Development bank to top agenda as Brazil hosts sixth BRICs summit

By Raymond Mpubani

BRICS leaders at 2013 G-20 Saint Petersburg summit: Dilma Rousseff, Manmohan Singh (who has since been replaced by Narendra Modi), Vladimir Putin, Xi Jinping and Jacob Zuma. Photo: Agência Brasil/Wikimedia Commons.

BRICS leaders at 2013 G-20 Saint Petersburg summit: Dilma Rousseff, Manmohan Singh (who has since been replaced by Narendra Modi), Vladimir Putin, Xi Jinping and Jacob Zuma. Photo: Agência Brasil/Wikimedia Commons.

BRICS summit starts in Brazil. A few hours after Germany winning its fourth world cup in Rio de Janeiro, the leaders of Brazil, Russia, India, China, and South Africa – the BRICS – will hold their sixth annual conference. The event will be held in the cities of Fortaleza and Brasilia, and will last two days.

The creation of a $50 billion development bank and $100 billion reserve fund is expected to top the agenda at the summit. According to Bloomberg, “the initiatives are born out of frustration with a lack of participation in global governance, particularly in the World Bank and International Monetary Fund.” However, Bloomberg also notes that the initiatives are still not enough to “revive the group’s waning clout.”

Other issues on the agenda are the location of the bank’s headquarters, security concerns between China and India, and the situation in Ukraine. Argentina will also be represented at the summit in Fortaleza after receiving an invitation from Russia.

China released its second foreign aid white paper. Just over half of China’s foreign aid – 51.8% – in the three years to 2012 went to Africa. In total, the aid was directed to 121 countries which included 51 African nations, 30 in Asia, 19 in Latin America & the Caribbean, 12 in Europe and 9 in Oceania. The total amount disbursed was $14.41 billion in three forms: concessional loans (55.7%), grants (36.2%), and interest-free loans (8.1%).

The figures in the white paper, however, do not tell the complete story of China’s aid: John Hopkins University professor Deborah Brautigam lists foreign funding made by China that was not covered by the paper.

However, there was domestic discontent over “the large sums given to countries in Asia and Africa at a time when China has “close to 100 million of people living in poverty””.

China’s First Automotive Works (FAW) opens production plant at Port Elizabeth. President Jacob Zuma launched the R600 million (($56 million) plant, which will produce 5000 trucks annually from “locally assembled from imported kits.” According to a statement by the Trade and Industry Minister, the investment is “clear sign of the maturing relations between South Africa and China.”

Incidentally, car plants in South Africa have recently either cut back on production (BMW) or suspended production altogether (General Motors), a result of “continuing industrial action in the metal and engineering sector.” The company says 550 jobs were created during construction, while the assembling plant will create another 350. 600 more jobs will be created when it starts producing passenger cars.

Meanwhile, another Chinese car manufacturing company is expanding its Africa market. Beiqi Foton Motor Company, “the biggest commercial vehicle manufacturer in China in terms of sales volume”, wants to sell more trucks and buses in Africa. Foton, which has an assembly plant in Kenya, was the first Chinese car company to build a production facility in Africa.

The company is reportedly building a new production facility in South Africa, where it already has a sales office. It also wants to sell more cars in North and West Africa, and is ramping up its efforts to that end.

American think tank releases report on Chinese engagement in Africa. The subtitle of the research report by the [American] RAND Corporation is ‘Drivers, Reactions, and Implications for U.S. Policy’. According to its abstract, the report “approaches Sino-African relations as a vibrant, two-way dynamic in which both sides adjust to policy initiatives and popular perceptions emanating from the other.”

It finds that “Chinese engagement in the region is primarily concerned with natural resource extraction, infrastructure development, and manufacturing, in contrast to the United States’ focus on higher-technology trade and services as well as aid policies aimed at promoting democracy, good governance, and human development.” Additionally, “African governments generally welcome engagement with China, as it brings them political legitimacy and contributes to their economic development. Some segments of African society criticize Chinese enterprises for their poor labour conditions, unsustainable environmental practices, and job displacement, but China has been modifying its approach to the continent to address these concerns.”

China and America, according to the report, “are not strategic rivals in Africa.” It calls for “greater American commercial engagement in African markets” to give China a serious competitor and, more importantly, benefit both Africa and the Americans.

Raymond Mpubani is a KAS Media Africa scholar at Wits Journalism.  

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