The BRICS in Africa: Promoting Development? 9780796926555

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The in Africa Promoting Development? Edited by: Funeka Y. April, Modimowabarwa Kanyane, Yul Derek Davids and Krish Chetty

Published by HSRC Press Private Bag X9182, Cape Town, 8000, South Africa www.hsrcpress.ac.za First published 2023 ISBN (soft cover) 978-0-7969-2637-1 ISBN (PDF) © 2023 Human Sciences Research Council This book has undergone a double-blind independent peer-review process overseen by the HSRC Press Editorial Board. The views expressed in this publication are those of the authors. They do not necessarily reflect the views or policies of the Human Sciences Research Council (the Council) or indicate that the Council endorses the views of the authors. In quoting from this publication, readers are advised to attribute the source of the information to the individual author concerned and not to the Council. The publishers have no responsibility for the continued existence or accuracy of URLs for external or third-party Internet websites referred to in this book and do not guarantee that any content on such websites is, or will remain, accurate or appropriate. Copy edited by Debbie Rodrigues Typeset by Conor Ralphs Cover design by Conor Ralphs Printed by Tandym Print Distributed in Africa by Blue Weaver Tel: +27 (021) 701 4477; Fax Local: (021) 701 7302; Fax International: 0927865242139 www.blueweaver.co.za Distributed in Europe and the United Kingdom by Eurospan Distribution Services (EDS) Tel: +44 (0) 17 6760 4972; Fax: +44 (0) 17 6760 1640 www.eurospanbookstore.com Distributed in the US, its possessions, Canada, and Asia by Lynne Rienner Publishers, Inc. Tel: +1 303-444-6684; Fax: +1 303-444-0824; Email: [email protected] www.rienner.com No part of this publication may be reproduced, stored in a retrieval system, or transmitted by any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission from the copyright owner. To copy any part of this publication, you may contact DALRO for information and copyright clearance. Tel: 010 822 7469 (from within South Africa); +27 (0)10 822 7469 Fax: +27 (86) 648 1136 Email: [email protected] Postal Address: PostNet Suite #018, PO Box 9951, Sandton, 2146, South Africa www.dalro.co.za Any unauthorised copying could lead to civil liability and/or criminal sanctions. Suggested citation: Funeka Y. April, Modimowabarwa Kanyane, Yul Derek Davids and Krish Chetty (2023) The BRICS in Africa: Promoting Development? Cape Town: HSRC Press

Contents

Abbreviations and acronyms Foreword Acknowledgements Chapter 1: Introduction and general Overview Yazini April and Modimowabarwa Kanyane

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Section 1: Governance in the Post-COVID-19 Era Chapter 2: BRICS governance and ethics architecture: Challenges and prospects Modimowabarwa Kanyane Chapter 3: China–Africa cooperation in the post-pandemic era: Challenges and way forward He Wenping

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Section 2: Relevance of BRICS Multi-Development Bank Funding and Infrastructure Development Chapter 4: BRICS New Development Bank: A development finance model conducive to strengthening South–South Cooperation Robert Ridolfi Chapter 5: BRICS, the New Development Bank and African development Isaac Khambule Chapter 6: Strengthening the BRICS Financial Cooperation Mechanism: Promoting pragmatic development Li Yijun Chapter 7: Analysing the BRICS Development Bank's response to COVID-19 Modimowabarwa Kanyane and Namhla Ngqwala

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Section 3: BRICS and Technology in Africa Chapter 8: The future of work in South Africa 133 Krish Chetty Chapter 9: Financing renewable energy technologies in BRICS 155 Kamleshan Pillay, Cyril Prinsloo, Jaya Josie, Frank Naidoo and Krish Chetty Chapter 10: Promoting financial technology partnerships in BRICS 179 Krish Chetty, Jaya Josie, Shenglin Ben and Zheren Wang

Section 4: Addressing Economic Development Disparities and Inequalities in BRICS and Africa Chapter 11: BRICS and transformation of Africa’s infrastructure in the COVID-19 era: Rhetoric and reality 207 Robert Tama Lisinge Chapter 12: Lessons in sustainable development for South Africa from the affordable housing policy of the BRICS countries 229 Jaya Josie, Krish Chetty and Yul Derek Davids Chapter 13: Women entrepreneurs in the BRICS informal economy: A transformative agenda amid the COVID-19 pandemic 253 Obianuju E. Okeke-Uzodike Chapter 14: BRICS: Finding and Funding the Nexus Between Peace, Security and Development 277 Buntu Siwisa Chapter 15: African low-income countries’ leapfrogging development and the role of the BRICS countries: A case study of Ethiopia and Rwanda 297 Ai Ping and Zhong Weiyun

Section 5: BRICS and the Health Industry in Africa Chapter 16: An innovation-sharing platform for vaccine research in BRICS: Strategies for the sustainable financing of innovation Krish Chetty and Charles Hongoro Chapter 17: Assessing COVID-19 and telemedicine collaboration on energy and internet communications technology: Implications for health in Africa Yazini April and Li Mengdi Chapter 18: China–Africa health cooperation and its implications during the COVID-19 pandemic Zhaoyi Liu Chapter 19: Resilience of health systems to disease outbreaks: COVID-19 – A comparative analysis of South Africa and other BRICS countries using the Global Health Security Index Charles Hongoro, Emmanuel Sekyere and Wilfred Lunga Chapter 20: Conclusion: Way forward for BRICS and development in Africa Krish Chetty and Yul Derek Davids About the Authors Index

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Abbreviations and acronyms 4IR ACDC ACWC

Fourth Industrial Revolution Africa Centres for Disease Control and Prevention The ASEAN Commission on the Promotion and Protection of the Rights of Women and Children ADB Asian Development Bank ADVANCE Accelerated Development of Vaccine Benefit-Risk Collaboration in Europe AF Adaptation Fund AfCFTA African Continental Free Trade Agreement AFD Agence Française de Développement (French Development Agency) AfDB African Development Bank AICHR ASEAN Intergovernmental Commission on Human Rights AIDS acquired immunodeficiency syndrome AIF Academy of Internet Finance AIIB Asian Infrastructure Investment Bank AIMM Anticipated Impact Measurement and Monitoring system AMC advanced market commitment APSC ASEAN Political-Security Community AR augmented reality ARD Agricultural Research for Development AREI Africa Renewable Energy Initiative ASCC ASEAN Socio-Cultural Community ASEAN Association of Southeast Asian Nations AU African Union AUC African Union Commission AUDA African Union Development Agency BOD board of directors BRI Belt and Road Initiative BRICS Brazil, Russia, India, China and South Africa BRL Brazilian Real BTI Bertelsmann Stiftung’s Transformation Index BTTC BRICS Think Tanks Council CADF China–Africa Development Fund CAF Corporação Andina de Fomento (Development Bank of Latin America) CAHF Centre for Affordable Housing Finance in Africa CAR Central African Republic CASS Chinese Academy of Social Sciences CCCC Council of Europe Criminal Law Convention on Corruption CCCMHPIE China Chamber of Commerce for Import and Export of Medicines and Health Products

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CCI CCS CDB CDC CDM CDP CEPI CO2 COGTA COIDIC

Chamber of Commerce and Industry carbon capture and storage China Development Bank Commonwealth Development Corporation Clean Development Mechanism Cassa Depositi e Prestiti (Deposits and Loans Fund) Coalition for Epidemic Preparedness Innovations carbon dioxide Cooperative Governance and Traditional Affairs China Overseas Infrastructure Development and Investment Corporation COMESA Common Market for Eastern and Southern Africa COP Conference of the Parties COVID-19 Coronavirus Disease 2019 COVAX COVID-19 Vaccines Global Access CPI Corruption Perceptions Index CSIR Council for Scientific and Industrial Research DBSA Development Bank of Southern Africa DEG Deutsche Investitions- und Entwicklungsgesellschaft (German Investment Corporation) DFI development-finance institution DHET Department of Higher Education and Training DHS Department of Human Settlements DIRCO Department of International Relations and Cooperation DoE Department of Energy DRC Democratic Republic of the Congo DST Department of Science and Technology DTI Department of Trade and Industry DTPS Department of Telecommunications and Postal Services EBRD European Bank for Reconstruction and Development ECOSOCC Economic, Social and Cultural Council ECOWAS Economic Community of West African States EDFI European Development-Finance Institution EDPRS Economic Development and Poverty Reduction Strategy EFSD European Fund for Sustainable Development EIB European Investment Bank EIC Ethiopian Investment Commission EIP external investment plan EMDC emerging market economies and developing countries EPRDF Ethiopian People’s Revolutionary Democratic Front ESG environmental social governance EU European Union EVRI European Vaccine Research and Development Infrastructure

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FAO FDI FEEM FinTech FLISP FOCAC FSI G20 Gavi GB GCF GDP GEEREF GEF GEM GERD GFHI GFI GHS GHSI GMP GSMA GTP HDI HF HIV HSRC IBGE IBRD IBSA ICA ICASA ICT IDASA IDCPC IEA IEEFA IFC IGCC IGD IHR

Food and Agriculture Organisation of the United Nations foreign direct investment Fondazione Eni Enrico Mattei  financial technologies Finance-Linked Individual Subsidy Programme Forum on China–Africa Cooperation Fragile States Index Group of 20 Global Alliance for Vaccines and Immunisation governing board Green Climate Fund gross domestic product Global Energy Efficiency and Renewable Energy Fund Global Environment Facility Global Entrepreneurship Monitor Grand Ethiopia Renaissance Dam Global FinTech Hub Index global financial institution Global Health Security Global Health Security Initiative good manufacturing practice Groupe Spéciale Mobile Association (Global System for Mobile Communications) Growth and Transformation Plan Human Development Index human factor human immunodeficiency virus Human Sciences Research Council Brazilian Institute of Geography and Statistics International Bank for Reconstruction and Development India, Brazil, South Africa Forum Infrastructure Consortium for Africa Independent Communications Authority of South Africa information and communications technology Institute for Democratic Alternatives in South Africa International Department of the Central Committee of the Communist Party of China International Energy Agency Institute for Energy Economics and Financial Analysis International Finance Corporation integrated gasification combined cycle Institute for Global Dialogue International Health Regulations

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IKS IMF IMI IP IPP IRP ISRO ITU JEE JIAS LED LGSETA MDB MDG MHUPA NAM NDB NDP NEPAD NERSA NGO NHBRC NIHSS NIR NO3 NORAD NURCHA OECD PartNIR PAP PCRD PDA PIDA PPA PPP PRASA PRISMA PV QII R&D RDP RE REC

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indigenous knowledge systems International Monetary Fund International Monetary Institute intellectual property independent power producer Integrated Resource Plan Indian Space Research Organisation International Telecommunications Union Joint External Evaluation Johannesburg Institute for Advanced Study local economic development Local Government Sector Education and Training Authority multilateral development bank Millennium Development Goal Ministry of Housing and Urban Poverty Alleviation Non-Aligned Movement New Development Bank National Development Plan New Partnership for Development National Energy Regulator of South Africa non-governmental organisation National Home Builders Registration Council National Institute for Humanities and Social Sciences New Industrial Revolution nitrogen oxide North American Aerospace Defence Command National Urban Reconstruction and Housing Agency Organisation for Economic Co-operation and Development Partnership on New Industrial Revolution Priority Action Plan post-conflict and reconstruction development personal digital assistant Programme for Infrastructure Development in Africa power purchase agreement public–private partnership Passenger Rail Agency of South Africa preferred reporting items for systematic reviews and meta-analyses photovoltaic quality infrastructure investment research and development Reconstruction and Development Plan renewable energy regional economic community

REFIT REI4P

renewable energy feed-in tariff Renewable Energy Independent Power Producer Procurement Programme REIPPP Renewable Energy Independent Power Producer Procurement RHLF Rural Housing Loan Fund RMB Rand Merchant Bank RPF Rwandan Patriotic Front SAATM Single African Air Transport Market SABTT South African BRICS Think Tank SACU Southern African Customs Union SADC Southern African Development Community SALGA South African Local Government Association SARS Severe Acute Respiratory Syndrome SARS-CoV-2 Severe Acute Respiratory Syndrome Coronavirus 2 SDG Sustainable Development Goal SEIR Susceptible–Exposed–Infectious–Removed  SHRA Social Housing Regulatory Authority SME small and medium-sized enterprise SMME small, medium and micro enterprise SO2 sulphur dioxide SOE state-owned enterprise S–SC South–South cooperation STEM science, technology, engineering and mathematics TA technical assistance TAH Trans-African Highway TCFD Financial Stability Board Task Force on Climate-Related Financial Disclosures TI Transparency International Tralac Trade Law Centre TRIPS Trade-Related Aspects of Intellectual Property UJ University of Johannesburg UN United Nations UNCAC United Nations Convention Against Corruption UNCHS United Nations Centre for Human Settlements UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme UNDRR United Nations Office for Disaster Risk Reduction UNECA United Nations Economic Commission for Africa UNECE United Nations Economic Commission for Europe UNEP United Nations Environment Programme UN-ESCAP United Nations Economic and Social Commission for Asia and the Pacific UNFCCC United Nations Framework Convention on Climate Change

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UNGA UNGASS UNIDO UNOSAA UNSC US USAID USSD VR WBGDG WEF WHO WPG WTO ZIBS

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United Nations General Assembly United Nations General Assembly Against Corruption United Nations Industrial Development Organisation United Nations Office of the Special Adviser on Africa United Nations Security Council United States United States Agency for International Development Unstructured Supplementary Service Data virtual reality World Bank Gender and Development Group World Economic Forum World Health Organisation Wise Persons Group World Trade Organisation Zhejiang University International Business School

Foreword The Brazil, Russia, India, China and South Africa (BRICS) bloc provides the roadmap to a multipolar global system based on increased international collaboration, expanded South–South cooperation and a vision for a new global order informed by the Bandung spirit, anti-colonisation and anti-imperialism. The post-Cold War unipolar system has brought increased conflict and greater inequality to the world. BRICS seeks to correct this imbalance by building a new cooperative and just global order based on equality, respect and constructive collaboration. The BRICS project is thus a critical component of humanity’s quest for lasting international peace, stability and prosperity. While the challenge is great, BRICS (which constitutes over 40% of the world’s population) is rapidly becoming the global focus of world trade and investment. Continued BRICS cooperation and the expansion of this multilateral forum hold great promise for a new, more peaceful, prosperous and productive world order. This book makes a significant contribution in providing appropriate and relevant intellectual building blocks for continued and expanded BRICS cooperation. BRICS is a relatively new institution, thus significant planning, careful consideration and inspiration are required to advance and expand productive collaboration. Many areas of successful and future cooperation are outlined and investigated in this book. Seven areas of critical South–South engagement are the focus of this timely and important study. International governance reform is an urgent priority for BRICS and the Global South in the quest to advance political and economic equality. Financing urgently needed construction in BRICS countries constitutes an important and central theme. The role of technology in advancing development and facilitating increased cooperation is also investigated. Economic development, and especially the central role of women in development, constitutes a central theme of the current and future development of BRICS. In response to the COVID-19 pandemic, BRICS has played a critical role in overcoming this challenge. Continued healthcare cooperation remains a key priority of BRICS. Given the unfortunate increase in regional competition and conflict, BRICS’s commitment to peace and security takes on a new and more urgent priority. This book is essential reading for all scholars, researchers and policy-makers who are interested in multilateralism, BRICS, and the peaceful and constructive transformation of the global system. Humanity’s quest for perpetual peace and common prosperity are at the heart of the BRICS agenda and long-term vision. This important study makes a very significant intellectual contribution to the realisation of that vision. Readers will be inspired, motivated and challenged to contribute to the BRICS debate going forward. Prof. Garth Shelton (University of the Witwatersrand) and Dr Farhana Paruk (Gordon Institute of Business Science)

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Acknowledgements We would like to express our heartfelt thanks to the National Research Foundation (NRF) for supporting and sponsoring the BRICS and African Development Conference held at Nelson Mandela University in 2018. This conference was a vital platform for scholars and researchers from around the world to come together and exchange ideas on some of the most pressing issues facing BRICS and African countries. It was at this conference that this book was born. We are deeply grateful to the NRF for their commitment to fostering academic research and their contribution to the success of this conference. Our appreciation to the National Institute for Humanities and Social Sciences (NIHSS) for their co-sponsorship of this book. The NIHSS has been a key partner in promoting and supporting research in the humanities and social sciences, and we are grateful for their continued support. We would also like to thank the Academy of Contemporary China and World Studies (ACCWS) for their assistance in promoting Sino–South African academic partnerships and for their support in the writing of this book. The ACCWS has played a crucial role in fostering collaborations between Chinese and South African scholars, and we are grateful for their contribution to this project. The Human Sciences Research Council (HSRC) – specifically its Developmental, Capable and Ethical State Division and Inclusive, Economic Development Division – should be acknowledged for providing the institutional home for this project. Finally, we would like to acknowledge the hard work and dedication of all the authors who contributed to this book. This includes external reviewers who gave of their time to review the chapters to ensure that these meet acceptable quality standards. The blind review and the editorial processes were quality checks built into this book. We are deeply grateful to every one of you for your contributions.

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Introduction and General Overview Yazini April and Modimowabarwa Kanyane

1.1 Introduction Brazil, Russia, India, China and South Africa (BRICS) have become an engine of South–South cooperation (S–SC) (UNECA 2014). The most significant outcome of the emergence of BRICS is the shift in the balance of power in global affairs. In the past decade, the international community has witnessed BRICS members becoming more actively involved in world affairs. The BRICS countries are prominent regional players, maintaining regional security and dealing with economic challenges either by working through regional institutions or sometimes coordinating with major external players (O’Neill & Stupnytska 2009). The BRICS countries collectively represent about 26% of the world’s geographic area and 40% of the world’s population (Dresen 2011). BRICS has aimed to reform global governance processes practised within various international institutional frameworks that do not match the scope and nature of 21st century challenges such as food insecurity, water insecurity and COVID-19. BRICS has shown tremendous determination and cooperation on global issues in recent years. Their alliance epitomises S–SC in the contemporary era (Anwar 2015). ‘South–South cooperation’ is a term historically used by policy-makers and academics to describe the exchange of resources, technology and knowledge between developing countries (also known as countries of the Global South). BRICS is a continuation of the tradition of the historic Bandung Conference to galvanise their collective muscle in the context of the Cold War and assert themselves in the international system. According to the BRICS leadership, the present context of international relations and cooperation between South Asian, African, Latin American and Oceania countries (collectively known as countries of the South) remains essential and has become more critical than ever before (South African Government Media Statement 2018). The past decade has seen an increased acceleration of commercial and strategic engagements between BRICS and Africa. Currently, with South Africa being part of the BRICS emerging economic power, the BRICS countries constitute the largest trading partners of Africa and new potential investors. BRICS has nourished Africa’s economic emergence and elevated the continent’s contemporary global positioning.

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The BRICS countries are also becoming significant investors in Africa, especially in the manufacturing and service sectors. Concerning foreign direct investment, the BRICS countries have strengthened their presence on the continent compared with traditional partners such as the US and Europe in the West and North. Trade between the BRICS countries and Africa rose to US$340 billion in 2012 – ten times higher than the value recorded in 2002. Currently, the BRICS countries trade more with Africa than among themselves (AfDB 2013). Trade between China and Africa, for example, has grown dramatically. China is Africa’s biggest trading partner at about US$254 billion in 2022 (Squazzin 2022). By 2018, South Africa exported and imported goods to the value of US$25 billion and US$11.5 billion respectively to and from the rest of Africa (Tralac 2021). Intra-Africa exports account for 11% of South Africa’s total exports and imports. South African exports to the rest of Africa are predominantly value-added goods (Tralac 2021). South Africa accounts for one-third of the sub-Saharan African economy and is an entry point for other BRICS countries to access Africa’s onebillion-strong consumer market (AfDB 2013). India has  emerged as one of the top five investors in Africa in recent years, with cumulative investments on the continent amounting to around US$74 billion (Majumdar 2022). From 2002 to 2012, Brazil’s overall trade with Africa quadrupled to US$20.6 billion, compared to its US$82-billion trade with the EU. The fastgrowing ties are overwhelmingly based on commodities exploitation as Africa taps Brazilian firms’ expertise in mining, oil exploration and tropical agriculture (Grudgings 2011). Although Africa was not the focus of Russia’s trade and foreign investment, it has become a new focal and growth point. By 2020, annual volume of trade between Russia and countries on the African continent reached US$14.5 billion (Statista 2022). Russian exports from, and imports to, the continent more than doubled between 2013 and 2018 (Statista 2022). Russia’s leading trade partner on the continent was Egypt. The value of goods and services exchanged with Egypt accounted for roughly one-third of the total trade volume between Russia and African countries (Statista 2022). In essence, BRICS has nourished Africa’s economic emergence and elevated the continent’s contemporary global positioning (South African Government Media Statement 2018). However, as mentioned earlier, the trading patterns between BRICS and the continent beg the question ‘What does BRICS mean for Africa?’ Is this bloc of countries committed to Africa by promoting continental self-reliance and economic diplomacy, or is it driven by self-interest? Also, South Africa must not be a proxy for African relations with BRICS, but a vital player to catalyse mutual interest. Given the COVID-19 pandemic, the current global climate in which the BRICS countries find themselves, and what it means for trade and investment on the continent, requires a publication of this nature. Serious questions must be asked and researched about the extent to which BRICS can collaborate with the continent

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on measures such as a global vaccine to counteract the coronavirus and future pandemics. This means fast-tracking the economy, given the economic slowdown and industrialisation, and effectively harnessing the Fourth Industrial Revolution (4IR). It requires BRICS’s collaboration with the continent to bounce back against the pandemic on a trajectory of economic recovery. The methodology of this book is premised on desktop research. The book is divided into five sections: (i) Governance in the Post-COVID-19 Era, (ii) Relevance of BRICS Multi-Development Bank Funding and Infrastructure Development, (iii) BRICS and Technology in Africa, (iv) Addressing Economic Development Disparities and Inequalities in BRICS and Africa, and (v) BRICS and the Health Industry in Africa. These sections are based on the 12th BRICS Summit, with the theme ‘BRICS Partnership for Global Stability, Shared Security and Innovative Growth’, in 2020 (Arfa 2020). It includes the 2018 BRICS Summit, which underscored the importance of multilateral development banks in countering the economic development challenges faced by the BRICS countries, strengthening coordination and cooperation on BRICS vaccine research, promoting the role of women in inclusive development, and peace and security. It also includes the 2021 BRICS Summit, the 13th summit hosted by India with the theme ‘Intra-BRICS Cooperation for Continuity, Consolidation and Consensus’. Based on the 2018, 2020 and 2021 BRICS Summits, the issue is whether the bloc will be able to pull its weight globally to cement its united positions on the global stage. If so, how would BRICS achieve global governance reforms in the post-COVID-19 era? Some of the critical issues and questions in this book include: • How can intra-BRICS and BRICS–Africa cooperation and partnerships (mainly through infrastructure, economic growth and the health industry) be improved? What is the desired impact of such engagements and interactions? • Determining whether the New Development Bank (NDB) remains relevant in mobilising finances from the national and multilateral development banks (MDBs) in the post-COVID-19 era. • Are institutions and public administration strategies needed within BRICS to further entrench BRICS governance cooperation with the African Union (AU) from a Global South perspective? • Following the BRICS partnership agenda, can BRICS–Africa partnerships contribute to technology advancement, economic growth and knowledge sharing in the technology sector? • Determining strategies that address women and gender developmental disparities and inequalities in BRICS and Africa.

1.2 Governance in the post-COVID-19 era Scholars have used the term ‘governance’ to denote the regulation of interdependent relations in the absence of overarching political authority, such as in the

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international system. It encompasses the institutions, policies, norms, procedures and initiatives whereby states and their citizens try to bring more predictability, stability and order to respond to transnational challenges. Governance covers many global, regional, national and local sectors. Accountability and checks and balances on public administration and public policies are essential for effectively providing public goods, delivering services and funding infrastructure. Accountability is a cornerstone of citizens’ perception of good governance and is crucial for the quality of public policies and the provision of public goods (World Bank 2015). Before the COVID-19 pandemic, some governments already faced multiple challenges in managing their economies and delivering services. The crisis has exposed vulnerabilities such as coordination failures, weak public institutions, ineffective and inefficient use of limited resources, insufficient accountability, and issues of patronage and corruption. Despite these concerns, governments are at the heart of the response to COVID-19. The nature of the pandemic necessitates action on multiple fronts, not just public-health measures to prevent the spread of the virus but also efforts to cushion the economic effects on local economic development; small, medium and micro-enterprise growth; informal growth; households; and the industrial sector. Governance measures spill over into the regional and global community. For example, the COVID-19 pandemic exposed the need for global governance to address growing hunger. South Africa, India and Brazil are BRICS countries that have experienced increased hunger challenges during the pandemic due to minimal government accountability and ethics. COVID-19 provides an unprecedented opportunity for the BRICS countries to provide a revised approach to global governance norms and implementation to promote sustainable development and poverty reduction on the continent. This governance section addresses the various levels of governance in BRICS countries regarding ethics, accountability, public administration, economic and innovative governance in their alliance and relations with the continent. The quality of governance is key in understanding the BRICS and continental growth story. Both economic theory and cross-country contexts suggest that governance is a critical factor in economic development, and it correlates with faster growth, higher investment and increased poverty reduction. Innovative governance is also an essential tool for public administration, as it can facilitate better policy decisions designed to address 21st century societal complexities and a holistic understanding of well-being (Malhorta 2015). Public administration cannot remain its old self; it should evolve. Several countries are attempting to revitalise their public administration through innovative e-governance (and mobile phones) to reduce corruption. It is vital to highlight the 2020 BRICS Summit Section 44 commitment, which states: …to promote international anti-corruption cooperation, particularly, in light of the 2021 Special Session of the United Nations General Assembly Special

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Session Against Corruption (UNGASS), strengthen BRICS collaboration, including within multilateral frameworks, subject to domestic legal systems, on all issues related to anti-corruption law enforcement, including on matters related to asset recovery and denying safe haven to corrupt persons and proceeds of corruption. We welcome the 2021 UNGASS and promote the United Nations Convention Against Corruption (UNCAC) as an important channel for international anti-corruption cooperation. We encourage the BRICS Anti-Corruption Working Group to continue its work in this regard. (BRICS 2020) The above commitment by the BRICS heads of state relates to Chapter 2, which focuses on ethics and governance from a comparative perspective among the BRICS countries. In this chapter, Modimowabarwa Kanyane emphasises how social accountability as a civic engagement should escalate to other BRICS countries to resolve their corruption troubles. The chapter examines whether BRICS understands global governance architecture based on its response mechanism for resolving ethical challenges at country levels. Issues of ethical leadership, anti-corruption structures, virtues, values and moral compass remain crucial and are subjected to scrutiny in the BRICS community. In Chapter 3, He Wenping examines the issue of global governance at another level among the BRICS countries, with a focus on international political and economic governance. This author argues that in the field of global governance, the ‘civilisational dispute’ and ‘model and system dispute’ presented by China and the US are in fact a reflection of this state of ‘China progress vs US retreat’ in the international system and pattern.

1.3 Relevance of BRICS Multi-Development Bank funding and infrastructure development A central goal of the NDB is to promote financial independence from Western multilateral banks and mobilise resources for infrastructure development. As the COVID-19 pandemic spread rapidly, the Chinese government turned to the NDB for support. Within weeks of loan approval, the NDB disbursed US$1 billion to Hubei, Henan and Guangdong – China’s three most affected provinces. In essence, the COVID-19 pandemic has demonstrated just how critical MDBs are in times of crisis. In other words, it has tested the strength and resilience of the NDB and the MDB to bounce back. In 2021, the NDB approved and disbursed US$4 billion, comprising a US$1-billion COVID-19 response loan each to Brazil, India, China and South Africa. The entire US$10 billion allocated in 2020 represented additional development assistance that would not have been available if the NDB had not been created five years previously (Maasdorp 2020).

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Another main objective of the NDB is to mobilise resources for sustainable infrastructure. Sustainable infrastructure in this sense refers to investments in sectors such as mixed energy generation, water, sanitation, transport and communications. Endowed with a subscribed capital base of US$50 billion, the NDB has played an indispensable role in providing additional pools of capital to BRICS countries to fund their sustainable infrastructure and economic development agenda. In July 2020, the NDB had an approved loan book of US$18.3 billion representing 56 significant infrastructure projects spread across the BRICS countries. Infrastructure development is also critical for continental growth (Maasdorp 2020). However, the NDB has focused more on internal lending and has not been open to African countries. As Robert Ridolfi asserts in Chapter 4, the critical question of the BRICS– Africa cooperation agenda is whether the NDB can be a real engine for sustainable development. Without a strategic development plan, the NDB will just wander into the same Western developmental model or Bretton Woods traps of structural adjustment programmes. These programmes have failed dismally to transform the African continent (Kanyane 2021b). According to the African Development Bank, Africa’s infrastructure development needs between US$130 billion to US$170 billion per year, with a financing gap of US$68 billion to US$108 billion (Kanyesigye 2019). African countries are still not sufficiently investing in connectivity and infrastructure, which significantly hampers regional trade. Apart from transport infrastructure for trade (border posts, road, rail, airports and seaports), security blockades, customs clearances, excessive border bureaucracy and petty corruption have held back growth and integration. Infrastructure development is also essential for initiatives such as the African Continental Free Trade Agreement (AfCFTA), as it provides a forum for social and economic mobilisation responsible for the conditions in which democratic governance is a viable option. Despite the NDB’s impact on promoting infrastructure at different levels on the continent, how should infrastructure in Africa be fast-tracked constructively? Currently, China is the leading BRICS country that has spent billions on continental infrastructure. China committed to lending African countries US$153 billion from 2000 to 2019 (Jennings 2021). To date, the continent has witnessed over 35 African countries engaging with China for infrastructure financing arrangements, with Nigeria, Angola, Sudan and Ethiopia the largest recipients of this arrangement (April 2015). China’s Belt and Road Initiative (BRI) has also contributed to continental infrastructure. In 2019, Kenya opened a US$1.5-billion Chinese-built railway line linking Nairobi and Naivash, touted as part of the BRI (Reuters 2016). A main caveat is that China should not be another neocolonial power on the continent, but rather a vital player in BRICS through the BRI. The Development Bank of Southern Africa (DBSA), a South African entity, has also played a significant role in funding infrastructure development on the continent. The DBSA actively supports the preparation and development

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of regional integration infrastructure projects such as the Southern African Development Community’s Project Preparation Development Facility (Heathcote 2018). Other examples of the DBSA’s key infrastructure projects are the US$400million development of Terminal 3 of Kotoka International Airport in Ghana through the Cenpower project (DBSA 2022). Interestingly, unlike the NDB which only lends to its members, the DBSA loans infrastructure funding to the Southern Africa region and the entire continent. Because NDB funding remains limited to BRICS member states, Isaac Khambule states in Chapter 5 that the bank’s impact remains limited. Khambule argues that influencing the reform of global financial institutions depends on BRICS’s ability to exert the NDB as an alternative to the International Monetary Fund (IMF) and the World Bank. Fully supporting the infrastructural developmental interests of African countries will set BRICS and the NDB apart from other global financial institutions. In addition, Khambule questions the NDB’s ability to assist the continent, given that the IMF has dominated lending to African countries and other developing nations during the COVID-19 pandemic – demonstrating a missed opportunity for BRICS countries to exert the NDB as the leading lender for developing nations. In Chapter 6, Li Yijun first stresses that due to the investment and financing practices of the NDB and BRICS countries, the BRICS cooperation mechanism has already become a formidable new force. First, the NDB is designed to drive the construction of the international financial cooperation mechanism and reconstruct the new international economic order. Second, this author argues that by enhancing investment and financing cooperation, BRICS can bring its comparative advantages in industrial development into full play, coordinate development strategy, participate in the global industrial division and integrate into the world economic development system. Suffice to say, it remains to be seen whether the NDB can recover from the economic loss resulting from the COVID-19 pandemic. This is covered by Modimowabarwa Kanyane and Namhla Ngqwala in Chapter 7. These authors indicate how COVID19 challenges could transcend the bank’s ability to fulfil its developmental mandate, especially its contribution to Africa and other regions of the Global South. Kanyane and Ngqwala maintain that the creation of similar BRICS mechanisms and methods is needed to assess the alignment of both public and private finance with the Sustainable Development Goals (SDGs). BRICS should commit to transforming investment behaviour and encouraging sustainable investments that promote more robust recovery in countries severely affected by COVID-19, working with the private sector and civil society.

1.4 BRICS and technology in Africa This section determines further how NDB financing could facilitate continental development inclusive of the 4IR and other infrastructure sectors such as energy.

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Digitalisation will soon underpin and impact all elements of society. A digital divide is an economic and social inequality about access to, use of, or impact due to information and communications technology (ICT) (Ortiz 2008). The issue of global inequality is connected to the digital divide because technology is an aspect of material wealth, and wealth production is based more on technology and knowledge. BRICS has made it clear that 4IR-related projects should be prioritised by the bloc. For this reason, digital trade, the use of digital solutions in intellectual property development and the promotion of artificial intelligence technologies were high on the agenda of the 2018 summit. BRICS recognised the significance of the 4IR through the 2018 BRICS Summit’s theme ‘BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution’. In 2019, the BRICS heads of state stated: We recognise the New Industrial Revolution (NIR) as a critical development opportunity from which all countries must equally benefit while acknowledging the challenges it brings forth. We note with satisfaction the progress in implementing the Johannesburg Summit decision to commence the full operationalisation of PartNIR. (BRICS Heads of State 2019) The BRICS PartNIR is an advisory group that promotes BRICS partnerships on matters concerning the NIR (BRICS Heads of State 2019). This group supports international cooperation while developing a work plan for digitalisation, industrialisation, innovation, inclusion and investment. To leverage the collective technological gains among the BRICS countries, partnerships ensure that knowledge and technical capabilities can be better dispersed within the bloc. Therefore, this section identifies the new opportunities resulting from the NIR and discusses strategies to set up partnerships that will leverage these opportunities. In particular, the section emphasises opportunities from the financial technology (FinTech) sector across BRICS. With the expansion of the FinTech sector in Africa, there is an expected increase in the financial inclusion of disadvantaged communities across the continent, thereby increasing their resilience to economic shocks. Africa is critical because it is the most marginalised and excluded region globally. Given Africa’s exclusion, one must ask whether Africa benefits more or less than industrialised countries from the rise of the internet and new technologies. In Chapter 8, Krish Chetty explores the relationship between social cohesion and technological advancement in South Africa to identify how the digital divide could be bridged to help grow the economy. The high levels of inequality and poverty in South Africa indicate that the population does not benefit from technological advancements equitably. For digital innovations to have a more significant impact, accessibility to such products or services should be improved for the poor. In Chapter 9, Kamleshan Pillay, Cyril Prinsloo, Jaya Josie, Frank Naidoo and Krish Chetty assert that the energy sector is a crucial driver for BRICS to transition to

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sustainable economic growth. The chapter focuses on the energy sector, with a specific interest in financing renewable energy (RE). The authors maintain that the NDB must support green bonds by promoting capacity building to issuers in terms of these bonds’ ability to attract new investors to the market. Moreover, there is a need for more extensive mapping of the complementarity of RE value chains across BRICS, as there is a significant demand for RE goods in all the BRICS countries. Rapid developments in ICT over the last two decades have prompted enquiries about what role these can play in development and whether developing countries can cope without them (BRICS Heads of State 2019). In Chapter 10, Krish Chetty, Jaya Josie, Shenglin Ben and Zheren Wang discuss how FinTech partnerships are critical for the BRICS countries and the continent. Arguably, financial technologies present various opportunities for developing and emerging economies, particularly in Southern and East Africa. By investing in such technologies, African countries have a chance to leapfrog expensive infrastructure investments previously made in the developed world, thus supporting greater financial inclusion in these countries. Given that FinTech advancement in China outpaces the rest of the world, the knowledge attained by their giant FinTech operators would greatly benefit FinTech sectors on the continent.

1.5 Addressing economic development disparities and inequalities in BRICS and Africa At the 2018 BRICS Summit, the BRICS leaders undertook to take their cooperation forward to support Africa’s efforts to accelerate the diversification and modernisation of its economies. This acceleration would be achieved through infrastructure development, knowledge exchange, support for increased access to technology, enhanced capacity building and investment in human capital (including within the framework of the New Partnership for Development [NEPAD]) (South African Government Media Statement 2018). However, despite their commitment to Africa, infrastructure development remains a widely acknowledged ‘hard development’ challenge within BRICS. The issue is whether BRICS – and Africa as a continent – can be lifted out of inequality, poverty and underdevelopment. It should be noted that even though high growth continental rates continued over the past decade, mainly driven by resources, there have been signs of rising inflation and account deficits in some parts of the region (including South Africa). This section examines economic development disparities and inequalities in BRICS and Africa by looking at issues such as industrialisation, peace, security and development, and economic empowerment from a gender perspective. Therefore, it is important to state upfront that economic growth should correlate with economic development, avoiding such disparities. Industrialisation is critical for economic growth and development. Evidence shows that no country or region in the world has ever achieved prosperity and a decent

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socioeconomic life for its citizens without a robust industrial sector. The BRICS leaders have expressed support for infrastructure development in Africa and its industrialisation within the framework of NEPAD. They reiterated the highest importance of economic growth that supports development and stability in Africa, as many countries have not yet realised their full economic potential. In Chapter 11, Robert Lisinge argues that BRICS cannot effectively facilitate African infrastructure development and financing or regional projects unless its priorities are aligned with Africa’s regional infrastructure priorities. These regional priorities must be aligned with the national political agenda of countries on the continent. The author asserts that, to date, most BRICS institutions have not invested more in Africa’s infrastructure development due to (i) inconsistencies in priority projects of BRICS and African countries associated with differences in the economic and political power of the countries; (ii) the complexity of implementing regional projects involving two or more countries; and (iii) differences in the interests, agendas, and understandings of and interpretations of policies by BRICS and African countries. Consequently, despite their commitment to Africa, infrastructure development remains a widely acknowledged ‘hard development’ challenge within BRICS. The critical difficulties in ‘sustainable development’ are more nuanced and contextspecific. Perhaps distinctly divergent from the position of advanced economies, BRICS countries have repeatedly stressed poverty reduction and inclusive growth as prerequisites to sustainable development. Indeed, a commonplace within these economies has been to ‘take eradicating poverty and promoting development as the centrepiece of the Development Agenda beyond 2015 and collectively ‘addressing the challenges of poverty and inequality’ (People’s Republic of China 2013). This is not surprising, as human development indicators in BRICS countries continue to lag behind those of developed economies. The outcome should lead to Africa’s socioeconomic well-being and prosperity beyond poverty eradication interventions. In Chapter 12, Jaya Josie, Krish Chetty and Yul Derek Davids review housing policies in the other BRICS countries and attempt to understand the origins of the housing challenges in these countries. The analysis then returns to a review of South Africa’s housing policy to better understand the scale of the human settlement or housing gap. By introducing a targeted funding model informed by socioeconomic disparities within the NDB, the bank could begin to support addressing the funding gap for housing development in South Africa and possibly within BRICS. This chapter is relevant, as it unpacks strategies to reduce inequalities through the necessary housing infrastructure that would promote living standards and development against socioeconomic spillovers such as crime. Regarding gender developmental disparities and inequalities in BRICS and Africa, Obianuju E. Okeke-Uzodike in Chapter 13 addresses the devastating impact of COVID-19 and highlights the need for BRICS to prioritise issues of transformation and development of women within the respective countries’ policy frameworks,

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indirectly influenced by the level of industrialisation. Moreover, Okeke-Uzodike argues that BRICS should ensure a platform for capacity building beneficial to informal women entrepreneurs. The possibility of adopting an informal cluster management concept should be considered. The BRICS heads of state recognise the centrality of the defence of women and support the need to eliminate the inequalities faced by women in BRICS countries. It involves promoting women’s rights, increasing the opportunities for women to play a more significant role in inclusive development and promoting women parliamentarians. As stated in the 2018 BRICS Heads of State Summit declaration, ‘Emphasising the role played by women in promoting inclusive development, we note the work being done to consider the establishment of the BRICS Women’s Forum and the BRICS Women’s Business Alliance (BRICS 2018). The fact is that economic development among women cannot materialise if they are not empowered to become part of the industrial journey, be it through industrialisation, production or manufacturing from a local level. Peace and security are also essential ingredients of economic development. Arguably, no country can develop or grow economically without peaceful coexistence among its population and across borders. The fastest developing nations have the best security structures or architecture, and peace and tranquillity (Kimanuka 2018). Peace implies much more than just the absence of physical violence.  Peace and development are fundamentally related to globalisation and global social development processes. Of particular interest for peace and development is how local communities are affected by global change and how local actors navigate the international system of peace, conflict, security and development (Kimanuka 2018). The five BRICS countries have steadily increased cooperation in peacekeeping, energy security and counterterrorism over the past decade, and are coordinating against new threats such as climate change and cybercrime (Goodrich 2018). The coherent and stable character of the BRICS agenda can also be seen in the discursive structures used in the 2018 Johannesburg Declaration (BRICS 2018). The declaration starts by expressing BRICS’s commitment to advancing its three-pillarsdriven cooperation in the long term and contributing to world peace and stability. In continuance of the traditional articulation of previous declarations, the introduction opens with a series of programmatic articles. It expresses commitment to the UN multilateralism, rules and norms of international law, emphasising the prohibition of force in international affairs (Filippo 2020; South African Government 2018). However, it is time that these declarations come to fruition. Over the years, BRICS has promoted an approach to conflict resolution and conflict management that pays more attention to the sensitivities of developing countries, mindful of their colonial experiences. From a South-oriented perspective, the bloc commended the role of regional and subregional organisations such as the AU, the Arab League and the Economic Community of West African States (ECOWAS), and expressed support for ‘nationally-led, nationally-owned’ initiatives in peace processes.

