The Rise of the BRICS in Africa

The Geopolitics of South-South Relations

Pádraig Carmody

• Publisher: Zed Books
• Year: 2013
• Print ISBN: 9781780326054
• eBook ISBN: 9781780326078
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: International Relations
• Index: Politics & International Relations

A little over a decade ago Africa was being spoken of in the media as the 'lost' or 'hopeless' continent. Now it has some of the fastest growing economies in the world, largely because of the impact of the BRICS: Brazil, Russia, India, China and South Africa. In this first book to be written about the BRICS as a collective phenomenon, Pádraig Carmody reveals how their engagements with Africa, both individually and collectively, are often contradictory, generating new inequalities and potential for development. Crucially, Carmody shows how the geopolitics of the BRICS countries' involvement in Africa is impacted by and impacts upon their international relations more generally, and how the emergence of these economies has begun to alter the very nature of globalization, which is no longer purely a Western-led project.

This is a path-breaking examination of Africa's changing role in the world.

1 | INTRODUCTION: NEW MODELS OF GLOBALIZATION

Then 2009 saw the end of what was known as the ‘Third World’: We are now in a new, fast evolving multipolar world economy – in which some developing countries are emerging as economic powers; others are moving towards becoming additional poles of growth; and some are struggling to attain their potential within this new system – where North and South, East and West, are now points on a compass, not economic destinies. (Zoellick 2010)

Trade between developing countries, and between them and the BRICS, is rising twice as fast as world trade. Even more strikingly, while growth has headed south, debt has headed north, the opposite of what happened in the 1970s and 1980s, when poor countries ran up vast debts. Gross public debt in the rich countries is rising, from about 75% of GDP [gross domestic product] at the start of the crisis in 2007 to a forecast 110% by 2015, says the IMF [International Monetary Fund]. Public debt in emerging markets is below 40% of GDP and flat. (Economist 2010a: 69, cited in Sidaway 2012: 54)

It is a commonplace to say that global economics and geopolitics are undergoing a major shift. The global financial crisis (GFC), originating from and centred in the West, and the generally rapid growth of a select group of developing countries, particularly the so-called BRICS powers (Brazil, Russia, India, China and South Africa), are two axes or dimensions of this rebalancing of the global geography of power. While the ‘rise of China’ has preoccupied Western policy-makers for the last number of decades, a growing number of other non-Western powers are challenging the dominance of the traditional ‘Great Powers’ in the fields of economics, culture and geopolitics.

Why the BRICS?

The BRIC acronym was originally coined by Jim O’Neill, an analyst at Goldman Sachs bank, in 2001. In 2003 Goldman Sachs produced a report in which they predicted that in less than forty years these countries would catch up with the world’s major industrial powers and become ‘the engine of new demand growth and spending power’ (Wilson and Purushothaman 2003: 2). However, as the opening quotes above intimate, this transition is happening much more quickly than anticipated, facilitated in part by the GFC. By way of example, in real terms China’s GDP is 50 per cent bigger, India’s more than 30 per cent and Brazil’s almost 15 per cent compared to the fourth quarter of 2007 (New York Times 2012). By some estimates, on the other hand, the economies of Japan, Britain and France are smaller than they were then, while those of Germany, the USA and Canada are all less than 5 per cent bigger than they were in 2007.

South Africa’s growth performance has been the least impressive among the BRICS, as it experienced recession following the GFC and its average income has fallen from 24 per cent below the world average in 1994 to 33 per cent below in 2010 (Clark 2012). Russia also suffered a substantial economic contraction in 2009, as the economy shrank by 8 per cent, as energy prices fell (World Bank 2013). However, economic growth had been rapid in advance of that and revived to average 4 per cent in subsequent years. Moscow is now home to the greatest concentration of billionaires in any one city: seventy-nine as compared to New York’s fifty-eight (Voice of Russia 2011).

Given the very different nature of the economies involved in terms of size, structure and growth performance, there has been some debate about the usefulness and validity of the BRICS concept (see Armijo 2007). However, currently the BRICS grouping accounts for more than 40 per cent of the global population, nearly 30 per cent of the world’s land area and almost a quarter of the global economy (BRICS 2012). Even more strikingly, their economies accounted for 55 per cent of global economic growth during 2000–08. According to their ministries of finance, ‘the inherent strength of the BRICS emanates from strong domestic demand-based economies in the case of India and Brazil and the significant outward linkages of China and Russia. South Africa benefits from its large resource base and proximity to untapped growth potential of the African continent’ (ibid.: 5). Already by 2011 the BRICS had more billionaires than Europe, having added, by themselves, almost 10 per cent to the total number of billionaires worldwide in the space of a year (O’Neill 2011).

