By Mikatekiso Kubayi
The BRICS and the G20 emerged as a response to a global governance architecture that was less than adequate for the times. This inadequacy is, in major part, responsible for the challenges of access to the necessary instruments for faster growth and development among the most sizable population groups in the world. Developing economies want to industrialise faster and in a more varied way to ensure safeguards against shocks to global value chains, such as seen with the pandemic and other global crises.
This is important for pandemic preparedness as well as any other black swan possibility. The extent to which these constructs can, could or will help achieve the said development will be crucial to how they are seen by the billions that inhabit this Earth. This article argues that despite the repeated failures to achieve requisite development, this can still be turned around if commitments are made through the centrality of the United Nations, and common effort to implement what is agreed upon in resolutions are lived up to.
The United Nations, with its centrality in the multilateral system to which both these constructs subscribe, champions development for the benefit of all humanity. It seeks to achieve higher Human Development Index numbers for all people throughout the world, with no one left behind. All members of the BRICS bloc are members of the G20 and all members of the G20 are members of the United Nations, that subscribe to multilateralism with the UN at its centre according the leaders’ declaration of the G20 2022 Summit in Indonesia.
The BRICS 2022 Summit also commits to the same position, according to the summit declaration. But this is not the only point that these two constructs have in common. Both summit declarations contain several points that commit their members to action in promotion of development, particularly that of developing countries. Before I discuss some of these points, here is the definition of development used by the premier multilateral organisation, the UN.
On 20 June 1997, at its 103rd plenary meeting, the UN adopted a definition of development in its resolution, a definition to which both the BRICS 2022 and G20 2022 summit declarations by implication commit themselves to. This definition is in two distinct parts: Development, and a motivation for growth in pursuit of development in its first two paragraphs under the heading Agenda for Development. The definition reads thus:
Development is one of the main priorities of the United Nations. Development is a multidimensional undertaking to achieve a higher quality of life for all people. Economic development, social development and environmental protection are interdependent and mutually reinforcing components of sustainable development.
Sustained economic growth is essential to the economic and social development of all countries, in particular developing countries. Through such growth, which should be broadly based to benefit all people, countries will be able to improve the standards of living of their people through the eradication of poverty, hunger, disease and illiteracy, the provision of adequate shelter and secure employment for all and the preservation of the integrity of the environment.
Some Development Challenges in Africa and the Developing World
These ideals contained in these two paragraphs seem insurmountable. Developing economies, particularly in the global south, face well-documented, ventilated and extensively analysed challenges by researchers, states, and other actors over decades. The challenges have been resolved in a plethora of forums, with much less than adequate developmental outcomes. Challenges of infrastructure finance rank high among these. Africa has a well-documented infrastructure financing gap. The African Development Bank advances a financing gap figure of up to $108 billion a year and an annual infrastructure need of up to $170 billion.
Africa and other developing regions also face the challenge of ‘illicit financial flows’. While many continue on a debate binge on definitions and types of these flows, Africa continues to bleed resources that it could use to invest in its own development. Many studies have been conducted by researchers at the World Bank (WB), the Organisation for Economic Cooperation and Development (OECD), and the United Nations Conference on Trade and Development (UNCTAD) among others. The UNCTAD is encouraging in that while it recognises advancements in multilateralism and in collective effort, such as the establishment of the African Continental Free Trade Area (AfCFTA), it firmly stresses African agency.
Another major challenge facing Africa and in fact, the developing world, is a shortage of Foreign Direct Investment (FDI). UNCTAD points to $83 billion in 2021, a figure similar to the WB pledge at the IDA for Africa Summit in Dakar, Senegal in July 2022. By comparison, the most developed economies received trillions in FDI. Common sense suggests that this is no surprise; after all, these are the areas that are most technologically advanced, with production capabilities of sufficient strength to not only sustain their position at the helm of not only the higher levels of the global value chains, but domination of the entire global value chain. Africa as well as the developing world, want and need to industrialise, particularly with a focus on developing localised production and mineral processing.
