BRICS + 6, THE ALTERNATIVE POWERHOUSE?

By Zainul Chandoo.

The author is a seasoned banker based in Tanzania. The views expressed in the article are those of the author and not the author’s employer.

zmchandoo@gmail.com

From the moment Jim O'Neill, an economist at Goldman Sachs, published a paper entitled "Building Better Global Economic BRICs" in 2001 – The advent of BRICS acronym was born standing for Brazil, Russia, India, China with South Africa joining in 2010. O'Neill argued that Brazil, Russia, India, and China were the four major emerging economies that were poised to become major players in the global economy.

The 22-year history has built an important base to what the future holds for the bloc – an alternate to G7 dominated financial and trading arrangement. The new additions of 6 members in August 2023 under host South Africa signifies the number 6 on the heading. The new additions from 2024 are Saudi Arabia, Iran, UAE, Argentina, Egypt and Ethiopia.

 

More countries interested – In the recent summit hosted by SA, almost 40 countries expressed desire to join the group over time. Whilst 6 got through, at least 20 others stand ready to join. Geographic breakdown of next batch of countries includes South America 4, Asia 5, Africa 3 and Middle East 3.

In an era of ongoing seismic shifts in Geopolitical arena, safeguarding the current and future economic, security and national interest have never been critical for most of the developing and emerging nations especially those in the Global South.

For some big BRICS + 6 powerhouses their rich ancient culture defines who they are – from the ancient culture of dragons, the Persia who shoved off many empires and colonialist, the land of Pharaohs, the Mughals and so on – it’s about sovereignty and independence and whereas for few it includes standing in the cusp of existential threat.

The importance of economic diversification and self-reliance post deglobalization efforts mid last decade, C-19 and the ongoing Russian/ Ukraine conflict in the west has only served to usher the multi polar world from the three decades of unilateral power domination.

BRICS nation’s economic performance has been noticeable so too their share of overall global GDP.

Share of GDP: BRICS vs G7

Source: WB and IMF data based on 2023 estimates

What a trade-off – GDP attrition by G7 is what has been gained by BRICS up to 2023 forecast and prior to addition of 6 new members.

Demographics are playing a substantial role – a young, educated and a growing middle-class population in BRICS vs aging, saturated and immigrant reliant G7.

A recognizable force

The BRICS + 6 is well supported by its population and resource base. In a natural resource hunger world, a block of 11 countries occupying north of 1/3 of critical natural global resource is indeed a power to reckon with. One can only imagine the opportunities to trade within each other. 

	Notional	% of global share
Gross Domestic Product	USD 30.7 trio	46%
Population	3.7bio	33%
Land mass	>39.8mio square km	30%
Oil production	40,400 bpd	43%
Gas reserve	94trio cubic meters	50%
Exports	USD6.25 trio	25.1%

Admittedly there are idiosyncrasies impacting each member and its growth trajectory thus far. Arguably some countries should have done better in the past, whilst the regional tensions and sanctions (over 3 decades in middle east) and sanctions on Russia since 2022 have not helped either.

The defining moment in the past 10 years exacerbated the road to alternate and the speed at which multipolar world will advance it’s cause and ideology. Not only pandemic, but USD weaponization (unilateral sanctions, limiting trade, financial participation and inclusion), the Trumpian policies (advent nationalistic and disregard of decades old world trade order), going against NATO expansion commitment signed in 2014, archaic polices under which multilateral institutions are run etc are soul searching and leaving many nations asking - who is next? What if me? What’s the alternate?

Achievements

A relatively new group has quickly become a major force in the global arena. The countries are committed to working together to promote peace, security, and development and perhaps more importantly an increasingly important role in shaping the global agenda.

Shared interest	Key achievements
Promoting economic growth and development	Contingent Reserve Arrangement, a financial safety net for BRICS countries
Reducing poverty and inequality	A development bank that provides loans to BRICS countries - >$30bio provided
Reforming the international financial system	Creation of a New Development Bank that provides loans to developing countries
Addressing climate change	Climate Change - commitment to reduce greenhouse gas emissions
Countering terrorism and other global threats	Establishment of a Think Tank Council, a forum to exchange ideas

The BRICS + 6 group is facing several challenges, however with that, comes opportunities based on sheer collective strength. They flaunt with a large population and a growing middle class, investments in infrastructure and technology, building an alternate global bank, exploring payment systems and a new reserve currency.

The broader issue that the BRICS as an organisation will have to address is the lack of deeper institutionalisation.

What’s in it for Africa?

The BRICS-Africa relationship is seen as a win-win partnership in a sense that Africa offers natural resources, growing markets, potential access to African continental Free Trade Area (AfCFTA) trade bloc whilst it benefits from financial resources, technology, expertise and energy supplies from BRICS.

From a geopolitical perspective it will mean more autonomy for African countries in their foreign policy decisions and potential of diversifying partnerships and alliances for more economic, political and security accords reducing reliance on any single nation.

There has been increasing engagements by BRICS with Africa in recent years in various forms such as:

• Trade: BRICS are now Africa's largest trading partners - trade reached >$500 billion in 2023. China is the largest trading partner for most African countries.

• Investment: BRICS are becoming significant investors in Africa – cumulative FDI reaching >$100 billion in 2023. China is the leading investor followed by India and Russia.

• Infrastructure: Involvements in African infrastructure projects such as the construction of roads, railways, and power plants.
• Development assistance: Including financial aid, technical assistance, and training.

However, challenges are abounded in this nascent but growing relationship including – uneven distribution of benefits: relationship has not been evenly distributed as some countries benefiting more than others, the debt trap: some African countries have become indebted to the BRICS countries, raising concerns about debt trap, the environmental impact: concerns on negative environmental impact on infrastructure projects.

Despite these challenges, the BRICS-Africa relationship is likely to continue to grow in the years to come. The BRICS countries are committed to their engagement with Africa, and Africa is seen as a key market for their exports and investments. Besides, Africa is navigating through same challenges and opportunities as most of the BRICS + 6 have gone through – ideal partnership to leverage learnings.

One thing is certain, however, a new acronym for the group will be needed very soon should my creation of BRICS + 6 not suffice.