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Moreover, BRICS urged the need to intensify the link between these actors and the United Nations (UN) by highlighting the importance of coordination at international, regional and local levels. Overall, what emerges from the BRICS vision for conflict management is a general preference for bottom-up strategies, characterised by low levels of intrusiveness of external actors and high levels of inclusion of local stakeholders. In Chapter 14, Buntu Siwisa explores how funding can, and should, consolidate links between peace, security and development. This author argues that BRICS is now best poised to undertake development interventions in peace, security and growth through linkages by using development agencies and providing a coordinated and systematic approach. It is suggested that slotting funding throughout all conflict resolution and conflict management phases is essential for effective development. Chapter 15, by Ai Ping and Zhong Weiyun, demonstrates how Africans can progress, through governance, to economic growth and development. The authors argue that the successful development of Ethiopia and Rwanda could be attributed to a conducive environment and a market economy with a plan. Ethiopia and Rwanda abandoned the command economy and embraced a free market economy. However, both governments also value the role of implementing an effective strategy instead of leaving the economy entirely unchecked.

1.6 BRICS and the health industry in Africa The book’s last section concentrates on developing partnerships that expand health services in BRICS and Africa. The chapters of this section pertain to vaccine research and broader health promotion priorities shared by the BRICS countries. In 2018, BRICS agreed that South Africa should host a state-of-the-art vaccine centre. The vaccine centre, based in Johannesburg, is set to give BRICS-affiliated countries, and those on the African continent, a platform for conducting thorough research to tackle the burden of diseases that continue to plague developing countries (Juta Medical Brief 2018). As the COVID-19 pandemic underscores the need for stepping up international cooperation in the healthcare sector, the process of setting up the BRICS Vaccine Research and Development Centre is even more prominent and pronounced during the COVID-19 pandemic. It is expected to gain momentum in the coming years. Today, the situation in Europe and Asia regarding research and high vaccination levels shows that COVID-19 can be defeated, just as two-thirds of the South African population could be vaccinated. The University of Johannesburg/Human Sciences Research Council study (the largest and most comprehensive study to date) showed that two-thirds of South Africans favoured the vaccine but about a third of the South African adult population remained unconvinced or hesitant. The support for vaccine adoption in South Africa is thus higher than in most countries in the world (Kanyane 2021a).

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All the BRICS countries are already involved in medical research, vaccine manufacturing and medical production. They play a substantial and increasing role in the global vaccine market through their vaccine manufacturers. The national regulatory authorities of four BRICS countries (Brazil, China, India and South Africa) were included as founding members of the World Health Organisation’s (WHO) Developing Country Vaccine Regulators Network, in addition to Cuba, Indonesia, the Republic of Korea and Thailand. Brazil, China, the Russian Federation and South Africa are members of the European Pharmacopoeia (Conway et al. 2019). South Africa’s Medicines Control Council (MCC) participates in the Pharmaceutical Inspection Co-operation Scheme (WHO 2013). Currently, of the vaccine manufacturers in BRICS, the ones in India are the most active globally. In Chapter 16, Krish Chetty and Charles Hongoro demonstrate how the pandemic exposed the need to accelerate research in vaccine production and streamline the vaccine production process. Infrastructure is therefore needed to facilitate the sharing of knowledge artifacts while working in a manner that continues to protect the intellectual property of those sharing their insights. Thus, knowledge and innovation sharing in vaccine and drug research is a core priority. Technological advances such as artificial intelligence (AI) make it feasible to embed language translation services into web-based platforms that can facilitate communication and collaboration. Regarding medical production in Africa, COVID-19 has exposed how vulnerable medical product supply chains are on the continent. Most African countries import a high number of drugs comprising 70 to 90% of imports – demonstrating a need to promote more local production (Conway et al. 2019). According to the UN Conference on Trade and Development and the WHO, many African countries need help to build their capacity to produce essential medical products such as vaccines, antibiotics and/or personal protective equipment. Productive capacity remains low (UNCTAD 2020). Of the 40 vaccine manufacturers in the 14 nations that are part of the Developing Countries Vaccine Manufacturers Network, only one is African – the Biovac Institute in Cape Town (South Africa), which currently delivers over 25 million vaccine doses per year for illnesses such as measles, polio and tuberculosis (UNCTAD 2020). Suffice to say, in line with the doctrine of S–SC, BRICS should assist African governments to look at their domestic capacity as insurance for the next pandemic so that they do not continue to rely on external sources as consumers and instead be producers. Otherwise, the continent’s 1.2 billion people remain vulnerable to global supply chain shocks and foreign trade policies (UNCTAD 2020). The 2020 BRICS Ministers of Health Meeting emphasised a Russian proposal for an integrated early warning system to prevent mass infectious diseases risks under the International Health Regulation for consideration. The ministers also highlighted a publication of the consolidated framework entitled ‘BRICS countries measures taken in the field of healthcare to counter the spread of the coronavirus disease (COVID-19)’. The ministers proposed involving the NDB to explore funding the integrated system

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to prevent the spread of infectious diseases with the potential for adverse medical and economic consequences (BRICS Ministers of Health 2020). In Chapter 17, Yazini April and Li Mengdi examine the potential prospects and challenges of addressing healthcare development related to mass infectious diseases in light of COVID-19. Telemedicine is proposed as a strategy that could use China–Africa collaboration through the Health Silk Road. The key issue is whether a collaborative approach through the Health Silk Road will succeed against the backdrop of the continental limitations of energy and ICT, which require extensive investment and infrastructure development and a clear continental health agenda. Other chapters in this section make various propositions for fast-tracking Africa’s health systems. In Chapter 18, Zhaoyi Liu presents China–Africa health cooperation as a widely recognised model of mutual benefit and a win for international collaboration. The significant health measures for cooperation proposed and implemented by China are of great significance to the fight against the COVID-19 pandemic in Africa. However, to promote self-reliance in public health in the future, China and Africa should enhance human capital development and a technological platform. In Chapter 19, Charles Hongoro, Emmanuel Sekyere and Wilfred Lunga reveal that no single country – irrespective of income level or development – has health systems that are fully resilient to pandemic outbreaks of global proportions such as COVID-19. Each country has its strengths and weaknesses that require different policy interventions. Medical diversity among countries is critical, as it speaks to the need for collaboration in order for healthcare development between BRICS and Africa to succeed. Pandemics and our experience with COVID-19 must teach us that emergency preparedness and response planning and operations, risk communications, access to healthcare, and compliance with health-related international norms and practices are ideals that all countries must pursue.

1.7 Conclusion Underlying key issues are raised in all the chapters of this volume, touching on governance and ethics in the post-COVID-19 era and emphasising the NDB as the BRICS global player in financing and development. MDBs play a crucial role in funding and infrastructure development, and will forever remain complementary to the NDB. Given the 4IR breakthroughs, addressing access to technology in Africa and BRICS is important to promote digital trade solutions and inclusivity. It requires bridging the digital divide emanating from inequalities in Africa; hence, addressing economic development disparities and inequalities in BRICS and Africa deserves attention. The last section of chapters addresses issues regarding BRICS and the health industry in Africa, particularly telemedicine and post-COVID-19 mitigation, adaptation and resilience against future pandemics.

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References

AfDB (African Development Bank) (2013) Africa and the BRICS: A win-win partnership. Accessed 18 February 2021, https://blogs.afdb.org/fr/afdb-championing-inclusive-growthacross-africa/post/ Anwar MA (2015) Are the BRICS committed to African development? Accessed on 20 February 2021, https://www.weforum.org/agenda/2015/08/ April FY (2015) Connectivity key to growth. Accessed 15 February 2021, https://www.iol.co.za/ capetimes/opinion/connectivity-key-to-growth-195367 Arfa J (2020) BRICS Summit: Highlights of the 12th BRICS Summit. Accessed 20 February 2021, https://www.jagranjosh.com/ BRICS (2018) 10th BRICS Summit of Heads of State and Government: Declaration and Action Plan, Johannesburg. Accessed 15 March 2021, https://www.gov.za/speeches/ BRICS (2020) XII BRICS Summit Moscow Declaration. Accessed 18 March 2021, http://www.brics.utoronto.ca/docs/201117-moscow-declaration.html BRICS Heads of State (2019) Brasília Declaration. Accessed 28 March 2022, http://www. brics.utoronto.ca/docs/191114brasilia.html#:~:text=We%20welcome%20the%209th%20 meeting,peacekeeping%20and%20transnational%20organized%20crime BRICS Ministers of Health (2020) Declaration of the X Meeting of BRICS Ministers of Health – Moscow/Russian Federation. Accessed 18 March 2021, https://eng.brics-russia2020.ru/ images/ Conway M, Holt T, Sabow A & Yuan Sun I (2019) Should sub-Saharan Africa make its own drugs? Accessed 12 March 2021, https://www.mckinsey.com/industries/public-and-social-sector/ our-insights/ DBSA (Development Bank of Southern Africa) (2022) Non-SADC Ghana Airports Company Capex Program. Accessed 24 November 2022, https://www.dbsa.org/ Dresen J (2011) BRICS: Shaping the new global architecture. Accessed 20 March 2021, https://www.wilsoncenter.org/event/brics-shaping-the-new-global-architecture Filippo C (2020) Do the BRICS care about international security? Accessed 20 February 2021, https://bricspolicycenter.org/en/publicacoes/ Goodrich J (2018) Decoding BRICS: What are the security priorities. Accessed 14 October 2021, https://news.cgtn.com/news/ Grudgings S (2011) As rich world sputters, Brazil looks to Africa. Accessed 20 February 2021, https://www.reuters.com/article/us-brazil-africa-newspro-idUSTRE7AG1KN20111117 Heathcote C (2018) African roundtable on good infrastructure governance. Accessed 13 March 2021, https://www.corruptionwatch.org.za/tag/ Jennings R (2021) Charting the future of China’s infrastructure projects in Africa after a decade of lending. Accessed 24 November 2022, https://www.voanews.com/ Juta Medical Brief (2018) BRICS Vaccine Centre to be based in South Africa. Accessed 18 March 2021, https://www.medicalbrief.co.za/brics-vaccine-centre-based-sa/ Kanyane M (2021a) COVID-19 vaccine challenges and lessons learnt in South Africa. Accessed 11 December 2021, https://www.orfonline.org/expert-speak/covid-19-vaccine-challenges-andlessons-learnt-in-south-africa/ Kanyane MH (2021b) Mobilizing BRICS New Development Bank for financing SDGs. Paper presented at the 13th BRICS Academic Forum, Observer Research Foundation (ORF), 4–6 August. Accessed 14 October 2021, https://youtu.be/vy_ZO7ZMw9U?t=7

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Kanyesigye F (2019) Africa’s infrastructure gap poses challenge to success of continental free trade area. Accessed 20 February 2021, https://www.iol.co.za/business-report/international/ Kimanuka O (2018) Why peace and security are essential enablers of development. Accessed 20 February 2021, https://www.newtimes.co.rw/opinions/ Maasdorp L (2020) COVID-19: How multilateral development banks can lead through a crisis. Geneva: World Economic Forum. Accessed 13 March 2021, https://www.weforum.org/ agenda/authors/ Malhorta R (2015) Delivering development and good governance, making human rights count. Improving Delivery in Development: The Role of Voice, Social Contract, and Accountability, World Bank Legal Review 6: 59–89 Majumdar R (2022) India woos Africa with trade, tech, investment. Accessed 24 November 2022, https://www.dw.com/ O’Neill J & Stupnytska A (2009) The long-term outlook for the BRICs and N-11 post crisis. Goldman Sachs Global Economics Paper 192. Accessed 20 February 2021, https\\www2.goldmansachs.com/ideas/brics/ Ortiz JA (2008) Net neutrality and the digital divide. Accessed 15 February 2021, https://psu.pb.unizin.org/ist110/part/chapter-9-net-neutrality-and-the-digital-drivide/ People’s Republic of China (2013) China’s position paper on the development agenda beyond 2015. Beijing: Ministry of Foreign Affairs. Accessed 15 February 2021, Reuters (2016) Kenya opens $1.5 billion Chinese built railway. Accessed 18 March 2021, https://www.reuters.com/article/ South African Government (2018) 10th BRICS Summit: Johannesburg Declaration. Accessed 24 November 2022, https://www.gov.za/speeches/10th-brics-summitjohannesburg-declaration-27-jul-2018-0000 South African Government Media Statement (2018) State of the Nation. Pretoria: Department of International Relations and Cooperation. Accessed 23 February 2021, https://www.gov.za/ speeches/ Statista (2022) Trade revenue between Russia and African countries from 2013 to 2020. Accessed 24 November 2022, https://www.statista.com/ Squazzin A (2022) China to focus on trade to deepen Africa ties, EIU says. Accessed 24 November 2022, https://www.bloomberg.com/ Tralac (Trade Law Centre) (2021) South Africa: Intra-Africa trade and tariff profile 2020. Accessed 30 2021, https://www.tralac.org/resources/infographic/ UNCTAD (UN Conference on Trade and Development) (2020) COVID-19 heightens need for pharmaceutical production in poor countries. Accessed 20 February 2021, https://unctad.org/ news/ UNECA (UN Economic Commission for Africa) (2014) BRICS/Africa partnership for development: driving inclusive growth and transformational change. Accessed 15 February 2021, https://archive.uneca.org/publications/bricsafrica-partnership-development World Bank (2015) World Development Indicators, Databank. Accessed 20 February 2021, https://datatopics.worldbank.org/world-development-indicators/ WHO (World Health Organisation) (2013) Immunisation standards. Geneva: WHO. Accessed 15 February 2021, https://www.who.int/teams/health-product-policy-and-standards/

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Section 1 Governance in the Post-COVID-19 Era

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BRICS Governance and Ethics Architecture: Challenges and Prospects Modimowabarwa Kanyane

2.1 Background It is more than a decade since BRICS was formed, followed by yearly summits. One of the significant milestones has been the establishment of the New Development Bank (NDB). As BRICS is an essential player in a multipolar world, its governance and ethics architecture deserve much attention in terms of the successful fulfilment of its mandate. The study covered in this chapter was undertaken to understand the governance and ethics interventions that BRICS espouses globally to articulate such practices at the pragmatic country levels. Of critical importance to analyse, through various instruments, were the issues of good governance and ethics in the bloc. This study used qualitative and quantitative methods to explore how BRICS understands governance and ethics architecture as a response mechanism to resolve governance and leadership challenges. A public administration discourse assisted in analysing how institutional structures, the rule of law, and non-state actors in the respective BRICS countries inform effective governance and ethics architecture at the global and regional levels.

2.2 Introduction BRICS is an essential global player in a multipolar world. Since its inauguration as an emerging economic power, BRICS has positioned itself as an advocate of a more just, equitable and all-inclusive international system. This internationalisation standpoint of inclusive, sustainable cooperation and development has remained a recurring theme throughout the declarations and protocols of the BRICS summits. One of the areas where BRICS has harnessed and consolidated its collective dynamism is reforming the power balance of the global political and economic system. This is not a one-size-fits-all approach. It is an inclusive approach to more coherent and cohesive global governance that has been at the forefront of how BRICS articulates its role and rules of engagement around forging a more appropriate and equitable governance and ethics architecture that is pragmatically responsive. The BRICS countries have relatively complex governance systems that are not uniform. The bloc has a comprehensive legal and institutional framework that deals with corruption in the respective member states. According to Kurakin and

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Sukharenko (2018), corruption has held back all five BRICS countries to varying degrees, but some have handled this issue better than others. At the BRICS Summit in Ufa (Russia) in June 2015, the members reaffirmed their commitment to act against corruption. They acknowledged that the burden of corruption, including illicit financial flows and ill-gotten wealth stashed in foreign jurisdictions, is a global challenge that negatively impacts economic growth and sustainable development. Two central questions informed the inquiry: Why does it matter to know how the BRICS countries should uphold global ethical values? To what extent can their actions be used to assess whether there is alignment between what BRICS articulates as a global player at an international level and what happens in the local context within member states? Through qualitative and quantitative research methods, this study explored how BRICS understands governance and ethics architecture as a response mechanism to resolve governance challenges at country and regional levels. Of critical importance to analyse were the issues of good governance, ethical leadership, anti-corruption structures, virtues and values, and moral compass in the BRICS community. A public administration discourse assisted in analysing the institutional systems, values and practices of the respective BRICS countries to inform effective governance and an ethics architecture at the global and regional levels. Therefore, the study provided a conceptual and contextual analysis of the BRICS community in preventing corruption through governance and an ethics architecture that is internationally compliant yet locally practicable and all-inclusive. Apart from the country-based case studies, relevant case evidence was drawn from the international protocols to inform the BRICS workable anti-corruption instrument that is punitive and preventive.

2.3 Locating governance and ethics in BRICS: A conceptual framework The concept of governance is not new. It is as old as human civilisation and means different things to different people. The term ‘governance’ originates from the Latin word gubernare, meaning ‘to steer’. It is usually applied to steering a ship (Sarva n.d.). Corporate governance is about steering an organisation in the desired direction – the responsibility to steer lies with the board of directors or governing board. ‘Corporate’ or ‘corporation’ is derived from the Latin term corpus, which means ‘body’. Governance means administering the processes and systems to satisfy stakeholder expectations. When combined, corporate governance implies a set of systems, procedures, policies, practices and standards put in place by a corporate body to maintain the relationship with various stakeholders transparently and honestly (Study Material 2014).

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By implication, it simply means that governance is directional. Hence, one cannot overstate its significance. Examples of governance collapse resulting from weak systems have highlighted the need to improve and reform governance at the local and international levels (Study Material 2014). The 2001 Enron collapse involved the hand-in-glove relationship between the auditor and the corporate client. The scams involving the fall in the US of corporate giants like WorldCom, Qwest, Global Crossing and Xerox, and the consequent enactment of the stringent Sarbanes Oxley Act, were critical factors that alerted the Indian government not to fall into the same pitfalls (Study Material 2014). In the wake of Enron and similar cases, countries worldwide reacted quickly by dramatically pre-empting similar events (Sarva n.d.). The BRICS countries must draw lessons from the corporate governance collapse of Enron and other entities. Simply put, governance is more than the process of planning and implementing. It encompasses processes, structures and law from political, economic and administrative multi-perspectives. It is a complex phenomenon (Islam 2017). Overall, governance is an interaction among systems, processes and traditions that determines the execution of power and responsibilities, and accounts for actions or inactions (including how citizens and other stakeholders are consulted and involved in decision-making). In short, governance is about power relations and accountability. It addresses myriad questions, including: Who has an influence? Who makes the decisions, and how are decision makers held accountable (Asaduzzaman & Virtanen 2016). Pretorius (2015) sums it up by stating that governance broadly focuses on the power and accountability of such power. The concepts of governance, good governance and corporate governance are understood differently epistemologically given multiple definitions in the literature. On the one hand, corporate governance is more specific and directed at private-sector-based governance arrangements for conducting business relating to companies, firms and corporations, and partnerships. Sarva (n.d.) defines corporate governance as the framework of rules, relationships, systems and processes within and whereby fiduciary authority is exercised and controlled in corporations. Relevant rules include applicable laws of the land and the rule of law of a corporation (Sarva n.d.). On the other hand, governance, or good governance, is not sector-specific but encompasses both the private and the public sectors. Good governance can either be the salient features of public-sector institutions or those of private- and public-sector organisations. The concept of governance is concerned directly with managing the development process, involving both the public and the private sectors. It encompasses the functioning and capability of the public sector and the rules and institutions that create the framework for public and private business conduct, including accountability for economic and financial performance and regulatory frameworks relating to companies, corporations, partnerships and so on (Asaduzzaman &

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Virtanen 2016). Kanyane and Sausi (2015) view governance as encompassing constitutional, legal and administrative arrangements whereby organisations exercise their power and the related mechanisms for public accountability, the rule of law, responsibility, effectiveness, transparency, ethics, integrity and citizen participation. Sambo and Kanyane (2020) attest that the concept of good governance recommends ideal administrative behaviour, which is opposed to unethical or questionable conduct. In the main, together with ethics, accountability is an essential governance pillar. Evidently, for BRICS to emerge as a significant global player, it should be informed by this governance pillar, which should be placed at the top of its agenda. Given the succinct distinction between governance and corporate governance, another problematic idea worth clarifying is what makes governance good (often referred to in the literature as good governance). As a concept, good governance does not have a straightforward definition, although it has been expanding rapidly in development discourse. Good governance is generally associated with efficient and effective administration in a democratic framework. It is equivalent to purposive and development-oriented administration, which is committed to improving the quality of life of the people and enlarging the scope of people’s participation in the decisionmaking process. However, the factors that make institutions and rules more effective (such as transparency, participation, responsiveness, accountability and the rule of law) may be regarded as the characteristics of good governance. Understandably, the worldleading aid institutions such as the World Bank, the UN Development Programme (UNDP) and the Organisation for Economic Co-operation Development (OECD) became the great proponents and frequent users of this concept, especially for aid recipient countries. Good governance promotes democracy, decentralisation, accountability, transparency, the rule of law, and people’s participation in their development according to their own accord (Asaduzzaman & Virtanen 2016). In summary, the concept of good governance has assumed centre stage in contemporary global political and developmental discourse. The OECD Council and the G20 Leaders’ Summit endorsed the G20/OECD Principles of Corporate Governance published in 1999 to assist policy-makers in evaluating and improving the institutional, regulatory and institutional framework for corporate governance. The principles are aimed at supporting economic efficiency, financial stability and sustainable growth, and are used as an international benchmark. The OECD’s recognition of governance principles demonstrates why the concept of good governance is critical in determining the fate of governments and investors. Governance is understood to assist in building ‘an environment of trust, transparency, and accountability necessary for fostering long-term investment, financial stability, and business integrity, thereby supporting stronger growth and more inclusive societies’ (OECD 2015).

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Governance has to do with effectively steering society, through networks and partnerships between governments, business corporations and civil society associations. Good governance connotes positive quality, desirability or what ought to be, but also implies the absence of its opposite – bad governance. Consequently, it is essential to understand this concept which juxtaposes the opposite concept of bad governance. Although there is a universal quest for good governance, there is no consensus on its meaning and how to use it in practical terms. Thus, there is no functional or single agreed-upon definition of good governance. Hence, it merits biased usage.The meaning attached to it invariably depends on the user (Pretorius 2015).The user could be the OECD, the G20 or the Bretton Woods Institutions. The World Bank, for example, supports aid recipient countries through its Governance Global Practice programme in building efficient, capable, inclusive, open and accountable institutions. The World Bank authorities determine the standard of measure in providing support. The World Bank surveys are conservative about aid recipient countries’ compliance with governance and good practice. Hence, addressing governance has been placed at the top of many countries’ policy agendas (World Bank n.d.). Therefore, good governance is an acceptable universal principle with transparent and standardised measures that can be monitored. Otherwise, governance will be heavily criticised by the public if left to the fate of the funders to determine how the aid recipient countries are supported. It is crucial to reach consensus on good governance, as it lies on the positive side of the governance spectrum, and it is the opposite of bad governance. Good or bad governance refers to the presence or absence of transparency and accountability in a country’s institutions. The same applies to participation or non-participation in decisions affecting citizens, and the level of freedom that private-sector and civil society organisations have or do not have. Understood in this way, good governance is a sine qua non for sustainable development (World Bank n.d.). BRICS, as an emerging global power, is no different in terms of using this concept to match the level and operations of the world-leading Bretton Woods Institutions. Now to a turn to ethics. The word ‘ethics’ is a suffix for many disciplines, such as medical ethics, law ethics, engineering ethics, research ethics and business ethics. In this study, ethics referred to public-sector ethics in general and in BRICS. In philosophical terms, ethics refers to a conception of right and wrong behaviour, determining when our actions are moral or immoral. It is the study of morality concerning whether behaviour is good or bad, right or wrong, virtuous or vicious; it forms a basis for evaluating others’ individual or institutional actions and conduct. Overall, ethics is a science of morals in human behaviour. It is the branch of philosophy that is concerned with studying the behaviour and character of people (Kanyane & Mutema 2015).

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Like governance, ethics is as old as humankind. By and large, ethics is both a process of inquiry and a code of conduct. As a code of conduct, it is like an inner eye that enables people to see the rightfulness or wrongfulness of their actions and behaviours in society (Raga & Taylor 2005). Based on this understanding, ethics is not a status that is acquired or earned. Still, it is a lifestyle worth emulating by those with sound moral judgment: judgment to discern right from wrong, and deliberately choose to act right. It is the ongoing and sustained conduct of uncompromisingly doing right as an individual or an organisation. Mutema (2016) conceptualises ethics as the field of study of how people try to live their lives according to a standard of ‘right’ or ‘wrong’ behaviour. The meaning of ethics is threefold: (i) ethics means right and wrong or good and evil; (ii) ethics is related to athe integrity of someone’s personal character and is understood as that which concerns individual character, which is how we ought to behave; and (iii) ethics is a set of principles or rules (codified or phantom) that sanctions or forbids certain kinds of conduct. According to Chandorkar and Agarwal (2018), it should be clear from the conceptual clarification that ethics is an unavoidable subject that deals with human beings who are capable of judging between right and wrong, good and bad behaviour. Ethics is essential, because it is associated with values and morals that inform human beings’ conduct within the mainframe of governance. The call to design governance and ethics architecture to address the problem of corruption, and to encourage and promote a high standard of professional conduct in the public domain, is a global call to action. This call is discussed in detail later, focusing on BRICS member states. Understandably, the governance and ethics architecture in this study was a comprehensive strategy to promote the integrity of the BRICS countries against corruption. So, it became imperative to examine the effectiveness of governance and ethics architecture as a tool for enhancing integrity, accountability, transparency, citizen participation and public scrutiny in BRICS. From the legal, institutional and socialisation arrangements, the governance and ethics architecture was consolidated for BRICS as a pragmatic response to its developmental challenges. For this reason, governance and ethics architecture enhances BRICS as an emerging global player. To this end, corporate governance, or good governance, and ethics are the first lines of defence against corruption. Good (corporate) governance goes beyond any rules and regulations that the BRICS governments can put in place. It is about ethics and the values that drive governments and companies to conduct their affairs. Therefore, it is all about trust relationships established over time between companies and their different stakeholders. Whereas good corporate governance practice cannot guarantee any corporate failure, the absence of such governance standards will lead to questionable practices and corporate failures. There must be synergy between general business principles and ethical values to ensure that governance and ethics remain effective lines of defence against such failures. A practical governance and

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ethics programme requires continual reinforcement of solid values. This chapter serves as a challenge to BRICS to ensure that government officials and company directors live and imbibe governance principles and ethical values. Ensuring a resilient BRICS as a global player would require a combination of governance and ethics architecture (Nainawat & Meena 2013). From the preceding analysis, it is apparent that governance and ethics architecture are inseparable lines of defence against corruption. Ethics is the critical pillar of governance in the same way that integrity, accountability, transparency, the rule of law and citizen participation are. For this reason, BRICS is analysed through the prism of governance and ethics architecture in this chapter.

2.4 BRICS case studies: A contextual framework Transparency International’s (TI) corruption surveys informed how the BRICS countries were analysed compared to Nordic countries. However, the TI has its shortcomings in terms of its measurements of the corruption variable. The TI corruption survey data between 2015 and 2020 are shown in Figure 2.1. This index includes five years of data from 174 to 180 countries surveyed globally by TI. As pointed out earlier, 2015 was a critical time in BRICS’s existence and the bloc reaffirmed its commitment to stand against corruption at the Ufa summit. In 1993, a few individuals decided to take a stance against corruption and created TI. TI is a global movement with one vision: a world in which government, business, civil society and the daily lives of people are free from corruption. Now present in more than 100 countries, 100 chapters worldwide with an international secretariat situated in Berlin, the movement leads the fight against corruption and works relentlessly to stir the world’s collective conscience and bring about change. Much remains to be done to stop corruption, but much has also been achieved, including: (i) the creation of international anti-corruption conventions, (ii) the prosecution of corrupt leaders and seizures of their illicitly gained riches, (iii) national elections won and lost on tackling corruption, and (iv) companies held accountable for their behaviour both at home and abroad (TI 2018). The analysis showed the BRICS countries’ corruption levels juxtaposed with corruption levels in Nordic countries. Nordic countries were preferred to BRICS countries because they tend to have low levels of corruption, hence the analysis. Nordic countries have a historical record of upholding socialist and ethical principles. Therefore, they were the baseline for the BRICS countries seen in Figure 2.1. With time, the BRICS members should develop credible instrument(s) to measure corruption in their own countries to complement the TI surveys. The TI surveys are not objective, as the data are drawn from perceptions and not real-time corruption scandals that have been investigated and concluded.

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Figure 2.1 Top five TI Corruption Perceptions Index (2015–2020) Score 100 90 80

Y

70 60

X

50 40 30 20 10 0

Sweden

Brazil

Russia

India

Score 2020

Denmark 88

Finland Norway Iceland 85

84

75

85

38

30

40

China South Africa 42

44

Score 2019

87

86

84

78

85

35

28

41

41

44

Score 2018

88

85

84

76

85

35

28

41

39

43

Score 2017

88

85

85

77

84

37

29

40

41

43

Score 2016

90

89

85

78

84

40

29

40

40

45

Score 2015

91

90

88

79

88

38

29

38

37

44

Source: Author

The ranking in Figure 2.1 shows each country’s perceived corruption position in other countries. The lower the ranking, the more corrupt a country’s government is perceived to be. On a scale of 0 to 100, a zero score indicates a highly corrupt (Y) country and a score of 100 indicates that the country’s government is less corrupt (X) (CPI 2021). It is essential to state that these indicators are not perfect, as they only paint a picture of how the people perceive corruption in their own countries and are not informed by the investigations of anti-corruption institutions (Eigen et al. 2008). However, this survey raises awareness about the existence and dangers of corruption, which is an essential precondition for fighting corruption or doing something about it. Hence, various organisations rely on the TI Corruption Perceptions Index (TI CPI). For example, indicators such as transparency in the TI CPI enable countries to know where they stand in international analyses. Arguably, good knowledge about corruption stimulates public debate and calls for further investigations and constructive interventions.

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The Nordic countries include Norway, Sweden, Denmark, Finland and Iceland. In 2013, the OECD reported that Norway was one of the countries with minor corruption in society (OECD 2013). According to the TI CPI, Norway ranked 4th out of 174 to 180 countries and earned an average score of 85 out of 100. This ranking placed Norway among the top five least corrupt countries globally, with the others being Demark, Finland, Iceland and Sweden (as shown in Figure 2.1). The BRICS countries were not in the top five least corrupt countries, as their scores ranged from 28 to 44 out of 100; while the Nordic countries’ scores were between 76 and 91 out of 100. Like other Nordic governments, the Norwegian government showed a commitment to good governance and the eradication of corruption in several ways. First, TI pointed out that the Norwegian leadership had implemented anti-corruption conventions, for example the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the 1999 Council of Europe Criminal Law Convention on Corruption, the 1999 Council of Europe Civil Law Convention on Corruption and the 2003 UN Convention Against Corruption. Second, the Directorate of Public Management in the Ministry of Government Administration set aside a budget and human capital to offer courses on ethics, fundamental public-sector values, the concept of the welfare state, and an introduction to a methodology for ethical reflection and problem-solving associated with daily problems of both professional and administrative character (OECD n.d.). Understandably, Nordic countries positioned to the left of the dotted line (X) were less corrupt. Norway has a small population of 4.6 million people. Notwithstanding other factors, it is easier to fight corruption in smaller jurisdictions. Norway is a prosperous bastion of welfare capitalism with a stable economy founded on ingenuity and transparency, the rule of law and a well-built tradition of minimum forbearance for corruption under a 1902 penal code that Norwegians have practised for over 100 years (Mutema 2016). Of course, there is no guarantee that a smaller country with a stable economy and welfare capitalism will rank less in corruption. In the main, it depends on the government’s commitment to fight corruption. The TI CPI classification shows BRICS countries positioned to the right of the dotted line (Y) in Figure 2.1, which brings with it many interpretations. Nevertheless, the prevalence of high corruption levels in BRICS countries is not surprising. It seems that Figure 2.1 shows the Global North (X) versus the Global South (Y). One stark interpretation is that BRICS is seen by many as an emerging global power in the Global South but appear, in contrast, as a bloc of corrupt countries. For example, according to the 2015 to 2020 TI CPI, Brazil, Russia, India, China and South Africa were all second from the tail end of countries with a high level of corruption. Another justification for why BRICS is perceived as a league of corrupt countries is the damning 2019 report of the Fragile States Index (FSI 2019), which revealed that South Africa and Brazil were perceived as countries that had worsened and

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were on the brink of collapse. The FSI is an annual ranking of 178 countries based on the different pressures they face that impact their levels of fragility. The index examines various factors (such as openness in government, accountability and levels of corruption) that are a cause for concern in countries. Corruption is a pervasive global phenomenon, but its intensity varies from location to location. A commonly expressed view is that corruption is more pervasive in developing countries than in developed countries. While this may be true because developing countries are susceptible to corruption due to a lack of capacity to fight it, this is not always the case because corruption knows no boundaries. For example, the OECD Foreign Bribery Report (OECD n.d.) provided the following list of countries (underdeveloped, developing and developed) that are as susceptible to corruption: Albania, Algeria, Angola, Argentina, Azerbaijan, Bahrain, Bangladesh, Belgium, Benin, Brazil, Bulgaria, Cameroon, Chad, China, Costa Rica, Croatia, the Democratic Republic of the Congo, Djibouti, Ecuador, Egypt, the former Yugoslav Republic of Macedonia, France, Georgia, Germany, Ghana, Greece, Haiti, Honduras, Hungary, India, Indonesia, Iran, Iraq, Israel, Italy, the Ivory Coast, Jamaica, Kazakhstan, Kenya, Korea, Kyrgyzstan, Latvia, Liberia, Libya, Lithuania, Madagascar, Malawi, Malaysia, Mali, Mauritania, Mexico, Mongolia, Montenegro, Mozambique, Myanmar, the Netherlands, Niger, Nigeria, Panama, Philippines, Poland, Portugal, Russia, Romania, Rwanda, Saudi Arabia, Senegal, Serbia, the Slovak Republic, Slovenia, Spain, Sweden, Syria, Chinese Taipei, Thailand, Tunisia, Turkey, Turkmenistan, Uganda, the United Arab Emirates, the United Kingdom, the United States, Uzbekistan, Venezuela, Vietnam, Yemen. These are countries whose public officials received bribes in international business transactions. The OECD data show that bribes are paid to officials in economies at all stages of development and not just in developing economies, as many may believe (OECD n.d.). Another view that is often expressed is that corruption is a universal phenomenon. Arguably, corruption merely varies in the form in which it manifests and thrives in different geopolitical and economic contexts. Notwithstanding these views, the presence of corruption in India is indisputable, as shown by the TI CPI computation on an annual basis (Chhokar 2015). Despite an array of legal and institutional mechanisms that characterise what governance is, corruption prevails in India, and this requires multiple efforts (as explained later in this discussion). In Russia, the Federal Anti-Corruption Law criminalises active and passive bribery, abuse of office, commercial bribery, trading in influence in the public and private sectors, and corruption by agents. It obliges companies to affirmatively develop anti-corruption compliance measures such as mechanisms for cooperation with law enforcement authorities; identifying, preventing and resolving conflicts of interest;

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and adopting a code of professional conduct for all employees. State and municipal officials, heads of state corporations, law enforcement officials and judges are obliged to report any suspected corruption. They must declare their spouses and their siblings’ income and property. Federal Law No. 230 requires all public officials and employees of state organisations to submit information on the funds spent to acquire property by them and members of their families. It also criminalises conflicts of interest and extends jurisdiction to the military. The law prohibits facilitation payments and restricts gifts worth more than 3 000 Russian Rubles. The Federal Security Service and the Prosecutor General’s Office are responsible for fighting corruption. Russia is a signatory to the UN Convention Against Corruption and the Council of Europe Criminal Law Convention on Corruption, and has ratified the OECD Anti-Bribery Convention. It is also a member of the Council of Europe Group of States against Corruption. In Russia, the internet is partly free. However, the media is heavily restricted and controlled by the state. Officials and the government frequently use the corrupt and biased courts to harass and silence journalists, highlighting the abuse of office and corruption. Foreign and national journalists, for example, faced physical intimidation when working on site. About 70 attacks on journalists and bloggers have been reported during 2015. A culture of participation in public life has not yet been developed, and views opposing the government are usually labelled as extremist and alarmist. Civil society is too weak to have a real impact on public life, as civil society is systematically discouraged from acting against alleged corruption cases and public integrity issues. Freedom of speech, freedom of assembly and organisation rights have been reduced over the last years. (Gan Integrity 2015). Against this backdrop, despite Russia’s comprehensive anti-corruption legal framework, enforcement is at variance and many high-profile arrests are considered symbolic. While the Russian government integrated international anti-corruption standards into its domestic legislation, those measures are parochially and partially enforced, usually against political opponents. The government’s most recent anticorruption efforts are unlikely to prove successful, as they do not address the need for systemic reforms such as political stability, judicial independence and enhancement of social accountability (especially in the media). Hence, corruption is rampant in Russia. Ethical dilemmas continue to engulf state-owned enterprises (SOEs) in the BRICS countries, especially Brazil, China and South Africa. SOEs are the main drivers in several significant economies. They contribute to countries’ GDP. Although SOEs are often the principal drivers of the formal sector of the economy and contribute significantly to economic growth as the main entities delivering numerous social goods and services to ensure a better quality of life for all, many experience governance failures as the main factor behind their inability to fulfil their developmental mandates. In addition, intergovernmental arrangements such

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as BRICS have members that have failed to develop a common agenda for SOEs, primarily due to governance, policy, oversight and accountability concerns. A case in point is Petrobras, one of Brazil’s most prominent multinational stateowned petroleum enterprises. It faced corruption scandals involving former Brazilian President Dilma Rousseff, who was suspended by the Senate on 12 May 2016 and impeached by the same body in August 2016. Several ministers and former President Lula da Silva were indicted along with her; over 117 senior executives faced charges. This despite Petrobras embracing exceptional corporate governance standards such as international listings, separation of CEO and chairperson, non-executive directors, board committees, regular financial and non-financial reporting, impressive disclosures, engagement with top auditors and a dedicated corporate governance officer (Reddy 2016). Notwithstanding their adoption and institutionalisation, these good governance standards remain to be tested against realities on the ground. China’s President Xi Jinping in 2014 announced an anti-corruption drive in SOEs, including PetroChina, China Southern Airlines and Sinopec (one of the largest petroleum corporations). This zero-tolerance campaign against corruption has seen over 10 300 officials investigated for graft involving mostly engineering projects, capital equipment purchases, bulk materials and international dealings. At the epicentre of these lapses is the collusive corruption manifesting when insiders such as management and directors join with outsiders (mainly politicians, government officials and powerful intermediaries) to abuse official power for private gain (Reddy 2016). China has also been criticised as a vehicle to invoke neomercantilism in the Sino-Africa relationship. With these neomercantilist and imperialist tendencies, Sino-Africa relations remain compromised. In one of the BRICS seminars in 2018 (HSRC/Unisa 2018), a participant lamented the state of affairs and posed the following questions: How can BRICS, as an emerging global player advocating for inclusive and sustainable development, be a watchdog to its members which have imperial and colonial tendencies? How should they face the consequences? From the preceding examples, it is evident that governance and ethical challenges are endemic in most SOEs in China and other BRICS countries – and South Africa is no exception. Kanyane and Sausi assert that the human factor (HF) plays a role in fiddling with, and flouting, anti-corruption laws, mainly supply chain policies. Corruption in the Passenger Rail Agency of South Africa (PRASA), with its prevailing occurrences of avoidable expenditure and preventable disruption of services, attests to this (Kanyane & Sausi 2015). Furthermore, while legislative reform is necessary to address problems and challenges in SOEs, the HFs of maturity and emotional intelligence to run the affairs of SOEs from a leadership and managerial point of view are vital. Unlike in Russia, civil society in South Africa (especially the media) should be hailed for being robust in shaping public opinion. When the press or investigative journalists expose wrongdoing, they function as a collective watchdog. Civil society serves as a powerful social accountability safeguard if unshaken. It is a powerful social accountability tool for deepening the roots of democracy, but it must report cases with credible and

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empirical facts without compromising and threatening its autonomy and existence. The South African social accountability mechanism is robustly mature and has unearthed corruption that could have gone unnoticed. A notable case in point is the state capture investigation conducted by the Zondo Commission of Inquiry. The establishment of the commission gained credence from the revelations of corruption in the media, which also triggered the National Prosecuting Authority (NPA) to act against perpetrators of corruption. Social accountability as civic engagement should escalate to other BRICS countries to resolve their corruption troubles (Kanyane et al. 2020). As seen in Table 2.1, the basis for many anti-corruption interventions in developing states remain traceable from legal, institutional and societal contexts such as anticorruption laws, watchdog bodies and social accountability instruments, especially the media (a shaper of public opinion). However, to implement the governance and ethics architecture initiative, the BRICS countries’ governments are at risk of addressing the symptoms of corrupt behaviour in the public and private sectors rather than the root cause – the causal HF. Almost one in two cases involving bribery of foreign public officials was in countries with high to very high levels of human development, according to OECD data based on the UN Human Development Index of the country where the bribery took place at the time (OECD n.d.). Table 2.1 Governance and ethics architecture – Local context

Civil society

Watchdogs

Rule of law

BRICS governance and ethics architecture: A domestic context Brazil

Russia

India

China

South Africa

Anti-Corruption Law, 2014; Brasilia, Criminal Code (Decree Law No. 2 848)

Russia’s Federal AntiCorruption Law No. 273, Article 13.3

Indian Penal Code, 1860; Prevention of Corruption Act, 1988; Disclosures of Lobbying Activities Bill, 2013

PRC AntiUnfair Competition Law, PRC Criminal Law

Prevention and Combating of Corrupt Activities Act, 2004; Prevention of Organised Crime Act, 1998; Protected Disclosure, 2000

Office of the ControllerGeneral

AntiCorruption General Directorate

Central Bureau of Investigation

Central Commission for Discipline Inspection

National Prosecuting Authority

Brazilian Federal Prosecution Office

National AntiCorruption Directorate

Central Vigilance Commission

National Supervision Committee

Chapter 9 Institutions

Comptroller and Auditor General

Anti-Graft Bureau to be established

South African Police Service

Hazare Civil Society Movement

Suppressed

AfriForum – Private Prosecuting Unit, Corruption Watch, Organisation Undoing Tax Abuse and so on.

