Momentum shifts to the south
Updated: 2013-03-28 07:16
By He Wenping (China Daily)
BRICS is promoting cooperation for development rather than dependency on assistance in its ties with Africa
With the theme "BRICS and Africa: Partnership for Development, Integration and Industrialization", the fifth BRICS summit opened in Durban, South Africa, on Tuesday.
As Africa's largest economy, South Africa's accession to BRICS in 2010 was not only an important channel for the BRIC countries -Brazil, Russia, India and China - to further strengthen cooperation with Africa as a whole, it also enabled the grouping to become a cooperation mechanism covering Asia, Europe, South America and Africa. Welcoming South Africa into the group of leading developing economies also reflected the rise in Africa's comprehensive strength in recent years and was recognition of the continent's development potential.
Since the mid-1990s, African economies started to stabilize. In eight of the past 10 years, six of the world's 10 fastest-growing countries were African.
However, because of the continent's colonial history, many African economies were closely linked with Western markets, so the African economy suffered a heavy setback in 2009 during the financial crisis, with the average economic growth rate dropping below 2 percent. However, with the help of the BRICS members and other emerging nations, although North African countries have experienced sluggish economic growth because of political and social turmoil, the continent as a whole maintained an average economic growth rate of about 5 percent in 2011 and 2012, which is roughly the same as that of Asia.
African countries' rapid recovery in the aftermath of the financial crisis and the North African unrest was a result of their closer economic and trade ties with China and the other BRICS countries.
With the United States' economic recovery still sluggish and Europe still struggling with the eurozone debt crisis, African countries hope to further strengthen their economic ties with BRICS, as Africa's sustainable economic growth and the BRICS countries' economic development are mutually beneficial.
Over the past decade the BRICS countries have contributed more than 50 percent of the global economic growth, and they have promoted the development of the African continent through trade and investment, making a great contribution to poverty reduction in Africa and the development of African economies.
According to a report released in February by the Standard Bank of South Africa, BRICS-Africa trade has grown faster than BRICS trade with any other region. The BRICS countries' total trade with Africa reached $340 billion in 2012, a more than tenfold increase over the decade. It is projected that BRICS-Africa trade will surpass $500 billion by 2015, roughly 60 percent of which will be China-Africa trade.
With regard to investment, the latest Global Investment Trends Monitor released by the United Nations on March 25 shows foreign investment from BRICS into Africa represented 25 percent of Africa's inflows in 2012. Most of the foreign direct investment projects in Africa funded by the BRICS were in the manufacturing and service sectors, which has helped to create jobs and promoted industrial growth in Africa. The report notes that this growing relationship between BRICS and Africa is likely to be reinforced in the future due to the rapid economic growth and industrial upgrading currently taking place in the BRICS countries.
Meanwhile, the establishment of the BRICS development bank will not only finance infrastructure within the five BRICS members, it will also provide loans to other developing countries to finance the construction of infrastructure. The BRICS development bank will also promote local currency trade settlement among the BRICS countries to increase trade within the bloc and help avoid potential economic losses caused by changes in the exchange rate of the US dollar. It will also increase BRICS' voice in international financial governance.
Although the economic growth of the BRICS countries declined slightly in 2012, in the long run the BRICS members will continue to act as the locomotive for the world economy. The World Bank has forecast that the BRICS economies will contribute more than 60 percent of global GDP growth in the coming years.
China, India, Brazil and other emerging powers will see faster growth than developed countries for a long time, and the world will continue to rely on emerging countries to stimulate economic growth in the foreseeable future. Africa, with its rich resources, huge market potential, ever-growing middle class and significant demographic advantage, will join the BRICS countries on the path to common development.
The author is director of African studies at the Institute of Western Asia and North Africa Studies under the Chinese Academy of Social Sciences.
(China Daily 03/28/2013 page8)