A new day is dawning over the skewed world financial system as five developing BRICS nations , Russia, India, China and South Africa (BRICS) forge ahead with efforts that will usher in a new era of equitable, if massive economic development for humanity.
The leaders of the BRICS nations, who represent half of the world’s population and 30% of the planet’s land area, have established a regime that has organised itself to contribute meaningfully to international financial dialogue.
BRICS, which has a combined nominal GDP of US$16 trillion has developed a unique monetary order to boost global economic growth and development, and create a foreign trade equilibrium based on equality, mutual trust, cooperation and the pursuit of peace among all nations.
President Jacob Zuma summed the situation up correctly when he said: “We must address the long recognised socio-economic challenges that confront developing nations within the current dynamics. In this regard we need to continue to vigorously partner with each other to advance our shared vision.”
This entails, as President of China Xi Jinping observes, a global economic governance system that reflects the profound changes in the global economic landscape, with increased representation and voice of emerging markets and developing countries.
One that rejects what has been described elsewhere as the current ‘casino’ financial system or ‘law of the jungle’ and replaces it with a project that expressly promotes the common good among nations, provides credit for high-technology development projects; on youth education and training and meets the growth challenges of the future.
Indeed, the chickens may be coming home to roost as history tells us that 72 years ago some 44 nations met at the Bretton Woods Conference to discuss a global monetary system that would achieve these noble ideals. The task was to find a common measure, a common standard, a common rule acceptable to all and not irksome to any. In the midst of World War II, the outcome of the conference was to create the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, which today is part of the World Bank. The task was to find a common measure, a common standard, a common rule acceptable to all and not irksome to any. The set up proved untenable for equitable dialogue because of the dominance of the United States and the United Kingdom in the 44 nation discussions.
The USA, which controlled two thirds of the world’s gold at the time, insisted that the Bretton Woods system should depend on both gold and the US dollar as standards. This was opposed to what the majority, including Sir John Maynard Keynes, one of the principal designers of the modern global financial system, had envisaged as they wanted a situation where nations were not to be obliged to set monetary policy according to how much gold they had, but according to their economic needs. Keynes had proposed the formation of an international clearing union or a global central under which both debtors and creditors would change their policies and create foreign trade equilibrium. Keynes’s plans were sensitive to the needs of the developing nations of the world. Whilst Great Britain supported and adopted Keynes’s solution as its official negotiating position, the US objected. Instead it pushed for use of the US dollar as the reserve currency, taking over the role that gold had played to keep market exchange rates within 1% parity. The US also got veto powers in these institutions. The consequences were catastrophic for developing countries.
Close to a century later, the BRICS and its allies are taking bold corrective measures by building a world system based on real value and to create a system capable of fundamentally shaping socio-economic growth and development.There have been some significant steps taken, in particular the launch of the New Development Bank, which has already started funding key projects. The momentum, however, needs to be maintained. As Prime Minister Narendra Modi, of India, said: “We have now reached a level where we should be even more ambitious. We should focus on more tangible mechanisms and outcomes. Make BRICS a platform of Impact.”
The New Development Bank creates the possibility for BRICS countries to achieve the economic growth and development objectives of our respective countries by providing stimulus packages and infrastructure initiatives. It aims to be aligned with BRICS governments’ economic policies. In South Africa, for example, the New Development Bank aims to align its activities with our National Development Plan.
A key enabler of this vision is business. Since its formation in March 2013, the BRICS Business Council has proven to be an effective platform for strengthening and promoting economic, trade, business, and investment ties among the business communities of the five BRICS countries and, for South Africa, with the broader African region.
Our overarching goal as the South African BRICS Business Council is, therefore, to bring tangible projects to fruition more quickly and to strengthen the interface between the governments and private sectors of the BRICS economies. The regular dialogue between business and government that is enabled by the Council and its various working groups has brought to the fore the key challenges that business feels are impediments to greater cooperation. The initiative has successfully created the space to allow business to make recommendations to government on how to address these challenges.
The BRICS Business Council needs to ensure that we are continually addressing our critics and demonstrating, through the showcasing of concrete initiatives, that the Business Council and the broader BRICS initiative are successful and are also making a significant contribution to growth and development in our respective countries.
To achieve this, the South African BRICS Business Council aims to focus on the following programmes:
• Insurance and re-insurance cooperation
• BRICS Agricultural seed bank
• Electricity generation and Transmission infrastructure in Africa
• BRICS information technology connectivity
• African Union’s North South Development Corridor
• Oceans economy co-ordination
• Co-operation projects on manufacturing in aviation
• Manufacturing and industrialisation programmes
The South African BRICS business portal launched this week is a mechanism aimed not only to provide information to other BRICS Business Councils, member companies, and governments, but also to provide a platform for communication and collaboration at a national and continental level. The portal has a facility where South African companies can register and then gain access to relevant information. It is also linked to a Twitter account and Facebook page, and these social media channels provide a mechanism to amplify company communication and exposure and for potential investors to find information about key initiatives. Through the launch of the South African portal, which is linked to the international BRICS portal, we are taking another step on the road to economic growth and prosperity in South Africa.
Transnet, who sponsored the development of this portal, should be lauded. Founding chairperson of the BRICS Business Council Patrice Motsepe also deserves special mention for the trailblazing work that he did in the formative years of the entity. Members of the Council Sandile Zungu, Khanyisile Kweyama, Dr Iqbal Surve and Stavros Nicoloau were also pivotal in their contribution towards this project, which is a game changer for inclusive development.
Nelson Mandela, who said: “Since my release, I have become more convinced than ever that the real makers of history are the ordinary men and women of our country; their participation in every decision about the future is the only guarantee of true democracy and freedom.”Indeed, BRICS gives us the power – as Sir John Maynard Keynes suggested 72 years ago – to make a unified and significant difference to millions in the world.
*Molefe is Chairman of the South Africa chapter of the BRICS Business Council. The BRICS Business Council, on Friday 23 September 2016, launched its trade and investment portal to fast track trade and investment within the BRICS trade bloc.