TL:DR,
- BRICS expansion adds six nations, strengthening the bloc’s de-dollarization strategy and establishing control over 30% of the global economy.
- Six countries join BRICS alliance, complementing efforts to create financial alternatives through local currency lending and the New Development Bank.
- NDB announced plans to begin lending in South African rand and Brazilian Real to defy the overreliance on US dollar.
The BRICS expansion continues to challenge the norm with the 15th BRICS summit concluding with new members and bold plans for change. Running from August 22 to August 24, at at Sandton Convention Centre in South Africa, the event highlighted BRIC’s revolutionary de-dollarization strategy.
Below is a sneak peek at the event’s theme quote, “a weopinized global financial system.”
A Bold De-Dollarisation Strategy Emerges
Hosted by President Cyril Ramaphosa, the 15th BRICS Summit was attended by founding members China’s President Xi Jinping, India’s Prime Minister Narendra Modi, and Brazil’s President Luiz Inácio Lula da Silva. President Vladimir Putin only attended the event virtually, owing to the complications arising from the ICC arrest warrant issued to him on claims over the abduction of children from Ukraine.
Rapid change is occurring with the organization’s focus on progress and changing norms. However, the peak of the event was delivered by President Vladimir Putin expressing how BRICS’ de-dollarisation strategy counters what he termed as a “weaponized global financial system.”
“The applied sanctions on sovereign states trample upon all the basic norms and rules of free trade and economic life, norms and regulations that not so long ago seemed immutable.
Instead, they have led to a shortage of resources, rising unemployment and other chronic problems in the world economy, such as an increase in food prices, affecting the most vulnerable countries.
BRICS states have stepped up their interaction, and our joint work will ensure economic growth and sustainable development bring concrete, tangible results globally.”
Heads of State attend the 15th BRICS summit.
Other presidents from across the globe that attended the BRICS summit 2023 include Samia Suluhu, President Miguel Diaz-Canel (Cuba), Lazarus Chakwera (Malawi), Filipe Nyusi (Mozambique), Nana Akufo-Addo (Ghana), Azali Assounami (Comoros), Hakainda Hicihlema (Zambia), Kassym-Jomart Tokayev (Kazakhstan), and Salva Kiir (South Sudan). Other key figures that attended the conference comprised vice presidents, Prime ministers, Ambassadors, and finance and business experts.
The event concluded with the successful inclusion of six countries in the growing global bloc.
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Six Nations Join the Growing Alliance
A watershed moment of the 15th BRICS summit was the successful inclusion of six new alliances: Argentina, Egypt, Iran, Saudi Arabia, Ethiopia, and the United Arab Emirates. This latest BRICS expansion resulted from a competitive process.
Five founder of BRICS.[Photo:BRICS]
Adding new members to BRICS will strengthen the organization and give a shared effort a new impetuous. As President Cyril Ramaphosa eloquently put it:
“BRICS ” stands for solidarity, progress, inclusivity, sustainable development, and a more equitable order. We are an inclusive formation of developing and emerging economies that seek to work together and benefit from our rich cultures, histories and systems to advance the prosperity of our people.”
New Development Bank: BRICS’ haven to replace the World Bank
Aside from the update on BRICS expansion, the bloc intends to challenge the dollar hegemony by pioneering local currency lending approaches.
The New Development Bank was set up by the five nations that comprise BRICS. Its main agenda is to finance projects and innovations tailored to offer solutions that help build a more inclusive, resilient and globally sustainable future.
Recently, the NDB announced plans to lend in South African rand and Brazilian Real to defy overreliance on the US dollar. On August 15, the bank closed the auction for its first South African rand bonds. According to Reuters, the two bonds, a 1 billion rand (US$52.3 million) five-year note and a 500 million rand (US$26.8 million) three-year note, attracted 2.67 billion rand of bids.
The BRICS development bank is also registering an Indian rupee bond programme worth US$2.5 billion over five years to boost local currency lending. NDB will register Brazilian Real and Russian ruble bond programmes soon. Furthermore, they hope to issue under 100 billion Russian Rubles (US$1.06 billion) bond programme set in 2019, according to Chief Financial Officer Leslie Maasdrop.
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The CFO further added that the bank targets to increase local currency lending from 22% to over 30% by 2026. Most of the local currency lending in the past has been in the Chinese Yuan. Impressively, the NDB has already raised US$4.5 billion, and targets to raise US$8 billion by the end of 2023.
These actions clearly position the NDB vs the World Bank as offering different approaches to development financing. The de-dollarisation strategy, accompanied by the local currency lending initiatives, sets up pace, prompting more to join the ongoing BRICS expansion.