Coalition of NGOs

TI Russia

Source: Author

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Table 2.1 shows that the BRICS countries have all it takes to establish barriers against corruption. At a bare minimum of governance and ethics, each BRICS country has the legal, institutional and non-state actors to prevent corruption. Based on this bare minimum, ethical behaviour by BRICS countries requires respect for the rule of law and the dignity of the individuals in society. Therefore, respect for, and compliance with, the rule of law could be a solution to prevailing corruption in the BRICS countries. Compliance with the rule of law is crucial for enhancing professionalism and helping to restore confidence in the BRICS space (Sambo & Kanyane 2020). However, BRICS countries has been fingered by TI and the FSI as corrupt. This primarily has to do with the enforcement of anti-corruption barriers, which have proven inadequate. As seen in Table 2.1, Russia, India and China have weak civil society movements to challenge corrupt action. The absence of civil liberties enables the proliferation of corruption in Russia and in China, with the suppression of interest groups by President Xi standing out as a bone of contention. The top politicians and officials must be willing to account for their actions and have measures to sanction any corrupt elements. Such sanctions are unfortunately reactive and not preventive. Hence, the call is for a pragmatic value-laden society. Sambo and Kanyane (2020) argue that the BRICS governance and ethical compass remains questionable, and the money spent on corruption is essential for bettering the lives of society, especially at the grassroots level within the BRICS jurisdictions.

2.5 Pragmatic ethics architecture prognosis: A value-laden society Kanyane (2014) argues that corruption is an ethical problem that needs moral resolution apart from legal and institutional instruments of governance. Formal legal and institutional control measures as depicted in Table 2.1, though necessary, cannot adequately resolve the problem of corruption alone. Therefore, ethical values are required to provide normative restraints and forge internal discipline against corruption. Arguably, corruption is a moral problem, and virtuous solutions should come into the mix. Hence, the emphasis on socialisation and not just legal and institutional rhetoric. According to Sisi (2018), Kanyane’s governance and ethics architecture, based on the combination of socialisation, institutional and legal remedies, remains a valuable intervention. The codes of ethics lay down the norms and standards of acceptable and unacceptable conduct within organisations. The code of ethics codify rules that are enforceable if they recognise governance and ethics architecture Presumably, with the positive HF derived from Kanyane’s governance and ethics architecture (e + t + h + i + c + a + l = ethical [e = ethics, t = transparency/trust, h = honesty, i = integrity, c = commitment, a = accountability and l = loyalty]), existing legal provisions promulgated to mitigate the scourge of corruption should be adhered to naturally. People should be willing to do the right thing, not out of fear of sanction but because they are predisposed to do it. Within the work environment, which largely comprises a positive HF, even people who have not acquired the right

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attitude to work will change their behaviours for the better by seeing those who lead by example (Kanyane & Sisi 2019). Courts of law have recognised the existence of a South African value-laden system based on the culture of ubuntu in the judgment of the Supreme Court of Appeal in SABC Ltd v Mpofu [2009] JOL 23729 (GSJ). Judge Jajbhay spoke of the need for directors to incorporate these values into their decision-making: Ubuntu speaks to our inter-connectedness, our common humanity, and [our] responsibility to each that flows from our connection. Ubuntu is a culture, which places some emphasis on the commonality and interdependence of the members of the community. It recognises a person’s status as a human being, entitled to unconditional respect, dignity, value and acceptance from the members of the community of which such a person may be part and proud. In South Africa and elsewhere, like a penal code, ubuntu must become a notion with resonance in the building of our constitutional democracy. All public officials, including business and civil society, must take cognisance of these values in the determination of their fiduciary duties placed on them with trust and confidence by the society in general. Thomas Hobbes argues that a society originates out of self-interest and fear, not from natural feelings for one’s fellow human beings. The selfish interest is rejected and considered unacceptable in any civilised and democratic society that encourages communal relationships and social cohesion (Albert 1980). Ubuntu, which is rooted in the African tradition, is at odds with the philosophies of Thomas Hobbes and Western cultures. According to Nawa et al. (2017), ubuntu is sociolinguistic and ancient anthro-philosophical thinking according to which Africans view their world. The philosophy permeates almost all facets of their being, including the sociology, anthropology and psychology of their lives. Central to this is that an individual’s whole existence is inextricably linked to the group’s interests or survival based on solidarity, conformity, compassion, respect and human dignity. The following mantra succinctly articulates this ideology: motho ke motho ka batho ba bangwe (a person is a person because of the other). From this perspective, the philosophy remains metaphorically portrayed as the ultimate calibrator of relations among Africans in general – or more philosophically, human potential (mind, body and soul). The demands for ethics and accountability, and effective and efficient use of public resources, require that BRICS countries put in place appropriate systems and structures informed by effective, ethical values subjected to periodic review to adequately meet societal expectations and needs. To this end, effective governance and ethics architecture in the BRICS countries should continue to shape and influence the direction, management and operation of the public and private sectors (including civil society organisations) to match international best practices for inclusive cooperation and development. According to Ladner et al. (2019), those who exercise authority must account for its use – to those on whose behalf they act.

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2.6 Conclusion The study provided a critical analysis of governance and ethics in the BRICS countries. At some point, given the alarming corruption levels informed by TI corruption surveys and the FSI, it appeared that the BRICS countries perceivably became a bloc of the most corrupt countries in the world. However, it became clear from the discussion that the BRICS countries should adopt the governance and ethics architecture designed and propagated by Kanyane to change the narrative portraying them as a grouping of corrupt countries. In this way, the gap depicted in Table 2.1 between the Global North (X) and the Global South (Y) could be reduced. The proposed governance and ethics architecture has proven valid as anti-corruption insulation for the BRICS countries. The governance and ethics architecture protocol will go a long way in fighting and preventing corruption. Kanyane’s governance and ethics architecture characterises detection, investigation, consequence management and prevention. Key to this is the emphasis on preventing corruption from happening, instead of reacting to it, because the costs of investigations and punitive measures are expensive. To this end, the BRICS countries should be able to transform their organisational anti-corruption structures and the proposed governance and ethics architecture to make a meaningful impact on reducing the costs of corruption. What matters most is the transformational shift to this proposed anti-corruption architecture. It must be implemented practically and should be monitorable, and its impact evaluated at intervals through consolidated and integrated efforts. The governance and ethics architecture initiative resonates with the people on the ground to ensure the experimental attainment of better lives. It is a long-term preventive mechanism to stop public funds from being looted or lost to corruption. Thus, this chapter calls for the launch of governance and ethics architecture in BRICS. References

Albert EM (1980) Joseph Butler: Conscience in morality. In EM Albert, SP Peterfreund & TC Denise (Eds) Great traditions in ethics: An introduction. 4th ed. New York: D Van Norstrand Company Asaduzzaman M & Virtanen P (2016) Governance theories and models. In A Farazmand (Ed.) Global encyclopedia of public administration, public policy and governance. Cham: Springer. https://doi.org/0.1007/978-3-319-31816-5_2612-1 Chandorkar N & Agarwal T (2018) Business ethics and corporate governance. Mumbai: Himalaya Publishing House Chhokar JS (2015) Anti-corruption mechanisms and institutions to address the problem of corruption in India. Background Paper. Islamabad: Pakistan Institute of Legislative Development and Transparency Eigen P, Fisman R & Githongo J (2008) Fighting corruption in developing countries. Session Handouts, Global Economic Symposium 2008 (GES), 4–5 September 2008, Plön Castle, Schleswig-Holstein, Germany, Kiel Institute for the World Economy, Kiel. Accessed 12 February 2021, https://www.econstor.eu/bitstream/10419/79084/1/729292614.pdf 34

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FSI (Fragile States Index) (2019) The World in 2019. Annual Report. The Fund for Peace: Washington DC. Gan Integrity (2020) Russia Risk Report. Accessed 12 February 2021 https://ganintegrity.com/ country-profiles/russia/ HSRC/Unisa (2018) International Seminar on BRICS Governance and Ethics Architecture, 10–11 October Islam MS (2017) Governance and development. In A Farazmand (Ed.) Global encyclopedia of public administration, public policy and governance. Cham: Springer. https://doi. org/0.1007/978-3-319-31816-5_1990-1 Kanyane MH (2014) 21 narratives of ethical dilemmas and their therapeutic resolutions in the 21st century. In L van Vuuren (Ed.) Ethics architecture handbook. Pretoria: Reach Publishers Kanyane M & Mutema EP (2015) Uprooting corruption and harnessing ethical leadership in Zimbabwe. In COK Allen-Ile, MH Kanyane & IU Ile (Eds) Governance and resource management in Southern Africa: Challenges and opportunities for advancement. Pretoria: Reach Publishers Kanyane M, Mutema EP & Zikhali T (2020) Social accountability in local government: Lessons from Vuwani (South Africa) and Gweru (Zimbabwe). Journal of Public Affairs: e2581. Accessed 23 November 2022, https://doi.org/10.1002/pa.2581 Kanyane M & Sisi M (2019) Supply chain – A service delivery enhancement or an impediment. International Journal of Management Practice 12(1): 109–126. https://doi.org/0.1504/ IJMP.2019.096684 Kanyane MH & Sausi K (2015) Reviewing state-owned entities’ governance landscape in South Africa. African Journal of Business Ethics 9(1): 28–41 Kurakin A & Sukharenko A (2018) Anti-corruption in the BRIСS countries. BRICS Law Journal 5(1): 56–77 Ladner A, Soguel N, Emery Y, Weerts S & Nahrath S (Eds) (2019) Swiss public administration: Making the state work successfully. Zurich: Palgrave Macmillan Mutema EP (2016) Governance and ethics architecture: A study of five urban local authorities in Zimbabwe. PhD thesis, Midlands State University Nainawat R & Meena R (2013) Corporate governance and business ethics. Global Journal of Management and Business Studies 3(10): 1085–1090 Nawa LL, Sirayi M & Kanyane MH (2017) International cultural diplomacy in post-apartheid South Africa’s international relations: Cosmetic or genuine change? Journal of Public Policy 13(1/2): 117–133 OECD (Organisation for Economic Cooperation and Development) (n.d.) Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials. Accessed 23 November 2022, https://www.oecd.org/corruption/oecd-foreign-bribery-report-9789264226616-en.htm OECD (2013) Ethics training for public officials. Paris: OECD OECD (2015) G20/OECD principles of corporate governance. Paris: OECD. Accessed 23 November 2022, http://dx.doi.org/10.1787/9789264236882-en Pretorius LG (2015) Public financial governance and management in Southern Africa. In COK Allen-Ile, MH Kanyane & IU Ile (Eds) Governance and resource management in South Africa. Pretoria: Reach Publishers Raga K & Taylor D (2005) Impact of accountability and ethics on public service delivery: A South African perspective. The Public Manager (Summer): 22–26 Reddy YRK (2016) State-owned enterprises and corruption: An international perspective. Moral Cents 5(2): 57–61

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Sambo VT & Kanyane M (2020) Ethics and accountability in BRICS countries: Analysing critical issues. Administratio Publica 38(3): 23–40 Sarva MK (n.d.) Corporate governance and ethics. Delhi: Lovely Professional University Satar DSA (2021) How CPI determines the extent of corruption in a country. Accessed 10 February 2021 Sisi MG (2018) Assessment of supply chain corruption in the three metropolitan municipalities in Gauteng province of South Africa. PhD thesis, University of Fort Hare Study Material (2014) Ethics, governance and sustainability. Module II Paper 6. New Delhi: The Institute of Company Secretaries in India in Pursuit of Professional Excellence TI (Transparency International) (2018) Collective action on business integrity, A practitioner guide for civil society organisations. Accessed 23 November 2022, www.transparency.org World Bank (n.d.) World Bank’s governance global practice. Accessed 12 February 2021, https://www.worldbank.org/en/topic/governance

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China–Africa Cooperation in the PostPandemic Era: Challenges and Way Forward He Wenping

3.1 Background For a long time, China–Africa cooperation has been labelled an ‘all-weather friend’ partnership that has withstood the test of many significant events in history. The COVID-19 outbreak is the latest severe test for China–Africa cooperation. The pandemic has posed a serious challenge to China–Africa cooperation, including economic and trade cooperation, Belt and Road Initiative (BRI) projects and people-to-people exchanges. Not surprisingly, in this anti-pandemic war China and African countries stand in solidarity, with mutual assistance, writing a new chapter of friendship in trying times and giving satisfactory answers to the latest tests of the pandemic.

3.2 Introduction 2020 was a year of special significance in the history of the world and China– Africa relations. The COVID-19 outbreak was not only a centenary test for the global public health system, globalisation process and international anti-pandemic cooperation, but also posed a serious challenge to China–Africa cooperation. In this anti-pandemic war, without gunpowder smoke, China and African countries have stood in solidarity, with mutual assistance, writing a new chapter of friendship in trying times. The unprecedented COVID-19 pandemic has brought shocks and challenges to China–Africa economic and trade cooperation and African economic development, reflected in hurdles to promote the BRI and resistance to personnel exchanges and economic and trade cooperation. In addition, after the outbreak of the pandemic, the cultural conflict and negative impact of public opinion on China–Africa cooperation has increased while Western interference and major power competition have intensified. China has the best economic growth performance among the BRICS countries. Since South Africa joined BRICS in 2010, the development of the BRICS countries began to be linked with Africa. As part of the cooperation between the BRICS countries and Africa, the increasingly close China–Africa cooperation is naturally conducive to promoting cooperation between the BRICS countries and Africa.

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China is the largest developing country, and Africa is the continent with the largest concentration of developing countries. China has always regarded China–Africa cooperation as one of the most important elements of South–South cooperation (S–SC), and China–Africa relations are called ‘the foundations of the foundations’ of China’s diplomacy. For a long time, China–Africa cooperation has been labelled an ‘all-weather friend’ partnership that has withstood the test of many significant events in history. The COVID-19 outbreak is the latest severe test for China–Africa cooperation. Whether China–Africa cooperation can provide a satisfactory answer to this big test is of great significance not only to current and future China–Africa relations, but also to China’s diplomacy with developing countries and the steady advancement of S–SC. Therefore, this chapter analyses and judges China–Africa anti-pandemic cooperation, and describes how China and Africa could overcome challenges in the post-pandemic era. This analysis has strong practical significance for understanding the current and future development of China–Africa relations. This chapter also describes how China and Africa have supported each other and laid a solid foundation for mutual relationships after the COVID-19 outbreak. At the same time, it summarises and analyses the impact and challenges of the COVID-19 outbreak on China–Africa cooperation. Finally, it puts forward views on, and suggestions for, areas where China and Africa should strengthen cooperation to meet these challenges in the post-pandemic era. Since the COVID-19 pandemic is still in progress, limited research materials and content are available for analysis. The research materials in this chapter were sourced mainly from relevant statements issued by the Chinese government and the AU, speeches by Chinese and African leaders at international conferences, papers published by scholars, reports of international media (including Chinese and African media), interviews with reporters and so on. As China plays a relatively large role in China–Africa anti-pandemic cooperation, more news releases and reports were sourced from the Chinese government and media for research material collection and use.

3.3 China and African countries join hands in fighting the COVID-19 pandemic All severely affected by the COVID-19 pandemic, China and African countries have joined hands by offering political support, providing medical supplies and assistance, and carrying out multilateral international cooperation – demonstrating the cooperation needed for a common future. At the height of China’s battle with COVID-19, African countries stood in solidarity with China and did their best to lend confidence and strength to the Chinese people. African leaders called Chinese President Xi Jinping to express their sympathies and

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support very early on after the start of the outbreak. The 36th Ordinary Session of the AU Executive Council issued a communiqué expressing confidence in China’s ability to win the battle. Egypt and South Africa, among other African countries, sent anti-pandemic medical supplies to China (Chinese Embassy in South Africa 2020). For example, appointed by Egyptian President Abdel Fattah al-Sisi, Egypt’s Minister of Health and Population Hala Zeid visited China on 2 March 2020 and donated 1 million medical face masks to China to support its response to the COVID-19 outbreak (Mi & Liu 2020). On 2 February 2020, with the support of the South African Ministry of Home Affairs and Ministry of Health, the South African company U-Mask donated 30 000 medical face masks to China (China News 2020). Equatorial Guinea and Djibouti, two of the least developed countries, donated US$2 million and US$1 million respectively to the Chinese government to fight the pandemic (Tang 2020). African people also offered political support to civil society and sent warm greetings. An example was the Dressing in Red and Standing for China event initiated by staff of the Standard Bank of South Africa, where tens of thousands of employees dressed in red tops and held banners and cards to cheer for China and Wuhan (Beijing Review 2020). As the COVID-19 pandemic swept across the African continent, China rushed in with assistance, sent anti-pandemic supplies and medical teams at the earliest time possible, and trained medical staff. By June 2020, China delivered bountiful medical supplies to over 50 African countries and the AU, sent medical teams consisting of 148 members to 11 African countries, and held multiple video conferences between Chinese and African experts to share experiences. More than 40 Chinese medical teams conducted nearly 400 training programmes to over 20 000 local personnel (CCTV 2020). Chinese civil society organisations and enterprises operating in Africa also took action and provided anti-pandemic assistance to Africa. For example, the Jack Ma Foundation and the Alibaba Foundation provided plentiful anti-pandemic supplies to almost all African countries in three rounds (Ma 2020). Their efforts contributed to strengthening Africa’s fight against the pandemic and fully demonstrated the humanitarian care of Chinese enterprises and civil society organisations. At the international and multilateral levels, China directed the international community’s attention to delivering assistance to Africa and took the lead in action. During the 73rd World Health Assembly held by video conferencing on 18 May 2020, President Xi announced China’s five measures to support global anti-pandemic efforts. These efforts were providing US$2 billion in international assistance over the next 2 years, setting up a global humanitarian response depot and hub in China, establishing a cooperation mechanism for Chinese hospitals to pair up with 30 African hospitals, making COVID-19 vaccines accessible and affordable to developing countries, and implementing the Debt Service Suspension Initiative for the poorest countries (China News 2020). All these measures could benefit Africa’s anti-pandemic efforts. In addition, matching Chinese hospitals with 30 African

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counterparts was highlighted as a crucial Chinese initiative that provided targeted and effective means to assist Africa during the pandemic. Furthermore, many international cooperation initiatives proposed by China fully exhibit China’s full support for African countries in fighting the pandemic and the mission China has undertaken as a major country. They also demonstrate China’s pursuit of building a China–Africa health community with a shared future. At the crucial time of Africa’s fight against the COVID-19 pandemic, China, South Africa (the rotational chair of the AU in 2020) and Senegal (the African co-chair of the 8th Forum on China–Africa Cooperation) jointly initiated convening the Extraordinary China–Africa Summit on Solidarity Against COVID-19 on 17 June 2020. Leaders of China attended the summit, together with leaders and representatives of over a dozen African countries, the chairperson of the AU Commission, UN Secretary-General António Guterres and the World Health Organisation’s (WHO) Director-General Tedros Adhanom Ghebreyesus as special guests from international organisations. The summit conveyed China’s belief in solidarity with Africa in fighting the pandemic and practising multilateralism. President Xi reaffirmed China’s ‘four unswerving commitments’ to cooperation with Africa in his keynote speech. These commitments included fighting COVID19 together, enhancing China–Africa cooperation, upholding multilateralism and taking the China–Africa friendship forward (Xinhua News Agency 2020d). The Joint Statement of the Summit underscored the impact of COVID-19 on African economies, urged early lifting of economic sanctions on Zimbabwe and Sudan by the West, and supported the development of the African Continental Free Trade Area (AfCFTA) (Xinhua News Agency 2020d). Given the cooperation between developed countries and Africa since the COVID-19 outbreak, China has played a leading role in providing assistance and supporting Africa in its fight against the pandemic, and has been the only country initiating an extraordinary summit on solidarity against COVID-19 with Africa.

3.4 Problems and challenges for China and Africa in their joint fight against COVID-19 Adversely impacted by the COVID-19 pandemic, the world economy has suffered a painful recession and the global industrial chains, value chains, supply chains and international trade have been ravaged. The pandemic has also disrupted China– Africa economic and trade cooperation. Moreover, some Western politicians and media used the coronavirus and the pandemic to shape negative public opinion against China, sowing discord between China and African countries (Qi 2020; Mead 2020; Wang 2020). Accordingly, China and Africa, in their joint fight against the COVID-19 pandemic, have encountered increasingly tough challenges in terms of public opinion.

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For one thing, the COVID-19 pandemic has disrupted and challenged China– Africa economic and trade cooperation as well as economic growth on the African continent. China–Africa bilateral trade has experienced steady growth since the establishment of the Forum on China–Africa Cooperation (FOCAC) in 2000, increasing from US$10.8 billion in 2000 to US$208.7 billion in 2019. In 2019, the four top African economies (South Africa, Angola, Nigeria and Egypt) saw their import and export volume with China exceed US$10 billion (Chinese Embassy in South Africa 2020). However, as they were hit heavily by the pandemic, these countries immediately adopted prevention measures such as lockdowns, suspension of flights and curfews. The pandemic impeded business flows, logistics, capital flow and service flow between China and Africa, and reduced bilateral trade, investment and project contracting. According to data released by the General Administration of Customs of China (2020), the first quarter of 2020 witnessed a drop of US$41 billion (14%) in China–Africa trade volume. Some BRI infrastructure projects in Africa slowed in terms of construction pace and experienced further challenges. The pandemic’s impact on China–Africa economic and trade cooperation is a consequence of its impact on the world economy. China and Africa’s economic and trade cooperation could hardly stay immune to the general shrinking world economy, especially when the pandemic affected Africa’s supply, demand and trade chains. As the pandemic spread, it shut down factories and upended work. Global demand for raw materials and energy dwindled, with little chance of recovery in the short term. In the meantime, as African countries locked down cities and shut down factories as pandemic prevention and control measures, the demand and supply sides of the global supply chain shrunk synchronously. African countries endowed with mineral resources suffered direct negative impacts. As the report entitled ‘COVID-19 in Africa: Protecting lives and economies’ released by the UN Economic Commission for Africa on 17 April 2020 suggested, Africa’s economic growth would fall from the previously expected 3.2 to 1.8% in 2020 due to the pandemic, with the potential to push 27 million people into extreme poverty. Major African economies such as South Africa, Nigeria, Algeria, Egypt and Angola faced fiscal risks due to domestic pandemic-related challenges and plummeting commodity prices. The crashing international oil prices could lead to a US$65billion loss in revenues for Africa’s fuel-oriented economies. Furthermore, as the COVID-19 pandemic spread, it took its toll on African economies due to tourism grinding to a standstill and reduced foreign direct investment and capital outflow (Mofcom 2020). Since the COVID-19 outbreak, China–Africa cooperation has been trapped in an increasingly complex and challenging public opinion environment. To stigmatise China, some Western countries (including the US) inflamed rhetoric about the ‘China virus’, the ‘Wuhan virus’, ‘China covering up the pandemic’ and ‘China should apologise and compensate’ (Qi 2020; Mead 2020). This rhetoric influenced the

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overall international public opinion environment against China, and deceived and misled local media and the public in Africa. US media and politicians consistently sowed discord and smeared China–Africa cooperation during the fight against the COVID-19 pandemic (Marsh et al. 2020; Xinhua News Agency 2020a). US media such as The Wall Street Journal and CNN used their strength in communication to maliciously spread rhetoric smearing China and fabricated the false narrative of ‘xenophobia rising in China’ and ‘Africans facing more hostility in China’. The spokesperson of the US State Department continued to pressure China, using hostile pandemic rhetoric while ignoring cases of racial discrimination in the US in 2020.

3.5 Building a closer China–Africa community with a shared future in the post-COVID-19 era In the era of globalisation, no country can deal with the challenges facing humanity alone, and no country can retreat as a self-isolating island. As UN Secretary-General Guterres said, ‘Although the pandemic was not caused by Africa, Africa may suffer the most severe consequences. Only if Africa wins the fight against the pandemic can the global pandemic be completely ended’ (UN News 2020). The developing countries in Africa that have been hit by the pandemic continued to suffer from the ‘development deficit’ problem and also faced a ‘vaccine deficit’ with a shortage of vaccines and a much lower vaccination rate compared to developed countries. Therefore, in the post-pandemic era, China and African countries need to strengthen health cooperation and revitalise the economy.

3.5.1 Strengthening China–Africa health cooperation China and Africa have had a 57-year journey of healthy cooperation since January 1963, when a Chinese medical team set foot on the African continent. Since then, medical teams have become a beacon of China’s assistance to Africa. Over the past five decades, Chinese medical teams in Africa have grown in scale. A total of over 20 000 medical staff from all over China have been stationed in more than 50 African countries. These staff have treated hundreds of millions of patients, trained tens of thousands of medical technicians, and have been widely commended by the governments of host countries and respected and loved by the local people (Li 2009). After the outbreak of the Ebola virus disease in Africa in 2014, China has taken active actions to boost the development of public health in Africa. Such actions include helping to build the headquarters of the Africa Centres for Disease Control and Prevention (Africa CDC) and setting up the only Level P3 Biosafety Laboratory (P3 Lab) in Sierra Leone. China has also helped African countries to optimise and upgrade relevant medical and health facilities, establishing several China–Africa

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friendship hospitals, sending Chinese medical teams to Africa and training African specialist physicians (Guo 2014). The China–Africa Public Health Cooperation Plan was one of the top 10 cooperation plans outlined during the FOCAC Summit held in Johannesburg in 2015. The plan was also one of the ‘Eight Initiatives’ launched at the 2018 FOCAC Summit in Beijing. The outbreak of the COVID-19 pandemic indicated that China–Africa health cooperation is crucial, urgent and has to be prioritised. In the author’s view, China needs to strengthen investment in public health in Africa and place health cooperation in a more pre-eminent position in bilateral cooperation across the board. In practical ways, China–Africa health cooperation could be comprehensively improved by constructing an African public-health system, building public-health software and hardware infrastructure, personnel training and experience sharing (He 2021). In 2020, Chinese State Councillor and Foreign Minister Wang Yi said in a joint interview with the Xinhua News Agency and China Radio and Television that China–Africa cooperation in the post-pandemic period would focus on three major priorities: (i) vaccine development cooperation; (ii) economic recovery; and (iii) transformation and development (Xinhua News Agency 2020c). In terms of vaccine development cooperation, President Xi delivered a speech at the opening ceremony of the video conference of the 73rd World Health Assembly on 18 May 2020, saying: ‘COVID-19 vaccine development and deployment in China, when available, will be made a global public good. This offer would be China’s contribution to ensuring vaccine accessibility and affordability in developing countries.’ At the Extraordinary China–Africa Summit on Solidarity Against COVID-19 in June 2020, President Xi said China would (People’s Daily 2020): • Start construction of the headquarters of the Africa CDC in 2020, ahead of schedule. • Work with Africa to implement the ‘Health Action’ within the framework of FOCAC. • Speed up the construction of China–Africa friendly hospitals and cooperation with China–Africa counterpart hospitals. • Jointly build the China–Africa health community. China is committed to taking the lead in supporting African countries after vaccine research and development are completed and put into production (Xinhua News Agency 2020b). On 8 October 2020, China signed an agreement with the Global Alliance for Vaccines and Immunisations (Gavi)1 and officially joined COVID-19 Vaccines Global Access (COVAX).2 These are important steps that China has taken to uphold the concept of a shared community of health for all and to honour its commitment of turning COVID-19 vaccines into a global public good. There is a Chinese proverb that states ‘commitment is gold’ – meaning that if you make a promise, you must fulfil it. The commitments made by the Chinese

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government have always been fulfilled and implemented. In December 2020, construction began on the Africa CDC headquarters, located south of Addis Ababa in Ethiopia. Upon completion, the project would include emergency response centres, data centres, laboratories, libraries, press rooms, training centres, conference centres, offices and apartments for expatriate staff. The facilities are expected to significantly improve the office and research conditions of the Africa CDC and its ability to respond to public-health emergencies in Africa (Chinese Embassy in Ethiopia 2020). Concerning vaccine provision, the first batch of China-made vaccines arrived at Cairo International Airport in Egypt on 11 December 2020. The first batch of Egyptian commercially purchased China-made vaccines and vaccine raw liquid arrived in Cairo on 21 May 2021. A team of Chinese experts was due to arrive in Egypt to work with Egyptian companies to implement localisation cooperation and vaccine technology transfer (Wu 2020). Egypt would be the first African country to cooperate with China and produce its COVID-19 vaccine. According to the Chinese Foreign Ministry, by the end of March 2021, China had provided vaccine assistance to 80 countries (about half were African countries) and 3 international organisations, exported vaccines to more than 40 countries, and cooperated with more than 10 countries on vaccine research and development and production (Hua 2021). Considering the cooperation between developed countries and Africa after the outbreak, China played a leading role in assisting and supporting Africa’s fight against the pandemic, and was the only country to have launched a special summit on solidarity and fighting the pandemic with African countries. The initial outbreak in China was controlled effectively. Work and school resumed in the second half of 2020. Both Africa and China confirmed fatal cases of COVID-19. Still, they accounted for only 4% of the world’s total cases – well below many reports by international authorities in the first half of 2020 (WHO 2022). On 29 and 30 November 2021, the 8th Ministerial Conference of FOCAC held in Dakar (Senegal) adopted the FOCAC–Dakar Action Plan (2022–2024). According to this action plan, China will provide another one billion doses of vaccines to Africa in the following three years. Six hundred million doses will be provided as free assistance, and four hundred million doses will be provided through joint production by Chinese companies and relevant African countries. Africa welcomes China’s support for exemptions from intellectual property rights for COVID-19 vaccines and encourages other countries to follow suit (Chinese Ministry of Foreign Affairs 2021a).

3.5.2 Reviving the African economy The pandemic has impeded China–Africa economic and trade cooperation, and Africa’s economic development. In an effort to revive their affected economies,

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African countries officially launched the first deal of the African Continental Free Trade Area (AfCFTA) on 1 January 2021, hoping to mitigate the challenges of change in the international environment by promoting economic integration on the African continent (Chinese Embassy in South Africa 2021). China has always firmly supported the integration process on the African continent. In addition to building the AU headquarters and improving office conditions for the AU, China has promoted the development of the AfCFTA in three other areas: (i) infrastructure construction; (ii) industrial development; and (iii) market integration (Luo 2017). In early December 2020, China and the AU signed a cooperation plan to jointly promote the construction of the BRI. This agreement also became the first cooperation document signed by China and a regional organisation. According to the plan, China will support the AU’s Strategic Framework for Vision 2063; strengthen cooperation with African countries in the fields of railways, highways, regional aviation and industrialisation; promote the integration process of African countries; and jointly address the challenges of globalisation (Xinhua News Agency 2020c). Although the COVID-19 outbreak had an impact on China–Africa economic and trade cooperation, the high level of complementarity in economic structure (where China’s technologies, capital and experience match Africa’s market, resources and growth potential) will not change due to the pandemic. Therefore, as supply and production chains are restored in the post-COVID-19 era, China–Africa economic and trade cooperation is expected to get back on track. Even during the pandemic, Chinese and African business communities attempted to create new business opportunities through new forms of business. For example, the 127th China Import and Export Fair (Canton Fair) that opened on 15 June 2020 adopted an online format for the first time. Exhibitors and buyers from Africa and other parts of the world stayed at home to discuss business and sign contracts using new formats such as online display and promotion, matching supply and procurement needs, and general negotiation (Lin 2020). This session of the online Canton Fair also indicated that China and Africa were ready to usher in a new era for trade through digital technologies. Building upon the advances of the Canton Fair, future post-COVID-19 China–Africa economic trade and cooperation should continue to integrate new technologies to promote new business models that facilitate closer cooperation. In this regard, President Xi referred to the Extraordinary China–Africa Summit on Solidarity Against COVID-19, noting that: China supports Africa in its effort to develop the African Continental Free Trade Area and to enhance connectivity and strengthen industrial and supply chains. China will explore broader cooperation with Africa in such new business forms as digital economy, smart city, clean energy, and 5G to boost Africa’s development and revitalisation. (Xinhua News Agency 2020e)

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The joint statement of the extraordinary summit stressed that China and Africa recognise the importance of digitalisation in the post-COVID-19 era, and support efforts to speed up the development of Africa’s digital economy and expand exchanges and cooperation on digitalisation. These efforts would concentrate on information and communication technologies, especially telemedicine, online learning, 5G and big data. The digital economy and cloud-based trade efforts have also propelled China–Africa trade to continue to develop despite the impact of the pandemic. For example, the latest data released by the General Administration of Customs of China show that in 2021, total bilateral trade between China and Africa reached US$254.3 billion (a year-on-year increase of 35.3%), of which exports from Africa to China improved to US$105.9 billion (a year-on-year increase of 43.7%) (Wang 2022). In addition to highlighting new business opportunities through greater China– Africa cooperation, expanding the BRI can contribute to Africa’s post-pandemic economic reconstruction. During the outbreak, China’s more than 1 100 BRI cooperation projects in Africa continued, and nearly 100 000 Chinese technical and engineering personnel remained in their posts in Africa. Several railway, highway and power plant projects have been resumed, making important contributions to local economic and social development. During Chinese State Councillor and Foreign Minister Wang’s visit to Africa in early 2021, the Democratic Republic of the Congo and Botswana signed a memorandum of understanding with China related to the BRI. The two countries became the 45th and 46th partner countries in Africa to participate in the BRI (CCTV 2021). Building the ‘Belt and Road’ projects together and overcoming the effects of the pandemic are becoming a common understanding and trend in Africa. In addition, to reduce the financial burden on African countries affected by the outbreak, China pledged US$2 billion in international assistance over two years to support the fight against the pandemic and economic/social recovery in developing countries. The funds were also earmarked for working with Group of 20 members to implement the Deferred Debt Repayment Initiative for the poorest countries. At the China–Africa Solidarity and Anti-Pandemic Summit held on 17 June 2020, China pledged to forgive the debt of interest-free loans to Africa due by the end of 2020 under the framework of FOCAC (Xinhua News Agency 2020d). It is believed that these financial interventions, new infrastructure development, and the focus on health, rehabilitation and improvement of people’s livelihood will give a strong impetus to the recovery of African economies in the post-pandemic era.

3.5.3 Promoting media cooperation and civil society exchanges As the Chinese saying goes, ‘To spread a rumour, you only need to open your mouth but to refute a rumour, you need to break your leg’. Cooperation with the media is believed to be essential for developing a positive narrative about Africa–China

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relations. In the author’s view, when major events concerning China–Africa relations unfold, the two sides must serve as authoritative information sources, taking the initiative to make their voices heard at the earliest possible opportunity and on multiple occasions. This strategy needs to be targeted at both the traditional media and social media via influencers. To some extent, social media influencers have a wider audience and can spread information faster. For example, some Western and African social media exaggerated the Guangzhou incident in early April 2020, claiming that Africans suffered racial discrimination during Guangzhou’s pandemicprevention campaign and framing China as a racist state. This unrealistic hatemaking rhetoric harmed China–Africa unity and directly led to the deterioration of several Chinese businesses in Africa (Marsh et al. 2020; Mead 2020). This hostile public opinion bothers Chinese investors in Africa, who feel more concerned about the negative public opinion than the COVID-19 pandemic. In recent years, under the general framework of the FOCAC Action Plan (such as the Ten Cooperation Plans in 2015 and Eight Actions in 2018), the exchanges and cooperation between Chinese and African media were carried out in an orderly manner and many positive results were achieved. The English channel of China Radio and Television set up a CGTN branch in Africa and the China Daily established and distributed an African edition. Many African journalists and editors have been invited to China for exchanges, training and internships with their Chinese counterparts (He 2020). In terms of people-to-people bonds, China–Africa exchanges on culture, media, science and technology, think tanks and young women have deepened in general, building a solid foundation to expand the BRI. For example, the China–Africa Universities 20+20 Cooperation Programme, the Confucius Institute programme and Luban Workshop for worker training have all continued to develop into new bridges for people-to-people bonds between China and Africa (Lou 2014; McCutcheon et al. 2021). By doing so, a broader base can be formed by those supporting China–Africa friendship. Only through joint efforts between Chinese and African media and people will malicious rumours, fake news and negative rhetoric of all kinds trying to sow discord and slander about China–Africa relations eventually be rebuked and fail.

3.5.4 Enhancing cooperation with BRICS and the international community as a whole For a long time, the idea that ‘developing countries are the foundation of multilateral diplomacy’ has been an important cornerstone of Chinese diplomacy. China and African countries agree on safeguarding the authority of the WHO and strengthening

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the role of multilateral institutions such as the UN. Chinese State Councillor and Foreign Minister Wang has made it clear that: [T]he UN remains the most complete institutional platform for the current international system, international law remains the most authoritative rule framework for inter-state relations, and the principle of the purpose of the Charter of the United Nations remains the most important guiding principle for peace and development in human society. Multilateralism is the foundation and pillar of the existing international order, and solidarity and cooperation are the only way to overcome the epidemic and move towards recovery. (China News Agency 2020) In support of the UN’s central role in international affairs, President Xi (on behalf of the Chinese government) announced the following four commitments at the 75th Session of the UN General Assembly in September 2020. First, China would provide a further US$50 million in support to the UN Global Humanitarian Response Plan for the COVID-19 Pandemic. Second, China would establish the third phase of the China Food and Agriculture Organisation of the UN Trust Fund for South–South Cooperation, to the amount of US$50 million. Third, the China–UN Peace and Development Fund would be extended for five years after its expiration in 2025. Fourth, China would establish the UN Global Geographic Information Knowledge and Innovation Centre and the International Research Centre for Big Data for Sustainable Development to provide new assistance for implementing the UN Agenda for Sustainable Development 2030 (Xinhua News Agency 2020e). China is the largest developing country and Africa is the continent with the largest concentration of developing countries. Strengthening international cooperation between China and Africa, and its firm support for the work and authority of the UN and the WHO in international affairs and world public health, are of particular importance for safeguarding the principles of multilateralism and international equity and justice. The 2020 Extraordinary China–Africa Summit on Solidarity Against COVID-19 had already delivered a strong voice supporting multilateralism and calling for international solidarity against the pandemic. On 19 May 2021, at the initiative of China (which held the rotating presidency of the UN Security Council), the council held a high-level meeting on Peace and Security in Africa: Advancing Post-Epidemic Reconstruction in Africa and Addressing the Root Causes of Conflict. Chinese State Councillor and Foreign Minister Wang chaired the meeting and called on the international community to step up its support for Africa and invest resources in areas that Africa urgently needed to help it overcome its difficulties and promote its post-pandemic reconstruction (Chinese Ministry of Foreign Affairs 2021b). In the post-pandemic era, China and Africa could hold similar special summits on major international issues, and could work closely together when selecting leaders

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of international organisations and setting the agendas of relevant international conferences to give the international community a common voice on China– Africa solidarity. Of course, China–Africa solidarity is crucial when fighting the pandemic and strengthening international cooperation. Such practices are not limited to China–Africa bilateral circles, but rather promote inclusive international cooperation. The Joint Statement of the Extraordinary China–Africa Summit on Solidarity Against COVID-19 specifically states: [S]upport exploring tripartite or multi-party cooperation in Africa with international partners on the basis of respect for the will of African countries and on the principle of activeness, openness and inclusiveness, and supporting Africa’s early victory over the pandemic and accelerated development’ (Xinhua News Agency 2020e). It is evident that China is happy to cooperate with international partners in a tripartite or multiparty way. As long as Africa agrees, it is conducive to Africa’s early victory against the pandemic and will accelerate its socioeconomic development.

3.6 Conclusion Unfortunately, the COVID-19 pandemic has affected international relations through tendencies of ‘self-centrism’ and ‘the law of the jungle’. Isolationism, bullying and unilateralism are constantly eroding an international system that places the UN at the core and values multilateralism. Therefore, it is important that China, Africa and BRICS strengthen international cooperation and firmly support the undertakings and authority of the UN and the WHO in international affairs and world public health. The COVID-19 pandemic is a disaster, but also a test for humankind. China’s actions during the pandemic have proven that the slogan ‘a community of shared future’ advocated by China is not an empty phrase but enshrines fundamental values of global governance. It has proven that the ‘community of shared future’ truly exists. On the one hand, economic globalisation and scientific and technological progress shorten the distance between countries and people. We are already interdependent with respect to economic development, social security and other common interests. On the other hand, we have found that a pandemic can quickly block economic development and trade, and flight traffic – increasing the distance between countries and people. The community of shared health, public safety and shared destiny no longer need more theoretical exploration, as the truth unfolds in front of us. As the saying goes, ‘When brothers are united, their profits break gold’. From the perspective of building a new type of international relations, the collective rise of emerging market countries and developing countries is an important conclusion of Chinese policy and will bring about profound changes in the world, unseen in a century. As a S–SC cooperation mechanism covering Asia, Europe, the Americas and

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Africa, BRICS can be regarded as a leader driving emerging markets and developing countries. It can contribute to, and play a role in, the reform and improvement of global governance in the post-pandemic era. For example, it can advance the strengthening of the international system with the UN at the core, oppose unilateralism and protectionism, promote global public-health security cooperation, unite to fight the pandemic, and oppose the politicisation and stigmatisation of the pandemic while insisting on promoting free trade and economic globalisation. China and Africa are the strongest forces of solidarity among developing countries in the Global South. Together, China and Africa can lead the process of BRICS–Africa cooperation, demonstrate the strength of solidarity between BRICS and developing countries, and ensure that the voice of the Global South is heard on the world stage. In doing so, the common voice of the Global South will have a profound impact on reshaping contemporary international relations. Endnotes 1 2

The Global Alliance for Vaccines and Immunisation (Gavi) is a public–private partnership for global health, established in 1999. Its purpose is to cooperate with government and NGOs to promote the development of global health and immunisation. COVAX is a project jointly proposed and led by Gavi, the WHO and the Alliance for Epidemic Prevention Innovation. On 8 October 2020, China signed an agreement with the Gavi to officially join COVAX.