The scale of growth in China is particularly impressive. ‘By 2010, for example, China’s GDP had grown by almost US$4 trillion since 2000 – meaning China has, in fact, created another seven Indias (at its 2001 size), nearly three Italys and more than two Frances’, dramatically increasing commodity demand around the world in the process (Moyo 2012: 17). China is now the world’s largest consumer of copper, accounting for 41 per cent of global demand. It is also the world’s largest consumer of many other minerals and cement. This massive demand arises from the need to fuel its export economy, growing domestic demand, and also the urbanization of the country (Harvey 2011; O’Neill 2011).

Collectively the GDP of the BRIC countries (excluding the recent addition to the group of South Africa) is thought to have grown from US$2.5 trillion (2000) to nearly US$9 trillion now (Moyo 2012), as their trade has expanded worldwide. China is now Africa’s and Brazil’s single largest trading partner and became that country’s biggest foreign direct investor for 2010. Outward foreign direct investment from emerging economies is also growing quickly, more than quadrupling from 1995 to 2005 (UNCTAD 2006, cited in Kragelund and Hampwaye 2012).

The rise of the BRICS is mirrored by the relative decline of ‘the West’, with the Group of Seven (G7) (USA, Japan, Britain, France, Germany, Canada and the UK) share of global GDP falling from 72 per cent in 2000 to a projected 53 per cent in 2011, according to the International Monetary Fund (Wade 2011), and to less than 40 per cent when adjusted to purchasing power parity (PPP), or what their currencies will actually purchase in their home countries. The ‘rich country club’ of the Organisation for Economic Co-operation and Development predicts that China will overtake the USA to become the world’s largest economy by 2016, and that by 2025 the economies of China and India combined will be bigger than those of the G7 industrial countries (Moulds 2012). This shift is also reflected in trade patterns. The ten biggest Asian exporters, outside of Japan, now send only 36 per cent of their exports to the European Union (EU), the USA and Japan, compared to 46 per cent in 1997 (Wade 2011). These changing economic patterns are also reflected in institutional architectures.

The initial four members of the BRIC group recognized the size and dynamism of their economies and the potential to influence the structure of global governance and began to convene meetings beginning in 2009. South Africa is a more recent addition to the group, joining in 2012, but Jim O’Neill has noted that there are other developing countries with bigger economies and better performance than South Africa’s, such as Indonesia or Turkey (BBC 2011, in World Bank and IPEA 2011), or Saudi Arabia, which has traditionally been a very important provider of overseas development assistance (Mawdsley 2012).

South Africa’s GDP is only one sixteenth that of China. However, it is symbolically, strategically and economically important as it serves as an entry point to the rest of Africa, and is that continent’s largest economy. One Brazilian analyst has referred to South Africa as the catalyst for African development and the country is viewed by many multinationals as a gateway or stepping stone to the rest of Africa. For example, Brazilian mining giant Vale has set up an office in Sandton, Johannesburg, as a base from which to pursue its interest in mining and minerals exploration and extraction in Africa (Davies n.d.). South Africa is of substantial strategic importance, as will be discussed in more detail later, and consequently arguably warrants inclusion in the BRICS grouping. Despite only having the 29th-largest economy in the world, South Africa ranks 9th in the index of government economic power (Basu et al. 2011).

Some have also questioned Russia’s inclusion in the grouping. It is arguably not a developing country, unlike the other members of the BRICS grouping, with a per capita income of about US$20,000¹ (World Bank 2013). However, it is worthy of inclusion in the grouping because of the size of its economy, which is slightly larger than India’s, and its rapid growth. It is now Europe’s largest car market (O’Neill 2011). Until the 1990s it had a socialist economic system and consequently it is also worthy of inclusion in this group of substantial or major ‘emerging economies’. BRICS nations held five of the top ten spots in the global index of government power in 2009, while older industrial powers, led by the USA, held the other five.

