BRICS Summit: Paving The Way For Shared Currency And Economic Expansion

The BRICS Summit currently underway in Johannesburg explores expansion and a shared currency, challenging the US dollar’s dominance. By Yeshiel Panchia

Opening Day of The 15^th BRICS Summit. Delegates take their seats for the BRICS business forum on day one of the BRICS summit at the Sandton Convention Center in the Sandton district of Johannesburg, South Africa, on Tuesday, Aug. 22, 2023. Expansion of BRICS membership is top of the agenda for the summit being hosted this week by South Africa. Photographer: Leon Sadiki/Bloomberg via Getty Images

The annual BRICS Summit kicked off in Sandton, Johannesburg, today to rapt viewers around the world, as the economic and political bloc touched on critical developments such as the expansion of its membership as well as the possibility of implementing a shared currency.

The summit is being attended by Brazil’s Lula da Silva, South Africa’s Cyril Ramaphosa, China’s Xi Jinping, India’s Narendra Modi, and notably Sergey Lavrov in place of Russian President Vladimir Putin. Clear in a number of speeches, including those of presidents Jinping and Ramaphosa, was a definite willingness for the expansion of the bloc, which is increasingly being seen as a counterweight to global Western influence and more representative of the interests of the Global South.

Critical to this shift is a move away from what is seen as the hegemony of the United States dollar in global exchanges, which has seen both China and Russia suffer due to ongoing trade disputes and the war in Ukraine respectively. Moves towards stronger ties with BRICS-aligned nations were previously noted by President Ramaphosa on Sunday.

“We have steadily strengthened trade and investment ties with other BRICS countries alongside collaboration in areas like development, skills, technology, security, and innovation…” said Ramaphosa in a press release. “South Africa has benefited from the New Development Bank, which was established by the BRICS countries in 2015.”

These increased economic ties are what South Africa, the BRICS bloc, and possible future member states stand to benefit from should a shared currency be implemented, with the African Continental Free Trade Area (AfCFTA) being highlighted as a stepping stone towards this.

“As we speak, there are 47 countries that have ratified the agreement establishing the AfCFTA… only one country is yet to sign. All of these countries that have ratified have accepted the legal obligations, commitments to significantly reduce barriers to intra-Africa trade… estimated at only 18%, which is very low,” said the AfCFTA’s Secretary-General, Wamkele Mene, during a plenary discussion at the BRICS Business Forum today.

Using the example of a Kenyan businessman trading in the Republic of Djibouti, Mene continued; “Why is the dollar involved? Two African countries trading using a third currency.”

Mene further highlighted the introduction of the Pan African Payments and Settlements System (PAPSS), a SWIFT competitor estimated to save $5 billion annually in fees on payments on the continent.

“We’ve introduced the Pan African Payments System… you will no longer have to rely on a third currency, you will no longer have to buy a third currency, to trade in Africa,” said Mene to applause from the room. “We want to move beyond the trade agreement but introduce tools that will enable the trade to happen.”

Much of the conversation around consolidation of the solidarity of existing BRICS member countries, the bloc’s willingness to accept new memberships, and its successes in establishing both ease of trade and cost-saving initiatives appeared to be a possible preparation of the ground for the introduction of a BRICS-wide currency, which, while previously posited, has not until recently offered the level of advantage it might to countries such as Russia and China.

Nations in the bloc have long discussed the possibility of BRICS Pay, aimed at allowing for seamless, decentralized digital payments between member countries. As recently as last month, Brazil’s President Lula also highlighted the impact of US dollar dependence. With Russia reeling from US-based sanctions due to the war in Ukraine, the country too has been vocal about lessening dollar-based dependence.

However, a realistic and technically viable plan as to how a multinational currency would work for the bloc has yet to have been posited, despite several speakers at the conference discussing it during the opening day.

In attendance were dozens of world leaders from across the African continent, either considering the possibility of joining the bloc or being courted for membership – and as talks proceed over the next few days of the summit, considerations around new membership and realistic postulations around the implementation of a BRICS currency will play a major focus, watched not just by the member countries themselves but also by many in the West.

As if to underline this point, said Ramaphosa: “BRICS has a vitally important role to play in the reform of global governance and in the promotion of multilateralism and cooperation throughout the world.”