References

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Chinese Embassy in South Africa (2020) China–Africa and China–South Africa bilateral economic and trade cooperation data in 2019. Accessed 16 July 2021, http://www.mofcom.gov.cn/ article/i/jyjl/k/202003/20200302941368.shtml Chinese Embassy in South Africa (2021) African Continental Free Trade Area officially launched on January 1. Accessed 6 April 2022, http://www.mofcom.gov.cn/article/i/ jyjl/k/202101/20210103028395.shtml Chinese Ministry of Foreign Affairs (2021a) The FOCAC Dakar Action Plan (2022–2024). Accessed 11 February 2022, https://www.fmprc.gov.cn/web/ziliao_674904/zt_674979/ dnzt_674981/qtzt/kjgzbdfyyq_699171/202112/t20211202_10461174.shtml Chinese Ministry of Foreign Affairs (2021b) Wang Yi chairs the high-level meeting of the UN Security Council on ‘Peace and Security in Africa’. Accessed 6 April 2022, https://www. mfa.gov.cn/web/ziliao_674904/zt_674979/dnzt_674981/qtzt/kjgzbdfyyq_699171/202105/ t20210519_9184279.shtml General Administration of Customs of China (2020) China–Africa trade volume. Accessed 6 April 2022, http://english.customs.gov.cn/statistics/Statistics?ColumnId=6 Guo J (2014) The Ebola crisis and China’s soft power construction in Africa. Contemporary World 12: 33–35 He W (2020) How can China–Africa relations continue to be brilliant under the complex international public opinion. People’s Forum 7: 118–121 He W (2021) Building a closer China–Africa community with a shared future in the postpandemic era. Guangming Daily, 3 January. Accessed: 6 April 2022, https://m.gmw.cn/ baijia/2021-01/03/34513185.html Hua C (2021) Foreign Ministry: China is providing vaccine assistance to 80 countries. People’s Daily, 30 March. Accessed: 15 April 2022, https://www.fmprc.gov.cn/ce/cesb/chn/fyrth/ t1874916.html Li A (2009) History, scale and influence of Chinese foreign aid medical team. Diplomatic Review 1: 25–29 Lin J (2020) The 127th Canton Fair ‘Cloud’ opens, 16 June 2020. Accessed 5 April 2022, http://www.xinhuanet.com/fortune/2020-06/16/c_1126118278.htm Lou S (2014) From aid to cooperation: Analysis based on the ‘20 + 20’ China–Africa Inter-University Cooperation Plan. Comparative Education Research 36: 1–5 Luo J (2017) African Union, African integration and China’s constructive engagement. Country and Regional Studies Z1: 78–92 Ma Z (2020) As part of China’s aid to Africa, Jack Ma donated another batch of anti-pandemic materials to Africa. China Youth Daily, 6 April Marsh J, Deng S & Gan N (2020) Africans in Guangzhou are on edge, after many are left homeless amid rising xenophobia as China fights a second wave of coronavirus. Accessed 20 July 2021, https://edition.cnn.com/2020/04/10/china/africans-guangzhou-china-coronavirus-hnk-intl/ index.html McCutcheon C, Billman S, Romero J & Kartscher M (2021) China’s Vocational Education Workshops seek to strengthen relations with Africa. China Brief 21(21): 10–20. Accessed 6 April 2022, https://jamestown.org/program/chinas-vocational-education-workshops-seekto-strengthen-relations-with-africa Mead WR (2020) China is the real sick man of Asia. The Wall Street Journal, 3 February 2020. Accessed 6 April 2022, https://www.wsj.com/articles/china-is-the-real-sick-man-ofasia-11580773677

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Mi C & Liu S (2020) Egyptian president’s special envoy and Health Minister Haley set off to China to express support for China’s fight against COVID-19. Accessed 16 May 2021, http://news.cri. cn/20200302/3ee4e2fe-60cf-aef8-3d33-f785fe57b42d.html Mofcom (2020) The United Nations Economic Commission for Africa predicts that Africa’s economic growth rate may drop to 2% this year. Accessed: 16 July 2021, http://xyf.mofcom. gov.cn/article/zb/202004/20200402951648.shtml People’s Daily (2020) Xi Jinping announces five measures to support global anti-pandemic measures. Accessed 10 April 2021, http://news.cnr.cn/native/gd/20200518/ t20200518_525094831.shtml Qi Q (2020) Trump’s speech at the UN General Assembly started with ‘Chinese virus’, and Chinese ambassador hit back. Global Times (Chinese version). Accessed 6 April 2022, https://xw.qq.com/cmsid/20200925A02NV500 Tang L (2020) In order to help China ‘fight the pandemic’, these African countries have really tried their best. Chang Kao Xiaoxi, 15 February Wang H (2022) China–Africa trade hits a new high under the pandemic, highlighting the resilience of China–Africa economic and trade cooperation. Accessed: 8 March 2022, http://www.scio. gov.cn/31773/35507/35513/35521/Document/1721046/1721046.htm Wang T (2020) Sinophobia: How a virus reveals the many ways China is feared. Accessed 6 April 2022, https://www.bbc.com/news/world-asia-51456056 UN News (2020) Fighting the pandemic together: UN secretary-general calls for $200 billion for Africa and debt relief. Accessed 20 July 2021, https://news.un.org/zh/story/2020/04/1055302 Wu A (2020) The first batch of Chinese-made COVID-19 vaccines arrived in Egypt, Egyptian officials: A historic moment. Guangming Daily, 12 December 2020. Accessed 6 April 2022, https://m.gmw.cn/baijia/2020-12/12/1301931119.html Xinhua News Agency (2020a) China refutes U.S. accusation of ‘xenophobia’ in treatment of Africans. Accessed 20 July 2021, http://www.xinhuanet.com/english/202004/13/c_138972450.htm Xinhua News Agency (2020b) Xi Jinping’s keynote speech at the Special Summit on China–Africa Solidarity and Anti-Epidemic, 17 June. Accessed 20 July 2021, http://www.xinhuanet. com/2020-06/17/c_1126127508.htm Xinhua News Agency (2020c) The Chinese government and the African Union signed a cooperation plan for the joint construction of the ‘Belt and Road’. Accessed 5 April 2022, http://www.gov.cn/xinwen/2020-12/16/content_5569870.htm Xinhua News Agency (2020d) Joint Statement of the Extraordinary China–Africa Solidarity Anti-Epidemic Summit. Accessed 8 February 2022, http://www.gov.cn/xinwen/2020-06/18/ content_5520093.htm Xinhua News Agency (2020e) Xi Jinping delivers an important speech at the general debate of the 75th UN General Assembly. Accessed 5 April 2022, http://www.xinhuanet.com/politics/ leaders/2020-09/22/c_1126527647.htm

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Section 2 Relevance of BRICS Multi-Development Bank Funding and Infrastructure Development

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BRICS New Development Bank: A Development-Finance Model Conducive to Strengthening South–South Cooperation Roberto Ridolfi

4.1 Background Emerging and developing countries have significantly increased their clout in the global political economy, as seen in their GDPs and economic growth. Some have accumulated long-term foreign exchange assets, which typically are placed in sovereign wealth funds. Nonetheless, a large part of these resources is invested in developed countries, with relatively low yields, even though there are large unmet needs in emerging and developing countries in terms of infrastructure and sustainable development. In 2012, a shortfall of investment of approximately US$1 trillion annually was estimated prior to the definition of the Sustainable Development Goals (SDGs) (Bhattacharya et al. 2012). Today, the needs are greater.

4.2 Introduction Today, emerging and developing countries have the necessary resources to finance a new development bank that could assist in closing the financing gap of the SDGs. The leaders of the BRICS member states created the New Development Bank (NDB) for infrastructure and sustainable development. This institution is intended to complement – not substitute – existing financial institutions in both the public and private sectors. Its existence strengthens the voice of developing and emerging economies in the development-finance architecture and boosts the South–South cooperation (S–SC) agenda. Some important similarities with other development banks in their initial phases are recognised, for example, the World Bank, which also started its life with a focus on infrastructure. Today, there is a strong case for investing in sustainable development, which could be successful if applied to emerging and developing economies with vibrant demographic dynamics. This investment case should be based on the need for growth, structural change, inclusion and resilience (Griffith-Jones 2014). There could be different reasons for the slow start of the NDB, from the structuring of the bank to relations among countries. Although the bank has approved tens of billions in loans, it has slowly disbursed considerably less. Problems are innumerable and include, but are not limited to: relations between China and India, which have

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been characterised by instability; sanctions on Russia that have made it difficult to lend to Russian companies (without touching on the war in Ukraine); political instability, and economic problems in both South Africa and Brazil, which presumably did not help the smooth financing of the bank. Transparency and sustainability have been difficult issues for the NDB. Some good projects were approved for climate change mitigation and adaptation in Brazil and renewable energy in India; others were more environmentally questionable in the absence of clear SDG-related criteria. Providing a framework and the metric for sustainable due diligence is paramount. This chapter argues that a strong, clear, SDG focus may address the above concerns and present the NDB as a truly innovative development bank. A comparative analysis of structures and systems of SDG compliance in development banking, as developed in this chapter, may help to shape the success story of the NDB as it drives S–SC through innovative and sustainable business models. Comparing the EU framework clearly shows the advantages of having a more agile intergovernmental decision-making body that operates based on policy principles and approaches to external lending. In this chapter, the author adopts an auto-ethnographic approach, drawing from years of concrete hands-on experience in development. Therefore, the bulk of the narrative is based on personal experience. In fact, the author has first-hand work experience as an expert and executive of the EU and UN, dealing with developmental concerns between 1994 and 2020 in various countries (including: Belgium, Italy, Malawi, Namibia, Kosovo, the Fiji Islands and Uganda). During these years, he started and managed initiatives such as the European Investment Plan and the European Fund for Sustainable Development of the EU (managing €44 billion). He also chaired the Africa Infrastructure Trust Fund, managed by the European Investment Bank. He initiated the Africa Renewable Energy Initiative, stimulated the creation of the management company of European development-finance institutions (EDFIs) for the implementation of the initiative of risk capital such as Electrifi and AGRIFi; was the chair of the Investment Committee of the first global private equity fund of funds for renewable energy and energy efficiency (Global Energy Efficiency and Renewable Energy Fund – GEEREF), among other executive responsibilities in the European Commission; and served as an ambassador in the diplomatic body of the EU. These experiences inform the views and recommendations shared in this chapter.

4.3 Underinvestment is the effect of the geopolitical scenario combined with structural competing development demands 4.3.1 Geopolitics of Africa explained by underinvestment and competing development demands The rationale for BRICS having a development bank for Africa is strong. The goal of creating sustainable development in Africa gives us an idea of how competitive

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advantages in strategies, with and for, Africa should be recognised as such by all the global partners and should provide the roadmap for the continent’s development. The challenge for Africa is to verify if its interests converge with those of BRICS and to see if the areas of convergence can be integrated into the priorities of the Africa Agenda 2063 in a realistic way (Nantulya 2019). The widespread, complete, effective and practical application of sustainability principles is key to the justification of a new social contract for future societies. It is also key to the transfer from rich to poor, from stable economic and social geographical areas to areas of instability, and from pension funds to the unemployed youth. Sustainability is not just a way of planning and organising economic development; it is also a part of the geopolitical dialogue. The 2021 Italian presidency of the G20 worked around three SDG pillars: people, planet and prosperity. But who is seriously working on this today? Several think tanks, NGOs and research institutes, some governments, a few enlightened entrepreneurs and very few bankers. These stakeholders are not enough. The goals of Agenda 2030 require the commitment of a much broader turnout of participants, starting with those who can mobilise the necessary financial resources. Today pension funds are among the main financial and institutional players, with over US$25 trillion invested (OECD 2017). In terms of remuneration and contribution, pension funds link the present to the future. They can make the present as positive and sustainable as the future. Pension funds tie together the futures of new and old generations in one financial vehicle; for this reason, they constitute an indisputably strong group of stakeholders. But by their mandate and risk profile, pension funds with an enormous number of resources need to team up with development bankers to reduce the overall risk of their investments. A partnership between BRICS and African pension funds, like European or US funds, could be a plausible way of channelling consistent resources to support sustainability.

4.3.2 Similar, alternative or complementary approaches? Europe and BRICS Understanding how BRICS, and China in particular, will play a role in developing a roadmap for SDG implementation is essential. China increased its commitments in Africa to US$7.5 billion in 2013 and engaged with 35 countries (Kim 2013). The strategic nature of Africa has prompted the interest of the main players in the global economy. The considerable attention that China pays to the continent is widely known. Similarly, India cultivates close relationships with African countries along the Indian Ocean – as does Brazil in Angola and Mozambique due to their lingua franca, but to a lesser extent. The EU has organised structured political and economic dialogues with Africa. France has maintained strong ties with its former colonial empire countries, including through the Organisation Internationale de la Francophonie (International Organisation of the Francophone). The UK has a substantial portion of the Commonwealth in Africa.

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The above relations call for a structured and permanent Europe–BRICS dialogue on Africa. There is a need to clearly and specifically identify the broad areas of complementarity that can foster cooperation between Europe and BRICS. Interestingly, the interests of African countries for China and Europe do not overlap. China and the other BRICS countries focus heavily on infrastructure investments and natural resources. In contrast, Europe (although interested in infrastructure and natural resources) can offer a wider area of cooperation, from the promotion of micro-enterprises to environmental and technological investments, and from training policies to welfare systems and the implementation of efficient public administration and democratic political institutions (EU 2021). In short, there is room to create a triangular alliance between Africa, Europe and BRICS that could have significant results. But an alliance or a dialogue will go nowhere without investments.

4.3.3 Underinvestment in Africa For a long time, investors grossly underinvested in Africa. The achievement of the ambitious goals in Agenda 2030 needs strong investment support. Eradicating poverty and hunger; providing people with access to clean water, sanitation and healthcare; and transitioning to cleaner energy require substantial additional capital. The promises of large investment to achieve the SDGs have not yet materialised. Between 2015 and 2020, the amount of external resources for developing countries declined; in 2016/17, foreign direct investment (FDI) dropped by 30% – down to US$750 billion – and project finance decreased. According to the African Development Bank, the gap for infrastructure financing in Africa amounts to approximately US$100 billion per year (Kanyesigye 2019). The COVID-19 pandemic has generated a crisis that will stifle any attempt to resurrect investments to achieve the SDGs. To answer these problems, initiatives like RELEASE G20 have been launched for G20 consideration. The pursuit of the SDGs, while enjoying bold political statements, has been underfinanced. Over the last few years, a key reference for SDG financing needs has been the UN Conference on Trade and Development’s (UNCTAD) World Investment Report of 2014. UNCTAD estimates that to meet the SDGs by 2030, total annual investments in SDG-relevant sectors in developing countries would need to be between US$3.3 trillion and US$4.5 trillion. Such estimates mean there is an annual financing gap of some US$2.5 trillion between current funding and what is required (UNCTAD 2014). Until now, development-finance institutions (DFIs) have mainly focused on a few (based on my experience) ‘easy’, low-risk SDGs. With an approaching 2030 deadline, the COVID-19-led crisis has shifted priorities for donor countries. They will need to consider realistically how they can finance the SDGs to achieve them in time. I believe (based on my long experience on the subject) that blended finance and public–public, public–private and private–private impact investments have the potential to scale up efforts, perhaps combined with stimulus packages allocated

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for post-COVID-19 recovery. S–SC must also play a role, and BRICS is the ideal platform from which to start. The NDB, which is structured as a real development-oriented BRICS bank, can play a significant role. Increasing uncertainty due to the COVID-19 crisis will increase the risks (both perceived and actual), especially in developing economies. The increased risk perception will unavoidably increase the cost of capital and affect the actual decision to invest. This will enhance the inability of investors to size up and price the new level of risk. There will be a boost to satisfy domestic needs in many wealthy nations to reduce the long supply chains beyond borders, and FDI in developing countries will decrease further. A boost in the perspective South–South via an efficient development bank pushed by the BRICS countries is both politically and financially viable.

4.4 Existing BRICS banking architecture in the post-COVID-19 framework towards 2030 and the SDGs The leaders of Brazil, Russia, India, China and South Africa met in Goa (India) for the 8th BRICS Summit to advance integration and sustainable development among the BRICS countries. After the NDB’s launch, the critical question for the S–SC agenda is if the NDB can become a real engine for sustainable development. The NDB, according to published information, approved, in its first year, over US$3 900 million worth of infrastructure and energy projects within the BRICS countries (including various energy investments in renewables) (NDB 2019). An essential factor distinguishing the NDB is that it lends to countries in their domestic currencies rather than pegging all loans to the US Dollar or the Euro. The NDB has not added additional member countries (allowing it to source financing from outside the five BRICS countries) and has not yet gone private (expanding operations to include lending to the private sector). Several obstacles impede the expansion of the NDB. For instance, the NDB has not yet defined what it sees as sustainable development or set clear sustainability criteria and indicators for its investments. The NDB also has an exclusion list (like many other DFIs) that identifies certain ineligible investments. However, investments in fuel sources like coal are allowed. The NDB needs to graduate from the natural resource exploitation development model, which is export oriented, and move convincingly towards social sustainability, transparency and participatory inclusion. These principles are important for fighting poverty within the Agenda 2030 framework. The NDB has also not involved civil society when forming its social and environmental policy framework. Furthermore, at the project level, it has not ensured that communities have the information they need, the opportunity to influence NDB investment decisions and an opportunity for recourse if they are harmed. Furthermore, while it has released its Interim Policy on Information Disclosure, it has not implemented it.

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Like many other DFIs, the NDB has adopted aspirational principles rather than concrete environmental and social performance requirements. Furthermore, the NDB, in the name of subsidiarity, has preferred the use of countries’ domestic environments and social parameter systems without clear criteria or processes. This is a major concern, since some countries systematically neglect their national environmental and social protections (Kweitel & Krishnaswamy 2016). The bank’s acceptance of compliance with environmental and social standards designed by borrowers, respecting its members’ policies, means that the social and environmental standards of projects that the NDB supports can be deficient.

4.4.1 How the NDB came to be India proposed the formation of the NDB in 2012. After two years of negotiations, the bank’s formation was announced at the summit in Fortaleza (Brazil) (BRICS Heads of State 2014). The idea of the NDB was to create a development bank that would challenge the global development-finance architecture created by developed countries in the aftermath of World War II, known as the Bretton Woods Institutions, crucially learning from the mistakes of that architecture. These ideas were powerful, and it could be assumed that the NDB would challenge the World Bank and the US Dollar. At the time, the BRICS countries were clear in criticising the International Monetary Fund (IMF) for not implementing reforms to give developing nations more decision-making power. BRICS was influential, as it involved five massive emerging countries with some of the world’s largest populations, landmasses and economies. The bank aimed to address developing nations’ need for funds to build infrastructure and develop their economies despite insufficient credit. Developed countries were welcomed to join the NDB, but they could not borrow from it or have voting powers exceeding 20%. No country has since, and up to 2018, based on my knowledge, asked to join the bank.1 The NDB has innovated in some areas, such as lending in local currencies to protect borrowing countries from a stronger US Dollar. The bank has also successfully installed its regional centres in Johannesburg (South Africa) and São Paulo (Brazil). It has established partnerships with important development banks, such as the Development Bank of Latin American (Corporação Andina de Fomento – CAF), the China-led Asian Infrastructure Investment Bank and the World Bank Group. The NDB’s credit rating ranges (according to various rating agencies) between AA and AAA in 2022, one short of the maximum, which signifies the advantages of staying together. This despite some members (notably Brazil and South Africa) facing considerable financial pressures (Wikipedia n.d.). For geopolitical reasons, the NDB needs to be an SDGs-oriented bank. The bank successfully emitted several bonds, including ‘green bonds’ in 2016. Future financing will have to be sustainable, which translates into adopting the purpose and principles of the SDGs in the bank’s presentation material but – importantly – also adopting

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apt policies, structures and systems to assess and measure imposed SDG metrics. It must also have a balanced governance and solid, innovative business model inspired by the S–SC agenda. Moreover, there is a need to draw some lessons from the experiences of building the EU financial architecture and how governance and business models perform.

4.5 Elements of similarity and divergence between BRICS and the EU in terms of development-finance architecture BRICS and the EU are quite different blocs, yet it may be interesting to identify if there are any similarities in their external financing. There are three main players: the European Investment Bank (EIB, the bank of the EU that the member states wholly own) and the European Bank for Reconstruction and Development (EBRD). The EBRD is not an EU institution, but a key European DFI owned by 69 countries and the European Commission. The two banks have financed operations in the same geographical areas with similar financial instruments, which raised problems because their objectives, risk attitude and expertise are quite different. The EIB primarily focuses on EU economic development and integration through its financial operations, most of which are in the EU member states. It operates in 118 countries, but its activities beyond the EU account for only 10% of its portfolio, with an extremely limited presence on the ground. The EBRD is the only financial institution with a political mandate to support democracy and the transition towards open market-oriented economies in Central and Eastern Europe. These areas include those countries that are EU member states, the Western Balkans and Türkiye, Eastern Europe and the Caucasus, Russia, Central Asia and Mongolia. The EBRD has extended its portfolio into North Africa and the Middle East, but is looking to extend further into sub-Saharan Africa. It has a presence in all its countries of operation. Technically, the EBRD has accomplished and concluded its mandate to bring several countries into the market economy. The EBRD and EIB cooperate on many projects, but there are two key divergences: pricing philosophy and policy influence. The EBRD uses market pricing, while the EIB takes a cost approach and adds a risk premium. The EIB provides non-conditional finance due to financing mainly its shareholders, while the EBRD uses finance as leverage to influence policy reform. At the centre, as a federator with the policy role and the financial instruments, the European Commission has important aid programmes in developing nations and neighbouring countries. From my direct experience of managing the development and blended finance in the European Commission, the EIB and EBRD – alongside several bilateral DFIs in Europe – have worked since 2008 in blended finance modalities with grants (and more recently guarantees) from the European Commission’s budget to create blended finance structures and investments both inside and outside the EU.

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Under the proposed new Multiannual Financial Framework 2021–27, the European Commission would reinforce its position as a hub. Yet, the commission’s complex structure and its top-heavy bureaucratic coordination mechanisms mean that it ‘lacks a single voice on development’. The commission retains ultimate political responsibility, but it lacks the banking and risk-management expertise required. Within the External Action Service (with a political coordinating role given by the Lisbon Treaty), there is an extensive network of delegations worldwide but their capacity to participate effectively in managing investment-oriented development approaches at the country level is limited (Gavas 2019). The European Commission is at the centre of the development-finance discourse due to its role in blended finance facilities and its responsibility regarding policy. The EU’s experience in blended finance has revamped its ideas about external financing.2 The commission proposed a regulation of the European Council to create a new innovative financial instrument, the European Fund for Sustainable Development (EFSD). The EFSD is one of the pillars of the new external investment plan (EIP, which I had the honour to design), also inspired by the success of the investment plan for Europe. This EIP is an important building block of the reformed EU migration policy. The new fund is aimed at mobilising EU grants to catalyse investment from public and private sources to tackle the root causes of migration in the European neighbourhood and Africa while helping to achieve the 2030 Agenda for Sustainable Development (European Commission 2017). The discussions after the EIP’s approval stimulated a reflection in 2019 by the Wise Persons Group (WPG), which was not the first attempt at rationalisation in the EU sphere to focus a development bank on addressing the SDG agenda.3

4.5.1 WPG’s 2019 report to the EU institutions The EU needs a development bank to strengthen its capacity to respond to significant global and regional challenges. In particular, these challenges include the risks and opportunities in Africa. From a geopolitical standpoint, Europe urgently needs to bolster its economic sovereignty without abandoning its ambition to forge multilateral coalitions. Development finance is a critical building block in this regard. Although Europe currently provides close to two-thirds of all global development finance, it would have a much greater impact if EU efforts are better coordinated (Berglöf 2019). The ideas proposed by the WPG are complex. Some are also likely to encounter practical objections because one of the institutions involved (the EBRD) has nonEuropean government shareholders, including the US. One option proposed by the WPG is to establish a new bank from scratch, with the EBRD, EIB and the European Commission as shareholders. But this would require substantial financial capital investments, and specialised staff and time (which is limited), to achieve the SDGs by 2030. For these reasons, EU finance ministers have rejected this scenario. The

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two remaining possibilities are to build the new bank from either the EBRD or the EIB, with the WPG preferring the former option. The EIB is the EU’s bank but not a development bank, while the EBRD is a development bank but not an EU bank. So, as the WPG notes in its report, there is no single, well-capitalised development financing entity with a complete set of financial instruments to complement the EU policy centre in a development financing centre function. The WPG suggested the option of creating a European Climate and Sustainable Development Bank focused on sub-Saharan Africa. The bank would have a full range of financial instruments to support development strategies and the climate agenda, with the ability to manage risks in challenging environments, support policy reforms and crowd-in privatesector finance with EDFIs.4 The EIB has already put forward a proposal to the member states to create the European Bank for Sustainable Development, which would become the EU’s development bank. The EIB would be a minority shareholder, with other shareholders comprising the European Commission, the EU member states and the DFIs. Once again, though, this would modify the EBRD’s geographical extension (Gavas 2019). Fortunately, a fourth option would weld together the different parts of the system in an interesting, and perhaps more politically palatable way, including by involving more national development institutions. Many of these national entities cover important areas, such as health and education, and operate in parts of the world where the EBRD and EIB have little or no presence. They could be integrated into an open European development-finance system where national, regional and global institutions compete to implement EU assistance projects under a coherent European development policy. This arrangement is basically the current system of the blended facilities at the core as a trigger of the EIP.5 The analysis of the EU scenario is useful to show some clear gains and lessons learned in returning to the NDB and BRICS situation (Berglöf 2019). BRICS needs one development bank to be a sustainable development bank. Like the EIB, the NDB is the BRICS bank. It now has the option of having a fully owned subsidiary or a separate structure for third countries’ operations to have a different risk profile for the two sets of operations. If the guarantees are joint and several for the two options, there is perhaps no big difference in risk. Therefore, a subsidiary for third-country operations within the NDB could be a simple business model to replicate. The issue of the absence of a policy dialogue platform run by an institution (like in the case of the European Commission) is not trivial. The policy agenda and the geopolitics of BRICS as a group can only be fulfilled by the NDB vis à vis a third country within a framework of agreed policy and principles among the five BRICS countries. The SDGs are a solid, shared and agreed-upon ground for BRICS to set a common policy for third countries. Therefore, for BRICS, the SDGs are politically even more important than for the EU. And for the NDB, they become la raison d’etre par excellence. Therefore, let us concentrate on the NDB and its philosophy as an

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innovation element that could make the simple financial set-up of BRICS more effective in measuring its contribution and how it achieves the SDGs. This change would be welcomed by partner countries that are, in turn, committed to the SDGs and Agenda 2030 but lack the necessary resources to implement it.

4.6 Existing SDGs in investment and development finance as a structuring factor of financial innovation As discussed, the SDG framework is a solid unifying framework for the NDB within the BRICS countries. Therefore, let us explore what other development institutions are doing concretely. Pending the substitution of the current main economic theory with one driven only by sustainability, we must steer and push for sustainability with pull and push actions. Such actions can be achieved through policy and investments (Ridolfi 2019). It is useful to compare how financial actors set the operations to verify and appraise sustainability alignment or compliance. Disclosure and transparent reporting are key, but are not enough to accelerate the transformation towards a sustainable world. For the significant role that the financial sector plays in driving sustainability, we shall look at the internal processes of international finance institutions (public or private) to assess, measure and quantify compliance or alignment to SDGs. Some information reported here is based on the public material available. The level varies greatly from the International Finance Corporation (IFC, which is part of the World Bank Group) setting the standards for a specific time to less-structured mechanisms in other banks.

4.6.1 International Finance Corporation The Anticipated Impact Measurement and Monitoring system enables the IFC to estimate the expected development impact of investments. The system allows the IFC to examine the systemic effects on the overall market. It looks at how a project affects stakeholders and examines the broader effects on the economy and society, including how projects promote objectives that underpin efforts to create markets by promoting competitiveness, resilience, integration within and across markets, inclusiveness and sustainability. IFC projects are assessed for the ability to create markets, defined as enabling the development of new markets or contributing to systemic improvements in how markets function and deliver sustainable development impact. However, none of the IFC measurements is compatible with SDG targets or indicators. The IFC operates and manages operating principles for impact management subscribed to by 94 investors, including Black Rock, the Deutsche Investitions- und Entwicklungsgesellschaft, the Commonwealth Development Corporation, Banque Nationale Paris Paribas, Cassa Depositi e Prestiti and Sarona.

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A great degree of discretion is left to the manager in trading off the five principles of the IFC. The fourth principle is key, although SDGs are not mentioned explicitly: In assessing the impact potential, the manager shall seek evidence to assess the relative size of the challenge addressed within the targeted geographical context. The manager shall also consider opportunities to increase the impact of the investment. Where possible and relevant for the manager’s strategic intent, the manager may also consider indirect and systemic impacts. Indicators shall, to the extent possible, be aligned with industry standards and follow best practice: SMART (Specific, Measurable, Attainable, Relevant, and Timely), and SPICED (Subjective, Participatory, Interpreted and communicable, Cross checked, Empowering, and Diverse and disaggregated). (IFC 2019)

4.6.2 Access EBRD funds To access EBRD funds, a project must inter alia satisfy banking and environmental standards. In 2019, the bank recognised that environmental and social sustainability is a fundamental aspect of achieving outcomes consistent with its mandate. The criteria for assessing the environmental and social impact of projects are defined as ‘performance requirements’. Their purpose is to avoid or minimise the investments’ environmental and social risks and impacts. However, the onus is on the client. The bank’s role is to (i) review the client’s information; (ii) provide guidance to assist the client in developing appropriate measures, consistent with the mitigation hierarchy, to address environmental and social impacts to meet the relevant performance requirements; and (iii) help identify opportunities for additional environmental or social benefits. There is much scope to introduce appraisal metrics with clear, measurable indicators to assess sustainability. The only aspect I can define as a broader idea of social impact to consider relates to cultural heritage. Regarding the use of natural resources and the reduction of pollution, the EBRD is cautious about imposing criteria linked to reducing greenhouse gases, water use, waste disposal and the use of environmentally hazardous products such as pesticides. However, there are no prescribed methodologies nor links to SDG indicators to measure, compare and assess the figures provided. On biodiversity, the bank has a long list of practices for clients to consider the impact of the project: biodiversity and ecosystem services, focusing on potential habitat loss, degradation and fragmentation, invasive alien species, overexploitation, migratory corridors, hydrological changes, nutrient loading and pollution. Again, no specific measure or indicator is prescribed.

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4.6.3 European Investment Bank As the EU bank, the EIB has made climate action one of its top priorities and developed a leading position among international financial institutions. In 2007, the bank issued the world’s first green bond. At the end of December 2019, the bank issued €3.4 billion in the green bond market, placing the bank as a world leader in the sector. The European Investment Fund (EIF, which is part of the EIB Group) specialises in risk finance to benefit micro-, small and medium-sized enterprises, and stimulates growth and innovation across Europe. The EIF uses the European Fund for Strategic Investments to finance investment in strategic areas with a highrisk profile related to the GEEREF. The EIF operates as a fund of funds to promote private capital in energy efficiency and renewable energy promotion projects. This resulted from an innovative effort that I led at the European Commission’s Directorate-General for Development Cooperation in 2008 under the impulse of the European Parliament to demonstrate the profitability of the venture, linked to highrisk investments in renewable and energy efficiency. The EIB Group applies the Global Reporting Initiative Standards framework to comprehensively disclose information relevant to its stakeholders. The bank states that the environmental and social safeguards assessments result in specific environmental and social ratings, which are translated into a final score for this criterion. Should a project fail to score sufficiently under this criterion at appraisal, the project is not proposed for financing. Beyond achieving a generic minimum score, it is believed that the assessments are primarily economic. The environmental and social standards seek to promote sustainable and inclusive growth while holistically protecting the natural and social environments. The promoter must ensure transparent engagement with stakeholders regarding implications for biodiversity and ecosystems as well as appropriate participation of local communities in the decision-making process. The bank is aware of the difficulties of measuring some aspects. Yet it is not clear how its final decision is made. In my opinion, there is no clear ranking system to classify them and the relative weights compared to more quantifiable indicators. As a result, some ambiguities remain in this model.

4.6.4 JP Morgan Development Finance Institution The JP Morgan Development Finance Institution applies three filters before an appraisal. In the first filter, there is a reference to child labour and drift net fishing. The second is a qualitative analysis and the third provides a mapping of SDGs. This mapping involves an assessment made to map the transaction to the SDGs that are impacted by the transaction. This is done by mapping how the transaction aligns with sector-specific SDGs (e.g., infrastructure, agriculture, health and education) or cross-cutting (e.g., job creation and economic growth, climate action and gender

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equality). Despite the comprehensive policy reference, there is no mention of SDG targets or indicators.

4.6.5 Rabobank Rabobank is a global leader in food and agriculture financing and sustainabilityoriented banking. It contributes to SDGs, focusing on SDG 2 (Zero Hunger) and SDG 12 (Responsible Consumption and Production). Rabobank collaborates intensively with organisations (including the UN Environment Programme [UNEP], the World Business Council on Sustainable Development, the World Wildlife Fund, and the Food and Agriculture Organisation of the UN [FAO]) to incorporate techniques and best practices. ‘Good performance in terms of responsibility and sustainability adds value to the business’ is a Rabobank creed. Rabobank supports innovation in the agri-food sector as a knowledge broker, which is central to the transition to more sustainable food systems. Compliance with sustainability criteria is a necessary condition for Rabobank investments. However, Rabobank supports its clients’ sustainability not only by providing financial services, but also through access to information and knowledge in the domain of innovations that could be applied to change behaviours aligned with SDGs.

4.6.6 Citibank Citibank is well positioned to contribute to several SDGs, particularly the energy and climate goals (SDGs 7 and 13). Improving cities continues to be a central tenet of the bank’s work with resilient infrastructure (SDGs 9 and 11). Citibank presents some highlights on integrating sustainability, including a U$100-billion environmental finance goal over 10 years (2014–2023). It continues to advance how it analyses and discloses climate risks related to its business and is a founding signatory of the Poseidon Principles, a global framework focused on assessing and disclosing the climate alignment of financial institutions’ portfolios. In 2019, Citibank endorsed the Principles for Responsible Banking, developed by the banking industry facilitated by the UNEP Finance Initiative. There is no mention of SDG indicators and targets in its financing operations.

4.6.7 Standard & Poor’s 500 The Standard & Poor’s 500 (S&P 500) Environmental & Socially Responsible Index was designed to measure the performance of securities from the S&P 500 that meet environmental and social sustainability criteria. The report entitled ‘Sustainable Development Goals (SDGs): Emerging trends and analysis of the SDG impact of companies in the S&P 500’ underscores that the SDGs have become a popular means of communicating a company’s alignment to the SDGs and has stimulated investor appetite to benchmark companies against one another in terms of their

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SDG performance. To implement this, in 2018, S&P Global launched the Trucost SDG Evaluation Tool meant to understand the positive impacts derived from alignment with the SDGs, assessing risks relating to climate change, natural resource constraints and broader environmental, social and governance factors (Trucost by S&P Dow Jones Indices 2018).

4.6.8 Black Rock On 16 April 2020, Black Rock (the world’s largest asset manager) announced the launch of the BlackRock Global Impact Fund, a new active equity impact strategy. The new fund allows investors to target companies focusing on a high-conviction, active-equity impact strategy to advance the SDGs. The portfolio includes companies whose activities increase access to quality education and affordable housing, and advance healthcare innovation to help with societal challenges such as the COVID19 pandemic, among other sustainable themes. Launching the fund during the COVID-19 pandemic has highlighted the companies’ important role in society. COVID-19 is one of the world’s greatest societal challenges, and impact investing will play a meaningful role in overcoming it. In 2019, as part of a new partnership with the Ellen MacArthur Foundation, BlackRock launched its first circular economy fund designed to drive investment in the circular economy that bets on sustainable business aligned with SDGs. Yet we do not see apparent clear links to targets and indicators. The analysis of the above banks, DFIs and some global investors entering the field of development finance shows the need for experienced IFCs to have concrete tools to measure, compare, improve and report the sustainability of investments under the SDGs umbrella. They do not have it, and they could apply them as part of the appraisal, decision-making monitoring and reporting of their investments. These interventions will contribute to reporting about countries of operation and companies financed throughout the process. The analysis above shows that for reputation, credibility and innovation, an essential feature of the NDB, if it must be the BRICS sustainable development bank, is that it has to have the capacity to implement effective, efficient and measurable SDG compliance.

4.7 Conclusion: A possible way forward for a real BRICS development bank Already the NDB has demonstrated effectiveness in intervening promptly with US$1 billion in support of provinces of China affected by COVID-19 (Maasdorp 2020). BRICS needs a robust and agile development bank that can cooperate with and compete with the Bretton Woods Institutions, the European architecture and the US’s newly reinforced development agencies framework (including the Development Bank). The European discussion is made more complex by the existence of two

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big banks. Still, in the case of a BRICS development bank, it may be desirable for BRICS to create this sustainable development actor inside the NDB or parallel to it. The BRICS countries could limit the shareholding to themselves at the beginning, as negotiations may be less complex and therefore quicker, or go for the option of broadening the membership from the start, as provision could be easily made for such broadening when the BRICS development bank is created. A BRICS development bank would lend to both the BRICS countries and other developing countries. Furthermore, it would be desirable to have a balanced portfolio of loans that includes middle- and low-income countries from different regions. This structure would make the bank more creditworthy, both because middle-income countries may be more creditworthy than low-income ones and to ensure the benefits of geographical diversification. A BRICS development bank would provide a valuable addition with a solid South– South flavour and new cultural perspectives to the existing network of multilateral, regional and national development banks. Multilateral and regional development banks seem to perform far better in their functions, including support for development through infrastructure investment, if they work closely with national development banks (which have far greater local knowledge). Similarly, national development banks can operate better if they have the financial and technical support of banks, such as the BRICS development bank will be able to provide. The NDB and the Contingent Reserve Arrangement can provide a valuable platform for BRICS to advance international financial and development architecture reforms favouring developing and emerging countries. The new institutions’ scale and speed in establishing them will significantly enhance such potential bargaining power for encouraging meaningful reform (Griffith-Jones 2014).

4.7.1 Essential catalyst role of blended finance for the achievement of sustainable development For the new SDG-oriented NDB to succeed in boosting investments, lessons must be learned from past North–South cooperation. In the underinvestment scenario, the role of blended finance as a bridge and catalyst is essentially played by development banks and development aid providers. Accordingly, they should aim to be more impactful on the sustainability metrics. The actors of blended finance have traditionally been big grant providers (European Commission) and DFIs, in both multilateral and bilateral forums. The grant content is an essential element for the blending of risks. Here there is a clear call for a substantial endowment for grant operations by BRICS to the bank. Reference can be made here to the biggest blended finance scheme ever conceived. The European EIP resulted from my 10-years of experience at the European Commission. It is also a consequence of my experience in leading the Sustainable

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Development and Planet and Prosperity Directorate in EuropeAid as the DirectorateGeneral for Development and International Cooperation between 2013 and 2017. The development-finance sector is essential, as it is the bridge between commercial financing and donorship. Grants, equity, loans, debt and risk mitigation products (guarantees and insurance products, including hedging) can include a ‘blended’ (concessionary) component. The concessionary element can be used to address different goals imposed by using public funds. For example, to ensure adequate training through technical assistance, creating market facilitating infrastructure (e.g., collateral registries and warehouses), establishing public grant funds to match private investments (such as the challenge funds), and setting up subsidised guarantee programmes and insurance schemes. Most remarkably, the grants can be used to impose SDG compliance on the investments. In the aftermath of the COVID-19 pandemic crisis, developing commodity-based economies will face mounting challenges such as public expenditure borrowing, inflationary spikes, commodity exports, a decline in tourism and limited access to foreign exchange in a shrinking fiscal space. In this doomed picture, blended finance more than ever before becomes essential as a tool for its role in de-risking investments. BRICS and the NDB can play an essential geostrategic role in this framework if they can create such a base for leveraging.

