Commentary: A BRICS bank for the South

The plan for a BRICS bank, announced at the BRICS summit in Durban in South Africa at the end of March, is a cause for celebration. More so for those of us who participated in the South Commission and in preparing its report and recommendations.

The South Commission was established in 1987 after the summit meeting of the Non-Aligned Movement in Harare in September 1986. In August 1990, the Commission released a report titled ‘The Challenge to the South.’ The purpose of the BRICS bank, to achieve a degree of autonomy from the Bretton Woods institutions, was part of the Commission’s recommendations.

Chapter four of the 1990 report outlines the idea of a South Bank, and emphasises the necessity of sharing wealth and opportunity within the global South. The report was more inclusive than the proposed BRICS bank in its vision of liberation when it stated: “Finance has proved to be the critical missing link in the entire range of south-south activities. Schemes of cooperation, whether in trade, production and investment, education or science and technology, need adequate financial resources to be viable… We have selected several areas in which cooperation in financial matters or financing of cooperation in economic matters is greatly needed… In the longer run we envisage new institutions, notably a South Bank which would initially finance trade and ultimately provide development finance.”

The leader of the South Commission, Dr. Julius Nyerere, anticipated more than 25 years ago the dangers for the countries of the southern continents if they did not form their own economic clubs and consolidated resources to design their own political economy. He often referred to the European Union as the model. He emphasised that just as the OECD secretariat provides support to the EU governments, we need to consolidate our economies and establish similar institutional support to enable us to function as a bloc.

However, members of the BRICS group seem to have woken up to the idea of bonding across continents only after the economies of the North went into a financial crisis in 2008. The economies of the southern countries, more enmeshed with the North than with each other, were swept into the crises too. This turning point, and the realisation that it is necessary to de-link to some degree from the North, contributed to the success of the recent BRICS summit.

South Africa managed to get widespread support in Africa for the BRICS conference. There were preparatory campaigns and mobile exhibitions. Meetings were held not only across the country, but all over the continent, to discuss the meaning of BRICS and the need to promote South Africa as a strong leader supported by all of Africa. When I visited South Africa recently, I gathered that the finance minister is a confident and strong leader, the Parliament and its committees are functioning vigorously, and numerous inter-African meetings are frequently held. This South Africa is far from the dysfunctional stereotypes projected in the Indian and international media.

Perhaps no southern continent needs economic autonomy more than Africa. The continent has an abundance of energy, natural resources and oil. In the growing drive towards neo-colonialism, China and other powerful economies are working to exploit these resources for their own ends and progress. This makes Africa extremely vulnerable, more so when the continent suffers from a lack of financial strength.

This is why Nyerere had appealed to all the South continents, and especially to China and India, to lead an economic emancipation, or what Mahatma Gandhi called economic freedom.

For all its internal troubles and fractured states, Africa aspires to unite as a continent. This brings to mind the poetic speech by the former president of South Africa Thabo Mbeki, when he declared, “I am an African.” Africa now wants to put forward a continental identity. The BRICS bank may well be the first step in that direction and in Nyerere’s vision of building an equitable and non-exploitative economic South.

Devaki Jain is a development economist, activist, and a Gandhian. She was also a Member of the erstwhile South Commission (1987-1990).

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