The BRICS grouping finds institutional expression through their annual meetings and also potentially through the creation of permanent institutions, such as the BRICS development bank, which is currently under active discussion. Using a variable geometry, they also coordinate policy positions in relation to issues such as climate change in other fora, sometimes to the chagrin of Western officials (Wade 2011). Each of the BRICS is also the most important and influential regional power in its respective world region: Africa, East and South Asia, Latin America and eastern Europe and the Caucasus. This regional power is expressed in a variety of ways, ranging from Russia’s military engagement in the Caucasus, through to influence in institutions such as the newly founded Banco del Sur (Bank of the South) in Latin America or UNASUL (Union of South American Nations) for Brazil. There is also a symbiosis between regional power and global influence which the BRICS cooperation mechanism seeks to crystallize.

Globalization, translocalization and the rise of the BRICS in Africa

The rise of the BRICS is fundamentally reshaping global governance and geopolitics, and also the prospects for African development. During the 1980s and 1990s (and even today) most African countries had programmes with the World Bank and the IMF. These programmes follow the tenets of the so-called ‘Washington Consensus’ based on privatization and liberalization and were one of the primary modalities through which globalization was facilitated and transmitted to Africa. However, the hegemony of the Western-dominated financial institutions in Africa has been challenged by the rise of the BRICS, recasting the nature of, and differentiating, globalization. For example, the Chinese EXIM (export-import) bank is now the largest provider of loans to Africa, ahead of the World Bank.

The Chinese government is much less prescriptive about the types of economic policies it expects ‘client’ or ‘partner’ states to pursue, as long as they remain open to Chinese trade and investment, exercising influence without conditionality (Shinn and Eisenman 2012). This ‘flexeconomy’ approach means that the governance templates designed in Washington, DC, by the World Bank and the IMF are now operationalized in a different context. Indeed, with new and emerging alternative sources of finance there is often less pressure to adopt or implement them. This raises the issue of how to conceptualize the impact of these power shifts on the nature of globalization on the continent.

The term globalization is often taken to imply a process of homogenization. Arguably some support could be offered for this proposition, at least in relation to the content of economic policy, during the era of World Bank/IMF ‘structural adjustment’ in Africa in the 1980s and 1990s when the majority of countries were forced to rapidly implement very similar free market economic reforms – so-called ‘shock therapy’. The effect of these policies was to spread and deepen the law of value, or commodification, in Africa, where social relations are increasingly organized on the basis of profit and market exchange. However, the rise of the BRICS has presented African countries with an alternative range of ‘partners’; opening up policy space and reconfiguring and restructuring processes of globalization. This conjuncture opens up the potential for African states to play a greater role in the development process, including through welfare programmes which may partially decommodify labour (Esping-Andersen 1990), as have been rolled out in South Africa in particular in recent years (Marais 2010).

There are many different definitions of what constitutes ‘globalization’. A ‘bare bones’ definition is that of an increasing interconnection between places based on greater flows of trade, investment, aid, technology, people and ideas, and perhaps political processes such as electoral democracy (Taylor 2012). However, it could be argued that this definition has an ‘inclusionary bias’ (Bair and Werner 2011), to the neglect of places that are (being) disconnected along various axes.

Other theorists have taken different approaches to understanding the changing nature of increasingly distantiated social relations. For example, Robertson (1997) preferred the term ‘glocalization’, which he took to mean the simultaneity – the co-presence – of both universalizing and particularizing tendencies. In its original usage this term referred to the twin processes of the space of circulation of capital becoming global, while the regulation of the ‘production-consumption nexus’ became downscaled or localized (Swyngedouw 1997). While these ideas offer insight, they arguably do not now adequately capture the evolving nature of globalization in Africa, where many places are becoming more connected, but the precise nature and impacts of these connections vary from locatio...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Abbreviations
• Acknowledgements
• 1 Introduction: new models of globalization
• 2 China: globalization and the rise of the state?
• 3 South Africa: another BRIC in the wall?
• 4 India: the geo-logics of agro-investments
• 5 Russia: unalloyed self-interest or reflections in the mirror?
• 6 Brazil: globalizing solidarity or legitimizing accumulation?
• 7 Conclusion: governance and the evolution of globalization in Africa
• Notes
• Bibliography
• Index