The Role of BRICS in the G20
While BRICS is distinct to the G20, it occupies a seat of influence in this body. According to the BRICS summit 2022 declaration, the G20 is of high importance and value to the BRICS bloc. The G20 is an important platform where the leading developing economies can engage with developed economies and advance the development agenda. There are many simple but pertinent questions asked of these constructs in developing countries. What is the potential of BRICS and the G20 to assist? To what extent do they and can they assist a strong drive for change to achieve better outcomes? These are questions many in a population that is expected to reach 2.5 billion by 2050 ask on a regular basis.
All BRICS members are members of the G20, four potential new members of BRICS are also members of the G20, and the current (India – 2023) and the next two hosts and chairs of the G20 (Brazil – 2024, and South Africa – 2025) are members of BRICS. There is ample opportunity to place developmental imperatives firmly on the global agenda over the next three years. Critical among these developmental issues are Infrastructure Financing and Investments, Climate Mitigation, Health, and greater access to global value chains.
The inadequacy of the global financial and economic governance architecture, having led to the establishment of both the G20 and BRICS, remains the major challenge. It is the major issue that BRICS aims to address at the G20. But such an effort is not and cannot be an overnight project. And correctly, some are very sceptical and others cautiously optimistic about prospects. There are some interesting points in the G20 2022 declaration worth pursuing, such as paragraph 4, that confirms the centrality of the United Nations in the multilateral system.
But there are several other potentially significant consequences. Paragraph 5, with its five action points, makes bold promises, particularly on multilateral development banks, and encourages public and private investment. This is optimistic, but it does not say much about conditions for access to finance, which has been the bane of development efforts. Paragraph 11 says:
…We stress the importance of ensuring that global energy demand is matched by affordable energy supplies. We reiterate our commitment to achieve global net zero greenhouse gas emissions/carbon neutrality by or around mid-century, while taking into account the latest scientific developments and different national circumstances. We call for continued support for developing countries, especially in the most vulnerable countries, in terms of providing access to affordable, reliable, sustainable, and modern energy, capacity building, affordable latest technology within the public domain, mutually beneficial technology cooperation and financing mitigation actions in the energy sector (G20 2022 summit declaration).
This is an important debate, considering the levels of development or underdevelopment in developing economies. These economies need to grow, establish industry and production capabilities, in the same way that developed economies did at the same stage of their development. But developed economies fuelled their growth and development with fossil fuels and industrialised with them. Developing economies now face both the bad news of having to cease the use of industrialising fossil fuels, as well as the necessity of finding financing for alternative fuels and the clean-up needed. However, they do appreciate the importance of a Just Transition. But financing for this undertaking must come from somewhere, as well as industrialisation possibilities that will come from it.
Paragraph 32 of the G20 resolution says that “We reaffirm our commitment to strengthening the long-term financial resilience of the international financial architecture, including by promoting sustainable capital flows, and developing local currency capital markets” (G20 2022 summit declaration). The New Development Bank (NDB) has already begun development of this option with the potential to expand. But the NDB is very young and even though a lot of progress is registered, it will be some time before it can garner sufficient resources for the impact it wants. Access to cheaper finance and investments is key to propelling the generation of growth and development required.
What is to be done?
There is no denying that despite development gaining lip service, decades of summits have not achieved the requisite development needed to address the UN Agenda for Development and Agenda 2030. Africa in particular has a young population that is educated and tech savvy, with a growing middle class. This young population is fuelling the projected 2.5 billion expected population numbers by 2050. Apart from population size, similar demographic trends are seen in Latin America, albeit with a projected decline in 34 years. Asian youth are not excluded from this concern. With proper support, today’s youth and tomorrow’s youth can assist in development that is required, according to the United Nations Development Agenda. BRICS has an important role in the G20, precisely guided by its own resolutions on the pursuit of development, to drive the agenda and keep pushing until it is done.
Mikatekiso Kubayi - researcher, Institute for Global Dialogue associated with UNISA, Research Fellow: Institute for Pan African Thought and Conversation, Doctoral Candidate, Political Studies, University of Johannesburg.
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