The BRICS countries will use the summit taking place in Johannesburg to bolster trade in their local currencies to gain greater independence from the dollar, rather than launching a common currency.
This is according to South Africa’s BRICS sherpa Anil Sooklal who spoke on the sidelines of the summit on Tuesday, saying: “The currency is being discussed but let me correct: It’s not about a BRICS currency. It is too early to talk about a BRICS currency.”
“What we are talking about is creating more financial inclusion in terms of global financial transactions, global financial trade and how we conduct our payment,” he added.
He said Brazil, India, Russia, China and South Africa will discuss “deepening interaction among ourselves using local currencies.”
He insisted that the five, as well as the Global South, needed to be able to borrow and make payment settlements in their own currencies, instead of being dependent on the dollar and the euro and losing money to currency conversion.
“We have started a momentum in terms of the global financial architecture where countries — not just BRICS but from the Global South, Africa included, — are saying that we need to trade and do business in our local currencies,” he explained.
African central banks have already begun implementing a pan-African payment system to facilitate trade using local currencies, Sooklal said.
African nations expect it to save them billions of US dollars annually in currency conversion costs.
Addressing the BRICS business forum through a video link, Russian President Vladimir Putin said the de-dollarization process among the bloc was irreversible, and the share of the US dollar in trade was decreasing.
“The objective, irreversible process of de-dollarization of our economic ties is gaining momentum.
“Efforts are being made to develop effective mechanisms for mutual settlements and monetary and financial control.
“As a result, the share of the dollar in export-import transactions within the BRICS is declining: last year it amounted to only 28.7%,” Putin said.
Brazilian President Luiz Inacio Lula da Silva said the group of emerging countries was not meant to challenge other international coalitions such as the G7 or the United States, but to "organise" the so-called Global South.
“We do not want to be a counterpoint to the G7, G20 or the United States. We just want to organise ourselves,” Lula said in a live broadcast on social media.
Dilma Rousseff, president of the BRICS’ New Development Bank (NDB) said plans were underway to start lending in the South African and Brazilian currencies in order to reduce global dependence on the US dollar, the Financial Times newspaper reported.
With the implementation of lending in the South African rand and Brazilian real and with reduction of reliance on the US dollar, the NDB is planning to promote the development of a more multipolar global financial system, the newspaper said, citing the bank’s president.
Meanwhile African countries want China to shift its focus from building infrastructure on the continent to local industrialisation, China's top Africa diplomat said at a briefing on the sidelines of the summit.
"African integration is already escalating and many African countries (have) asked China to consider (a) shift (of) our focus," Wu Peng, director-general of China's department of African affairs at its foreign ministry, said.
Wu said the change was needed especially considering the Africa Continental Free Trade Agreement (AfCFTA), which was launched at the start of 2021 and is intended to enable African countries to trade tariff-free in future.
China will talk through its plans for African industrialisation with African leaders on Thursday at a special roundtable on the sidelines of the meeting of the summit.
Cape Times