/ 22 August 2023

Brics leaders say free trade and central currency are key points

Brics Summit 9628 Dv (1)
Photo by Delwyn Verasamy/M&G

Minister of Trade and Industry Ebrahim Patel has called on delegates to the Brics summit to meaningfully contribute to the future of global sustainability and accelerate trade within the member countries.

Patel said this during his welcoming address at the business forum on the first day of the Brics Summit held in Sandton, Johannesburg, which was set to officially kick off on Tuesday afternoon.

He added that South Africa was ready to partner with all the Brics countries on the development of new-energy vehicles, technologies, capital and market experiences for mutual benefit.

Patel said the country plans to use the gathering to advocate for Brics countries to use their own currencies when trading with one another, as a mechanism to push for the reform of global political and financial institutions.

He mentioned that this is not a new agenda but rather a continuation of previous Brics declarations and initiatives.

Echoing Patel, Brazil’s Finance Minister Fernando Haddad said Brics initiatives should empower countries beyond those in the bloc.

“Brics should not be a meeting that benefits the partners of the country only but should be impactful to all the countries in the world,” Haddad said.

India’s business chapter chairman Onkar Kanwar said before talking about trade benefits, the summit needed to address the impact of climate change.

“We need renewable energy to reduce emissions … Brics has to come up with plans to be ahead of climate change, to be able to process used water and save agriculture from climate change. We need to have a collaborative relationship, so we can make decisions that can positively impact our grandchildren,” he said.

On Monday, during a manufacturing forum, Patel discussed how trade with fellow Brics members accounts for “21% of the country’s global trade, with China accounting for the highest share of the Brics club’s trade with South Africa at 68%”.

Patel highlighted South Africa’s trade with its Brics partners had grown from R487 billion in 2017 to R830 billion in 2022.

He added that, in 2023, China exported R214.7 billion to the country and imported goods worth R116.3 billion. In 2022, the value of exports to China was R188.6 billion compared to imports of R367.4 billion.

According to the Observatory of Economic Complexity report, Brazil exported goods to the value of R14.7 billion to South Africa, making it the third biggest exporter to the country, while its imports amounted to R5.1 billion between June 2022 and June 2023.

Central currency

Speakers at the forum added that the intention was to increase free trade plans across the Brics partners and create a connection among them to ensure a seamless trade process, to help them weather any possible sanctions from the West.

Discussing free trade for Brics partners, Russia business chapter  chairperson Sergey Katyrin said the summit would benefit the partners in having free trade agreements to enable the growth of trade that would boost the economies of the countries involved.

Katyrin said the Brics partnership has an opportunity to grow and become independent of the West and be able to trade amongst themselves. He added that through collaboration they could become a bigger trading bloc by 2050.

Shaogang Zhang, China’s promotion of international trade vice chairperson, added that free trade would enable the partners to help each other to create a new trading landscape.

Shaogang added that free trade opened up the opportunity for a central currency that would make trading between the countries accessible.

This is not the first time the Brics currency to be used in trade has been mentioned. After the invasion of Ukraine by Russia in 2022, Western leaders imposed sanctions on Russia in an attempt to block it from accessing finances. This led to Russia’s idea to de-dollarise by developing a new currency that would be used by Brics to move away from the influence of the dollar.

But, on Monday, India’s Foreign Secretary Vinay Mohan Kwatra said during a media briefing deliberations among Brics partners had focused on boosting trade in national currencies, instead of on developing a common currency.

Brazilian Association of FinTechs representative Diego Perez said a Brics currency would be beneficial for small businesses in member countries, only if it underwent proper processes so that it did not fail.

Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa