NAMIBIA and its fellow SADC members should embrace BRICS as an alternative source of funding and shy away from the Bretton Woods institutions with their harsh lending conditions.
As the tenth BRICS summit takes centre stage in Johannesburg, developing countries have lifted their hopes and are keen on beneficial outcomes that might be channeled to them by the more economically advanced states such as Brazil, Russia, India, China, and South Africa who began to work together to strengthen their role in global governance a decade ago.
The new financial institutions put in place by the Brics countries will alter the global financial landscape irreversibly and SADC and Namibia per se must take advantage of this.
Since the inception of BRICS (bringing together Brazil, Russia, India, China and South Africa) in 2009, it has been seen as a mainly flag waving exercise by a group of influential emerging economies, with little in terms of convergent interest other than signalling their strong dissatisfaction over persistent Western dominance of the world economic, financial as well as security order, but unable to fashion credible alternative governance structures themselves.
However, after announcing the much awaited establishment of the New Development Bank (NDB) with a 50 billion dollar subscribed capital and a Contingency Reserve Arrangement (CRA) of 100 billion dollars, the monopoly status and role of the Bretton Woods institutions – the World Bank and the International Monetary Fund (IMF) – stand broken.
True, it may take the NDB and the CRA considerable time and experience to evolve into credible international financial institutions but that clearly is the intent.
In essence, President Hage Geingob who is in attendance and also the Chairman-in-waiting of SADC ought to assess the impact of the BRICS on SADC, and Namibia in particular, with the view to harness and learn from the positive outcomes of this important gathering.
BRICS leaders have kept the door open for other stakeholders, like SADC, but will retain at least a 55 percent equity share. They have also been careful to declare that these new institutions will supplement the activities of the World Bank and the IMF, and this has also been the initial response from the latter.
Nevertheless, the emergence of an alternative source of financing with norms different from those followed by the established institutions will alter the global financial landscape irreversibly.
From a strategic point of view, this is an ideal opportunity to eschew the International Monetary Fund (IMF) and its sister organisation, the World Bank, who have been imposing harsh lending conditions on African states.
It also is worth noting that supporting this view is the fact that BRICS is now seen as a new bloc that would take on the Western liberal order, which has been patronizing and disappointing in pushing its own global agenda.
There is no slightest hint from the IMF or World Bank that the policies they have been advocating during the heydays of the so-called Washington consensus – austerity, privatisation and financial liberalisation – have contributed to weak and unequal growth in African countries, a situation that has caused wide political discontent and needs urgent redress with BRICS seemingly providing an alternative.
In advocating for development in SADC, Geingob should push for an agreement on how to counter cyber-crimes, terrorism, counter-terrorism, money laundering, human trafficking and transnational organized crimes.
While Geingob said he would deliver a statement on various issues, especially South-South co-operation, this would be a chance to draw the attention of BRICS’ Development Bank to SADC’s priority needs in infrastructure development, energy, food security, water, and many others.
To date, this new Development Bank has approved a N$4 billion loan to South Africa for energy projects to help reduce its reliance on heavily polluting coal fired power plants and N$4 billion for a transportation project in China which should be seen as its intent to channel funding to African projects.
Through the harsh borrowing conditions by the IMF and the World Bank, several African countries have fallen on hard economic times, and their interests have often failed to align.
BRICS is not just an exercise in symbolism. Through trial and error, the BRICS have found a way to cooperate in “financial statecraft” to achieve larger foreign policy goals.
They have built new institutions, such as the new Development Bank and the Chinese-led Asian Infrastructure Investment Bank, and they have successfully pushed for reforms to the old Bretton Woods system and amplified their own voices within it. What unites these countries is less a common vision of a new world order than a “common aversion” to Western hegemony.
Confidente. Lifting the Lid. Copyright © 2015