Image source: CGTN
The 10th Summit of the BRICS trading bloc recently hosted in South Africa under the theme of ‘Collaboration for Inclusive Growth and Shared Prosperity in the Fourth Industrial Revolution’ was one of the more significant meetings of the trading bloc particularly for African states and their participation. More so, in an attempt to create a new rise of emerging markets during turbulent times of global trade and cooperation. The global political economy has been experiencing increased uncertainty mainly driven by the foreseeable trade war between the US and China compounded the events leading up to Brexit in the European Union. Certainly, some of the most influential countries and/ or regions in the world have developed an inward-looking posture to international trade and cooperation. Consequently, that has not served emerging markets well.
The quest for shared prosperity in the fourth industrial revolution is of particular importance for the continent of Africa because it has the youngest population in the planet, a growing consumer base and The Economist indicated that six of the world’s 10 fastest-growing economies over the past decade are from this region. Moreover, the participation of other outreach countries in the 10th BRICS Summit such Rwanda, Zimbabwe inter alia is significant because over 60% of the world’s population is Asian, African and Latin American. Therefore, the participation of SA in this trading bloc as the gateway to the rest of the continent has an important role to play in creating solid partnerships for inclusive growth and driving transformation and cooperation amongst developing economies.
What started out as a little more than an investment category by Goldman Sachs in 2001, BRIC (without South Africa at the time) is now a trading bloc that by 2016, had accounted for 41% of the world’s population, 23% of global GDP worth about US$40.6 trillion (£30.9 trillion), 18% of trade and just under 40% of the world territory. The establishment of the New Development Bank and Contingent Reserve Agreement has strengthened BRICS’s case as a global governance institution, of which some view as an alternative to Bretton Wood institutions such as the World Bank and the International Monetary Fund (IMF). Largely viewed as part of an attempt to reform financial and Global governance institutions to respond more meaningfully to the challenges and aspirations of the people in the global south as it were. The BRICS bloc had achieved a 70% compliance rate with respect to of implementing Summit decisions.
The presence of African Union (AU) Chairperson and President of Rwanda Paul Kagame among 27 other, most of which are African, Presidents that were invited to the Summit to participate in the BRICS Plus session created a space for the common interests of the AU and BRICS bloc to be articulated and for strengthened multi and bilateral engagements to take place.
The major challenge that confronts the ability of African nations to leverage strengthened collaboration for inclusive growth with the BRICS trading bloc lies in its regional economic communities (RECs). Six African countries are members of only one REC, 26 are members of two RECs and 20 are members of three RECs, while only 1 country belongs to four RECs. The main reason provided is that countries believe that this enhances their political and strategic positioning. However, practically, this has led to duplication and overlapping protocols. The African Continental Free Trade Agreement (AfCFTA) is the culmination of a vision set forth nearly 40 years ago in the Lagos Plan of Action, adopted by African Heads of State and government in 1980.
In the quest for the establishment of the African Economic Community (AEC), the AfCFTA is an important milestone, including the establishment of a continent-wide customs union (thus also free trade area) and continent wide economic and monetary union (and thus also a currency union) and parliament to be completed by 2028.
We have seen the developmental impact that technology has had in Africa such as the impact of M-Pesa in mobile money payments and transfers in Kenya for low-income and unbanked consumers. Compounded by what will soon be the world’s largest workforce, exploding mobile connectivity and a huge market of over 1 billion people set to more than double by 2050 which are some of the factors that have been driving and will drive the growth of Africa’s middle class.
These factors serve as ingredients to strategic developmental pathways for transformation with the next wave of industrialisation that it characterised by artificial intelligence, increased digitisation and modernisation. In light of this, the Fourth Industrial Revolution presents a unique opportunity for strengthened connectedness between African countries, FinTech solutions that promote financial inclusion empowering Africa’s poor and creating inclusive economies.
The commitment of BRICS to support the infrastructure development and connectivity financing deficit through the work undertaken by the New Partnership for Africa’s Development (NEPAD) is pertinent in the strategic areas of people-to-people cooperation, global governance and international peace and security.
Good governance in the interest of increased trade, investment promotion and aftercare therefore needs to be the apex priority of the AU thus enhancing the efforts of the African economic community and positioning the region to achieve more meaningful and impactful trade deals that will drive the transformation and renaissance agenda of the continent.