4.7.2 Some principles of operation for the NDB With a firm purpose rooted in SDGs, blended finance and innovation, the NDB could position itself as an engine for sustainable development. Without it, the NDB will just be wandering with the same usual development model (Kweitel & Krishnaswamy 2016). The scale of lending of the BRICS bank needs to be large enough to make a meaningful impact given the immense scale of needs identified. Furthermore, the impact of a BRICS bank must be measured in terms of its capacity to leverage its co-financing of projects with private and public sectors. National and regional development banks, the World Bank and other IFIs can be natural partners, but the NDB must be able to be the leader of banking syndicates. An important issue is the quality of lending, which means sustainability parameters. The pace of growth of a portfolio of loans and the quality of loans must be balanced thorough assessment, monitoring and evaluation according to SDG indicators. Although the scale of operations is important, high-quality loans are a priority because they maximise the likely development impact of the projects and minimises the risk of default. The latter is key to improving the credit rating of the BRICS bank. It is also important that the NDB makes profits on its loans, as these can be reinvested, allowing for expansion of capital and facilitating increased lending. The degree of complexity of the financial architecture of operations of the NDB must be considered. The more complex the products, the longer they take to be

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designed and implemented. Simple sovereign conditioned loans can be concluded much faster than complicated loan structures. Transactions involving equity take longer due to senior loans. Mezzanine funding requires a risk profile posture that bankers often tend to avoid. Complexity breeds a lack of transparency and leads to reputational risks. The BRICS bank may wish to assume greater project risks (e.g. investing in impoverished countries) when these projects have potential large developmental or SDG-related impacts and benefits. It should create blended structures that will allow the operations without taking purely financial risks that could lead to substantial losses.

4.7.3 SDG compliance at the core of the NDB Systems of SDG compliance are still primitive and are coupled with poor standardisation of processes. They largely use qualitative – not quantitative – criteria and have limited capacity to measure impact and report on progress for targets. High subordination to financial due diligence is one of the main issues to be addressed. Blended finance has the potential to help bridge the investment gap for delivering on the SDGs. South–South cooperation and the NDB as a new strong player in sustainable finance could be a game changer if set with a strong operationally effective way of translating SDG compliance into practice. The UN launched the SDGs as a blueprint for a more just, sustainable and prosperous future. They are gaining recognition within the private sector. Impact investors and private companies aiming for corporate disclosure on the SDGs are looking for tools and ways to analyse and present their SDG performance. And while blended finance has the potential to support financing for development, it is important to ensure that blended financial operations meet the needs of the SDGs. At the same time, institutional investors prefer standardised financial instruments, which enable investments at a large scale. Better standardisation of processes will be necessary, both at the level of SDG indicators and data and at the level of blended-finance frameworks. Data-driven analysis for understanding the full impact of a business across its value chain can be useful in understanding where to minimise risks and maximise both SDG and financial returns. Leveraging the SDGs as a framework not only for sustainable development, but also for innovation towards generating new, more future-ready revenue streams, can help identify business opportunities that simultaneously serve the needs of the SDGs. If blended finance is to be scaled up, leverage ratios will need to increase – which means that banks and DFIs will need to mobilise private finance better, being able to manage and mitigate the higher level of risk this implies. De-risking mechanisms will include improving the official blended finance framework and poor data availability, hampering transparency and accountability and undermining public

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trust in this approach. The SDGs encompass a broad range of environmental, social and governance issues, and their relevance will be different from sector to sector and for different companies. To assess a company’s exposure to each SDG based on the sectors in which it operates and the geographic distribution of its value chain, sectorspecific data availability must be coupled with science-based solid quantitative analysis. Today, few companies disclose or even have access to detailed information about their impacts on the broad range of issues represented by the SDGs across their value chain. There is an urgent need for better data and transparency. Efforts should be made to align and harmonise both SDGs and blended-finance frameworks. The BRICS countries can move the agenda forward.

4.8 Recommendations for action It is essential to develop metrics and tools to guide companies – and even more so for finance-sector investors – increase transparency and disclosure, report more and link up strongly to the SDGs. A set of global and science-based metrics should be developed on the solid basis of SDG indicators – and used. The metrics must translate the SDGs into tangible business decisions for large and small public and private investors. To achieve this, simplification and practical approaches have to be explored to deal with the complexity of SDGs. Similar tasks have been undertaken on climate finance or energy, and the path can be followed for food. It will be important to gather broad stakeholder input: the metrics must be scientifically robust, simple and concrete, and make business sense because they must be achievable. Companies and investors must be part of the process to own their implementation. Buy-in from venture capital investors driving the market towards, and generating interest in, companies with sustainable practices is also essential. It may be appropriate to link up with the Financial Stability Board Task Force on Climate-Related Financial Disclosures. In this sector, using blockchain technologies will be essential to link sustainability metrics and SDGs to finance leaders in order to become better financial decision-makers involved in production compliance. The blockchain can provide supply-chain information to all the participants in the chain, starting from final consumers to the finance sector. This would give actors a foundation for rewarding good performance based on sustainability metrics. With time, this can be translated into science-based indices for the financial markets. Ultimately, the mainstreaming of SDGs will be measured by establishing if financing decisions are tied to companies demonstrating sustainability via measurable indicators, indicating their performance across the dimensions of nature, energy, water, chemicals, soil and social dimensions (including governance issues on the management of natural capital and land in particular). The SDG metrics must be part of the due diligence of the BRICS sustainable development bank. UN agencies’ work and actions on SDGs at a scientific level must be translated into business practices to create a mechanism to put a price on externalities linked to

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nature, sustainability and social cohesion. To do so, financing companies should be encouraged through policy incentives to collaborate more, emphasising policies and practices to ensure that food systems players are financially supported, particularly when projects take on extra costs associated with shifting to sustainable food. Reduced financing costs and increased access to finance through pressure from the investor community will facilitate the process. To be part of the evolution of science and methodologies, the NDB focused on SDG implementation will have agreements and platforms with the agencies dealing with SDG indicators like the one started with the FAO by the NDB. Policy-makers must exert all their leeway to create incentives along value chains in various sectors for players along the chain to meet SDG-aligned targets. The opportunity of the large subsidy schemes derived from the COVID-19 crisis is not to be missed. In the EU, this will be linked to the NextGenerationEU recovery plan. Subsidies, tax breaks and other incentives should be created specifically to support small- and medium-sized companies transitioning to sustainable practices. These incentives can only exist if tied straightforwardly to the SDG targets (translated into practice through the metrics and tools). These targets thus support the virtuous behaviour of consumers. It will be crucial to conceive new financial blended instruments to allow investors to hedge risk and push companies to be rewarded for their performance in the medium term. Associated with profit, we will see a proliferation of other parameters (water consumed, CO2 emitted and so on). The BRICS bloc, as countries and in their own policy space, must be an example for the bank to apply the same standards to clients. A suitable policy space for SDG implementation is necessary for the investments to follow concretely into the same SDG space. This can also be seen as a topic for structured dialogue between BRICS and other countries in the Global South in terms of the logic of S–SC. The push factor from investors is fundamental. Transparent reporting and communication between players in the markets and investors is essential. Pressure from investors and shareholders for increased disclosure and transparency about sustainability in company reporting will drive investors to hold companies accountable. The financial segment can share due diligence processes and methodologies, including certification to reduce system costs and encourage standardisation on the high upper end of the spectrum of quality. The tools conceived for business will have to have the same certification metrics, validation schemes to be used in loan appraisal and investment design. Indexes will be based on the same metrics. However, we know that the pure private financial sector will not take more risks than necessary. For this reason, we need to connect the blended finance techniques and the development banks, world to commercial finance in a way that is instrumental to the policy incentives and the schemes that public authorities will decide to implement. The dialogue with other long-term investing agencies like

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pension funds is fundamental to build cascading financing models with various risk profiles in the investment vehicles. This dialogue is increasingly inspired by sustainability concerns and will evolve further. Positioning one’s self into the most modern approaches to sustainable investing will also create a common ground with other IFIs and private financial actors. They are still in the ascending part of the learning curve for SDG compliance. A BRICS bank with modern governance, strongly geared towards SDG implementation, with enough resources for blended finance and innovative financial approaches, will be able to boost Africa’s sustainable economic growth for the social benefit of the people of the African continent, overall prosperity and peace in line with the vision of the AU’s Agenda 2063. The BRICS development bank has already demonstrated effectiveness in intervening promptly with its US$1-billion support to the provinces of China affected by COVID-19 (Maasdorp 2020). Endnotes 1 2 3

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Author’s interview with executives of NDB in Shanghai, July 2018 The author personally worked in two phases between 2007 and 2017, culminating in 2017 with the creation of the External Investment Plan and the European Fund for Sustainable Development. Already in 2010, Michel Camdessus (former managing director of the IMF) started reasoning about the financial architecture of the external financing of the EU. The creation of a powerful new European development bank could then, and can now, increase the EU’s global influence and give its foreign policy more credibility. Concrete proposals came also after the introduction on December 2009 of the EU’s Lisbon Treaty – which was supposed to streamline Europe’s structures, placing both policy-making and much external spending under the control of a new foreign policy chief. Differently, in the BRICS situation, such an institutional arrangement has no parallel. Ownership would comprise a controlling European majority to ensure that EU funds deliver for EU policies, as well as countries of operation. The EBRD, therefore, could become the European Climate and Sustainable Development Bank, subsuming the EIB’s external financing activities. Its shareholders would be the EIB, the European Commission, the EBRD, the member states and other DFIs and it would need a sufficiently strong EU majority shareholding. This would require diluting non-EU shareholding through a capital increase, particularly the US shareholding that is presently the single largest in the EBRD. Furthermore, after Brexit, the EU will control only a little over 50% of the votes in the EBRD, whereas many important decisions require larger majorities. And if Europe were to provide more capital, there are no guarantees that non-EU shareholders would agree to reduce their voting shares. This option would most likely entail shutting down the EBRD’s present portfolio in certain countries where it currently operates. This option also would involve separating the activities of the EBRD and EIB. The two banks already run against each other in many countries and sectors, and their current expansion plans would increase the overlap. The EIB could focus solely on EU countries, with its assets elsewhere transferred to the EBRD. Conversely, the EBRD could hand over its assets in the EU and focus on the European neighbourhood and sub-Saharan Africa. Such an exchange would not be easy, but it was prepared once – in 2013. The third and central

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component of this proposal would be to recast the EBRD as the European Sustainable Development Bank, working alongside institutions such as the World Bank and the African Development Bank. In order to increase its lending capacity, the EBRD would need additional capital. Because only EU shareholders are likely to contribute, their voting shares in the bank should increase. But non-EU shareholders (including the US, the UK and – importantly – recipient countries) would still be represented, thus preserving a multilateral approach. Meanwhile, the EIB would focus on becoming the European climate bank, and would serve as a backstop to help strengthen national DFIs.

References

Berglöf, E (2019) Europe needs its own development bank. Accessed 14 November 2022, https://www.project-syndicate.org/commentary/four-options-for-building-a-europeandevelopment-bank-by-erik-berglof-2019-11 Bhattacharya A, Romani M & Stern N (2012) Infrastructure for development: Meeting the challenge. London: Centre for Climate Change Economics and Policy. Accessed 14 November 2022, http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2014/02/ PP-infrastructure-for-development-meeting-the-challenge.pdf BRICS Heads of State (2014) The 6th BRICS Summit: Fortaleza Declaration. Accessed 14 November 2022, http://www.brics.utoronto.ca/docs/140715-leaders.html European Commission (2017) The External Investment Plan. Accessed 9 April 2022, https:// ec.europa.eu/eu-external-investment-plan/about-plan_en EU (2021) Partnership Agreement Between the European Union and its Member States of the one part and Members of the Organisation of African, Caribbean and Pacific States of the other part. Accessed 14 November 2022, https://international-partnerships.ec.europa.eu/system/ files/2021-04/negotiated-agreement-text-initialled-by-eu-oacps-chief-negotiators-20210415_ en.pdf Gavas M (2019) The Wise Persons Group Report on Europe’s Development Finance Architecture: Merger, Acquisition or Reinvention? Accessed: 14 November 2022, https://www.cgdev.org/ blog/wise-persons-group-report-europes-development-finance-architecture Griffith-Jones S (2014) A BRICS Development Bank: A dream coming true? UNCTAD: Geneva. Accessed 14 November 2022, http://unctad.org/en/PublicationsLibrary/osgdp20141_en.pdf IFC (International Finance Corporation) (2019) Investing for impact: Operating principles for impact management. Washington DC: International Finance Corporation. Accessed 14 November 2022, www.ifc.org Kanyesigye F (2019) Africa’s infrastructure gap poses challenge to success of the Continental Free Trade Area: Experts. Accessed 2 June 2021, https://www.iol.co.za/business-report/ international/africas-infrastructure-gap-poses-challenge-to-success-of-continental-freetrade-area-experts-28991635 Kim Y (2013) Chinese-led SEZ in Africa: Are they a driving force of China’s soft power? Accessed 2 June 2021, https://scholar.sun.ac.za/handle/10019.1/85183 Kweitel J & Krishnaswamy S (2016) Is the BRICS Bank tooled for sustainable development? Accessed 14 November 2022, https://chinadialogue.net/en/business/9315-is-the-brics-banktooled-for-sustainable-development Maasdorp L (2020) COVID-19: How multilateral development banks can lead through a crisis. Accessed 2 June 2021, https://www.weforum.org/agenda/2020/07/brics-new-developmentbank-leads-member-states-through-the-covid-19-crisis/

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Nantulya BP (2019) Implications for Africa from China’s One Belt One Road Strategy. Washington DC: Africa Centre for Strategic Studies. Accessed 14 January 2022, https://africacenter.org/ spotlight/implications-for-africa-china-one-belt-one-road-strategy/ NDB (New Development Bank) (2019) Annual Report 2019: Investing for Innovation. Accessed 14 November 2022, https://www.ndb.int/wp-content/NDB Annual Report/AR2019_UI/ downloads/NDB_2019_ARA_1.pdf OECD (Organisation for Economic Co-operation and Development) (2017) Pension fund assets grew in most economies in 2016. Paris: OECD. Accessed 14 November 2022, https://www. oecd.org/pensions/private-pensions/Pension-Funds-in-Figures-2017.pdf Ridolfi R (2019) SDGs for people, planet and prosperity. Rome: FAO. Accessed 14 November 2022, https://www.fao.org/3/ca5137en/ca5137en.pdf Trucost by S&P Dow Jones Indices (2018) SDG evaluation tool launched by Trucost. Accessed 9 April 2022, https://worldinvestmentforum.unctad.org/wp-content/uploads/2018/08/TrucostSDG-Tool-Press-Release-Final2.pdf UNCTAD (UN Conference on Trade and Development) (2014) World Investment Report 2014: Investing in the SDGs – An Action Plan. Geneva: UNCTAD. Accessed 14 November 2022, https://unctad.org/system/files/official-document/wir2014_en.pdf Wikipedia (n.d.) List of countries by credit rating. Accessed: 9 April 2022, https://en.wikipedia. org/wiki/List_of_countries_by_credit_rating

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BRICS, the New Development Bank and African Development Isaac Khambule

5.1 Background The BRICS bloc has become a forefront multilateral alliance, pushing for reforms in the governance architecture of global financial institutions (GFIs). The BRICS countries have outlined a vision for an equal and just world order representative of the interests of emerging and developing economies after decades of crippling policy conditionalities from the International Monetary Fund (IMF) and the World Bank. This prompted BRICS to establish the New Development Bank (NDB) as an alternative institution that caters to the interests of developing nations. Against this backdrop, this chapter explores the potential impact of BRICS, the NDB and the associated potential benefits for African development. This chapter brings to light the fact that the impact remains moderate because the NDB funding is limited to BRICS member states. Influencing the reform of GFIs depends on BRICS’s ability to persuasively advocate for the NDB as a viable alternative to the IMF and the World Bank. Fully supporting the infrastructural developmental interests of African countries will set the NDB apart from other GFIs.

5.2 Introduction The global financial crisis of 2007–08 resulted in a decline in global investment and left a development finance vacuum for many emerging and developing countries. Since then, many nations have recovered from the effects of the global financial crisis, with a few countries in the Global South still battling to overcome the shocks. Although at a slow pace, Africa is transitioning from being a continent with economic activities concentrated in primary commodities to an economically diversified continent attracting investors based on its large consumer base. While raw materials remain the dominant driver of economic activities in African countries, the financial services, telecommunications and transport sectors have witnessed significant economic activity and investment growth over the last two decades (UNECA 2017). This transition from relying on one economic sector to diverse economic sectors has ensured African economic growth at an average rate of 3.2% over the last decade (UN 2020). Growing African domestic economies in an international economic landscape dominated by competition for foreign direct

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investment (FDI), particularly in the era of de-globalisation and de-financialisation for infrastructure development, manifests an acute need for alternative development finance sources. This comes after decades of the World Bank and IMF advocating for anti-crippling policies and conditionalities. The African Development Bank (AfDB) views infrastructure as a critical progress enabler for Africa’s growth, development and sustainable development – as evinced by the fact that African growth has largely been driven by investment in infrastructure (AfDB 2021). The majority of the global development finance in Africa has been for traditional needs such as infrastructure improvement and energy. Development finance for innovation and development remains neglected and understudied in the development finance landscape because of a lack of data (Kenny et al. 2018). The proactiveness of global development financial institutions and state-owned enterprises (SOEs) has improved energy efficiency in Africa (Te Velde 2011). Such success is observed from improved social and economic infrastructure generated by funding from DFIs. In East Asia, the particular focus of state financial activism was on linking development finance with productive sectors to expedite economic growth and development, with Taiwan being distinctive in supporting both small and big firms. This was achieved through state intervention in the banking sector to enable adequate financial support for local firms and industries critical to accelerating the nation’s economy (Thurbon 2020). The rise and significance of BRICS in the international political economy are unprecedented in the 21st century. For Woods (2008), the BRICS countries are increasingly exerting an influence, not only in their regions, but also in international affairs, especially in key decision-making structures within the UN. The relationships within BRICS are characterised by growing cooperation that extend beyond the economies within this partnership to many parts of emerging and developing nations (Sidiropoulos et al. 2018). The increasing economic and political clout of the BRICS economies has been accompanied by the realisation and increasing acknowledgement that the time has come to effect reforms within global institutions, especially GFIs. The BRICS countries have taken upon themselves the responsibility to promote the interests and representation of emerging and developing nations in the decision-making of such institutions. Besides the quest to reshape and reorder global governance and the institutions thereof, riding high above other interests and considerations has been the need to move the emerging economies and developing countries from the periphery back to the centre of the global political economy. This resulted in BRICS establishing the NDB to cater to the developmental needs of the BRICS countries and emerging and developing nations, particularly infrastructure development needs. The rise of BRICS and the NDB coincides with the de-globalisation and de-investment of global development. As such, this chapter explores the potential impact of the NDB in influencing reform of the World Bank and the IMF, and the associated potential benefits for African development.

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Pursuant to the aims of this chapter, the next section focuses on the institutional arrangements of GFIs and their contested imbalances. The chapter traces the establishment of BRICS and the subsequent creation of the NDB, its mandate and its envisaged role in the international development landscape. The discussion then focuses on the nexus between BRICS, the NDB and the potential benefits for African development. The chapter argues that three factors will determine the impact of BRICS and the NDB on African (infrastructural) development: (i) the degree of the NDB’s proactiveness in African development through funding catalytic infrastructural and economic development projects; (ii) the extension and inclusion of Africa and other developing countries in the NDB’s governance structures to raise the bank’s financial capacity; and (iii) the NDB’s ability to set its strategic vision apart from existing multilateral development banks (MDBs).

5.3 Realism, global governance and the contested imbalances There is consensus among many developing nations that the current global governance architecture is full of imbalances and does not reflect the world’s collective needs (De Coning et al. 2015). The consensus is that policy decisionmaking in multilateral institutions (particularly in GFIs) is not inclusive and representative of other interests such as those of the countries in the Global South. The current global governance institutional arrangements were established by the West and are dominated by Western policies. The promotion of Western interests has always been at the expense of the developmental needs of emerging and developing nations (Weisbrot & Johnston 2016). This has led to an unequal world economic and political order that has failed to create inclusive global institutions in terms of the UN, World Bank and IMF. For example, developing countries are rarely represented in the UN Security Council (UNSC). This has often led to Western interests being promoted at the expense of global peace and security, as demonstrated by the Libyan and Syrian cases. Both cases show how global institutions that are not representative influence conflict outcomes. The imbalance observed in global governance can be attributed to the dominance of realism in international relations. According to the realist theory, states are rational calculating actors seeking to survive and maximise power; they calculate their interests in terms of power and seek to protect their sovereignty and national interests at all cost (Woods 2008). In the context of this chapter, realism is applied by the US and its Western allies in global economic governance by using political and economic power to ensure that the international political economy system (global governance and financial institutions) favours Western nations (Antunes & Camisao 2017). This is evident in that the US and its Western allies dominate global policy-making through traditional Western institutions such as the Bretton Woods Institutions (World Bank and IMF).

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As the realism theory holds that each state seeks to maximise its power in the international sphere, the theory presents a controversial ground for analysing BRICS. China is able to pursue its foreign policy and development interests outside the BRICS structures, and so do India and Brazil. This is evident in the unilateral investments made by India and China in Africa. The realism theory can explain this behaviour through the thinking that policies based on morality or idealism can lead to weakness – and possibly the destruction or domination of a state by a competitor. In this sense, pursuing the national interest is ‘amoral’ – meaning that it is not subject to calculations of morality (Weisbrot & Johnson 2016: 12). While there are some elements of realism within BRICS, there are also elements of liberalism/ institutionalism and constructivism underpinned by cooperation to advance the interests of developing nations (Weisbrot & Johnson 2016). The case of Africa’s relationship with the IMF and the World Bank is a crucial example of the consequences of an imperfect global governance structure that is controlled by the US and its allies. In the beginning of the 1980s, the economies of African countries and other developing nations faced slow and negative growth. As an antidote to the challenges, the IMF and World Bank designed prescriptive policies that had to be adopted to change the fortunes of developing nations; such policies came to be known as the Washington Consensus (Cheng 2015). Contrary to ‘consensus’, Kahn (2004) notes that these policies were implemented grudgingly in Africa and other parts of the world. Trevor Manuel, former South African finance minister, once expressed the view that there was no clear consensus that Africa needed the Washington Consensus. Khan (2004) argues that it was not the right time for Africa to adopt these policies because globalisation had made it hard for the continent to open to the world and simultaneously capitalise on the Washington Consensus. This is because African economies relied on high commodity prices for their GDP, and the share of world trade in such commodities was declining at the time (Khan 2004). The proposed change in voting shares of the IMF that took place in 2010 only became effective in 2016. Figures 5.1 and 5.2 show that the US’s voting shares changed to 16.5% in 2017, thus it retained its veto power. However, it is equally important to note that the voting shares of emerging and developing nations dropped, whereas the Organisation for Economic Co-operation and Development (OECD) countries retained their dominant voting shares within the IMF. Weisbrot and Johnston (2016) note that the voting shares of leading emerging and developing countries decreased by 3%. The US Department of the Treasury remains the key decision-maker in policies affecting emerging and developing nations seeking IMF assistance. The power of the US is demonstrated by the fact that the IMF charter requires more than an 85% majority to make a decision, whereas the US has more than 16% – giving it ultimate veto power and showing that the US is still in charge of the Bretton Woods Institutions (Weisbrot & Johnson 2016).

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Figure 5.1 IMF voting shares before reforms

India 2.34%

Brazil 1.71%

Russia 2.39%

China 3.81%

United States 16.73%

Canada 2.55%

Italy 3.15%

United Kindom 4.29%

France 4.29%

Japan 6.23% Germany 5.80%

Source: IMF (2016)

Figure 5.2 Current IMF voting shares BRICS 14.18%

United States 16.50%

South Africa 0.64% Brazil 2.59% Russia 2.59%

Japan 6.15%

India 2.64%

Germany 5.32%

China 6.09% Canada 2.22%

France 4.30% Italy United Kingdom 3.02% 4.03%

Source: IMF (2016)

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In 2010, the BRICS Summit statement suggested that reforms would only be effective if emerging and developing nations’ voting power was increased to include their participation in key decision-making structures (Weisbrot & Johnson 2016). Diminutive efforts have been undertaken to ensure that the GFIs are inclusive after the Washington Consensus, the 1997 Asian financial crisis and the 2007/08 global financial meltdown. The reforms that have been undertaken include the few votes given to emerging economies such as Mexico, South Korea, Turkey and China as of 2016 (BRICS 2010). However, the voting shares of emerging and developing nations (especially the BRICS countries) are still less than the 15% threshold required for veto power; whereas the US holds the veto power with more than 16% of the voting shares. Therefore, the IMF has not dealt with its credibility issues because emerging and developing nations are not fully represented within its decision-making structures. The poorest countries (the majority of them in Africa) are still the least represented, making global institutions less inclusive and less effective at understanding the needs of developing nations. As shown in Figure 5.2, it is not only African countries such as Nigeria that are underrepresented, but the entire Global South. As such, it can be argued that the IMF has failed to prioritise the interests, and listen to the voices, of developing countries in determining its policy direction. Therefore, it is not a surprise that the likes of China, Brazil, Mexico and India are no longer reliant on the IMF for financing for their development initiatives and/or programmes (Woods 2008). Three of these countries are BRICS countries, which suggests that BRICS could build an alternative vision of the new global order (marked by multipolarity) because there seems to be a slow pace of reform in the IMF. The World Bank has failed to radically transform its governance and redirect its focus towards pro-developmental policies. While the World Bank’s key role has been to help countries maximise their growth and ensure that growth is equitable, the bank’s governance does not reflect these tenets (Woods 2008). The World Bank’s current governance has failed to follow the shifts taking place in developing economies, especially in relation to policies driving the better economic prospects of such nations. The Word Bank has been criticised for failing to draw lessons from the East Asian development experiences, as it has preferred US-favoured policies such as deregulation, privatisation and marketisation (BRICS 2010). The World Bank’s failure to transform its governance is noticeable in the fact that it has always selected leaders based on their allegiance to the US and Western-aligned states (A SEED Europe 2020). BRICS is on record criticising the World Bank’s failure to be transparent and use a merit-based system, as it continues to fill positions based on allegiance to the US (Woods 2008). For this reason, the World Bank and the IMF are responsible for promoting uneven development opportunities through policy advocacy. The G20 is another bloc that plans to reform the governance of global institutions. It is at an advantage in that it has more member states than BRICS. To show the

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significant representation: the G20 moved from being the G8 to being the G20 to create space for emerging economies to have a voice in global governance structures. The countries that are represented in the G20 form up to 85% of the global economy, compared to the 30% that BRICS represents (BRICS 2010). Notably, the G20 was ‘created not only to solve the problems of the developed economies with the help of emerging economies, but also to maintain the stability in the global economy by universally managing the highly risky financial instruments’ (Zoellick 2011: 2). Nonetheless, the G20 is not a suitable bloc to bring effective reforms to the current global governance system, because it is concerned with stabilising the existing global capital structure rather than reforming it. While it is argued that the G20 is trying to save a failed world economically, Cooper (2019) insists that the G20 has failures and successes despite its inability to effect global changes after the 2008 global financial crisis (Haibin 2012).

5.4 Emergence of BRICS and its nascent role in global governance It was Goldman Sachs that, in 2001, first coined the BRIC acronym in realisation of the economic potential growingly experienced by Brazil, Russia, India and China. Goldman Sachs predicted that with the then pace of economic growth, the BRIC countries would become one of the leading blocs of economies (Cooper 2019). A decade and a half later, BRICS (with the inclusion of South Africa in 2011) emerged as one of the foremost multilateral organisations with a growing influence in the global political economy. The rise of these economies is increasingly gaining significance because of the increased internal cooperation that has characterised BRICS over the years. Within a short time, BRICS has made a compelling case for the need to reform the governance architecture of GFIs to ensure that such institutions are reflective and representative of the needs of emerging and developing countries (O’Neill 2010). BRICS’s call for the reform of GFIs gives credence, and adds impetus, to the calls of emerging and developing countries for such institutions to transform and place on their agenda the needs and interests of the Global South. Various proponents and critics of BRICS have emerged over the years. Proponents of BRICS hold that the bloc is the antithesis of the traditional Western model of global governance that has often created an unequal world and promoted cooperation that is not mutually beneficial (BRICS 2010). They advance the view that BRICS envisions a new global order aimed at creating an equal world enhanced by ‘law, equality, mutual respect, cooperation, coordinated action and collective decision-making of all states’, as reflected in BRICS Summit statements (BRICS 2010: 2). De Coning et al. (2015) view BRICS as forging international coexistence driven by a common development agenda for developing nations and creating an alternative global order. The commonalities among these proponents are foregrounded on the belief that BRICS is representative of the interests of developing nations.

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Some critics believe that BRICS is another form of global imperialism, with states such as Brazil and South Africa continuing the role of safeguarding the interests of other more prominent countries such as Russia and China (Bond 2013). Other critics go as far as to point to the different regimes prevailing in all these countries and the slowdown faced by the likes of Brazil and South Africa. Internal challenges such as Russia and China’s failure to support the ambitions of other BRICS member states to hold permanent seats in the UNSC are outlined as barriers to the bloc (Ferdinand 2014). This shows that, despite existing cooperation among the BRICS countries, realism is not suppressed. However, despite such criticisms, BRICS still proves to be more than a coincidence as it continually deepens its cooperation and global influence. The influence of BRICS in global affairs can be measured in many ways, but this chapter’s focus on global economic governance warrants an emphasis on the increasing size of the BRICS economy and growing influence in diplomacy (Haibin 2012). The first measurement, rightly cited by Goldman Sachs, has proven to be the foremost reason for the recognition that BRICS currently enjoys internationally. The economic power of BRICS countries (especially Russia, India and China) is an offshoot of the importance of BRICS, as it makes it competitive globally. The economic might of BRICS as a whole is seen in the fact that it makes up 24% of the world’s GDP, 16% of the world’s trade share and 41% of the world’s population (Haibin 2012). At the bloc’s first summit in Yekaterinburg (Russia) on 16 June 2009, BRICS signalled commitment to seek reforms in international financial institutions to meet the needs of developing nations and implement changes in the world economy. The summit adopted a resolution that the international financial system should be diversified, principles of equality and transparency in decisionmaking should be adopted, and an open merit-based system of selecting heads of international financial institutions should be institutionalised (BRICS 2009). As alluded to above, the increasing size of the BRICS countries’ combined economy and growing economic clout go a long way in showing the kind of influence that the BRICS partnership wields in the international economic system. The economic power of BRICS, therefore, generates sufficient influence for the bloc to push for the reform of global institutions. This shows that emerging markets are slowly making their voices heard in the global political economy (BRICS 2009). For instance, BRICS mainly cooperates on economic issues in the UN General Assembly. However, BRICS is criticised for its failure to ‘form a coherent bloc when it comes to resolution sponsorship’ (Haibin 2012: 8). Voting divergences between BRICS countries are underpinned by critical areas such as nuclear disarmament and human rights (Dijkhuizen & Onderco 2019). On the diplomatic front, it seems that BRICS has accumulated political power to contest or stop superpowers such as the US and its allies from escaping accountability for their actions. This is due to the power that states such as Russia, China and India

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have within the UN. However, the big issue that this highlights is whether the BRICS countries will be able to follow up on their promises of influencing global institutions to create the kind of world order that BRICS envisages. De Coning et al. (2015) argue that the kind of world that BRICS envisages is one of equals and the absence of hegemons, representative of emerging and developing nations in decision-making. While recognising various aspects of diplomacy, this chapter is limited to economic diplomacy. Platforms such as the BRICS Parliamentary Forum, BRICS Government Forum, BRICS Economic Forum and BRICS Financial Forum demonstrate pillars of building common diplomacy in BRICS countries. South Africa joining what was formerly known as BRIC, and is now BRICS, is one way of understanding the vision that BRICS has for the new global order. South Africa, although relatively speaking not an economic power to the magnitude of other BRICS countries, is a powerhouse on the African continent. South Africa’s admission to BRIC/BRICS was based on the country’s influence in not only Southern Africa, but in the entire African continent, and its reputation and influence in the global system. Others have cited South Africa’s inclusion as based on the country’s regional influence, its diplomatic role in international affairs and the BRICS objective to include Africa in its development plans (Haibin 2012). This undertaking by the BRICS countries ensured increased influence in global and regional governance. Notwithstanding its envisaged ambitious goals and despite the growing stature of its member countries such as China, the BRICS regional hegemons cannot actively reform global institutions without the support of other developing countries.

5.5 Nexus between BRICS, the NDB and African development The voice and influence of the BRICS countries in global economic governance have increased since the 2008 global financial crisis, with a particular focus on the need to reform the IMF and the World Bank. The strategic move of BRICS in reaching out to other developing nations to influence the promotion of a rules-based global order is emphasised by Wang (2018). Notably, this cannot be studied in isolation of the new and just global order that BRICS seeks – a global order that is based on mutual benefit for developed and developing countries. In their quest to increase their global influence and shape a new global economic governance system based on egalitarianism, the BRICS countries established the NDB as a Global South multilateral bank aimed at funding development initiatives across emerging and developing nations (NDB 2019). BRICS presented the NDB as an alternative to the traditional development financing led by the IMF and the World Bank, a development finance model seen as not representative of the interests of emerging and developing nations. The establishment of the NDB signified the commitment of the BRICS countries to reform the current GFIs and their governance, and unlock infrastructure development in Africa and other developing regions.

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The idea of establishing the NDB was first considered at the 4th BRICS Summit held in New Delhi (India) in 2012. The idea behind the establishment of the NDB was the need to mobilise resources to accelerate infrastructure and sustainable development projects in BRICS and other emerging and developing countries (NDB 2019). BRICS further highlighted that the NDB was strategically established to finance infrastructure-related projects within developing nations to unlock prosperity and meet Sustainable Development Goals (SDGs) through established global, regional and local partnerships (NDB 2019). The emphasis on infrastructure development is underpinned by the recognition that the lack of adequate capital infrastructure undermines the growth of many developing countries. As such, the ideas that led to the establishment of the NDB can be linked directly to the goal of supporting the immediate infrastructural needs of developing countries, particularly the lessindustrialised countries in Africa. In contributing to addressing these common developmental challenges, the NDB could play a key role in mitigating the challenges of poverty, unemployment and inequality in emerging and developing countries through attractive conditionalities. Investing in infrastructure could bring about economic growth, job creation and poverty reduction for many African countries. Understanding the main objectives of the NDB is crucial to establishing the kind of impact that can be expected from this new development institution. The NDB (2019) is aimed at fostering the development of member states, supporting economic growth, promoting competitiveness, facilitating job creation and building a knowledge-sharing platform among developing countries. The NDB has prioritised the funding of projects within BRICS countries, with the majority of the projects being infrastructure (transport, social infrastructure, information, communications and technology) and renewable- energy-related projects, with US$25.07 billion approved to date. The NDB (2019) has put its energies into ensuring that development is sufficient and sustainable and brings growth, while at the same time being cautious of the environmental damages. For example, US$550 million funded Russia’s Locomotive Fleet Renewal Programme, US$500 million funded India’s Housing for All project and US$1 billion funded South Africa’s National Non-Toll Roads Management Programme (NDB 2021). This has increasingly become a bone of contention due to climate change issues and the fact that developing nations are disproportionally affected by the consequences of climate change. Strategically, this puts sustainable development at the centre of the NDB’s developmental agenda for developing nations. There is acknowledgement that it is important to link BRICS’s transformed global governance project with Africa’s needs. Infrastructure deficit is among the leading factors behind Africa’s underdevelopment and inability to meet the SDGs. Housing, energy, transportation, water, sanitation, and information and communications technology (ICT) are critical areas that need infrastructure investment to address the slow pace of development and growth in many African countries. With the unprecedented digitalisation and digitisation of the world, the AU Commission and the OECD (2019) note that the African continent requires significant infrastructure investment to ensure

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access to digital infrastructure, as approximately 300 million people on the continent live over 50 kilometres away from a fibre source. Such infrastructure investment could be promoted through infrastructure information sharing between highly industrialised countries and less industrialised BRICS countries. This is interlinked with the NDB’s goal of supporting infrastructure development in developing nations. Some of the basic tenets pursued by BRICS for reforming global governance include the mission to reform the voting rights and representation of developing nations within the IMF and the World Bank. The NDB is innovative because its governance architecture is designed to ensure equal representation for all its founding members, compared to the governance architecture of existing MDBs that promote an uneven distribution of power, as observed in the IMF and the World Bank (Sidiropoulos et al. 2018). Furthermore, the NDB sets its governance architecture apart by allowing local institutions to determine the development trajectory by using local legal frameworks instead of a universalised approach by other institutions. This allows local people to develop local solutions to their developmental problems while ensuring national sovereignty in the policy arena. This is widely noted to be a key ingredient missing from the IMF and the World Bank, as some of the conditionalities promoted by these institutions undermine the policy sovereignty of borrowing countries (A SEED Europe 2020). Africa is increasingly experiencing growth in FDI. The UN Economic Commission for Africa (UNECA 2017) notes that Africa’s financial flows have undergone various changes since the Monterrey Consensus of 2002, with vast opportunities and new challenges emerging in the continent’s mission to make Africa a prosperous place. FDI has had moderate growth in Africa, with an estimated increase of 1.5% of GDP between 2002 and 2013, and poor countries and low-income countries experiencing an increase from 3% of GDP in 2005 to 9.9% of GDP by 2009 (UNECA 2017). Interestingly, there have been increasing partnerships between the BRICS countries and African countries over the last two decades. Between 2006 and 2017, BRICS imports from Africa increased by 12%, while the BRICS share of exports increased by 14.5% (from 20.1% to 34.6%). In the same period, ‘exports from the BRICS to African countries more than tripled, from US$45 billion in 2006 to nearly US$140 billion in 2017. During this same period, BRICS imports from African countries nearly doubled, from US$48 billion to US$86 billion’ (Sidiropoulos et al. 2018: 24). However, no records exist to quantify the direct contribution of these amounts outside of the development finance given to South Africa. Despite these inroads, the financing landscape for developing countries remains with insufficient domestic and inflow resources to fund infrastructure-related projects. Investment in energy infrastructure is recognised as a primary need because 65% of the African population remain without electricity, with the power demand expected to increase 93% by 2035 (AfDB 2017). Furthermore, there is evidence of spatial distribution of electricity coverage in urban areas (65%) and rural areas (68%), leaving 700 million people without electricity (AfDB 2017). This signifies the

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importance of investing in energy infrastructure to address current backlogs while meeting future demands, because energy plays an essential role in economic growth. The needs of Africa’s growing population will have to be met with comprehensive provision of energy services to fuel industrialisation and development. This underscores the need for greater infrastructure investment to meet the continent’s immediate energy needs. Despite 53% of the roads being unpaved, roads remain the dominant mode of transport for goods (80%) and passengers (90%), while rail infrastructure is primarily found in North and Southern Africa (AfDB 2017). This has a bearing on the cost of doing business in Africa, with research showing that the high cost is among the leading reasons for underinvestment on the African continent (Eifert et al. 2008). SOEs such as Transnet in South Africa play an essential role in closing this gap; China’s Belt and Road Initiative  is another example of efforts to address deficits in transport infrastructure. Many ‘African governments have been turning to Chinese infrastructure finance and construction firms, whose response times and upstream processes are fast and competitive in providing transport, power generation and telecoms infrastructure’ (OECD & African Centre for Economic Transformation 2020: 12). Despite these efforts, many African countries still lack sufficient infrastructure to improve connectivity so as to minimise the costs of doing business and attracting large-scale investment on the continent. At the BRICS Leaders–Africa Dialogue Forum Retreat, the BRICS countries emphasised a commitment to accelerating the African Agenda, particularly African infrastructure development and industrialisation in the New Partnership for Development’s (NEPAD) Infrastructure Project Preparation Facility (DIRCO 2014). This underscores the critical role that can be played by the NDB, the AfDB, NEPAD and a host of other national development banks that focus on providing an impetus to African industrial development through infrastructure grant funding. This mission is made possible through South Africa’s gatekeeper role in the African development agenda of BRICS because of its strategic positioning in BRICS and in Africa. In this context, BRICS can play an essential role in NEPAD’s goal to improve the African continent’s integration with the global market and help African countries catch up with developed countries.

