The crusade by the BRICS (Brazil, Russia, India, China and South Africa) group of nations to create a new
financial infrastructure would have a positive impact on the development prospects of African nations, said
Ashraf Patel, a senior research associate with the Institute for Global Dialogue and member of the South Africa BRICS Think-Tank Network, in an interview with Sputnik.
Noting that the launch of the BRICS alternative reserve currency would be "a huge boost" for Africa, he emphasized that a proper payment mechanism is needed to make sure it is beneficial for all the parties concerned. In this regard, Patel stressed that BRICS should
work closer with the African Union and other regional blocs, and also invite the organization to the forthcoming BRICS summit.
Patel explained that this initiative is particularly important for African countries, given that many of them are facing the challenge of huge debt repayments, and "this is mainly with the creditors in the North," such as the IMF. He recalled that the world's major financial institutions haven't offered either a sustainable solution to the African nations' debt problems, or debt rescheduling.
Over the past several months, the BRICS member states and other countries across the globe have made major strides in adopting alternative currencies, in particular China's yuan, for trade deals. Patel noted that many states, including Russia, China, India, Iran, Argentina, and Brazil have embarked on "a definite policy shift" in using other currencies instead of the US dollar.
He explained that this trend is currently gaining momentum as it goes beyond trade relations, altering the "geographic economic reality" and global politics with the economic power shifting from the North to the East and South.
Even though the dollar is still the world's dominant currency, he noted, there is a trend currently seen in EU policy that would be able to undermine the US' dominance in the international financial system. He explained that the EU is now trying "to take an independent line in world affairs, both politically, foreign policy-wise, and economically". The countries are willing to diversify their trade relations and follow a more independent foreign policy which could ultimately be a cause of concern for the US, the expert said.
Patel also recalled that many nations have recently voiced their
intention to join the BRICS bloc. He noted that these countries, such as Argentina, Saudi Arabia and Iran are "the powerhouses in the developing world" and particularly in their regions. Therefore, they would be "a huge boost for BRICS states" in terms of expanding trade relations within the bloc and creating a new financial infrastructure. In this regard, he reiterated, it is necessary to make sure that African nations are also part of these major developments.