Five of the world’s biggest emerging economies, which together make up the BRICS group – Brazil, Russia, India, China and South Africa – have met in Durban, South Africa, to take part in the fifth annual BRICS Summit.
While the event is aimed at cementing relations between the countries in a show of strength and unity that presents an alternative to Western economies, it is also expected to highlight growing competition.
The five BRICS nations now account for 17% of global trade and direct foreign investment in the grouping has tripled in the last decade, according to a UNCTAD report released on Monday.
The summit, held on 26-27 March, announced the creation of a BRICS crisis fund, the Contingent Reserve Arrangement, with an initial pledge of US$100 billion. Brazil and China have also signed a deal for a line of credit worth US$30 billion, shoring up trade between the two nations.
The fact that this year’s summit is taking place in Africa is significant: trade between the BRICS and African nations has increased tenfold in the past decade, the report says.
Trade between the BRICS and African countries has now reportedly even outpaced inter-BRICS trade, meaning fierce competition for influence over the fast-developing continent’s natural resources.
Due to China’s acute reliance on importing huge quantities of commodities and foodstuffs to keep its economy booming, it is by far Africa’s biggest business partner, with India a distant second. Although Brazil has reported to have ramped up its rapprochement with various African countries, direct investments in Africa remain low.
Despite the fact that demand for Brazilian imports across Africa has also risen sharply in the past decade – from US$1.35 billion in 2001 to US$12 billion in 2011 – Brazil has focused predominantly on Mozambique and Angola. Locations where major Brazilian companies such as Vale, Petrobras, Andrade Gutierrez and Odebrecht have set up African bases.
Yet China has made inroads into these countries as well, and therefore Brazil now has to compete for lucrative infrastructure, mining and exploration project bids.
Read the full article on The Rio Times.