Africa rises as BRICS countries set up a different aid model
Early this month, leaders of five leading emerging economies made a revolutionary decision that will have a significant impact on developing world economies.
At a summit in Durban, South Africa, the leaders of Brazil, Russia, India, China and South Africa (collectively known as BRICS) unanimously decided to set up a development bank that will finance development and infrastructure, not just in emerging economies, but in what is known as the Global South.
The leaders also endorsed a $100-billion contingency reserve that can be deployed to bail out a crisis-ridden BRICS country. This decision represents a significant move by emerging economies to break away from the traditional donor-recipient model advocated by Western nations for more than six decades.
The BRICS countries – which account for more than a quarter of the global GDP – are asserting their clout by showing that they are willing to bankroll projects in poor countries and to help each other to avert financial crises, without resorting to traditional development banks such as the World Bank and the IMF.
What remains to be seen, however, is what conditionalities the BRICS Bank will impose on countries and whether the loans extended will be on more favourable terms. Nonetheless, the bank will impact the way international lending agencies conduct their business.
This good news comes in the wake of several articles in the international press that have dubbed Africa as the “rising” or “aspiring” continent.
Journalists have suddenly switched from being Afro-pessimists to Afro-optimists as African economies take off in places such as Angola and Ethiopia, once written off as hopeless countries that suffered from endemic poverty and conflict.
About a year ago, Time magazine, in a cover story titled 'Africa Rising', attributed Africa’s phenomenal economic growth to aid-effectiveness. The Economist (which once dubbed Africa as 'The Hopeless Continent'), is more realistic in its assessment of why Africa’s economies are growing while those in the rest of the world are stagnating: it attributes growth to the continent’s commodities-led economies and its “demographic dividend,” i.e. the rising proportion of working-age people.
Financial analysts underscore the role played by non-traditional donors, such as India and China, and the prevalence of mobile telephony, which has had a marked impact on the economies of countries such as Kenya.
In March, in a special report titled 'A Hopeful Continent', the Economist stated that Kenya’s economic growth was significantly boosted by modern technology, particularly mobile banking and money-transfer services.
However, even in Kenya, political tensions, poor governance and greed often get in the way of sound economic policies and innovations. Already, legislators are demanding the disbanding of the Salaries and Remuneration Commission which finally put a much-needed cap on what they could earn while in office.
The avarice displayed by Kenya’s political elite has been a stain on Kenya’s reputation since the 9th and 10th parliaments awarded MPs exorbitant salaries. These recent demands, if met, will not only drain the country’s resources, it will further dent the country’s image.
President Uhuru Kenyatta has said his government will not entertain such demands. This and other sensible decisions he might make in the coming weeks may assuage some of the fears sceptics have about his commitment to implementing the Constitution.
It is also not lost on Kenyans that after threatening “consequences” and sanctions against Kenya if International Criminal Court indictees form the next government, Western countries and the UN are now revising their policies to accommodate the Kenyatta government.
The UN has issued new guidelines that state that its officials need not avoid contact with people facing charges at the ICC as long as they cooperate with the court.
Meanwhile, Uhuru’s Obama-like sleeves-up-touchy-feely-hand-holding-first-name-calling informal style is making people wonder whether this new look is mere PR or whether he is setting an example on how government should interact with citizens. Let us hope it is the latter.