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BRICS Summit – Picking Up the Bits

SA is giving itself a pat on the back for hosting the 15th BRICS Summit in August. The highlight was the acceptance of 6 new BRICS members  Egypt, Ethiopia, Argentina, the UAE, Saudi Arabia and Iran have joined (we wonder will this mean a change of name for the bloc and how do you make a pronounceable name with EEAUEASAI?). Of course, the expansion of the bloc signifies a growing alignment of geopolitical and economic agendas within the BRICS. However, a larger membership also means greater challenges to reaching consensus and adds new layers of complexity. In particular, now with 3 African countries, will the BRICS agenda clash with the AfCFTA agenda?

The BRICS have been flirting with expanded local currency use since 2010 when they launched the Interbank Cooperation Mechanism. They are also developing a “BRICS pay” system that would facilitate digital cross-country local currency payments. As readers will recall, India recently put its national currency forward as a global contender to the US$ for cross-border payments and the Indian government has announced that it will expand its Unified Payments Interface (UPI) in Africa through commercial partnerships between payments platforms. The immediate targets are Namibia, Mozambique and Kenya.

At the Summit some delegates went further, to propose a common BRICS currency. EFA/EFSA were interested to note that in a press conference following the Summit, SA’s Minister of Finance, Mr Enoch Godongwana, warned against that plan, pointing out that if a common currency was created this would need to be controlled by a “BRICS Central Bank”, which would require that the countries that signed up to the common currency would lose the ability to decide their own national fiscal policies. For SA, as a small fish in the new BRICS pool, that could be very uncomfortable.

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Alastair Tempest

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