SOUTH AFRICA

South Africa hosts milestone 10th BRICS summit

July 25, 2018

The five emerging economies known as the BRICS meet in Johannesburg for their 10th summit to develop their significant achievement, a credit-rating company aimed at breaking the dominance of the big three – S&P Global Ratings, Fitch Ratings and Moody’s Investors Service.

The purpose is to lower borrowing costs associated with the assessments of the three.

BRICS groups Brazil, Russia, India, China and South Africa, countries that together constitute 43 per cent of the world’s population and generate roughly 22 per cent of global GDP.

The first achievement was the opening of the New Development Bank (NDB) in Shanghai in 2015 with the purpose of getting money back from the Western banking system to finance BRICS members’ own infrastructure and development, and to enhance their financial systems. The NDB opened its first regional office, the Africa Regional Center, in Johannesburg in Aug 2017.

By its own reckoning, the NDB is achieving benefits for BRICS members.
“The Bank has committed U.S.$1.5 billion in loans to member countries so far,” according to NDB Vice President Leslie Maasdorp in Sep 2017, “with a strong emphasis on renewable energy. Furthermore, plans are on track to reach the target $2.5 billion of loan commitments by end of 2017. This will pave the way to reach between $10 billion and 15 billion of loans by 2021.”

The next significant achievement for the BRICS bloc would be anything related to their core goal of trade liberalization. It has been elusive from the start. All broadly support free trade and oppose protectionism, but they have different opinions on how to achieve it. The Bloomberg news service notes that trade relations are heavily tilted in China’s favour – and it has been the largest trading partner for the other four nations in recent years.

Bloomberg observes that the BRICS have found little common ground in recent years as their growth trajectories have diverged and geopolitical ambitions have spurred tensions. China’s ambitious Belt and Road initiative also adds to the tensions as it encroaches on to the other BRICS nations’ areas of influence, particularly India’s and Russia’s, according to an expert interviewed by the news service.

#22615 Updated: JUN 15 TO ADD DETAILS OF PLANNED CREDIT-RATING AGENCY