What is the purpose of BRICS?

The reasons behind BRICS countries’ involvement in Africa include their appetite for the continent’s natural resources, Africa’s large and untapped agricultural sector as well as the opportunity for investments and transfer of technology and knowledge targeting the growing middle class which is estimated to include more than 300 million people.

Appetite for natural resources: For many experts, the engagement of the BRICS in Africa is essentially driven by the continent’s abundant natural resources. BRICS are major players in the exploitation of natural resources in many African countries including Angola, the Democratic Republic of Congo, Nigeria, and Sudan. Brazil and China are the most active in exploring and exploiting gas, oil, and minerals resources in Africa. The presence of these major global players in the natural resources sector has brought large investments in various infrastructure projects in recent years to the continent. However, natural resources do not represent the main BRICS investment in Africa. According to the United Nations Conference on Trade and Development (UNCTAD), 75 percent of the value of BRICS FDI projects in Africa between 2003 and 2012 are in manufacturing and services. Only 10 percent and 26 percent of the number and the value of projects, respectively, are in the natural resources and agricultural sectors.  

Africa’s agricultural sector: The agricultural sector is vital for African economies and it is hoped that it will continue to be an engine of economic growth for the continent. The engagement of BRICS countries in the African agricultural sector is motivated by the fact that these countries would need to promote their experiences in terms of agricultural development as a way to unlock the continent’s potential. Brazil, which is a leading global player in trading agricultural commodities, can be a model for African countries regarding agricultural development and can assist Africa in enhancing agricultural productivity and reducing the impact of food insecurity. The success of the Brazilian agricultural model is mainly due to the vertical integration of the sector, the strong support of the state, and high levels of mechanization. Fostering agriculture in Africa will be a major development tool to eradicate poverty and hunger over the long term. In that context, sharing the experience of the BRICS would boost Africa’s agricultural productivity.

Seeking diversification and new markets: Besides the huge potential offered by the African primary sector, the BRICS are attracted by the benefits of diversification of African economies as well as the possibility to enter into a large untapped market of one billion African consumers. Over the years, the BRICS countries have accumulated large amounts of reserves which have been invested mainly in the developed world. The persistence of the global financial crisis, which has hit developed countries particularly hard, is motivating the BRICS to shift a portion of their investments toward other emerging destinations in order to maximize returns while reducing risks. Hence, Africa may offer BRICS the opportunity to diversify towards new frontier markets. Moreover, investing in Africa implies access to a one billion consumer market with its growing middle class. In recent years, sectors such as telecommunications, financial services, and retail have recorded high rates of growth in most African countries due to high demand by Africa’s middle class.

Implications for Africa

The strategic interest of the BRICS in Africa will strengthen the position of South Africa as a leading regional power and a gateway for other BRICS countries to the African market. As the BRICS are consolidating their positions in Africa through massive investments, this seems to create a new source of development funding for the continent.

South Africa as an influential regional power: South Africa joined the BRICS in 2010 after receiving an official invitation from the group. South Africa is by far the smallest BRICS country in both economic and demographic terms. South Africa’s GDP is less than a quarter of Russia’s, the smallest of the four BRIC countries (Brazil, Russia, India, and China). Also, the population of South Africa which is only 50 million is far below Russia’s 140 million and Brazil’s 190 million. As South Africa accounts for one-third of the Sub-Saharan African economy, it constitutes an entry point for the BRICs to access Africa’s one billion consumer market.