5.6 Potential impact of BRICS and the NDB in Africa The diffusion of the current global order presents an opportunity for BRICS to play a decisive role in influencing the international development trajectory. Influencing a change in international affairs is not easily attainable (Haibin 2012). In terms of international development: While emerging economic power is a theoretical term to define the economic dynamics of developing countries, this does not adequately reflect their

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geopolitical and foreign policy impact. Translating economic power into international influence, for instance by changing others’ thinking and behavior, or by contributing to international public goods, is a difficult process; yet emerging economies have been defined as emerging powers to describe their increasing international influence. (Haibin 2012: 3) Admittedly, the case that economic power does not translate into international influence proves that reforming global institutions cannot be done overnight. Although a key mandate of the NDB has been to allow other developing countries to become members, this has not materialised. This undermines BRICS’s mission of cooperating with other developing countries to ensure greater representation in the international finance landscape. For BRICS, influencing global institutions will not materialise without collective efforts among emerging and developing economies (Woods 2008). Thus, BRICS should identify and create a shared vision catering to all emerging and developing economies in order to collate enough support to influence global institutions. The NDB is one of the particular mechanisms that BRICS can use to influence the reform of GFIs and support infrastructure development in Africa. The contested governance of the IMF and the World Bank shows that the imbalances arise from the lack of representation of emerging and developing nations in key decision-making structures. The principles of inclusiveness, egalitarianism and transparency set the NDB apart from the IMF and the World Bank. The NDB principles are as follows: • Egalitarian. ‘The New Development Bank is founded on the principles of equality and democracy. We believe in democratic decision-making and inclusivity of all stakeholders. We understand that the true meaning of development is, at the core, the vision of a great leveller – a vision that is inclusive, not selective’ (NDB 2019). • Transparency. ‘The New Development Bank believes in transparency and complete disclosure. We are committed to ensure that our proceedings are transparent and all our policies, procedures and documents are publicly accessible’ (NDB 2019). The IMF and the World Bank have failed to embrace the principles on which the NDB is founded, thus consolidating its position as an alternative avenue for international development finance. The IMF and the World Bank lack egalitarianism, as many emerging and developing nations such as Indonesia, Nigeria, Türkiye, Argentina and the United Arab Emirates are underrepresented in GFIs despite their share in the world economy. Transparency has been one of the weakest links of the IMF and the World Bank, as positions are based on nationality rather than merit (Weisbrot & Johnston 2016). The lack of egalitarianism, inclusion of developing nations and transparency in the operations of the IMF and the World Bank, therefore, sets the NDB apart

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because BRICS are advocating for the representation of emerging and developing nations. However, the NDB’s contribution needs to be demonstrated by availing infrastructural development support for African countries through the NDB and not just through bilateral relations. Therefore, it becomes essential to ensure that the BRICS countries’ investments in Africa are strategically aligned to the NDB. The anti-globalisation, anti-free trade, anti-climate change (the US in particular) movement and weakening global governance structures present BRICS with an opportunity to play a more prominent role in the global development financing landscape. The initial withdrawal of the US from the Paris Climate Change Agreement left a wider gap for funding means to address climate change before it re-joined in 2021. The NDB can vigorously lead in this area through the increasing influence of countries such as Brazil, China, India and South Africa in climate change negotiations. As a measure, the NDB (2019) provided financial assistance of more than US$1.5 billion in green and renewable energy and transportation to signal clean energy commitment. Notably, most of Africa’s development finance is for traditional needs such as infrastructure improvement and energy. The NDB could play an important role in strengthening the capacity of FDI in developing nations to achieve developmental outcomes driven by local savings in the infrastructure landscape (Sidiropoulos et al. 2018). The NDB’s increasing presence within the global political economy will, therefore, affect the kind of development undertaken by developing countries, particularly in the financing sphere, depending on the degree of participation of other developing nations. The NDB provides countries in the Global South with an opportunity to control the direction that their development will take. It also affords them an opportunity to shape the course of their development in a manner that speaks to their own realities and needs rather than adopting or ‘importing’ policies they do not need. The establishment of the regional NDB office in South Africa was touted as an essential milestone that may bring alternative credit terms, improve infrastructure development, address poverty, increase equity in the distribution of investment and form close cooperation with African banks (Nene 2016). This approach is attractive to emerging and developing nations in Africa because it can be financed by institutions that represent Global South collaboration. Suppose BRICS succeeds in being the alternative funding institution for emerging and developing nations. In this case, the IMF and the World Bank will be coerced to reform their institutions to reflect universal interests rather than being pro-Western. The influence of the BRICS countries is limited to their respective regions and can be extended to the broader international system through financing development for emerging and developing countries, and the NDB is such an instrument to fulfil this ambition. The impact of the NDB on African development will be determined by a host of factors, with the most important being the strategic objective of BRICS and the NDB. The NDB’s (2017) General Strategy 2017–2021 is silent on the bank’s engagement

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with Africa. Some authors view the NDB as complementing existing international financial institutions rather than challenging them and helping to curb further global financial crises by providing funds to avoid global volatilities. However, this approach to the NDB is less useful if BRICS seeks to challenge and reform the IMF and the World Bank because it may adopt a diplomatic approach that delays reforms. Other authors argue that the global governance system can be reformed by developing countries uniting to influence the current systems (Haibin 2012). The NDB is one platform that brings about the needed reforms. While BRICS believes that states can coexist while solving different challenges and seeking a new world order that is devoid of hegemons, this remains untenable without developing nations institutionalising platforms to represent their interests (De Coning et al. 2015). As such, BRICS should seek coexistence that is not built on the international financial system exploiting African countries in the global political economy. Developing countries in Africa have to split their small domestic resources between financing infrastructural and economic development opportunities and providing citizens with adequate social and economic infrastructural services. In 2014, Africa had US$530 billion in domestic taxes, while external financial flows amounted to US$200 billion (OECD, AfDB, UNDP & ARD 2015). The absence of viable infrastructure development finance necessitates creating an African–BRICS cross-border infrastructure development fund targeted at improving the capacity of African countries to deliver infrastructure (Beri 2014). Such an infrastructure development fund should be linked to Africa’s developmental needs and should be capable of accelerating Africa’s industrialisation to compete in the global economy. This can be linked to the BRICS (2013) Summit declaration to stimulate infrastructure investment and industrial development based on mutual benefits across African countries as a measure of ensuring job creation and skills development and transfer. The NDB could fulfil this role as per mandate to support infrastructure development in developing nations to address the severe backlogs undermining growth and prosperity. It is only through a clear African–BRICS infrastructure development programme that BRICS can proactively shape the infrastructure landscape in Africa and limit reliance on the World Bank and the IMF. The BRICS countries aim to channel their foreign reserve base to strategic sectors such as infrastructure development. Under the theme ‘Unlocking Africa’s Potential: BRICS and Africa Cooperation on Infrastructure’, the importance of BRICS in infrastructure development and industrialisation in Africa was identified as one of the crucial pillars of cooperation (DIRCO 2014). In recognition of the growing digitalisation of the world, infrastructure in the communications industry, research and development, and technology and innovation infrastructure should be the backbone of BRICS cooperation and infrastructure investment in Africa. Notably, infrastructure and communication-driven technologies have emerged as modern drivers of economic development and poverty reduction. This cooperation

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is observed in BRICS countries such as India and China through their vast infrastructure-related projects throughout the African continent. Beri (2014) notes that India has undertaken widespread infrastructure development and training programmes in African countries (such as Nigeria, Zambia, Egypt, Ghana and Lesotho) and many other countries. The BRICS countries need to play a proactive role in ensuring that the cross-border infrastructure development-related financing projects presented under the AU/ NEPAD Presidential Infrastructure Champion Initiative and the Programme for Infrastructure Development in Africa presented at the BRICS summit are fully exploited by the NDB and BRICS countries. The NEPAD programme is based on the roads, seaports and rails infrastructure corridors identified as potential drivers of the continent’s industrialisation. However, NEPAD has been unable to raise the targeted US$64 billion every year because of the diverse political-economic conditions and interests. Through the BRICS platform, NEPAD’s goals can be placed at the centre of the BRICS–Africa development agenda. The institutional arrangements for this partnership may be established as the official BRICS–Africa platform in addition to the relationship that African countries already have with BRICS countries such as China and India. As the world needed counter-cyclical policies to combat the social and economic impacts of COVID-19, many developing nations in Africa (including South Africa) turned to the IMF for assistance. South Africa was the only African country to benefit from the NDB’s COVID-19 Emergency Programme Loan. It was noted that historically a ‘review of 41 countries with IMF agreements during the world recession of 2009 found that 31 of the agreements contained pro-cyclical fiscal policy, monetary policy, or both’ (Weisbrot & Johnston 2016: 6). After the 2008 global financial crisis, the majority of IMF assistance has been to European countries – moving away from times when the majority of loans were for emerging and developing nations. BRICS – through the NDB – could have strategically provided developing nations with alternative financing to support their counter-cyclical policies, but the IMF provided such funding despite the institution’s history of effecting cyclical policies in Africa. For South Africa, the IMF’s COVID-19 loan was attached to the state cutting its wage bill and spending (Khambule 2022). These are cyclical measures that may worsen the country’s high levels of poverty and unemployment. Thus, it was an opportunity missed by the NDB to mobilise funding for developing countries.

5.7 Conclusion BRICS’s importance in the contested global political economy is reflected in its vision of improving intra-BRICS cooperation and reforming the unjust global governance structures to be representative of emerging and developing nations. Translating the political and economic power that the BRICS countries enjoy in their respective

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regions into an organised global political and economic influence in international affairs is the main priority for BRICS’s envisaged just world order. The IMF and the World Bank cannot pursue such a fair, equal and just world order in isolation of the needs of African countries that have been subject to biased and crippling lending principles from the international community. In the era of de-globalisation and de-financialisation, and in recognition of the IMF’s unjust lending practices towards African countries, there is a serious need to build alternative structures to serve the interests and reality of developing nations (particularly in Africa). The NDB was established to address this lack of lending structures that are representative of the needs of developing nations. Therefore, in this chapter, it has been important to explore the potential impact of BRICS and the NDB in influencing reform of the World Bank and the IMF, as well as the associated benefits for African development. The BRICS countries demonstrate an awareness of the effects of the lack of representation of developing countries in GFIs such as the IMF and the World Bank. This has led to BRICS being vocal about the reform of the IMF and the World Bank to be representative of the needs and interests of developing nations if a fair and just world order is to be realised. NDB-led support is important because developing nations share some common characteristics, which require that responses come from within to be effective, as opposed to external solutions accompanying IMF loans that have proved to be biased against African development. As such, BRICS’s ability to present the NDB as an alternative MDB representing the interests of developing nations will influence the degree of reforms undertaken by the IMF and the World Bank. The NDB is better positioned to influence such reforms because the G20 is more concerned about sustaining the modus operandi of the IMF and the World Bank than changing it. A higher degree of reform within the IMF and the World Bank could lead to reduced lending rates and conditionalities, thereby creating competition for funding African development. Given the increased cooperation and bilateral development projects undertaken in Africa by BRICS countries such as China and India, the potential role of the NDB may lead to improved lending. However, this depends on the ability of the BRICS countries to mobilise developing economies to believe in the common vision of a just and fair world that is fully representative of developing countries in decision-making. The NDB must promote effective and informed development lending policies that are based on the realities and experiences of the countries of the Global South, rather than imposing Western development experiences and practices on the Global South. Through the principles of egalitarianism and transparency, the BRICS countries can champion their cause by ensuring that the NDB funding caters for all developing nations. If the NDB succeeds in its mission to reform the governance of GFIs, BRICS will be a step closer to the new world order it envisages.

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Strengthening the BRICS Financial Cooperation Mechanism: Promoting Pragmatic Development Li Yijun

6.1 Background The global financial crisis of 2008 dramatically changed political and economic patterns worldwide. In this new situation, a group of emerging market countries rose. As the leaders of economic development among the emerging market countries, Brazil, Russia, India, China and South Africa (BRICS) present many similarities in economic characteristics based on their developmental stage and have a great necessity to cooperate. First, economic cooperation among the BRICS countries can boost the development of their economies and effectiveness of trade to achieve mutually beneficial economic growth. For instance, they are highly complementary in trade and have significant comparative advantages. They can draw on their strengths through greater economic cooperation and make up for their weaknesses by pursuing mutual development. Second, the economic cooperation among BRICS countries is conducive to establishing a more reasonable and comprehensive global governance system. Since the 2008 global financial crisis, BRICS has energised global recovery and economic growth. However, the existing global governance system places some restrictions on emerging economies when they actively contribute to global economic growth. Therefore, the BRICS countries should join forces to improve the effectiveness of the global governance system based on global economic rules and new development needs. Third, the global value chain and industrial chain are undergoing significant adjustments. BRICS can integrate smoothly and deeply into the rebuilding of the global value chain with their funds, technologies and resources by enhancing their economic cooperation. Fourth, faced with the common challenge of the COVID-19 pandemic, BRICS countries should improve their developmental resilience through their economic cooperation in trade, finance and global governance coordination in order to effectively resist external risks and make up the funding gap. Moreover, BRICS should enhance investment and financing to achieve more pragmatic and sustainable cooperation.

6.2 Introduction The concept of BRICS stems from the international market’s optimistic expectations for the growth prospects of emerging economies. Economic and trade cooperation

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is the anchor and propeller of BRICS cooperation. The BRICS countries’ cooperation is based on their mutual needs in trade and investment, as well as improvement of the international financial system. Along with the achievements of the BRICS cooperation mechanisms in these fields, the BRICS countries have faced traditional troubles and growing pains such as exchange rate risk, new structural reform and homogenous competition among the five countries. To tackle these challenges, the BRICS countries need to strengthen their coordination further, pursue a more favourable external economic environment, and assist one another in achieving development goals through pragmatic project cooperation and investing and financing mechanism innovations.  This chapter follows an auto-ethnographic approach, drawing from the author’s extensive experience in the development-finance sector. The author has followed BRICS’s development for more than 10 years, working at a Chinese development financial institution. With experience in several projects that required collaboration with banks in BRICS countries, the author takes this opportunity to discuss the experience, challenges and outlook for the five countries’ cooperation within the context of the BRICS Interbank Cooperation Mechanism. The author analyses the objectives of BRICS cooperation and the challenges faced by the group. Thereafter, the author explores how BRICS might optimise its external financing environment and internal mechanisms. The recommendations and views posited by the author are her personal views drawn from her own experience.

6.3 Objectives and practices of BRICS in investment and financing cooperation 6.3.1 Enhance the global financial governance system Global financial governance refers to how government sectors of various countries, international organisations, NGOs, multinationals and other market entities participate in managing global financial affairs. Systematic financial risks should be avoided through discussions, coordination and consensus of all the partners, and economic and financial systems should be stabilised. In addition, all the partners should establish and maintain a good international financial order (Han 2016: 1–6). In brief, global financial governance enables financially interested parties to act in concert and draw on their advantages to avoid mutual disadvantages in the international financial area (Lin & Li 2017: 24–26). The existing international financial system has some major limitations in institutional arrangements. For instance, international financial institutions such as the International Monetary Fund (IMF) and the World Bank fail to, or even find it difficult to, fulfil their duties coordinating the international finance market. Besides, the unconfined dollar standard system, combined with the US macroeconomic policy lacking continuity,

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could easily result in frequent international financial crises. Various countries’ foreign exchange reserves are constrained by US domestic monetary policies, which means their currencies could depreciate at any moment. Such risk leads to numerous uncertainties in the international exchange rate system. This mechanism certainly damages the interests of the emerging market countries, BRICS countries in particular, in trade and investment. Based on the official operation of the New Development Bank (NDB) and other investment and financing cooperation among BRICS countries, the BRICS cooperation mechanism has already become a new force to drive the construction of the international financial cooperation mechanism and the reconstruction of the new international financial order. As the major participant in the global political and economic patterns, BRICS contributes to effective global capital allocation and optimises the mode and means of financial regulation. BRICS also develops outbound investments with wider region distribution and more asset categories, and has a greater radiation influence, playing an increasingly influential role in the recovery and stabilisation of the world economy. As the overall capability increases, BRICS assumes more obligations and responsibilities in the international community, especially in trade protectionism resistance, financial security maintenance, maintaining and developing an open world economy, balancing regional development and multilateral diplomacy. BRICS has already taken an active part in the existing global financial governance system and a series of worldwide activities. These activities include the Basel III Negotiation, World Trade Organisation (WTO) Talk, G20 Summit, and quota and voting rights reform of the World Bank and IMF to improve the framework of the international financial system (Guanqun 2017: 20–22).

6.3.2 Advance economic structural reform BRICS countries confront complex tasks for the structural reform of the internal economy, such as the transformation of resource and economy structure, ‘dual economy’ structural problems or uncertainties from changes of government. Therefore, helping one another to carry out structural reforms is one of the primary BRICS investment and financing cooperation objectives. To realise this objective, BRICS should first diversify its mode of investment and financing projects through efficient negotiation, communication and coordination; deepen industrial and innovation cooperation among BRICS countries; and build a new engine to drive economic growth. Second, through enhancing investment and financing cooperation, the BRICS countries can integrate their development strategies and bring their comparative advantages in industrial development into full play. BRICS can actively participate in the global industrial division, and integrate into, and rebuild, the world economic development system. Besides, through investment and financing cooperation, BRICS could accelerate the construction of the

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multilateral trade system, resist trade protectionism, and improve the openness and inclusiveness of BRICS investment and trade.

6.3.3 Promote cooperation in infrastructure and industries BRICS has enhanced investment and financing cooperation to facilitate infrastructure, trade and other industry projects. Chinese financial institutions, such as the China Development Bank, have participated in major projects and made significant contributions to BRICS infrastructure construction (Zhu & Li 2018: 87–96). For example, the direct financing support to the South African company Transnet, the support combined with investment and a loan to the China Three Gorges Corporation for the acquisition of a Brazilian hydropower project, and the Brazilian Real (BRL) guarantee support to the State Grid Corporation of China for the Mountain Beauty Transmission Line Project in Brazil. Such actions have greatly innovated investment and financing modes, reduced financing costs, and improved economic and social benefits for businesses while enhancing BRICS infrastructure construction projects.

6.3.4 Deepen trade and economic exchanges Trade and economic cooperation are the major engines driving emerging economies to integrate into economic globalisation and boost economic development and prosperity. Mutual economic cooperation among emerging economies can diversify trading direction and expand trade scale while weakening reliance on, and attachment to, traditional trade partners (developed economies). However, there have been problems in the structure and stability of trade among BRICS countries. Besides, based on cumulative data from the UN Conference on Trade and Development (UNCTAD) and economic statistics of five countries, BRICS trade is mainly concentrated on traditional bilateral merchandise trade and less on service trade, technology trade and internet trade (UNCTAD n.d.). The establishment of the NDB has simplified settlement and lending procedures among the five BRICS countries. According to its General Strategy 2017–2021, the NDB intends to fulfil its mandate of mobilising resources for infrastructure projects (including trade facilitation infrastructure). A virtuous circle of trade and investment will be formed by increasing investment in trade infrastructure. The investment will auger a new stage for BRICS trade expansion.

6.3.5 Guide emerging market countries to establish international investment and financing cooperation standards The international investment rules are presently fragmented and characterised by the lack of an overall multilateral system and an efficient international operation

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institution. BRICS structural transformation runs with the constraints of the existing international investment and financing cooperation norms. According to the Environment Social Framework of the bank, the NDB has explored setting up an advanced safeguard system based on the five countries’ domestic systems, which shows the respect for each country’s particular system and indicates confidence in their high standards and high-quality development (NDB 2017a). As the initiator of reforming the international financial order, BRICS investment and financing cooperation will be conducive to gathering the experience needed to lead the emerging market countries to improve international investment and financing cooperation standards. BRICS can facilitate investments, explore methods for enhanced investment supervision, protect the interests of the host country and the investing country, and release economic vitality.

6.4 Challenges to BRICS investment and financing cooperation 6.4.1 Exchange rate risk As the most developed economy globally, the changes in the economic situation and economic policies of the US have had an important and profound impact on the investment and financing of other countries in the world. The US Dollar is the most commonly used major currency in the global currency market. Most currencies are traded relative to the US Dollar. Therefore, changes in this currency influence exchange rate fluctuations and directly affect other countries. The US Dollar’s influence is also important when making international investment and financing decisions (Lu & Wang 2012: 63–64). In economic globalisation, the US monetary policy’s spillover effect increases daily. The changes in exchange rates are generally divided into two parts: The exchange rate fluctuation itself (the appreciation/ depreciation of the currency) and the degree of exchange rate fluctuations. The trends of exchange rates will affect foreign direct investment (FDI). The depreciation of the host country’s currency will reduce the relative costs of FDI, especially labour costs. Therefore, the return on capital of FDI will increase, which in turn will help to increase the FDI. However, the appreciation of a country’s currency will increase the relative cost of investment, which is not conducive to attracting FDI. Exchange rate trends have different kinds of influence on different types of FDI (Polat & Payaslioglu 2016: 112–129). Through empirical research on FDI in China, it was found that the rising currency value was not conducive to attracting tradable FDI but conducive to attracting non-tradable FDI (Han 2020: 34–44). Exchange rate fluctuations will bring more risks and uncertainties to transnational investments. FDI income may be lost due to sharp fluctuations in the exchange rates and may face the risk of a deficit.

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At the same time, exchange rate fluctuations have increased the cost of FDI. Even if hedging tools can be used, they will also increase the cost of multinational enterprises. In addition, the increased uncertainty will greatly weaken the country’s attractiveness for FDI. The expectation of exchange rate fluctuations is also detrimental to foreign investors making direct investment decisions. Therefore, the increase in exchange rate fluctuations harms the attractiveness of the economy to FDI, which is an important factor affecting international investment and financing cooperation. Taking Brazil and its currency as an example, the value of the BRL had a significant trend of appreciation between 2006 and 2011. As shown in Figure 6.1 below, the growth of FDI was relatively weak during this period. From 2011 to 2015, the value of the BRL depreciated while FDI increased significantly. Figure 6.1 Brazilian Real exchange rate (against US Dollar) and FDI fluctuation (2006–2016) 120 000 3.5

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6.4.2 Challenges in synergising economic structure transformation and the Fourth Industrial Revolution (4IR) During the 10th BRICS Leaders’ Meeting in Johannesburg (South Africa) in 2018, China’s President Xi Jinping made an important speech at the BRICS Business Forum and said: ‘We will jointly build the BRICS partnership for the new industrial revolution; strengthen macroeconomic policy coordination; promote innovation and industrialisation cooperation; and jointly accelerate the transformation, transformation and upgrading of new and old economic drivers.’ The BRICS New Industrial Revolution Partnership Initiative was officially approved that year. However, each country’s industrial planning lacks the connectivity or integrated planning required to promote economic structural transformation. Russia has formulated the national outline of Developing Industry and Enhancing Industrial Competitiveness; India has launched the Made in India Plan; Brazil has released the Greater Brazil Plan; South Africa has presented the New Growth Path and National Development Plan 2030; and China has launched structural reforms for the supply side. The BRICS plans have not yet been linked to one another and do not form a common development plan. BRICS has also not yet established a more centralised economic development framework. BRICS currently contends with factor productivity weaknesses and a bottleneck in industrial upgrading. According to the IMF data (Adler et al. 2017), due to the weakness of total factor productivity from 2007 to 2015, the economic growth rates of advanced economies and emerging market economies declined by an average of 0.04% and 0.12% respectively. Their negative impacts have accounted for 47% and 86% of the losses in annual growth of advanced economies and emerging market economies respectively. A BRICS short-term recovery driven by a demand-side stimulus is difficult to sustain for a long time. Supply-side reforms are a top priority for the improvement of total factor productivity. Industrial chain coordination and production standardisation also need to be improved. BRICS’s production support capabilities lack unified standards in raw materials, research and development (R&D) design, professional talents and system standards (Tian 2017a). Weak production support capabilities in BRICS have become a challenge that restricts manufacturing capacity and international competitiveness. Promoting BRICS cooperation in its advantageous industries is expected to expand general cooperation based on production, covering multiple links and strengthening production-supporting capabilities.

6.4.3 Overlap in terms of international division Raw materials dominate the exports of Brazil, Russia and South Africa. Two-thirds of Russia’s exports are oil and gas products (Commerce Bureau of Shenzhen 2019). Brazil and South Africa have similar trends, with raw materials accounting for 50%

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(Trading Economics n.d.) and 33% of their exports respectively. The overlap of exports between China and India is reflected in labour-intensive and low-technology products, which account for a high proportion of the two countries’ exports. The overlap of products and industries in this international division of labour has increased competition within the BRICS countries to an extent and weakened their value-chain cooperation. Taking China as an example, based on the Organisation for Economic Co-operation and Development (OECD) and the WTO’s value-chain data calculations (as shown in Figure 6.1), the degree of in-depth value-chain cooperation between China and Brazil, Russia, India and South Africa was 20.3%, 16.7%, 22.1% and 24.6% in 2018. Given these levels of cooperation, BRICS has not yet realised the ideals of a ‘new global value chain’. Figure 6.2 Three centres of global trade in intermediate products and services

Source: OECD (2018)

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6.4.4 Lack of a BRICS rating mechanism The three major international rating agencies – S&P Global Ratings (previously Standard & Poor’s), Moody’s and Fitch – have limitations. Since the 2008 financial crisis, many governments, financial institutions and scholars have questioned the reliability of these rating agencies. Professor John Ryan (2011) has proposed their negative impacts, for example, the rating analysis tends to be stable. Global credit rating agencies have long been inclined to maintain a stable rating analysis. The slow processing of relevant information has made the credit ratings lack real-time performance. There is also a lack of accountability in their systems. In the period leading up to the financial crisis in 2008, credit rating agencies failed to properly appreciate the risks in more complex financial instruments. For instance, structured finance products backed by risky subprime mortgages were issued with incorrect ratings that were far too high (European Commission n.d.). The rating grades reported by these rating agencies are used in all countries to perform an initial evaluation of the country’s reputation. The rating results are based on data and the subjective views and suggestions of the analysts. They lack an accurate accountability mechanism to ensure the authenticity of the ratings. For emerging markets, the negative impact is even greater. Rating agencies were born from, and designed for, developed economies. Credit rating agencies have limited the right of emerging markets to obtain sovereign ratings (Ryan 2011). Today, many countries do not have sovereign ratings, so they cannot secure finance through issuing bonds in the international market.

6.5 Establish a sustainable investment and financing mode within the BRICS framework BRICS cooperation should be aimed at promoting common sustainable development within the framework of the UN. It is unique, as it appeals to the BRICS member states to take action together to eradicate poverty, promote economic growth, and meet social needs such as education, health, social security and employment opportunities. With comprehensive social development, BRICS thus lacks a virtuous foundation for sustainable investment and financing. Conversely, the positioning of investment and financing needs to be in line with sustainable development. The investment and financing of the BRICS countries will also concentrate on green development, people’s livelihoods, education and social security. BRICS will shoulder the responsibility of development and solve the economic and social structural problems (Tian 2017b).

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6.5.1 Give full play to the unique advantages of development finance and take development as the primary task According to the Sustainable Development Goals (SDGs), the primary development goal includes eliminating extreme poverty and reducing inequality. The leaders of BRICS countries have discussed topics on establishing safeguarding mechanisms for environmental and social security; establishing mechanisms for information exchange, accountability and post-crisis compensation; and demonstrating the leadership of the BRICS countries in sustainable development for years. In addition, BRICS aims to promote public consultation and discussion mechanisms, and to adopt a genuinely democratic governance structure (Tian 2017b). Through cooperation among the BRICS countries, a more regionally-tailored cooperation mechanism for development finance will facilitate the SDGs of regional economic cooperation.

6.5.2 Further tap converging points of interests during BRICS cooperation As the G20 gradually replaces the G8 as the dominant force in global governance, the BRICS countries should unite more closely in global governance as participants in the institutional design of global governance. By balancing the economic and noneconomic interests of all the parties, BRICS further taps the converging points of interest. It is necessary to focus further on reforming old, imperfect and inappropriate international regulations. Through multilateral dialogue mechanisms, the BRICS countries ought to reach consensus on the issue of global economic governance and seek a more just and fairer international environment for BRICS members, together with other developing countries, in international trade and investment. The author contends that in the cooperation process, BRICS should pay attention to the sustainable growth of national economies and combine outgoing and incoming finance and investment to mobilise complementary economic advantages and thus achieve mutual promotion. BRICS could actively carry out international technical cooperation in industries with strong competition. In energy conservation and emission reduction technology, BRICS should focus on technology research and build an R&D team to promote technological breakthroughs. In developing complementary industries, BRICS must support the comparative strengths of all parties; strengthen economic and trade exchanges; form stable economic growth points; and establish an interaction between economic, trade and financial cooperation. At the same time, BRICS should further deepen mutual political trust among countries, strengthen cultural exchanges among the BRICS members and promote the countries’ cooperation. This cooperation is needed in security, food, energy, climate, science and technology, and education through dualtrack exchanges between the government and the people.

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6.5.3 Accelerate the improvement of the regional financial cooperation mechanisms The establishment of the NDB has simplified the procedures for trade and financing among BRICS countries, facilitated financial services such as investment and financing among countries; and solved financial weaknesses related to infrastructure construction (Pan 2015). The author contends that, after establishing the NDB and its emergency reserve arrangements, BRICS should establish a financial regulatory mechanism. In building the regulatory mechanism, BRICS should respect the financial sovereignty of all countries as the basic principle, and achieve the fairness and efficiency of financial supervision openly and transparently. At the same time, it is necessary to establish mechanisms for capital flow monitoring and crisis prevention monitoring (Hong 2018). There is a need to accelerate the construction of a BRICS credit rating system and effectively evaluate the global and regional macroeconomics (Bhogal 2017). In addition, the formulation of regulatory details for the NDB and emergency reserve arrangements of the BRICS countries could improve the management of the NDB. Drawing on the organisational structure, decision-making process and management system of the European Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank (ADB) and so on, BRICS members could establish a banking management system that is in line with the reality of emerging market countries. In doing so, BRICS should form the corporate culture of the NDB and thus establish a good reputation for cooperation. BRICS must continue optimising and upgrading its industrial structures and appropriately adjusting its economic development model. BRICS members have to meet the needs of financial cooperation and stabilise the external environment. In optimising and upgrading the industrial structure, the development of traditional labour-intensive industries, technology and capital-intensive industries should be considered to improve the BRICS countries’ core competitiveness in the global industrial division of labour and seek a higher position in the global value chain (He 2017). BRICS must make full use of its investment and financing systems, placing the NDB at the core and as the bond of these systems. This is essential for BRICS to stand a chance in increasing infrastructure construction and upgrading the human capital of its members. The NDB has set up regional offices in other BRICS countries. Members have to take the complementary advantages of market technology and energy of the BRICS countries to increase the utilisation ratio of natural resources and form a new, open and mature industrial structure system. In adjusting the economic development patterns, BRICS has to focus on stabilising economic growth and make full use of comparative advantages, the broad market of BRICS countries and the existing cooperation results. Such efforts will reduce the adverse effects of inadequate investment and infrastructure, the large income gap, poverty and weak social foundations.

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6.5.4 Encourage multilateral development banks, the Green Climate Fund and other important funds to invest in the green growth of BRICS countries Leveraging international finance to steer funds to investment and financing of low-carbon infrastructure improves the quality of growth and helps to achieve sustainable development. According to their strategy and mandate, the newly established Asian Infrastructure Investment Bank (AIIB) and the NDB aim to invest in green infrastructure. In the investment process, it is necessary to strengthen the protection of the environment where the project is located and integrate it with the local urbanisation processes to promote local employment. First, based on infrastructure investment in climate change and sustainable growth, countries could form their unique international influence. In addition, ‘sovereign wealth funds’ should be encouraged to invest in low-carbon sectors. As special public investment funds with specific objectives, sovereign wealth funds can be used as a financing source for multilateral development banks such as the AIIB to invest in low-carbon sectors to expand their financing scale. To advance the development agenda in emerging markets, BRICS could apply its strengths in developmental finance. Second, based on the stage of development and the features of BRICS, the bloc should actively promote international climate technological cooperation. Such exchanges will promote trade contacts in complementary industries, increase interaction, deepen trade and foster financial cooperation. Third, based on the development features of BRICS regional finance, the bloc needs to accelerate the construction of financial cooperation mechanisms. The establishment of a cross-border mechanism for financial regulation could embed the risk prevention of long-term climate projects and control mechanism of BRICS into the global cooperation construction and enable globalisation to keep abreast of regionalisation. BRICS interests can be expanded by integrating the principles of openness, transparency, equality and mutual beneficiation. Such integration could help realise fairness and efficiency within financial regulation structures. Fourth, based on the necessity of optimising and upgrading the BRICS green industrial structures, the bloc should rationally adjust the economic development model to guarantee an external environment for stable finance to foster financial cooperation.

6.5.5 Explore the application of the digital economy (blockchain and so on) in the investment and financing field BRICS can become a benchmark for regional space and economic cooperation in the 4IR. To achieve this goal, the bloc must promote technology spillovers and ‘learning in doing’, as such experiences could promote financial innovation and investment that

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finances development. In the field of the digital economy, blockchain technology – due to its typical ‘decentralisation’ feature – facilitates BRICS to realise ‘corner overtaking’ in the competition of the global value chain (China Development Bank 2019). Blockchain technologies can reduce reconciliation and dispute resolution costs among financial institutions in the field of payments. In the field of asset digitalisation, various assets like stock equities, bonds, bills, income receipts and warehouse receipts can all adopt blockchain technologies. These assets can be represented as digital assets on the chain to enable their owners to initiate a transaction without involving intermediaries. In the field of smart securities, as a transaction based on a financial asset is a contract between the parties concerned following certain rules, the blockchain can adequately express this business logic (for example, fixed income securities, repurchase agreements, various swap dealings and syndicate loans) through programming code. This system could automatically execute these contracts. In supply-chain finance, a specific business application includes receivables finance. For instance, realising the multilevel circulation of receivable vouchers (blank notes) based on core corporate credit in the supply chain via an external financial institution could provide a low-cost financing interest rate for receivables. In liquidation and settlement, the transaction of financial assets involves two significant aspects: payments and securities. A legal digital currency based on the blockchain may be the foundation for a ‘settlement tool’ to complete peer-to-peer lending and real-time liquidation and settlement. In the field of customer identification, the blockchain may realise safe and reliable management of digitised identity information to improve the efficiency of customer identification and reduce costs under the premise.

6.6 Suggestions to strengthen the investment and financing mechanism of BRICS countries 6.6.1 Establish a BRICS multilateral credit rating mechanism Establishing a BRICS credit rating agency will target credit issuers in emerging market countries and establish the agency as an independent and reliable provider of credit evaluation for foreign currency issuance (Bhogal 2017). The establishment of a rating agency can be carried out in three steps. First, the rating business of a BRICS credit rating agency begins with the foreign currency loans provided by NDB projects. Second, increase the popularity of a BRICS credit rating agency so that banks and financial institutions in BRICS countries and emerging markets will use the BRICS credit rating agency. Third, the credit rating agency should aim to expand its membership and provide more services to other emerging markets such as Mexico and the Philippines.

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The following elements should be considered in the establishment process. The first is the regulatory considerations and legal framework, and the second is the ownership structure. If the equity structure is dispersed, it is held jointly by member development banks, financial institutions and well-known credit rating agencies. Where the equity is held by the financial institutions, it is technically linked to a well-known credit rating agency. The third consideration involves ensuring that the rating is independent of the shareholding institution that issues the loan. Fourth, it is important to eliminate political influence and conflicts of interest. Lastly, it is necessary to introduce competition among world-renowned credit rating agencies in the subsequent operations stage.

6.6.2 Drive the development of BRICS bond markets (1) Strengthen BRICS mutual cooperation and establish emergency insurance mechanisms The advantage of BRICS lies in the opportunities for rapid economic development and high profitability. However, investors are concerned, particularly, about the default risk of the bonds. Once a default risk occurs, the negative effect will be passed to other financial sectors and other BRICS countries. Therefore, as the bond market advances gradually, a cooperative emergency insurance mechanism should be established within the BRICS countries (Sang et al. 2012). The IMF generally fulfils the role of the world’s lender of last resort. However, since the IMF is not a central bank, the resources it can provide are limited. As international financial institutions such as the IMF are led by developed countries, the provision of aid loans becomes highly political and limited in the event of a financial crisis. For example, in response to the European debt crisis in 2009, the Greek government had to accept harsh financial rectification to get assistance from the IMF and the EU. To an extent, this worsened Greece’s local economy. Therefore, BRICS countries should jointly establish funds to cope with corresponding risks. For defaulted bonds (especially sovereign bonds), liquidity assistance can be provided under certain conditions to also serve as a lender of last resort, effectively reducing the risks and boosting investor confidence. (2) Strengthen international financial organisations’ cooperation and expand the scale of financing Since overseas investors have a limited understanding of bond issuers in the BRICS countries, it is difficult for ordinary companies to collect funds directly by issuing bonds in the international financial market. With an international financial organisation as an intermediary, the credit rating of the bonds issued by those companies is generally higher, so investors are more willing to buy. The BRICS countries should strengthen cooperation with international financial organisations such as the International Finance Corporation and the ADB to expand their

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business and provide more channels for bond financing to other member states. This expansion will allow more BRICS companies to have financing opportunities. (3) Promote interbank market cooperation among the BRICS countries The construction of the interbank market is one of the core elements of developing a national bond market. At present, the interbank market of the BRICS countries is still much divided. There are apparent differences in the system and regulations, credit rating, auditing of conversion risks, clearing and settlement systems, and so on, of interbank markets. Interbank markets still vary greatly in terms of developmental maturity. The BRICS countries should strengthen the cooperation and communication in the interbank market and, through consultation, strengthen the accounting/ auditing standards and improve compatibility among laws and regulations in different countries. BRICS should also offer broader accessibility for investors in BRICS countries and enrich the investor structure to support the complementary cooperation of BRICS country investors in areas such as capital, information and technology. In addition, cross-border electronic trading platforms could be established in the interbank market of BRICS countries to reduce transaction costs. (4) Improve cross-border regulatory coordination and promote information transparency The asymmetry of information has led investors to worry about the bonds of the BRICS countries, and the adverse selection has made high-risk bonds more buoyant in the market. As market managers, governments should formulate guidelines and supervise the implementation, increase the transparency of corporate information and improve the legal regulations of debt contracts. From a political point of view, domestic audits and supervision may result in fraud. Therefore, it is also necessary to strengthen the cooperation of information supervision among the BRICS countries and to establish mutual supervision mechanisms. In short, advancing the development of the bond market can optimise the financial system of the BRICS countries, reducing and mitigating the risks of the financial system and enabling more effective allocation of funds in the region. The opening of the capital account, the implementation of local currency bonds, the establishment of insurance mechanisms, the promotion of cooperation among international organisations and banks, and the improvement of market supervision will all help to accelerate this progress. In its implementation, the BRICS countries should work together to actively explore and promote institutional innovation actively.

6.6.3 Deepen local currency settlement and currency swaps BRICS needs to boost cooperation in local currency settlements in trade to enable the subjects of economic activities to exchange local currencies voluntarily as a means of settlement and payment of commodities and services. However, there

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may be several problems in this process. Therefore, BRICS needs to cooperate with international organisations such as the IMF to establish a corresponding mechanism to prevent systematic risk. Moreover, BRICS needs to adjust and improve agreements and plans to properly broaden the service conditions of reserve and establish a more comprehensive risk-assessment system. Box 6.1 TCX Fund - How to solve the currency mismatch problem of emerging market countries To solve the currency mismatch problem of emerging market countries, the TCX Currency Exchange Fund (hereafter TCX) was established by developmental financial institutions, special micro-credit investment institutions and other contributors in 2007. The investors included the Dutch and German governments and 22 multilateral and bilateral institutions. Investors and customers of TCX provide financing for the borrowers in local currency while using currency and interest rate swaps to transfer currency risk to TCX in order to limit exchange rate and interest rate fluctuations. The counterparties of private sectors also reduce their risks via currency and interest rate swaps. With tools hedging its own risk of exchange rate and interest rate, TCX can continuously provide financial services of currency swap to customers. Like TCX, BRICS may establish a more extensive currency swap mechanism based on cooperation in local currency. Source: TCX Fund (n.d.)

6.6.4 Promote knowledge sharing in financial collaboration BRICS cooperation should include both capital and knowledge cooperation, which can deepen understanding, enhance trust and relieve suspicion internally. BRICS’s overall influence on power can be improved with specific measures. These measures may be vertically and horizontally combined with multiple types, and should foster cooperation with multiple institutions. The measures will then enhance the construction of the BRICS Think Tank and its communication and cooperation with international think tanks. Regularly conducting knowledge sharing and experience exchanges will demonstrate the positive role of knowledge sharing. Long-term comprehensive plans are crucial for a country or region to realise leapforward development. BRICS must draw up long-term plans and boost system construction to promote knowledge sharing through think tanks or institutions with similar functions. Through bank–government–enterprise cooperation, developmental financial institutions may boost the construction of the market, credit and system to make up for market vacancy and deficiency. State development objectives can finally be achieved by serving the key infrastructure projects with investment and financing, and providing commercial finance support to promote the implementation of projects.

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6.6.5 ‘Greening’ the BRICS banking system The BRICS countries are promoting green and development-oriented financial cooperation. The green economy has the characteristics of a long-term, public welfare economy producing limited profits. These characteristics are shared with the development finance arena. In light of the launch and development of the NDB, a BRICS green financing market should be established to promote BRICS cooperation on environmental technology and green infrastructure construction with innovative cooperation among BRICS development financial institutions (NDB 2017b). Exploring green investment opportunities for infrastructure will continue to be an important driving force for rapid economic growth in the BRICS countries. It will also serve as the basis for the long-term economic development of the BRICS countries and provide important opportunities for promoting green investment in them. An important method is to bring environmental factors into the bank management framework, especially the whole flow of project assessments. At present, a globally recognised practical framework for green or sustainable banking does not exist, but there are best practices to consider. For example, the finance initiative of the UN Environment Programme (UNEP), working closely with the banking sector, has begun to build systems for managing environmental, social and governance issues in order to reach the objective of carbon neutrality. Many multilateral development banks have set up their own environmental social governance (ESG) standards for several years and continue to improve the system. BRICS development financial institutions could learn from ESG experiences and turn them into environmental tools at the financial institution level when developing advanced international green standards. The BRICS countries’ banks advocate for responsible finance, which is crucial for achieving a greener, brighter and more effective BRICS future.

