The decision by Brazil, Russia, India, China and South Africa (the BRICS) to establish a joint development bank, and the move by the People’s Bank of China and Russia’s Vnesheconombank to foster closer ties with South Africa, at the fifth BRICS Summit in South Africa in March, highlight Africa’s growing strategic importance to the countries.
Creating an integrated market for trade among the five economies, also known as the BRICS, and fostering closer ties with Africa, were the two main issues tabled at the summit, which took place in Durban.
Speaking to reporters at the meeting – entitled BRICS and Africa: Partnership for Integration and Industrialisation – Xi Jinping, the president of China, said: “We are ready to work with African countries, to push our ties to a higher level and expand them to a broader area.”
China – the largest net investor in Africa of the BRICS – dominated the summit, signing a series of deals with South Africa including an agreement with the People’s Bank of China to enable the South African Reserve Bank to invest $1.5bn in China’s interbank bond market.
Vnesheconombank established a memorandum of understanding with South Africa’s Industrial Development Corporation (IDC) to establish a business forum, and Brazil’s Development Bank publicised its move to co-operate with the IDC on strategic sectors, including automotive, food processing and pharmaceuticals.
The BRICS have become significant investors across Africa with their share in Africa’s FDI flows reaching 14% in 2010, according to estimates from the UN Conference on Trade and Development. Additionally, the BRICS’ share in Africa’s total value of greenfield FDI projects rose from 19% in 2003 to 25% in 2012.
The presence of several African heads of state, including the presidents of Angola, Côte d’Ivoire, republic of Congo and Egypt, underlined Africa’s prominence on the summit agenda.
The decision by Brazil and China to establish a currency swap deal also placed intra-BRICS co-operation firmly on the meeting’s agenda. According to Standard Bank, the countries’ respective banks were expected to swap up to $30bn worth of local currency. In addition, all five countries agreed to a contingent reserve of foreign currency worth $100bn, to provide balance of payment support during times of crisis.