BRICS influence grows as it invites six countries to join

Welcoming the new member countries President Lula Da Silva of Brazil said, "With this expansion, the GDP of BRICS is now 36% of global GDP and 47% of the world's population". This is a significant development, and the West is surely taking notice of the unity in the active cooperation of emerging market economies.

The addition of two African countries will be welcomed by the continent and will be seen as a major accomplishment of President Cyril Ramaphosa's Chairship of BRICS.

Ethiopia is a major economic player in the East Africa region and the headquarters of the African Union are based in its capital Addis Ababa. Egypt is the leading economy in North Africa and is seen as an important bridge between Africa and the Middle East.   

The Arab world and BRICS

However, the biggest beneficiaries of the expansion are countries from the Arab world. With three countries coming from the Arab region, they are now poised to play a major role in the direction of the bloc — particularly when it comes to global energy markets.

BRICS countries could soon account for over 40% of the world's oil production and over 30% of global consumption. Some analysts have already begun to speculate that this development could result in the beginning of the end for the so-called "petrodollar".

Read more: Is the petrodollar losing its lustre?

This means oil producers could push for oil export revenues to be paid in currencies other than the US dollar.

The invitation to Saudi Arabia — the biggest oil producer in the world and the fastest-growing economy in the Middle East — is a significant coup for BRICS, and it now means the bloc has become a key player in the oil and gas sector.

The attraction for Saudi Arabia in joining BRICS centres around shared core values, these include mutual economic and political cooperation, non-interference and respect for national sovereignty.

While Saudi Arabia's economy might be the major economy in the Middle East, it's still heavily reliant on oil as a single sector. Aligning with BRICS provides a major opportunity for the Saudis to work with diversified economies in order to accelerate other economic sectors that will drive renewed economic growth.

Tourism, sports, trade and industrial development are just some of the avenues that Saudi Arabia has earmarked as drivers of its Vision 2030 programme.

On his part, Saudi Arabia's foreign minister said that the Kingdom appreciated the invitation by BRICS to join the group and would study the details before the proposed 1 January joining date and take "the appropriate decision."

Brics common currency

While there may have been unity in expanding the bloc, it wasn't the case at the BRICS Business Forum when the issue of forming a common currency was discussed.

Business leaders from the developing world engaged in robust debate about the practicalities and quite frankly the impracticalities of using a single BRICS currency. The consensus was that while a single currency might be desirable, it's not implementable at this stage, and it will take a long time to materialise.

The hurdles that stand in the way of a common BRICS currency are many. All of the member countries have different monetary regimes, China and Russia have state-owned central banks while South Africa, India and Brazil have independent central banks.

Read more: A BRICS currency is nothing more than a pipe dream

China and Russia aren't willing to cede control of their central banks in order to form a new currency. So, in many respects, the five-member bloc is still very far away from each other from a fiscal policy perspective. The addition of six new members won't make the situation easier because they bring a whole new host of political and economic differences.

The most positive discussions around the issue of de-dollarisation came from the New Development Bank — an institution set up by BRICS to provide infrastructure loans to developing countries.

The Shanghai-based lender, also known as the "BRICS Bank" plans to increase its use of local currencies in facilitating trade and investment to 30%. While 70% of the bank's funding will still be dollar-denominated, the move to local currencies is a significant step in reducing its reliance on the greenback.

The NDB is seen as one of BRICS' main success stories, it has distributed over $30bn of loans to fund projects in the developing world —18% of which are in South Africa.

Summit declarations

The wide-ranging summit declarations adopted by the leaders are an indication of the major issues that BRICS wants to prioritise.

South Africa's President Cyril Ramaphosa said the declarations reflected key BRICS messages on matters of "Global economic, financial and political importance. Which demonstrate the shared values and common interests that underlie our mutually beneficial cooperation."

For South Africa — from an organisational and policy perspective—  the 15th BRICS summit has been a major success, and the event has been historic in terms of adopting new members and reshaping the international order.

The continued growth of BRICS comes at a time of increasing global polarisation and stark geopolitical differences between major world powers.

The Russia-Ukraine war and tensions between the United States and China are the major political events of the day. New members add more clout to BRICS and the bloc sees itself as a champion for the global south and as a viable counterweight to the West

Emerging market economies are aligning themselves in an organisation that serves as a powerful and unified political voice of the global south. With the addition of six new members, BRICS now represents almost half of the world's population, and this is enormous from a political standpoint.

However, for the billions of people in the global south, the true measure of BRICS' success will be economic prosperity, and that is still to be realised.

The next summit will be hosted in the Russian city of Kazan in 2024.