6.7 Conclusion Instead of day-to-day international talks, practical projects are the feature of BRICS countries. Since establishing the BRICS cooperation mechanism, several important achievements have been made in trade, investment, finance and other areas where the five countries share common interests. However, with the deepening of cooperation, the difficulty of further breakthroughs increases. The improvement of the global economic order is still a challenge to BRICS cooperation and a common interest. BRICS countries have considerable room to cooperate in this field. The author has analysed the BRICS practice mode as well as challenges and future opportunities for investing and financing cooperation based on many investment and financing projects. Furthermore, the author offered suggestions for improving

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and guaranteeing the operation of the cooperation mechanism to enable simplified future collaborations. Based on this analysis, the author suggests that the five countries explore building a multilateral rating mechanism of BRICS, driving the development of BRICS bond markets, deepening local currency settlements and currency swaps, promoting knowledge sharing in financial collaboration and transforming the BRICS banking system into a greener multinational platform. The NDB is a new international, multilateral, coordination platform and a milestone for BRICS cooperation. It should play a more central role in each country’s industrial development, regional coordination and the rebuilding of the global governance system. With the optimisation of the global financial systems, BRICS’s pragmatic collaboration will have more favourable conditions and achieve SDGs. References

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Lu D & Wang W (2012) The mode and development of bilateral local currency settlement. China Finance (4): 63–64 NDB (New Development Bank) (2017a) Environment social framework. Accessed 10 April 2022, www.ndb.int/wp-content/uploads/2017/02/ndb-environment-social-framework-20160330. pdf NDB (2017b) NDB’s general strategy 2017–2021. Accessed 27 February 2022, https://www.ndb. int/wp-content/uploads/2017/07/NDB-Strategy-Final.pdf OECD (Organisation for Economic Co-operation and Development) (2018) Trade in value added (TiVA): Principal indicators. Accessed 27 February 2022, https://stats.oecd.org/Index. aspx?DataSetCode=TIVA_2018_C1 Pan Q (2015) What’s new: The background, significance and challenges of the establishment of the BRICS New Development Bank. World Outlook (5): 20–31 Polat B & Payaslioglu C (2016) Exchange rate uncertainty and FDI inflows: The case of Turkey. Asia-Pacific Journal of Accounting & Economics 23(1): 112–129 Ryan J (2011) The negative impact of credit rating agencies and proposals for better regulation. Working Paper of the Stiftung Wissenschaft und Politik in Berlin. Accessed 10 April 2022, https://www.swp-berlin.org/publications/products/arbeitspapiere/The_Negative_Impact_ formatiert_of_Credit_Rating_Agencies_edited.doc Sang BC, Yang L & Wei Z (2012) Financial cooperation among BRICS countries: Status quo, problems and prospects. International Trade (12): 1–6 TCX Fund (n.d.) Summary of presentation of TCX Fund. Accessed 27 February 2022, https://www.tcxfund.com/ about-the-fund/ Tian F (2017a) Economic growth, structural transformation and production capacity cooperation among BRICS countries. Journal of Latin American Studies 39 (4): 5–104 Tian F (2017b) Prior issues and policy choices for sustainable development cooperation in BRICS countries. Journal of International Economic Cooperation 8: 61–62 Trading Economics (n.d.) Brazil exports. Accessed 27 February 2022, https://tradingeconomics. com/brazil/exports UNCTAD (UN Conference on Trade and Development) (n.d.) Statistics. Accessed 14 April 2022, https://unctad.org/statistics Zhu W & Li Y (2018) Practical research on development finance supporting investment and financing cooperation among BRICS countries – Take China Development Bank as an example. Development Finance Research (4): 87–96

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Analysing the BRICS New Development Bank’s Response to COVID-19 Modimowabarwa Kanyane and Namhla Ngqwala

7.1 Background In the main, BRICS (as an emerging global superpower) derives its strength from the New Development Bank (NDB) – the primary key driver of the economies of BRICS member states. In general, it contributes to loans and investments as the economic stimulus package of the BRICS member states and their regional partners. Despite the NDB being the principal driver of BRICS on the economic front, providing the bulk of economic growth in the BRICS community, it is exposed to COVID-19 challenges in development financing. Yet, it has to cope with the demands of the BRICS community. The main research question of this study is whether the NDB can recover from the economic loss caused by the COVID-19 pandemic and transcend these consequences to fulfil its developmental mandate, especially its contribution to Africa and other regions in the Global South. Using the NDB as a case study underpinned by economic and sustainable development, the study underscores that the NDB is susceptible to financial challenges and, therefore, it is in under economic distress to meet the demands of the BRICS member states. Based on the findings, there is a need to strengthen the resilience of the NDB to make a practical contribution to the Global South and beyond.

7.2 Introduction At the 4th BRICS Summit in New Delhi (India) in 2012, the BRICS leaders considered setting up a BRICS development bank to mobilise infrastructure capital and sustainable development projects in BRICS and other emerging economies as well as in developed countries (Griffith-Jones 2015). Jim O’Neill, an economist at Goldman Sachs, coined the acronym BRIC (without South Africa) in 2001 and informed thinking on the formation of the bank. Bertelsmann-Scott et al. (2016) contend that the NDB is a multilateral development bank founded by the BRICS member states. It has US$50 billion of subscribed capital in Brazil, Russia, India, China and South Africa. Out of this US$50 billion, US$10 billion was used to fund infrastructure and sustainable development projects in the BRICS countries, other emerging economies and developing countries.

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The bank’s work complements the efforts of multilateral and regional financial institutions to foster global growth and development. It pays attention to the swift, scalable and effective maximisation of the developmental impact. Griffith-Jones (2015) writes that the bank supports public and/or private initiatives through loans, guarantees, equity participation and other financial instruments to fulfil its mission. Through its foreign policy, China gained visible footsteps in Africa. It drastically diminished the monopoly of Western countries that had had large footprints on the continent since the colonial period. As foreign direct investment (FDI) can be a powerful driver for economic growth and development, BRICS became more involved in investing in Africa. Consequently, millions of people in the BRICS member states have been pulled out of poverty, resulting in health gains and meaningful steps towards achieving the Millennium Development Goals at the time. Even without any systematic solution or an inconsistent pace, it created safety nets. Recently, developing nations have had to compete and develop markets under the COVID-19 pandemic protocols. In the context of the COVID-19 pandemic, the globalised world order is facing its most formidable challenge. State and multilateral health agencies seek to curb the spread of COVID-19 with the support of prominent private actors and civil society. The NDB, along with other multilateral development banks, has become a crucial economic weapon to complement limited government resources in order to tackle the pandemic given the fiscal constraints of most of the BRICS countries (Maasdorp 2020). In addition, the entire globe is grappling with the effects of COVID-19 and it is predicted that the worst has yet to occur. To resolve this problem, the international community needs to work together. With the COVID-19 pandemic, there is no onesize-fits-all solution. Therefore, it is essential to take into account each country’s unique vulnerabilities and position ownership and empowerment of the recipient countries as the fundamental concept of South–South cooperation (S–SC). COVID-19 is estimated to have negatively impacted 1.6 billion informal workers, with women overrepresented in the most severely affected sectors, increasing poverty among casual workers and their families. In addition, COVID-19 may expand informal employment, since laid-off workers from the formal economy would most likely seek employment in the informal sector (UN 2020). COVID19 threatens jobs. World merchandise trade was predicted to plummet by 32% in 2020/21, with an expectation of a 2021/22 recovery. However, this depended on the duration of the outbreak and the effectiveness of the policy responses. Thus, trade fell steeper in sectors with complex value chains, mainly electronics and automotive products. This means that the services trade was directly affected by COVID-19 due to transport and travel restrictions. Consequently, export earnings were low in all developing countries. Those dependent on commodity exports played a significant role in complex value chains, as destinations for tourism were most affected.

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Moreover, the main aim to reverse the consequences of the COVID-19 pandemic is to encourage the economic growth rate representing domestic entrepreneurship productivity (Popkova et al. 2020). The COVID-19 pandemic disrupted the lives of every person, community and economy. The pandemic caused the global economy to convulse with shock. Countries involved showed negative growth adaptations, apart from China (where the virus originated). As a result of the substantial decrease, the UN expected FDI to fall between 5% and 15%, reaching the lowest level since the 2008 financial crisis. Humphrey (2020) contends that the NDB has AA+ ranking in the international markets, but AAA ranking in China because of US$10 billion in shareholder capital and a still small loan portfolio. Although it was not designed for this purpose, the NDB could increase a rapid response to the COVID-19 crisis. However, China and India expressed concern about the possible risks. In their opinion, the non-conditionality of aid could disrupt the changes needed by these countries to advance development while posing a risk of wasting resources on nonproductive investment (Kragelund 2011). Consequently, the COVID-19 pandemic slowed the momentum of completing BRICS projects in time, which is a matter of concern for the NDB. For this reason, under the COVID-19 crisis, China (followed by many other economies) had to isolate socially and economically through strict lockdown regulations. The COVID-19 outbreak and the need for a lockdown decreased energy consumption. Economic and industrial activities were temporarily halted and, therefore, drastically reduced energy consumption, followed by reduced carbon emissions (Balsalobre-Lorente et al. 2020). The ideas of remaining at home and socially distancing to reduce the COVID-19 surge embraced the world. Consequently, many countries closed their borders and ordered business activities to shut down. Depending on the ferocity of the wave, differential, countries opted for hard or soft lockdown. The global prevention measures included testing, treatment, isolation, quarantine, wearing face masks and sanitisation. Vaccines came into the mix to curb the surge. Against this backdrop, the study analyses the NDB’s response to COVID-19 by focusing on the five BRICS member states. Therefore, the study draws attention to issues of critical importance: the emergence of the NDB as a global player; BRICS and Africa perspectives; the NDB’s COVID-19 response; China’s COVID19 response and lessons for other countries. Based on these thematic issues, the conclusion details recommendations for further research.

7.3 Emergence of the NDB as a global player The 5th BRICS Summit took place in Durban (South Africa) on 26 and 27 March 2013. The summit drew attention to the bloc – a sign of the world’s multipolarisation and the challenge to global governance and prevailing standards. Held under the theme ‘BRICS and Africa: Partnership for Development, Integration and Industrialisation’,

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the announcement of the formation of the NDB was the highlight of the summit. The final declaration reaffirmed the desire to develop such a bank, but its official launch did not materialise at the time (Habchi & Martinet 2013). The disparity between infrastructure funding demand and supply in developing countries stems from the challenge of accessing long-term financing. Therefore, developing countries have faced immense investment and funding gaps to fund infrastructure. The inability of multilateral development banks controlled by developed countries to make up the difference prompted BRICS to launch a new development bank. The five BRICS countries decided that the NDB’s headquarters would be in Shanghai (China), with a regional centre in South Africa. An Indian citizen would be the first president, serving an initial term of five years. The idea is to have a presidency that rotates. South Africa fought hard to create the development bank and its first regional centre in Africa – the only office mentioned explicitly in the Articles of Agreement. Jiejin (2015) explains that S–SC has sought equal rights in the international economic system for developing countries while reforming international structures. The goal of the new S–SC is to create a new global financial system for developing countries. Consequently, creating a new international mechanism correlates with S–SC. The purpose of establishing the instrument is not to disrupt ties with the previous economic structure, but rather to complement and complete it. At the 2015 BRICS Summit, the memorandum of understanding on cooperation regarding the NDB outlined an agreement for the development finance institutions of each BRICS country to work with the bank. These are Brazil’s Banco Nacional de Desenvolvimento Econômico Social (Brazilian Development Bank), Russia’s Vnesheconombank, India’s Export–Import Bank, China’s China Development Bank Corporation and South Africa’s Development Bank of Southern Africa (Bertelsmann-Scott et al. 2016). According to the G24, which represents the interests of 24 developing countries, the annual capital needs of developing countries in infrastructure construction were US$1 800 billion and existing investment amounted to about US$800 billion, resulting in an annual financing gap of about US$1 000 billion from 2013 to 2015 (Jiejin 2015). The institution’s purpose is to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies. Developing countries complement the existing efforts of multilateral and regional financial institutions for global growth and development by providing technical assistance for projects to be supported by the bank (Griffith-Jones 2015). The NDB continuously provides a valuable addition to the multilateral, regional and national development banks. It works closely with national development banks to gain greater local context and perform better in supporting productive development through infrastructure investment. Similarly, national development banks operate better with the financial and technical support of the NDB (Griffith-Jones 2015).

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7.4 BRICS and the Africa perspective In 1956, China and Egypt formed diplomatic relations, which resulted in the cooperation agreement with leaders of African states such as Ben Bella (Algeria), Sékou Touré (Guinea) and Kwame Nkrumah (Ghana) (Powanga & Giner-Reichl 2019). S–SC has an extensive history. Chinese ideological thinking influenced China’s relations with Africa, emerging as an alternative to the West and the Soviet Union. China’s support was moral and material at the time, basically for liberation struggles. In the 1980s, the relationship became one of economic cooperation based on mutual interests. China and Africa have a background of political and economic concurrence, developed throughout the years. The growth in commercial activity between China and Africa expanded due to Chinese financial assistance to the region, focusing mainly on infrastructure (Foster et al. 2008). The growing ties between China and Africa included China’s emerging role as a major financier of infrastructure on the continent. This financier role predates that of the NDB. Chinese loan investments in African states became an opportunity for sustainable economic growth for the continent, but Africa’s growth depended on China’s demand for African resources. There are seven factors of Chinese investments: commodity prices, capacity to extract, infrastructure, manufacturing, employment, market access and consumer base. Hanauer and Lyle (2014) write that China’s investments assist African development and improve their economic growth. Hence, China seeks to acquire oil, gas, minerals and other natural resources for self-benefit. Furthermore, Beijing has sought markets in Africa for Chinese companies to sell their goods and services. This becomes a significant problem for less-developed countries. First, consumers prefer low-cost goods offered by Chinese manufacturers rather than goods produced in their own country. Second, African governments purchase low-priced Chinese military material and hire Chinese construction and engineering companies to develop necessary physical infrastructure. While BRICS’s initial focus was strengthening global economic governance in response to the 2008 financial crisis, BRICS cooperation and dialogue have moved into the fields of political security. The 2009 BRICS Summit concentrated on the global financial crisis and the imperative of a reformed financial and economic architecture. In 2012, the summit communiqué focused on economic and financial problems, Afghanistan, terrorism and the Middle East war. The 2015 Ufa communiqué was broader, addressing the various conflicts in Africa, a nuclearfree Middle East, the world’s drug problems, cybercrime and internet governance, climate change and the Sustainable Development Goals (SDGs) (Bertelsmann-Scott et al. 2016). Despite the slight increase in overall BRICS Africa trade in 2017 (excluding South Africa) to US$223.7 billion, from US$201.5 billion in 2016, the BRICS and African

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countries remain unequal. In 2017, more than 80% of exports from African countries to the BRICS countries were primary commodities, while the top three exports from the BRICS countries to African countries were manufactured goods (Sidiropoulos 2018) A more sustainable partnership requires that African countries in different sectors be better integrated in the value chain as producers, suppliers and consumers. Also, efficient investment in infrastructure to facilitate industrialisation is an important African goal. The BRICS member states’ growing economic power has outpaced their voices in the World Bank and the International Monetary Fund (IMF). In recent years, South– South economic collaboration has widened significantly. Brazil now has a higher number of embassies in Africa than the UK. China has been the most significant trading partner in Africa. Africa’s trade volume now exceeds North–South trade by about US$2.2 trillion – over a fifth of world trade. With China, Brazil and India being greater donors, low-income nations have also seen exponential growth in South–South foreign aid. Thus, BRICS institutions are partly the product of a twodecade-long phase of increased economic participation by, and among, developing nations (Desai & Vreeland 2014). The trade engagement between BRICS and Africa fostered the emergence of new economic models that better respond to the consumption needs of African populations, of whom 70% remains in the low-income category. In their backyard, businesses from India and China are manufacturing low-cost products to meet demand in markets where a large proportion of the population finds themselves at the base of the social pyramid. By expanding in Africa, these businesses are betting on the emergence of a middle class and developing consumption habits. Primarily led by China, BRICS thus has impacted economic growth in African countries and helped the continent to weather the global financial crisis (Habchi & Martinet 2013). As for COVID-19, given that African countries have weak health systems and testing is significantly insufficient, the continent in its entirety is COVID-19 riskaverse beyond measure. For example, the statistics of COVID-19 confirmed cases are only meaningful in terms of a country’s testing policy: how much testing is done, who is being tested, and how many tests are COVID-19 positive. While it is encouraging that most countries offer some form of testing, there is limited data on the actual number of tests performed, the number of tests per population and the rate of positive tests for African countries. Many health policy experts in the region expressed concern that testing is too low to provide an accurate picture of the spread of the virus (Henningsson & Rivera 2020). The available data for a few African countries suggest that many positive cases are missed, which allows the virus to spread even further. Altogether, the African situation deserves COVID-19 relief funds so as to sustain stretched African economies and their health systems.

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7.5 COVID-19 response of the NDB In February 2020, the NDB announced its readiness to help BRICS member states against COVID-19. According to the NDB (2020), in September 2020, it issued US$2 billion towards its five-year COVID-19 response. This is the highest US Dollar benchmark bond ever made. Moreover, the net proceeds from the issuance of bonds should fund SDGs in the BRICS member states, including emergency relief programmes related to COVID-19. The NDB intended to provide up to US$10 billion in crisis-related aid, including funding expenses related to healthcare, social security and promoting efforts to recover the economy. The NDB has approved US$4 billion of COVID-19-related emergency aid projects. Furthermore, the consequences of the COVID-19 pandemic are being tracked and discussed by financial institutions around the globe. They work to understand societies and economies’ immediate problems, and the long-term effect on the integrated financial system. As the COVID-19 pandemic spread rapidly from Wuhan in Hubei province to surrounding regions, the Chinese government turned to the NDB for support (Maasdorp 2020). On 19 March 2020, the NDB’s board of directors provided the People’s Republic of China with an RMB7-billion Emergency Assistance Programme Loan. The special issue of the bond in local currency financed healthcare and local authorities in three regions of China (Barrowclough 2020). Borrowers often required assistance with relief and social assistance during the COVID-19 pandemic. The NDB had to alter and adjust due to COVID-19 surges. In terms of the response to the COVID-19 pandemic in BRICS member states, the loan was the NDB’s first Emergency Assistance Programme Loan and the largest loan to date. It aims to fund unforeseen public-health expenses that are critical. Understandably, the programme focused on three provinces in China – Hubei, Guangdong and Henan – because COVID-19 hit them hard. The programme enabled these three provinces to fund their most critical needs to tackle the COVID19 surge, thereby reducing the outbreak’s adverse effects on their local economies (NDB 2020). According to Maasdorp (2020), the programme sought to minimise the loss of civilian life and enhance the capacity of the public-health sector in the three provinces by strengthening their system of emergency response to health problems. The positive impacts of the outbreak and recovery of social and economic activities require the reduction of detrimental social and economic effects. On 30 April 2020, the NDB’s board of directors approved a US$1 billion Emergency Assistance Programme Loan for India. The programme’s goal was to help the government of India in its efforts to control the spread of COVID-19. Also, it aimed to reduce the social and economic human losses caused by the coronavirus. This was the bank’s second Emergency Assistance Programme attempt to assist its member states in combating COVID-19. The funding scope of the programme includes the

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emergency response and strengthening the social safety net of the healthcare sector for expenses incurred since 1 January 2020 (NDB 2020). The programme, therefore, provides essential health services and strengthens India’s social security network while improving the resilience of the public-health sector and health emergency response structures by promoting India’s socioeconomic recovery. In a statement to respond to the COVID-19 outbreak, the NDB’s board of directors welcomed the development of emergency assistance. The emergency loans to the member states finance direct expenses relating to the fight against COVID19 and thus provide support for government measures contributing to economic recovery (NDB 2020). The COVID-19 Emergency Assistance Programme Loan of US$1 billion to the South African government was approved by the NDB’s board of directors on 19 June 2020. Xian Zhu, the NDB’s vice president and chief operations officer, said: The COVID-19 Emergency Programme Loan to South Africa will be provided in response to the urgent request and immediate financing needs of the South African Government. NDB’s assistance will address urgent health needs in South Africa to overcome the COVID-19 pandemic and help mitigate socioeconomic impacts on the most vulnerable populations…such focus of the Bank’s financing is in line with the emergency loans provided by the NDB to China and India earlier this year. (NDB 2020) The loan would assist the government of South Africa in implementing its COVID-19 healthcare response and establishing a social safety net to mitigate the economic effects of disease control measures on vulnerable people. The programme contemplated the prevention, diagnosis and response to the health threat posed by COVID-19. It complemented social grants to disadvantaged communities affected by initiatives to prevent and control the disease (NDB 2020). In July 2020, the NDB’s board of directors approved a US$1 billion COVID-19 Emergency Programme Loan to the government of the Federative Republic of Brazil. The loan would enable Brazil to safeguard the income of about 5 million people, including self-employed and unemployed workers in helpless situations. Moreover, the basic income guaranteed by the programme helped low-income families to obtain greater access to food and health-related services such as medicines and personal hygiene products, which are essential for COVID-19 prevention (NDB 2020). However, the NDB (2020) contended that the loan would also enable the government of Brazil to ensure sound fiscal support in the fight against the disease and that priority investment projects were put in place, thereby contributing to the country’s economic recovery. Multilateral development banks and development agencies such as: the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Development Bank of Latin America, the German Development Bank and the French Development Agency, made loan provisions complemented by the NDB in Brazil. The latter joined efforts to provide US$4 billion in financing to mitigate the

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social and economic impacts of the pandemic. Mr Marcos Troyjo, the president of the NDB, said: The COVID-19 Emergency Programme Loan to Brazil will contribute to the country’s ongoing efforts to strengthen social safety nets and address immediate socioeconomic impacts of the COVID-19 outbreak, particularly on the most vulnerable population in Brazil…It also represents an important milestone for the Government of Brazil and NDB in the fight against COVID-19, in coordination with other multilateral development banks and development agencies. (NDB 2020) The NDB plays a significant role within the member states in providing emergency loans to fight COVID-19. Still, there is no literature showing that Russia has borrowed any loan from the NDB to respond to the pandemic or applied for the Emergency Assistant Programme Loan that the bank offers. Although the IMF confirmed that Russia also implemented measures to respond to COVID-19, Shah (2020) contends that Russia declared a fiscal package of approximately US$12 billion (0.9% of its GDP). Under the quasi-fiscal measures, Russia allocated US$7.3 billion (0.6% of its GDP), which included subsidised and guaranteed loans for small and medium-sized enterprises (SMEs), retailers and distributors; assistance for debt restructuring through government loans; and recapitalisation of leasing firms in the transport sector. It also established a new lending facility with a refinancing limit of RUB500 billion to shore up SME lending. According to Balakrishnan (2020), Russia announced the launch of Sputnik V – a home-based adenovirus-based COVID-19 vaccine supported by the Chinese government.

7.6 China’s COVID-19 response and lessons for other countries Under the significant public health risk that the COVID-19 spread posed to the world, the World Health Organisation (WHO) declared a public health emergency of international concern over the global outbreak of COVID-19 on 30 January 2020 and escalated it to a worldwide crisis on 11 March 2020. Liu et al. (2020) state that after the official announcement of the COVID-19 outbreak, the entire machinery of China started concerted and comprehensive efforts to curb the infectious disease. On 20 January 2020, COVID-19 was included in the statutory reporting of Class B infectious diseases. Several nations lauded the Chinese government for the steps taken to monitor the rise in citizens infected with the virus. China’s strict control measures proved to significantly reduce the COVID-19 spread. On 22 March 2020, there were 292 142 laboratory-confirmed cases and 12 784 fatalities worldwide, of which 81 498 cases and 3 267 deaths were in China. Liu et al. (2020) state that the Chinese government took drastic national steps to curb the spread of COVID-19 and positive results were obtained based on empirical evidence. Below are some significant examples

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of measures that the government adopted to respond to the COVID-19 crisis. The medical systems in Wuhan faced overwhelming shortages of healthcare workers and vital medical resources, including medical grade personal protective equipment and limited space in hospitals to manage the surge of patients with COVID-19. In the face of these challenges, the central government organised 42 600 healthcare providers and workers, and tonnes of medical supplies were dispatched to Wuhan and neighbouring areas in Hubei province from all over the country (Song et al. 2020). The government established two designated hospitals and several mobile cabin hospitals with a bed capacity of over 50 000 in Wuhan. Since February 2020, home-isolated patients were hospitalised in the newly-built square cabin hospitals. In addition, all close contacts and suspected cases had to undergo mandatory isolation in special facilities and were placed under medical observation for 14 days (Zhang et al. 2020). The prevention and control strategies were adaptable and refined over time to fit the complicated and changeable situations. The latest research estimated the trend in Wuhan using the phase-adjusted Susceptible–Exposed–Infectious–Removed  (SEIR) model. It provided COVID-19 estimations after implementing strict prevention and control measures in China. Subsequently, the infections declined according to SEIR predictions. The decline in COVID-19 cases across China proved that the agile and stringent standards in multiple settings effectively interrupted transmission chains and drastically reversed the escalating COVID-19 issues (Zhang et al. 2020).

7.7 Recommendations for BRICS member states’ COVID-19 recovery and beyond A sustainable financial systems framework should be unleashed to reinforce the NDB’s resilience in making a practical contribution to the Global South. There is a need to create similar mechanisms and methods to assess the alignment of both public and private finance with the SDGs. The instruments should be committed to transforming investment behaviour and encouraging sustainable investments that promote more robust recovery from COVID-19 affected countries, working with the private sector and civil society (UN 2020). Global disclosure and reporting should be launched. Countries should adhere to a sustainability-related disclosure process, consistent with international standardsetting measures for both public and private market players, in line with implementing sustainable financial systems frameworks to improve transparency on available capital. The goal of this will be to facilitate the change in finance from brown to green or blue, and increase the size of finance and the impact on substantive issues such as inequality, gender and the security of the most vulnerable (like small island developing states and least-developed countries) (UN 2020).

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Enabling environments should be created. According to the UN (2020), governments should create favourable conditions for the private sector. They should align their strategies and business models to the SDGs in parallel with regional and global measures. Governments should take steps as part of their revised national plans for recovery from COVID-19, with clear public transition plans and timelines. Investment priorities are critical. By following the SDGs, governments should translate their national strategies into concrete policy actions and expenditure plans incorporated into the national budget and planning processes. With transparent public transition plans and timelines, governments should integrate sector investment plans into their updated national COVID-19 recovery plans. It is crucial to invest in universal health coverage through comprehensive, resilient and sustainable health systems, ensuring quality health services (including sexual and reproductive health) and rights focusing on broader determinants of health. It should include implementing a One Health approach to preventing, recognising and reacting to health threats, linking people, animals, plants and their typical habitats, infectious diseases, antimicrobial resistance and health threats related to climate change by strengthening public-health functions (UN 2020). Investment in re-skilling for re-employment in the wake of COVID-19 will go a long way in controlling fossil-fuel intensive industries and activities. Therefore, there is a need to address inequality and exclusion, including fighting gender gaps; a need to reach out and protect all citizens (especially women and girls, people with disabilities, and marginalised and crisis-affected groups). It should include investment in social protection systems; vaccinations; skills development; care services; decent job opportunities; support for informal sector workers; secure, equitable land tenure and governance; and gender-based violence prevention and services (UN 2020).

7.8 Conclusion COVID-19, which is primarily a health crisis, has had adverse economic effects for most economies in the world for two years (2020 and 2021) and beyond. Some economists believe that the Earth gravitated towards one of the greatest economic crises in the history of humankind. Disruption of production and social distancing measures related to the health crisis, which virtually all countries adopted to combat the pandemic, led to a significant slowdown in economic activity. As an emerging global superpower, BRICS derives its strength from the NDB (the primary key driver of the economy among BRICS member states). Its contribution to loans and investments as the economic stimulus of the BRICS member states and their regional partners is an added formidable force in the Global South and beyond. China was the first country to receive NDB finance and successfully got COVID19 under control. The lesson from China conveys a critical message in preventing COVID-19 from spreading. Despite all the challenges encountered, the experiences

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and lessons learned from the COVID-19 pandemic and the interventions are essential points of reference for the NDB’s board of directors to develop innovative policies and inclusive mechanisms dealing with the post-COVID-19 impact on humankind as a long-term worldwide measure. References

Balakrishnan VS (2020) The arrival of Sputnik V. The Lancet Infectious Diseases 20(10): 1101–1216 Balsalobre-Lorente D, Driha OM, Bekun FV, Sinha A & Adedoyin FF (2020) Consequences of COVID-19 on the social isolation of the Chinese economy: Accounting for the role of reduction in carbon emissions. Air Quality, Atmosphere and Health 13(12): 1439–1451 Barrowclough D (2020) South–South public finance: A rapid review of cooperation and resilience to face COVID-19. Accessed 11 October 2020, https://publicbankscovid19.org/images/PDF_ FILES/Chapter_18_-_South-South.pdf Bertelsmann-Scott T, Prinsloo C, Sidiropoulos E, Wentworth L & Wood C (2016) New Development Bank: Moving the BRICS from an acronym to an institution. Accessed 14 November 2020, https://media.africaportal.org/documents/saia_sop_233_bertelsmann_ scott_et_al_20160627.pdf Desai R & Vreeland V (2014) What the new bank of BRICS is all about. Accessed 2 November 2020, https://www.brookings.edu/opinions/what-the-new-bank-of-brics-is-all-about/ Foster V, Butterfield W, Chen C & Pushak N (2008) Building bridges: China’s growing role as infrastructure financier for sub-Saharan Africa. Washington DC: World Bank Griffith-Jones S (2015) Financing global development: The BRICS New Development Bank. Briefing Paper 13. Bonn: German Institute of Development and Sustainability Habchi L & Martinet L (2013) The BRICS in Africa. Afrique Contemporaine 4: 13–30 Hanauer L & Lyle JM (2014) Chinese engagement in Africa: Drivers, reactions and implications for U.S. policy. Santa Monica, CA: RAND Corporation. Accessed 10 October 2020, https://www.rand.org/pubs/research_reports/RR521.html. Also available in print form Henningsson E & Rivera A (2020) 1 million confirmed COVID-19 cases in Africa. Accessed 12 December 2020, https://www.one.org/africa/blog/1-million-covid19-casesafrica/?gclid=CjwKCAiArIH_BRB2EiwALfbH1EYo55f8isOiezVjceUP39UNTj5lRA8c_ lfUtA_BMNZQK75TNBeCsxoC8JQQAvD_BwE Humphrey C (2020) All hands on deck: How to scale up multilateral financing to face the Covid19 crisis. Accessed 10 October 2020, https://www.research-collection.ethz.ch/bitstream/ handle/20.500.11850/411421/1/200408_mbds_coronavirus_final_0.pdf Jiejin Z (2015) New South–South co-operation and the BRICS New Development Bank. BRICS Insights Paper 2. Johannesburg/Cape Town: South African Institute of International Affairs Kragelund P (2011) The rejuvenation of non-traditional donors’ development cooperation with Africa. Development and Change 42(12): 585–607 Liu W, Yue XG & Tchounwou PB (2020) Response to the COVID-19 epidemic: The Chinese experience and implications for other countries. Accessed 10 October 2020, https://www.mdpi.com/1660-4601/17/7/2304 Maasdorp L (2020) COVID-19: How multilateral development banks can lead through a crisis. Accessed 10 October 2020, https://www.weforum.org/agenda/2020/07/brics-newdevelopment-bank-leads-member-states-through-the-covid-19-crisis/

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NDB (New Development Bank) (2020) NDB prices USD 2 billion benchmark bond to further support Covid emergency response. Accessed 10 October 2020, https://www.ndb.int/press_ release/ndb-prices-usd-2-billion-benchmark-bond-support-covid-emergency-response/ Popkova EP, Delo P & Sergi BS (2020) Corporate social responsibility amid social distancing during the COVID-19 crisis: BRICS vs OECD countries. Research in International Business and Finance 55: 101315 Powanga LA & Giner-Reichl GR (2019) China's contribution to the African power sector: Policy implications for African countries. Journal of Energy 2019: 1–10 Shah SD (2020) Covid-19 and fiscal response by BRICS countries. Accessed 1 January 2021, https://www.researchgate.net/profile/Sachin_Shah14/publication/344979001_Covid-19_ and_fiscal_response_by_BRICS_countries/links/5f9b93aaa6fdccfd7b8a74c6/Covid-19-andfiscal-response-by-BRICS-countries.pdf Sidiropoulos E (2018) BRICS–Africa cooperation: Achievements and opportunities. Accessed 7 October 2020, https://media.africaportal.org/documents/GA_Th3_PB_ sidiropolous_20180719.pdf Song XJ, Xiong DL, Wang ZY, Yang D, Zhou L & Li RC (2020) Pain management during the COVID-19 pandemic in China: Lessons learned. Pain Medicine 21(7): 1319–1323 UN (2020) Financing for development in the era of COVID-19 and beyond. Accessed 5 December 2020, https://www.un.org/sites/un2.un.org/files/part_ii-_detailed_menu_of_options_ financing_for_development_covid19.pdf Zhang S, Wang Z, Chang R, Wang H, Xu C, Yu X, Tsamlag L, Dong Y, Wang H & Cai Y (2020) COVID-19 containment: China provides important lessons for global response. Frontiers of Medicine 14(2): 215–219

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Section 3 BRICS and Technology in Africa

8

The Future of Work in South Africa Krish Chetty

8.1 Background This study explores the relationship between social cohesion and technological advancement in South Africa. The linkages between these dimensions are discussed from the context of South Africa’s engagements in BRICS. Through engaging with study participants from the research and business sectors, this chapter identifies a set of policy drivers that may influence the country’s trajectory for economic and social transformation. Given South Africa’s high level of inequality, it may be unclear how advancing technological adoption can improve the living conditions of the poor. This chapter attempts to identify how the digital divide could be bridged to help grow the economy and enhance social cohesion. While the study participants had a pessimistic outlook for South Africa’s developmental trajectory, given the country’s experiences post-1994, they did point to various opportunities to reverse this trend and promote a competitive economy that is conducive to employment creation.

8.2 Introduction The COVID-19 outbreak and subsequent shutdown of economies worldwide have challenged the world to reassess which occupations are essential to their countries’ continued operation and survival. Due to the pandemic, working arrangements are undergoing substantial change. Workers from all sectors have been forced to carry out their roles under the threat of the coronavirus. To counter the threat, employers have been forced to rapidly digitise their business models. Those with digital access and skills have been better prepared for the transition, allowing workers to work from home or remain connected to colleagues and networks remotely. This rapid transition has deepened existing digital and social inequalities, and highlights the consequences of not addressing the drivers of inequality (Van Deursen 2020). The key link between productivity and inclusion during this period has been one’s digital capability, and this perhaps offers a solution to address future social inequalities. After the pandemic, technology will continue to advance at a rapid rate, requiring BRICS and the globe to reassess their policy priorities in light of the changes. In particular, low- and middle-income countries need to determine if their policies

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are preparing their populations to take advantage of technological change and to participate in the digital economy. In 2018, South Africa made a concerted effort to centralise the question of technological advancement during its presidency of BRICS. In that year, the BRICS Heads of State Summit was held under the theme ‘BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution’ (BRICS Heads of State 2018). Thus, South Africa emphasised three thematic priorities for the bloc related to inclusive growth, sharing in prosperity and the so-called Fourth Industrial Revolution (4IR) as termed by the World Economic Forum (WEF) (Schwab 2016). In 2018, the BRICS heads of state noted not only the benefits of technological advancement, but also recognised the challenges to society if nations were illprepared for these advancements. In light of this, the Partnership on New Industrial Revolution (PartNIR) was established to promote collaboration in all areas of BRICS economies affected by technological advancement (BRICS Heads of State 2018; 2019a). The need for sharing information and technology in this space requires BRICS to self-reflect and identify its strengths and weaknesses that will be affected by technological change. With this in mind, South Africa’s President Cyril Ramaphosa established the Digital Industrial Revolution Commission in 2018. The commission brought together policy-makers, business representatives, civil society and academics to identify relevant strategies, necessitated by technological changes, which are appropriate to the local South African context (Ramaphosa 2018). Public–private partnerships have been identified as essential policy vehicles to promote economic transformation while understanding the policy environment. This chapter provides insights that are valuable to the commission and fora such as the BRICS Think Tanks, which seek to project future scenarios for South Africa’s policy trajectory. Various government initiatives have been established to explore the impact of digitalisation on the South African economy. The Department of Trade and Industry (dti) established the Future Industrial Production and Technologies Unit, which examines the impact of digitalisation on the National Development Plan (NDP) and in light of the Sustainable Development Goals (SDGs) for 2030 (dti 2018). The Department of Science and Technology (DST) prioritised programmes to develop science, technology, engineering and mathematics (STEM) skills in the country (DST 2017), while the Department of Higher Education and Training (DHET) convened studies into emergent technologies (Gerber 2018). The Department of Telecommunications and Postal Services (DTPS) was managing the interdepartmental Digital Transformation Commission to reviewing policies related to digital transformation (DTPS 2017).

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With several initiatives at the national level, the BRICS countries are also accelerating their efforts in the area of digitalisation. The BRICS bloc established several initiatives in 2019, such as the Digital BRICS Task Force comprising representatives from BRICS communication ministries and the BRICS Institute of Future Networks Council (BRICS Heads of State 2019a). Given the numerous efforts in South Africa and across BRICS, it is crucial that the local context drives South African policy. The social context of the country differs substantially from those of the developed world. The study participants emphasised this point, noting that solutions for South Africa need to be based on local knowledge. The high levels of inequality and poverty in South Africa infer that the population does not equitably benefit from technological advancements. Thus, while it is debated if this is a 3rd, 4th or 5th Industrial Revolution, the social inequalities remain. In the world of work, the formally and informally employed, as well as the unemployed, experience digitalisation differently. Digital capital has not diffused equitably across society, with varied access to public and personal digital infrastructure or the accumulation of digital skills (Gillwald et al. 2018). With the rapid pace of technological advancement, South Africa needs to determine how this change is likely to influence social development in the country. Will greater reliance on technology further exacerbate inequalities or are there opportunities that the technology presents that could aid social transformation in this country? This study seeks to explore this question, recognising South Africa’s position within BRICS. The chapter reviews the relationship between technological advancement and social cohesion against the background of the COVID-19 pandemic and various challenges. It seeks to identify relevant policy drivers that will influence whether the country can attain a positive or negative outlook.

8.3 Methodology In preparing this chapter, the Delphi approach was adapted to allow both researchers and industry experts to share their views on a selection of relevant research themes in a structured manner. The study was performed with research partners in India, Tandem Research. Tandem Research identified the two central dimensions explored in this study: social cohesion and technological advancement. In projecting the expected future for South Africa, the study participants were asked to determine if they believed the country would reach a state of: (i) low social cohesion and low technological advancement; (ii) low social cohesion and high technological advancement; (iii) high social cohesion and low technological advancement; or (iv) high social cohesion and high technological advancement.

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Figure 8.1 Four scenarios: Social cohesion versus technological advancement

4. High social cohesion, high technology advancement

1. Low social cohesion, low technological advancement

2. Low social cohesion, high technological advancement

Social Cohesion

3. High social cohesion, low technological advancement

Technological Advancement Source: Author

A Google group was created to collect the responses of the participants. The participants were able to share their views on 10 open-ended questions and to comment on the answers of other participants. The 10 questions related to: i. the description of the world and South Africa in 2030; ii. an exploration of the country’s transition from its current circumstance to the outcome identified in the scenario; iii. a discussion of labour productivity in particular sectors; iv. an exploration of the potential disparities in the workforce to be experienced by 2030; v. an examination of employment conditions and how they will evolve by 2030; vi. a discussion of how the economy evolved; vii. an examination of worker policies required in such a scenario; viii.an examination of employer policies needed in such a scenario; ix. an exploration of the requirements of workers of the future; and x. a discussion of employer needs in 2030.

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The study was launched at a meeting of the Monitoring and Evaluation Community of Practice hosted by the Council for Scientific and Industrial Research (CSIR). This forum brought together experts from government, business and academia. In addition, policy researchers from the Human Science Research Council (HSRC), Global Economic Governance and Nelson Mandela University were invited to participate in the forum. To further the conversation, after inputs were received via the Google forum, an online question-and-answer session was held with all the participants to understand their inputs. The participants had an opportunity to revise their positions after listening to the views of other participants. These discussions were documented and contributed to the data collected during this study. The ideas described by the participants and discussed in this chapter have been described in the context of literature, including academic articles, policy reports and newspaper articles, supporting their respective arguments. At the outset of the discussion, it was expected that the study participants would favour one of the four conceptual scenarios pertaining to the social cohesion and technological advancement dimensions. Following the final question-and-answer discussion and data collection process, only two scenarios were deemed possible. These scenarios refer to either a positive or a negative outlook for the future. The positive outlook sees reductions in poverty, unemployment and inequality, with subsequent gains attained in technological advancement. The pessimistic scenario sees technological advancement further exacerbating social divides, worsening the triple threat of poverty, inequality and unemployment. These dimensions and the rationale for these scenarios are explored in the following sections.

8.4 Social cohesion in the context of BRICS For this study, a broad and inclusive definition is used when referring to the term ‘social cohesion’. The term is applied as a descriptor of all social conditions affecting the quality of life of South Africans. In this respect, it describes issues of poverty, inequality, unemployment, access to services, well-being, economic opportunities, effects of crime and trust/mistrust among the population. In order to understand the findings of the study, South Africa’s performance in terms of these thematic concerns is described in the context of BRICS. According to the World Bank, South Africa remains one of the most socially and economically unequal countries in the world, and among the BRICS countries, with a Gini-coefficient of 0.63 in 2017 (World Bank 2018). Furthermore, the UN Habitat Study identified that the top nine most unequal cities were in South Africa, with Gini-coefficients ranging from 0.75 in Johannesburg to 0.67 in Cape Town (UN Habitat 2010). Among the BRICS countries, six Brazilian cities featured in this list but with lower levels of inequality ranging between 0.61 and 0.5.

