bring in female talent and young people. And I expect that we will start seeing a shift on that front as well.
And if the IDC portfolio companies start living as good examples of what this country should be doing more and more, then I will be happy.
In August, the IDC approved a funding of R16.7 billion ($1.1 billion). What kind of businesses will that money go towards?
The companies are diverse. We need to be focusing on industrial development and a significant majority of the companies that benefitted from our R16.7 billion disbursement were industrial companies. However, because of where the economic cycle is, there’s quite a number of distressed companies. We’re a development financial institution, therefore, we would like to think of ourselves as patient investors. And where companies are distressed, but we can see there’s an opportunity to be viable down the line, we want to support them…
What are the new industries the IDC is currently looking at?
In fact, we have a new division called New Industries. We have recognized that for IDC and South Africa to remain relevant, we need to understand the 4th Industrial Revolution.
The new era businesses cannot be valued in a similar fashion as one would value the retail company where you look at the profits and you say ‘ok, the business is doing well’.
There, you look at the technology, you look at the potential of that technology and you support the business on that basis.
I was fascinated there is a company in South Africa working in the Internet of Things (IoT) space because it is tempting to assume that those new technologies are just being developed in the rest of the world but that South Africans have actually started companies in that space is exciting for me.

Tag: BRICS Summit

FORBES AFRICA SOCIAL MEDIA

New Members, Old Powers: BRICS’ New Year Expansion As 10-Country Bloc

New Name For BRICS? Summit In South Africa Unveils Newer Members In The Bloc

BRICS Summit: Paving The Way For Shared Currency And Economic Expansion

South Africa At Crossroads As It Attempts To Navigate Hosting BRICS Summit Amid Global Tensions

Why We Need ‘Hard Cash In The Economy’