Mikatekiso Kubayi
BRICS and the G20 emerged as a reaction to the state of the global governance architecture, which has ceased to correspond to the spirit of the times. This discrepancy is largely the cause of problems with the access of the main (by size) groups of the world’s population to the necessary tools for faster growth and development. Developing countries want to industrialize faster and in a more diverse way in order to protect themselves from shocks in global value chains such as a pandemic and other similar crises. This is important for the readiness for the appearance of “black swans”. The extent to which these new structures will be able to contribute to development is crucial to how they will be viewed by the billions of people inhabiting the Earth.
It is also important that, in our opinion, the failures in achieving the necessary development can still be corrected if, thanks to the central role of the United Nations and common efforts, the obligations set out in UN resolutions are fulfilled.
The central role of the UN
The United Nations, which occupies a central place in the multilateral world system, stands for development for the benefit of all mankind. It aims to achieve higher values of the Human Development Index for all people in the world so that no one is 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, supporting the principle of multilateralism, which is centered on the UN, according to the leaders’ statement at the G20 summit in 2022 in Indonesia. The Declaration of the 2022 BRICS Summit expresses the same position. However, this is not the only thing that unites the BRICS and the G20. The declarations of both events contain several points that oblige their participants to act in the interests of development, especially developing countries. Before discussing some of these points, we will point to the definition of development given by the leading multilateral organization – the UN.
On June 20, 1997, at the 103rd plenary meeting, the UN adopted its resolution “Agenda for Development”, containing a definition of development, which is indirectly followed by the declarations of the BRICS and G20 2022 summits. It sounds like this:
“Development is one of the main priorities of the United Nations. Development is a multidimensional task to improve the quality of life of all people. Economic development, social development and environmental protection are interdependent and complementary components of sustainable development.
Sustainable economic growth is a necessary prerequisite for the economic and social development of all countries, especially developing countries. With such growth, which should be based on a broad basis to serve the good of all people, countries will be able to improve the standard of living of their peoples by eradicating poverty, hunger, disease and illiteracy, providing adequate housing and secure employment for all people and preserving the integrity of the environment.”
Some development challenges in Africa and the developing world
The ideals contained in these two paragraphs may seem unattainable. Developing countries, especially the global South, have been facing serious problems for decades, which have been addressed in many forums, but without much results. An important place among them is occupied by the problems of financing infrastructure. The lack of infrastructure financing in Africa is well documented. The African Development Bank forecasts a deficit of up to $108 billion per year, with funding needs of up to $170 billion per year.
Africa and other developing regions also face the problem of “illicit financial flows”. While there is debate about the definitions and types of these flows, they continue to deplete the resources that Africa could use to invest in its own development. This is confirmed by studies of the World Bank (WB), the Organization for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD). The findings of UNCTAD are encouraging in the sense that, analyzing the role of multilateralism and collective efforts, such as the creation of the African Continental Free Trade Area (AfCFTA), this organization strongly emphasizes the importance of African initiatives proper.
Another major problem facing Africa, and indeed the entire developing world, is the lack of foreign direct investment (FDI). UNCTAD writes that in 2021 they reached $83 billion. Similar figures were called by representatives of the World Bank at the summit of the International Development Association in Dakar in July 2022. By comparison, the most developed countries receive trillions of dollars’ worth of FDI. From the point of view of common sense, this is not surprising, because these are technologically advanced states with production capabilities of sufficient strength to maintain dominance in global value chains. Meanwhile, Africa, like the rest of the developing world, needs industrialization, especially with an emphasis on the development of both localized production and localized processing of minerals.
The role of BRICS in the G20
Although the BRICS differs from the G20, the bloc occupies an important place in this body. According to the declaration of the 2022 BRICS summit, the G20 is of great importance and value for the BRICS bloc. The G20 is an important platform on which leading developing countries can interact with developed countries and promote the development agenda. Many simple but relevant questions are being asked about these structures in developing countries. What is the potential for BRICS and G20 assistance? To what extent do they help each other and can they contribute to the desire for change to achieve better results? These questions are regularly asked by many representatives of a group of countries whose population is expected to reach 2.5 billion people by 2050.
All BRICS members, as well as four potential new members of the group are members of the G20, and the current chairman of the Group of Twenty (India) and the next two (Brazil and South Africa) are members of the BRICS. This opens up great opportunities to bring the imperatives of development to the global agenda. The most important among these issues are investment in infrastructure, mitigation of climate change, health and greater access to global value chains.
The inadequacy of the architecture of global financial and economic governance, which predetermined the creation of both the G20 and the BRICS, remains a serious problem. This is the main issue in which the BRICS and the G20 should seek progress. However, this is not a project in which you can achieve quick success. It is quite true that some experts regard the prospects skeptically, while others are cautiously optimistic.
There are several interesting points in the G20 declaration of 2022 that deserve attention in this aspect. For example, paragraph 4, which confirms the central role of the United Nations in the multilateral system. Paragraph 5 contains bold promises, especially with regard to multilateral development banks, and encourages public and private investment. This is optimistic, but it says little about the conditions of access to finance that complicate development efforts. Paragraph 11 reads as follows:
“… We stress the importance of ensuring that global energy demand matches affordable energy sources. We reaffirm our commitment to achieving global zero greenhouse gas emissions/carbon neutrality by about the middle of the century, taking into account the latest scientific developments and various national conditions. We call for the continued support of developing countries, especially the most vulnerable countries, in terms of providing access to reliable, sustainable and modern energy sources, in the name of capacity building, affordable new technologies that are in the public domain, mutually beneficial technological cooperation and financing in the energy sector.”
This is an important issue for developing countries. Their economies need to grow, create industry and production facilities, just as developed countries did at a certain stage of their development. However, developed countries stimulated their growth and development at the expense of fossil fuels and carried out industrialization based on it. Now developing countries are required to stop using fossil fuels in industry and find financing for alternative types of energy. Of course, they, like everyone else, understand the importance of a fair transition. But it requires funding that has to come from somewhere.
Paragraph 32 of the G20 resolution states: “We reaffirm our commitment to strengthening the long-term financial stability of the international financial architecture, including by promoting sustainable capital flows and the development of capital markets in the national currency.” New Development Bank (NBR) I have already started to act in this direction. But the NBR is very young, and despite significant progress, it will take some time before it can gather enough resources. Access to cheaper finance is the key to stimulating the necessary growth and development.
Necessary measures
It is hard to deny that no matter how many influential people have been talking about development at summits for decades, it has not led to the results necessary for the implementation of the UN Development Agenda and the 2030 Agenda. Meanwhile, Africa, in particular, has a young, educated and technically literate population and a growing middle class. It is projected that 2.5 billion people will live in Africa by 2050. Similar demographic trends are observed in Latin America, although experts predict that its population will stop growing in 34 years. Do not forget about the young population of Asia. The value of the structures discussed for today’s youth and the youth of tomorrow depends on how much they can contribute to development in accordance with the UN Agenda. In this sense, BRICS plays an important role in the G20, guided by its own resolutions on striving for development and continuing to promote the relevant agenda until it is implemented.
Mikatekiso Kubayi is a researcher at the UNISA Institute for Global Dialogue, a researcher at the Institute of Pan-African Thought and Dialogue, a doctoral student at the University of Johannesburg.
Valdai International Discussion Club
Source: BRICS website