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At the national level, the economic growth of BRICS has continued despite challenges related to social and economic justice. When one compares average levels of inequality between the 1990s and early 2000s, income inequality increased in Russia, China, India and South Africa. Only Brazil showed decreasing levels of inequality, which many researchers believe was related to well-targeted social programmes introduced during this period. Bhorat and Van der Westhuizen (2012) argue that if the state is unable to address these challenges, the stresses experienced by the poor majority are likely to threaten the survival of South Africa’s democracy (Ivins 2013). South Africa’s inequality trends show an increasing division between the rich and poor. This division has roots in the country’s historical inequities and is due to an inability of the country’s policies to mitigate against the tide of worsening socioeconomic conditions (Bhorat & Van der Westhuizen 2012). Netshitenzhe (2013) argues that while it is crucial to monitor outcome indicators related to poverty levels and income inequality, one should understand how access to assets, services, opportunities and human capital influences such indicators. Poor households in South Africa (using the upper-bound poverty line) spend 64% of their earnings on basic needs such as food, shelter and mobility. The remaining 36% is directed to miscellaneous costs experienced by the household. Many are unable to save and are thus at risk of financial shocks (Stats SA 2017b). It is also important to recognise the relationship between internet access and income. Access to the internet is closely related to available income. When the South African population is stratified by their monthly income into five quintiles, one sees that 84% of those in the quintile with the highest income have access to the internet. Conversely, only 34.7% of those in the lowest quintile can access the internet (Stats SA 2017a). Given that poor households have less disposable income, the poor are forced to prioritise necessities over purchasing internet data bundles or digital devices. Table 8.1 Internet access per monthly income band Internet connection/South African household/Income band (ZAR) Below 1 500

34.7%

1 501–3 500

40.6%

3 501–7 500

56.6%

7 501–12 500

72.6%

Above 12 501

84.2%

Source: Stats SA (2017a)

Before COVID-19, South Africa’s rate of unemployment among young people aged between 15 and 34 years was recorded as 41% (Stats SA 2019). Throughout 2020, vulnerable people experienced additional hardships due to movement restrictions, likely worsening a bad unemployment situation. The National Income Dynamics

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Study showed that by April 2020, employment among their sample had decreased by a further 10% (Casale & Posel 2020). The continued and increasing high levels of unemployment highlight weaknesses in South Africa’s education system and the pathways young people follow to find work. This disjuncture perpetuates cycles of poverty and high unemployment (Spaull 2015). One of the perpetuating factors limiting economic growth is the concentrated nature of the economy. With low levels of competition in most areas of the formal economy, small businesses have found it difficult to enter the market and build successful enterprises. The corporate sector has greater control over the pricing of goods and services while dominating the market. This limited competition is most acute in the financial, retail, telecommunications, transport, insurance and manufacturing sectors (Pienaar 2017). These concerns have been raised by the Competition Commission, which has noted the high barriers to market entry (Ntingi 2017). Potential solutions for overcoming these challenges involve addressing competition regulations, organising consumers and scaling initiatives that aid the entry of new businesses to the market (Theron 2006). This array of interrelated factors is complex and contributes to a state of low social cohesion in the country. Those who have access to the internet or can derive benefits from new technologies are a minority with greater disposable income or financial means. Generally, those who are advantaged in this manner attended higher-performing schools, allowing them easier access to universities and finding more productive jobs (Spaull 2015). Subsequently, the poor majority, not accessing such schools or work, find themselves engaged in informal or semi-formal work. For digital innovations to have a more significant impact, accessibility to such products or services needs to be improved for the poor. Supposing that innovation is to be the catalyst for economic growth, policies need to be initiated that not only allow the young entrepreneur space, time and resources to use new technologies, but also provide the capacity to fail in their attempt at innovation (Blankley & Moses 2009; Francke & Alexander 2019).

8.5 Technological concerns in the context of BRICS Innovations built on the latest technologies require that the developers and the entrepreneur be well versed in the problem and in how the technology can be applied to produce the solution. Thus, the entrepreneur and developer require a strong foundation supported by relevant IT architecture and appropriate support procedures (Link 2018). Similar to Maslow’s hierarchy of needs, self-actualisation can only be attained when preceding needs are supported, such as physiological factors, issues of safety, belonging and esteem. In the innovation space, access to digital tools, networking capabilities, network security and the ability of skilled workers to engage with fellow innovators are needed to inculcate an innovative environment (Link 2018).

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Technology adoption in the home tends to outpace technology adoption in the workspace. Changing existing business models tends to be more difficult. Thus, the entrepreneur that can leverage the benefits of the tool is better positioned to disrupt the market (Hinchcliffe 2014). This lag time before adoption also allows businesses a short period to assess the value of the technology application and identify potential use cases. The shift in technologies also leads to challenges in acquiring suitably skilled human resources who can develop in the technology domain and operate the new product or service. In brief, to enable innovations, access to infrastructure and skilled human resources are vital. The WEF released the Network Readiness Index in 2016, with South Africa placed in position 65 out of 139 ranked countries. South Africa’s score of 4.2 out of 7 was underpinned by strong performance in cellular network coverage, but was curtailed by the weak social impact of such services (WEF 2016). While South Africa’s urban areas are well covered, the use of this infrastructure to access the internet is limited. The Independent Communications Authority of South Africa (ICASA) reported that only 9.5% of households had internet access. In comparison, 59% of households had at least one member of the household who was able to access the internet, be it at work, in a library or in an internet café (ICASA 2018). Comparatively, using data reported by the International Telecommunications Union (ITU), internet access grew steadily across other BRICS countries. India had proportionally the lowest percentage of its population that could access the internet, with a reported 34% in 2017. Russia performed the strongest, with 76% of its people able to access the internet. The ITU also reported that 56% of South Africans had internet access. Across BRICS, access to the internet was most common by using mobile technology. At the same time, broadband internet access was limited (Klapper et al. 2018). Figure 8.2 Percentage of population accessing the internet (2000–2017) 80 70 60 50 40 30 20 10 0

Brazil

Source: Klapper et al. (2018)

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Russian Federation

India

China

SouthAfrica

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

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2012

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While mobile internet access gives innovators the opportunity to access technology without the installation of expensive network cabling, the cost of mobile internet access is a limiting factor (Hawthorne & Grzybowski 2019). As noted, the majority of low-income households has limited disposable income, curtailing their purchases of internet data bundles. The Alliance for Affordable Internet assessed the costs of mobile data bundles in 2019. It noted the comparatively high costs of mobile internet access in sub-Saharan Africa and South Africa in particular (Alliance for Affordable Internet 2019). Countries where mobile internet costs were cheaper tended to be those with healthy competition in the broadband market. Suppose that regulatory bottlenecks related to the use of the spectrum and the awarding of mobile operating licences were to be removed. In that case, greater competition would possibly enable reduced costs in South Africa (Gillwald et al. 2012). Comparatively, South Africa also has some of the highest costs in Africa for mobile internet access, with data bundles generally cheaper in countries such as Ethiopia, Kenya and Egypt (as highlighted in Table 8.2). Table 8.2 Average cost of mobile data bundles in a selection of countries in US$ (2019) 100 MB

500 MB

1 GB

2 GB

5 GB

10 GB

Brazil

9.83

9.83

9.83

9.83

13.47

16.38

India

0.43

0.51

0.75

0.75

1.46

2.86

China

5.57

5.57

5.57

8.5

12.9

20.23

South Africa

2.02

6.25

10.37

14.91

28.18

42.09

Ethiopia

3.13

3.13

3.48

6.61

14.7

24.34

Kenya

1.48

2.61

4.19

4.94

9.88

19.75

Nigeria

2.78

2.78

2.78

3.33

9.72

13.88

Egypt

0.29

0.59

1.18

2.35

4.71

8.82

Source: Alliance for Affordable Internet (2019)

Over time, more government services become available online. Certain services conducted in person are supplemented with online services, including filing one’s tax returns, registering a car, renewing one’s driver’s licence or purchasing credit for electricity consumption (McKinsey & Company 2014). These services support efficiencies but do not equitably benefit all of society due to the internet access constraints mentioned earlier. South Africa is also a net importer of Information and Communications Technology (ICT) goods and services. Net importation increased by 100% between 2014 and 2017 (DTPS 2017). This increase highlights the limited competition and supply of ICT services in the South African market, forcing businesses to procure international support. Such imports further increase the costs of such services. With technological advancements in the manufacturing sector, only a few South

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African operators experience the gains associated with such advancements due to the limited competition (Camarate 2018). Digital transformation leaders in the country also struggle to innovate and build new solutions due to the limited choices they have in terms of product/service consumption (Camarate 2018). To innovate in this environment, PricewaterhouseCoopers believes that it is essential that South African business models clearly outline how their strategic, operational, technological and human resources intersect and propel the business forward (Camarate 2018). The Centre for Competition Regulation and Economic Development believes that digital transformation can occur if policy-makers carefully inspect all the industries in the economy. By identifying the root industries driving economic growth, targeted interventions can be made to revitalise their use of technology and innovation practices (Mondiliwa 2018). Arguments have also been made in favour of prioritising the manufacturing sector by promoting industrialisation. Such an effort may undo years of de-industrialisation, where greater emphasis was placed on the services sector (Ngulube 2014). The BRICS heads of state have declared that knowledge sharing and partnerships are pivotal for developing new technologies and innovations that will collectively propel the bloc forward (BRICS Heads of State 2019b). Cross-sector knowledge sharing has also been reported as key to the development of technical and entrepreneurial skills. With knowledge sharing, weaknesses can be identified that may be resolved through revisions to regulations, improved data analysis or greater incorporation of STEMbased knowledge across all sectors (Mondiliwa 2018). As new policies are developed to leverage technological advancements, the critical question is: Who will benefit from the intervention? For innovation promotion to result in the growth of the local economy, the capacities of local entrepreneurs must be developed in order to position them to have the skills and facilities necessary to compete in the market. Well-placed investments enable innovation to flourish and grow the economy. In the following section, the primary policy drivers that will influence South Africa’s growth trajectory are outlined. These are based on recommendations made by the study participants.

8.6 Findings: Policy drivers 8.6.1 Policy coherence South Africa’s post-1994 history of neoliberal economic policies was described mainly as unconstructive by the study participants. Further support is needed to promote digital inclusion, education and skills development. The participants argued that the state should explore progressive alternatives to neoliberalism such as

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Keynesianism, real socialism or a 21st century approach to socialism as described by Manuel and Luna (2007). Whichever policy approach is chosen, policy-makers must guard against workforce exploitation and pursuing profits. Redistributive policies are needed that address the most pressing social concerns identified through the collection of empirical data. In South Africa’s governance system, the multiple spheres of government disaggregated by department and agency have resulted in a mechanistic government structure. Due to the rigidity of this form of organisational structure, it will be difficult for the state to respond to technological advancements in an agile manner or to embrace innovation (Tohidian & Rahimian 2019). To ensure coordinated policy implementation, the study participants emphasised the need for each state actor to understand their mandate clearly. This coordination is critical to minimise duplicated mandates shared by state actors. Coordination and knowledge sharing are vital for ensuring that related organs of state cooperate when their mandates align. Policy also needs to be developed holistically by applying both the top-down and bottom-up approaches to policy-making. When designing policy from the top down, the policy framework must identify each actor, their mandate and the manner of collaboration. From the bottom up, the policy must identify interventions that are valued at a community level. Community and cross-sectoral engagements will be critical for promoting knowledge sharing. The core focus areas for policy development include innovation promotion, regional integration, reducing the barriers to market entry and supporting the greater industrialisation of the manufacturing sector.

8.6.2 Access to digital infrastructure South Africa’s NDP discusses the need to transition towards an inclusive knowledge economy (National Planning Commission 2011. The Integrated ICT White Paper of 2016 describes a future built on a connected society (DTPS 2016). These connections are dependent on communications infrastructure, which is essential for greater digital inclusion across society. This infrastructure provides the foundation for the development of services and applications that produce content and data. The study participants argued in favour of developing applications and services that are consistent with the digital capability of the poor. Recognising that a large portion of the poor operates feature phones that only access the second-generation cellular network, it is important to expand the service offerings made available by using this form of technology. The Unstructured Supplementary Service Data (USSD) interface was identified as a means to aid communication in a cost-free and inclusive manner. The growth of the MPesa application in Kenya and subsequent promotion of financial inclusion through the USSD platform was cited as a key reason for recommending this form of technology (Hanouch 2015). The study participants

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further recommended that the state should prioritise the allocation of the spectrum to allow network operators to access a broader share. This increase in access is expected to decrease the costs of internet access and provide more South Africans with access to high-speed internet (Banda 2020). If the issues of digital exclusion remain, it is expected that the formal economy will gradually shrink while the informal economy will expand. This expanded informal economy is disconnected from the online world, allowing the widening of the digital divide. South Africa’s high level of inequality already shows signs of such disconnection. When respondents to the General Household Survey in 2015 who did not access the internet were asked why they did not use the internet at home, 33% indicated that they had no interest in doing so and that the internet held no relevance in their lives (Stats SA 2017a). Other reasons were related to the costs of internet access and a lack of digital skills. The limited awareness about the potential benefits of digital inclusion emphasises the need to bridge the digital divide and promote digital inclusion.

8.6.3 Digital skills development Developing the digital skills of the population was identified by the study participants as a strategy to promote digital inclusion. The training required for skills development should be tailored to the needs of communities and be consistent with the skills valued by employers. The participants argued that if the supply of digital skills was not addressed, South African businesses were in danger of becoming less innovative, competitive and productive. Ultimately, a decreasing level of digital skills among the workforce will force employers to import such skills, further shrinking the local economy. There are potential entry-level employment opportunities that require basic digital skills, which could facilitate access to the labour market for low-skilled workers. Building such skills could assist in addressing the challenges of unemployment. The core sets of skills that should be developed fall into five areas of competency, including information access, computer operations, navigating and producing media content, and understanding technology (Chetty et al. 2018a). In addition to developing competencies in these areas, it is important to expand the depth of training, allowing trainees to progress from entry-level literacy to mastery of these skills. At the same time, while advancing their skills, it is important to build their understanding of the technical operation of the tool; the cognitive aspects of how a particular device or service works; and the ethical dimension of understanding the appropriate use of the technology (Chetty et al. 2018b). While digital skills are multidisciplinary, it is also important that workers learn to apply their skills in different contexts. Workers who can transition between sectors are more likely to identify areas of improvement or opportunities for disruption.

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Incentivising the mobility in the workforce will also help guard against their skills becoming redundant over time due to technological advances. An agile workforce that can be reconfigured in the face of change will become more resilient. Digital skills development may offer that opportunity to promote skills transferability, as they have been described as falling into the ‘T-shaped individual category’. These are transversal skills applicable in multiple sectors (European Commission 2011).

8.6.4 Influence of socio-cultural norms The study participants argued that socio-cultural norms have a strong influence on technology adoption and usage at a community level. Such concerns need to be factored into the design of digital policy programmes. These factors have been shown to affect the manner in which training programmes are conducted given the varied expectations of men and women. Statistics have emphasised the digital gender divide, which affects women’s usage of new forms of technology (OECD 2019). Policy-makers need to be aware of the impact of entrenched social norms that are expected at the community level. Community taboos have a significant impact on the lives of people. For example, where men predominantly attend training facilities, women wishing to participate in such programmes are sometimes viewed as promiscuous. Thus, women have fewer opportunities to expand their skills sets (Chetty et al. 2018a). These biases result in women and young girls experiencing higher levels of anxiety when accessing and operating digital tools. Ultimately, these additional stresses result in fewer women completing studies in STEM fields and curtail their opportunities to benefit from digital transformation (OECD 2019). In addressing these biases, training programmes must be designed in a manner that is sensitive to the needs of women. For example, it is essential to recognise the time-poverty experienced by women. Often, due to cultural norms, women may be expected to complete household chores before attending the training. In such circumstances, scheduling these programmes at convenient times may overcome such a barrier to access (ADB 2015). The W20 engagement group of the G20 developed a set of policy recommendations to advance digital inclusion among women. The study participants shared these views. Policy programmes require detailed monitoring and evaluation strategies to collect information about the beneficiaries of the programme which is disaggregated by gender. This level of detail will allow policy-makers to refine interventions promoting the inclusion of women in such efforts. Also, it is important to ensure that the programmes (which advance access to the internet and digital services) promote accessibility, affordability, and safety of such services and content (Sibthorpe et al. 2018).

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8.6.5 Recognising the value of the data Data have been described as the oil that fuels the 4IR. In terms of benefiting from technological advancement, the study participants emphasised South Africa’s need to promote its capabilities related to the extraction, storage and analysis of data. The creation and exploration of data allow for the identification of new patterns and associations in society, which can be leveraged and transformed into innovations (WEF 2019). New insights derived from data analysis are contributing to new efficiencies and innovations across the economy. For example, the agricultural sector benefits from data trends about crop yields, soil quality and various factors that influence their business model (Andrade et al. 2014). These insights provide opportunities for entrepreneurs to disrupt existing industries. Platforms such as Amazon and Alibaba have built their businesses on data-driven innovations, revolutionising practices in the retail and supply-chain industries (Webb 2016). Moretti (2012) describes the multiplier effects of innovation and job creation. The analysis of data can lead to new insights that yield potential advancements in the form of direct job creation. Together with these jobs, indirect jobs are created by supporting those engaged in direct work. For example, in 2012, Apple employed 12 000 people in Cupertino but these positions were supported by 70 000 indirect jobs in professions such as those for lawyers, teachers, waiters and hairdressers (Moretti 2012). However, the effects of digital exclusion are more involved and do not only pertain to the limited access to digital devices. It also creates gaps in the big data produced that describe these patterns in society. While those with digital devices are measured and are likely to benefit from the limitless potential of innovation, the disconnected population is not counted (White & Pinsky 2018). Thus, without innovative methods to collect data on this group of society, innovations will not be targeted to the needs of the offline community, who are predominantly from low-income households (McKinsey & Company 2014). The study participants recommended that to become a leader in innovation, the country should invest in data-intensive occupations across all industries. The opportunities for innovation are likely to grow, given that the majority of data gathered through sensors associated with the Internet of Things remains unstructured and unused. The unstructured data have an unknown layout, content and meaning. There is a great need to systematise such information to develop new insights for future disruption and innovation. Furthermore, such data are growing exponentially, highlighting the mass of untapped innovation potential (Azad et al. 2020). These professions will be able to examine business problems, complex challenges and develop appropriate solutions. In future, there is further scope for data scientists to continue to specialise their skills in this field (Shah 2019).

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8.6.6 Balancing the manufacturing and services sector The study participants argued that it would be important to guard against buying into a leapfrogging narrative that promotes digital services over physical services. The digital service alternative can often be inaccessible to the poor or may provide a watered-down version of the physical service. Relying on such services will act to disenfranchise the poor further. Instead, it is recommended that South Africa should learn from past Chinese and Indian economic models. In brief, China invested heavily in manufacturing, providing new employment opportunities, and absorbed much of the workforce who were mostly poor with little formal skills (Brandt et al. 2016). The flourishing manufacturing sector in China led to the formation of indirect service sectors that supported those engaged in the manufacturing sector (China Services Sector Analysis 2011). By contrast, in India, the state promoted the online services sector while neglecting to invest in infrastructure and manufacturing. The country’s weak infrastructural backbone has been cited as a cause of many of the current economic challenges in the country (Viswanathan 2017). South Africa needs to expand its means of production. By promoting the manufacturing sector, it is believed that the country will be in a better position to benefit from economic growth driven by technological advancements. Developing the manufacturing sector, instead of exporting the country’s resources, has long been identified as a pathway for South Africa’s sustainable development. This initiative may require the introduction of state protections for fledgeling businesses entering the market. Historically, South Africa introduced state subsidies to stimulate the growth of the domestic manufacturing sector. Promoting free trade in this context may be detrimental to South Africa’s infant industries, despite the World Bank’s recommendations in favour of such policies (Schneider 2000). Deloitte believes the primary driver for developing the local manufacturing sector is to promote skills development, arguing that the competitiveness of the sector will depend on talent-driven innovation. To take advantage of the incentives introduced by the dti, Deloitte recommends that businesses and investors should carefully examine the state’s incentive policy to ensure that they can benefit from such provisions (Deloitte 2013). The core argument made by the study participants was to establish a central foundation for employment for the South African economy. Given the high numbers of unemployed people with limited skills or digital skills, in particular, the state must initially promote labour opportunities targeted to the needs of the majority, seeking work. Developing the manufacturing sector will assist in absorbing the unemployed, which will contribute to the expansion of the services sector indirectly.

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8.6.7 Labour protection The study participants highlighted the limited impact that trade unions in South Africa have had in curtailing the government’s adoption of a neoliberal policy agenda. This trend needs to change, as the trade unions will have a vital role to play in demanding additional protections for workers engaged in the digital economy. The gig economy is expected to produce more work in the form of short-term contracts (Lepanjuuri et al. 2018). Consequently, work is likely to become more precarious due to digitalisation, and revisions to labour legislation and policy are needed. The legal definitions of employer and employee in this economy are vague at present, allowing platforms to treat workers as independent contractors who have little collective bargaining powers or ability to challenge rulings of the platform that influence their rate of pay or access to work (Collier et al. 2017). Platform-based work also requires the worker to assume greater risks and costs when carrying out their roles. These risks and costs are experienced during travel, paying higher insurance premiums, and in the costs of consumables required for their work (Allaire et al. 2019). Given the pace of change of the digital economy, these loopholes in policy need to be addressed to provide workers with greater security and counter the challenges of precariousness they face in the new economy.

8.6.8 Financial technologies Promoting greater financial inclusion is a promising strategy to build the resilience of the low-income population of South Africa. From a macro perspective, increasing the level of savings across the population will support opportunities for economic growth. As greater numbers of people become formally banked, they will have a better chance of accessing work in the formal sector. With more people engaged in the formal economy, South Africa will be able to increase its taxable revenue base (Jha et al. 2014). These views are supported by the World Bank, which describes the impact of increased financial inclusion in terms of poverty alleviation and growing prosperity (Uddin et al. 2017).1 In advancing financial inclusion, various factors need to be addressed, including decreasing transaction fees, reducing the distance to access a bank and developing financial products that address the needs of the poor (Ardic et al. 2011). Financial technologies have begun to disrupt the available traditional banking product offerings. These new entrants to the market, when developed in line with the interests of low-income consumers, have shown potential in providing low-cost financial services targeted to the poor. However, these entrepreneurs have also experienced challenges related to the concentrated financial sector in South Africa, making it difficult for new entrants to access the market. Arguments have been in favour of relaxing the regulation restrictions for banking licences, proportional to the level of risk these new entrants pose to the market and their clients. This policy was adopted in China, which has seen positive results in expanding competition in the financial services sector (Yew & Talib 2018).

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8.7 Conclusion With the acceleration of digitisation across the world, policies need to be revised rapidly, understanding the impact of these broad changes to the economy. Given the slow pace of change in South Africa to date, the study participants held mainly a pessimistic view of the future. Many argued that there is insufficient political will to change the country’s economic policies. It is feared that technological advancement is likely to exacerbate the effects of inequality and expose the weaknesses of the government and its policies. Among the BRICS countries, new efforts to promote knowledge sharing and collaboration through initiatives such as the PartNIR or the Digital BRICS Task Force are providing opportunities to build the knowledge economy. Knowledge sharing is widely cited as critical to promoting an innovative environment, which is needed to grow the economy. These initiatives at a national level need to be supported with efforts at subnational, business and people levels to promote a broader sharing of ideas. This chapter has outlined the key policy drivers that experts in South Africa believe need to be leveraged to allow South Africa to transition to a state of high technological advancement coupled with a form of high social cohesion. Achieving this scenario will be a difficult task if one considers that, since the advent of a democratic South Africa, the country has failed to counter the trends of inequality. However, to achieve the goals established in the country’s NDP for 2030 and beyond, economic policy must be focused on developing opportunities for the poor. Policies are needed that will expand South Africa’s digital capital through investments in public infrastructure that make digital connectivity more accessible and cost effective. These investments need to be coupled with developing the education system to ensure that the school and higher education sectors provide learners and students with training valued by employers. Furthermore, digital skills need to be integrated into these forms of education. These skills are essential to access new forms of entry-level employment. Beyond infrastructure development and education-centric policies, there is a need for the state to expand further and develop the domestic manufacturing sector. This expansion is expected to transform the economy, allowing South Africa to become more self-reliant. Businesses need to also better understand the available incentives offered by the government to take advantage of some of the subsidies made available for expanding the manufacturing sector. Together with advancing financial inclusion and ensuring that suitable protections are in place for the labour market, these initiatives will help to build the resilience of the worker and provide them with a framework of support. Despite the existing pessimistic outlook, there are opportunities for South Africa to reach the preferred state of technological advancement and social cohesion. These concepts need not be mutually exclusive; and it is believed that with the right balance of economic policies, new technological advancements can, in some instances, catalyse economic development and address some of the social disparities experienced not only in South Africa, but across BRICS.

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Financing Renewable Energy Technologies in BRICS Kamleshan Pillay, Cyril Prinsloo, Jaya Josie, Frank Naidoo and Krish Chetty

9.1 Background As the BRICS countries strive to promote sustainable economies, they also prioritise equitable economic growth. The energy sector is a crucial driver for BRICS to transition to sustainable economic growth. Traditionally, the BRICS countries depended on fossil fuels to generate electricity, including coal, natural gas and oil. However, the transition to renewable energy (RE) has become an important policy priority for BRICS. A significant obstacle to pursuing a diversified energy mix consistent with climate policies such as nuclear, shale gas, coal and RE is the availability of sustained capital flows. However, the BRICS bloc has signalled its interest in transitioning from fossil fuels to RE sources. Financing of this transition to renewable energies has been a primary challenge limiting the diversification of BRICS’s energy mix. The lack of funding causes concerns over the economic feasibility of such energy projects. Investors are also deterred from projects not located in areas with supportive policies on renewable energies. This chapter describes potential strategies to overcome these two barriers that may promote increased investment in the RE sector and offers recommendations to policy-makers across BRICS.

9.2 Introduction Domestically, each of the BRICS countries has made concerted efforts to increase the uptake of RE. This has been done through national planning and creating a more enabling policy environment for green economic growth. Various economic incentives have been offered in the BRICS countries to drive growth in their respective RE industries. In 2015, the BRICS countries also became global investors in RE, with all the members (excluding Russia) among the global top 10 RE investors (McCrone et al. 2016). South Africa has made significant strides in changing its electricity generation make-up by introducing nearly 10% of generation from RE sources, particularly wind and solar resources. Through its Renewable Energy Independent Power Producer Procurement Programme (REI4P), it procured more than 6 300 megawatts (MW) of renewable electricity, created 110 000 employment opportunities and attracted nearly R200-million-worth of investments in South

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Africa (Eberhard & Naude 2017). In addition to RE procured, jobs created and investment attracted, the REI4P had other positive impacts. South Africa has created a burgeoning RE manufacturing sector by introducing local content requirements into the programme. Yet, an analysis of South Africa’s nascent RE manufacturing sector and RE market factors indicates scope to grow this sector. The rapid expansion and resurgence of the RE sector in BRICS was largely due to the bloc’s commitment to reduce carbon emissions. This expansion is in line with member countries’ international obligations, recognising that China, India and South Africa are the biggest producers of carbon emissions in their regions because of their use of coal for electricity generation. South Africa, India and China are the predominant users of coal for energy production, while Russia possesses large known coal reserves that could be exploited should its gas reserves not be economically viable in future. In 2014, coal accounted for 93% of electricity generation in South Africa, 75.1% in India and 72.6 % in China (Figure 9.1) (World Bank n.d.). As a result, China, India, Russia and South Africa were in the top 10 globally in coal mining production. Among the BRICS countries, South Africa – like China, India and Russia – also has large endowments of recoverable coal reserves. After the US, Russia has the second-largest coal reserve, followed by China. India has the fifth-largest reserve, while South Africa is in seventh place globally (World Bank n.d.). One of the main reasons why economic growth decreases emissions in Brazil and Russia is because both countries are less dependent on coal as a source of energy production. Notably, Brazil has an ample supply of hydroelectric power and Russia depends largely on its abundant natural gas reserves. To limit temperature increases to 2°C, investment in low-carbon power generation and energy efficiency must increase by between 3 and 7 times (IEA 2015). This intervention will require an additional investment of between US$780 billion and US$2.3 trillion by 2035 (IEA 2015). There is general agreement within the research community that limiting global mean temperature increases will be determined by the actions of BRICS and other emerging economy coalitions. One of the major outcomes of the 16th session of the Conference of the Parties (COP 16) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Cancun in 2010 was the need to mobilise at least US$100 billion per year by 2020 through the Green Climate Fund (GCF). This outcome was endorsed by the member states at the BRICS Summit and cited as critical in implementing and financing climate change action. Despite this high-level acknowledgement from BRICS, there is still a high degree of uncertainty on whether the pledges for the GCF will be realised. By 31 July 2020, the GCF had raised US$10.3 billion from 40 developed and 9 developing countries (GCF1 n.d.). With this gap in financing, vulnerable countries remain at immediate risk of climate threats such as droughts and rising sea levels, while climate adaptation and mitigation projects remain underfunded (Mattar et al. 2019; Hogan 2019).

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This chapter explores how the BRICS countries have responded to the call to expand RE projects in order to determine whether their actions are of a suitable scale to achieve agreed-upon international climate change targets. In the following two sections of this chapter, we discuss the transition to RE in BRICS countries and the financing of clean technologies to produce carbon-neutral electricity. Finally, in the conclusion, we make some proposals for energy policy in BRICS.

9.3 Energy and BRICS 9.3.1 Transition towards clean technologies for energy in BRICS China, India and South Africa are dependent on coal for electricity generation. In 2012, 81% of electricity in China was generated through coal production, followed by 68% in India and 95% in South Africa (World Bank n.d.). Despite a low ranking among its BRICS partners, South Africa is the 12th largest carbon dioxide (CO2) emitter globally and is responsible for half the emissions from the African continent. Furthermore, South Africa’s largest energy resource is coal, and the country has domestic and export supplies sufficient for 200 more years. By 2018, coal dependence remained high in South Africa at 72%, followed by 64% in China and 59% in India (Ritchie & Roser 2020). The power sector in South Africa is responsible for 48% of emissions. Coal accounts for 77% of fuel demand and for 95% of the input in electricity production (DMRE n.d.; Carbon Brief 2018). The coal industry employed approximately 95 000 direct workers in 2019, according to the Minerals Council of South Africa (2020); it contributed about 1.8% to the country’s low GDP growth of 0.8% in 2018, in an economy with an official unemployment rate above 25% (Minerals Council of South Africa 2019; Stats SA 2018a; Stats SA 2018b). Given the abundant coal reserves in BRICS and the increasing energy demand, BRICS will continue to depend on coal for the foreseeable future. With the secondlargest global reserves and increased demand from China, Russia has already committed to increasing coal output to 30% by 2030 (Ministry of Energy of the Russian Federation 2010: 18–23). Globally, coal dependency remains high, with South Africa leading, in terms of emissions intensity due to coal, among the G20 nations (Climate Transparency 2019a: 7). Coal accounts for approximately 30% of the G20’s primary energy supply, remaining at relatively constant levels since 2012 (Climate Transparency 2019b). Reports indicate that since 2008, coal represents about 40% of global energy consumed and is the main contributor to world energy demand (IEA 2019: 10–12).

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9.3.2 Energy sources in BRICS and Africa BRICS has tried to address related energy security challenges. Cooperation on energy has been a priority for the BRICS bloc since its first meeting in 2009, with the Yekaterinburg Declaration noting: We stand for strengthening coordination and cooperation among states in the energy field, including amongst energy producers and consumers and transit states, in an effort to decrease uncertainty and ensure stability and sustainability. We support diversification of energy resources and supply, including renewable energy, security of energy transit routes and creation of new energy investments and infrastructure. (BRIC Heads of State 2009: para. 8) This call for cooperation on energy was further strengthened by the BRICS Think Tanks Council’s report entitled ‘Towards a Long-term Strategy for BRICS’, highlighting various areas for cooperation among the BRICS countries. To foster competitiveness and complementarity among the member states, it recommends cooperation in the energy sector. The document highlights: While bearing in mind that fossil fuel remains one of the major sources of energy, BRICS reiterates the belief that renewable and clean energy, research and development of new technologies and energy efficiency can be important drivers to promote sustainable development, create new economic growth, reduce energy costs and increase efficiency in the use of natural resources. (BTTC 2015: 86) Globally, and within the BRICS countries, substantial RE investment programmes are underway. This is being done through national planning and creating a more enabling policy environment for green economic growth. Various economic incentives have been offered in the BRICS countries to drive growth in their respective RE industries. Despite China’s significant reliance on fossil fuels, it is also a leader in RE generation and equipment production (South African Cities Network 2017: 81–90). In Germany, a country recognised as a staunch advocate of renewable energies, coal remains a crucial energy input in the short to medium term through imports from Russia (Wettengel 2020). Thus, the abundant supply of low-cost coal will be an attractive and cost-effective energy production input despite its high contribution to sulphur dioxide emissions (90%), dust emissions (70%), nitrogen oxide emissions (67%) and CO2 emissions (70%) (Cook & Lloyd 2012). This dependency on coal poses a threat to the environment, requiring investments that mitigate against the effects of using this cheap fuel. Clean technology investment is one of the most effective methods to reduce coal-based emissions. In addition, for sub-Saharan Africa in particular, clean technologies in the use of coal must be seen as part of a transition strategy towards mobilising alternative sources of energy such as natural gas, hydropower, and solar and wind power (Nxumalo 2019).

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South Africa’s energy strategy is captured in the Integrated Resource Plan (IRP) for Electricity, including a mix of coal, RE, natural gas from shale, nuclear and hydroelectricity (DoE 2011: 6–23). Coal, nuclear, shale gas and hydroelectricity are the main sources of base-load electricity, with coal being the cheapest. For RE, sub-Saharan Africa has abundant exploitable solar, wind, natural gas, hydroenergy and geothermal energy sources. However, the 2014 Africa Energy Outlook reported that over half of Africa’s 90 gigawatts (GW) of on-grid power generation capacity was produced in South Africa. 45% of this generation capacity was sourced from South Africa’s coal, 22% from hydro and 17% from oil sources across the continent, and 14% mainly from Nigerian gas (DoE 2011: 13–16, 56, 57). Despite investment interest in solar and wind energy, sub-Saharan Africa requires more investment to develop alternative sources such as hydropower or gas reserves. Within 25 years, sub-Saharan Africa could surpass Russia in natural gas supply, expecting to produce 175 billion cubic metres per year by 2040 (DoE 2011: 13–16, 56, 57). Much of this can be produced in the Southern African Development Community (SADC) region, with Mozambique, Nigeria, Angola and Tanzania having been earmarked for potential supply opportunities. In addition, South Africa is already involved in Mozambique’s natural gas programme. Across Africa, there is opportunity to develop hydroelectric production capacity, with the highest untapped potential worldwide. Globally, Africa accounts for 17% of hydropower supply, producing 37 GW but only using 11% of its capacity (Redd n.d.; International Water Power & Dam Construction 2020: 42–60). Hydropower remains an attractive investment opportunity, given its low average cost of electricity generation compared to other energy sources. Thus, the low level of investment and exploitation of these resources is surprising, given the potential large-scale development and impact (IEA 2014: 13–16, 56–57). There are opportunities for BRICS countries to invest in SADC countries with untapped hydropower potential, such as the Democratic Republic of the Congo (DRC), Lesotho, Mozambique, Namibia, Angola and Zimbabwe. In terms of hydropower production in SADC, the predominant investment focus has been the Inga III (4.8 GW) and Grand Inga (44 GW) projects in the DRC. Through the BRICS New Development Bank (NDB) and other multilateral development banks (MDBs), BRICS countries can enter into financing partnerships to invest in such energy sources (Bullock & Hülsmann 2015: 42–60). Energy security, which is a significant concern in Africa, could be managed through increased nuclear energy installation. According to Campbell (2018), 20% of South Africa’s population still do not have access to electricity. Acknowledging that future nuclear energy plans must be reliable, safe, clean and provide affordable power, nuclear sources complementing renewables could offer a solution to the ageing coal-fired power plants. However, despite the inclusion of nuclear sources in the government’s energy plans, the installation of the new build has been complicated.

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One of the major inhibitors to implementing nuclear energy systems is the constant notion that renewables cannot complement nuclear energy. According to Kilian (2018), if nuclear is to be integrated into the energy mix, it is essential that financing, technology and communications be adapted. Killian (2018) also notes that the significant initial capital costs should not be a deterrent, as the operating and maintenance costs can be affordable once a facility is built. Figure 9.1 BRICS energy consumption by source (2018)

South Africa

China

0.4% 0.8% 0.5% 0.0%

72.8%

3.2% 0.1%

22.3%

0.5% 0.9% 1.1% 0.3% 3.5%

India

64.1%

8.2% 21.6%

0.3% 0.4% 0.7% 0.3% 1.6%

59.0%

6.5% 31.2%

0.0% 2.6% 0.0% 0.0% Russia

13.2%

58.7%

2.5% 0.1% 0.6% 1.9% 2.1% Brazil

0.0% Solar

22.9%

7.3%

14.2% 11.4%

10.0% Nuclear

Source: Ritchie & Roser (2020)

160

20.0% Wind

62.4% 30.0% Other renewables

40.0% Coal

50.0% Natural gas

60.0%

70.0%

Hydro power

80.0% Oil

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9.3.3 RE trade and investment in BRICS South Africa’s nascent RE manufacturing and services sector can benefit from intraBRICS cooperation. All the BRICS countries have shifted their focus and policies to more sustainable sources of electricity generation, as highlighted earlier. This shift has resulted in burgeoning manufacturing hubs in these technologies. A macrolevel overview of the solar and wind manufacturing value chains across the BRICS countries illustrates the complementarity of these value chains. Table 9.1 highlights several areas in which BRICS countries can cooperate, specifically in polysilicon, ingot and wafer production. It indicates that production capacity for these products exists in India and China, but not yet in South Africa, Brazil and Russia. At the same time, while the other BRICS countries have well-developed wind turbine manufacturing sectors, South Africa does not. However, it does have the capacity to manufacture blades, gearboxes and turbines (Climatescope 2015). Cooperation in this regard can focus on knowledge sharing, investment and/or trade. Table 9.1 Solar and wind value chains in BRICS Sector

Value chain segments

B

R

Solar

Balance of plant

✓

✓

I

C

S

✓

✓

✓

Availability Cells

✓

✓

✓

✓

Engineering

✓

✓

✓

✓

✓

Inverters

✓

✓

✓

✓

✓

Modules

✓

✓

✓

✓

✓

Operation and maintenance

✓

✓

✓

✓

✓

Project development

✓

✓

✓

✓

✓

✓

✓

Polysilicon/Ingots Wafers Wind

✓

✓

Balance of plant

✓

✓

✓

✓

✓

Engineering

✓

✓

✓

✓

✓

Operation and maintenance

✓

✓

✓

✓

✓

Project development

✓

✓

✓

✓

✓

Towers

✓

✓

✓

✓

✓

Blades

✓

✓

✓

✓

Gearboxes

✓

✓

✓

✓

Turbines

✓

✓

✓

✓

Source: Climatescope (2015)

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Currently, China is the largest solar photovoltaic (PV) manufacturer globally, accounting for more than 60% of total global production. Moreover, China has emerged as a global leader in PV production, offering PV modules at 30% lower cost than similar models from the EU and Japan (Sager 2014). However, planned investment in PV manufacturing in other BRICS countries is ramping up considerably, with India, Brazil and Russia within the top 15 countries (Figure 9.2). Figure 9.2 Total PV manufacturing capacity announcements by country (2016, Megawatts) 18 000

17 040

16 000 14 000

13 155

12 000 10 000 8 000 6 000

5 200

ia

er th O

ss Ru

nd

505

160

et

he

rla

oc

200

s

co

220

N

m

an

y

an Ir

er G

a ra

bi

SA

iA

a

an iw

re

Ta

Ko

U

ud Sa

So

ut

h

an

d

sia

ail

ya ala

M

Th

m

a

na et

in

a

Vi

Ch

di In

360

il

665

or

1 340 1 000 1 000

0

az

2 700 2 380 2 340

M

2 000

Br

3 470

4 000

Source: Osborne (2017)

Despite this, apart from trade with China, South Africa’s intra-BRICS trade in solar PV modules remains low. Figure 9.3 highlights South Africa’s trade in solar PV modules with other BRICS countries. More than half of South Africa’s PV modules are sourced from China. However, very few modules manufactured in South Africa are exported to other BRICS countries (TradeMap n.d.). While this limited analysis focuses only on one item within a solar PV system (albeit a core one), a similar analysis is likely to reveal other sectors within the value chain where greater complementarity lies.

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Figure 9.3 Trade between South Africa and other BRICS countries: HS854140 photosensitive semiconductor devices (US$ million, 2017) 140 114.3

120 100

75

80

59.6

60 40 20

9.9

0

World Import

China

1.8

0

India

0.2

0

Russian Federation

0

0

Brazil

Export

Source: TradeMap (n.d.)

Historically, investment from other BRICS countries into South Africa has remained extremely low, especially relative to some other key economic partners (Figure 9.4). Again, the exception here is South Africa’s engagement with China, where much is concentrated in the media and information and communications technology (ICT) sectors. Investment from Brazil and Russia is marginal and does not register in the South African Reserve Bank’s Quarterly Reports (Prinsloo 2017). There is a need to scale up investments across BRICS. This investment will increase trade flows and will likely address the structural nature of South Africa’s trading relationship with other BRICS countries. Currently, South Africa exports primarily raw commodities and imports manufactured goods. Investment into the value chains of different countries will enhance more equitable trade among the BRICS countries (Prinsloo 2017). Figure 9.4 South Africa’s foreign assets and liabilities, select countries (2016, R millions) 1 200 000 1 000 000 800 000 600 000 400 000 200 000 0

United Kingdom

Netherlands

United States

Inward Direct Investment

Brazil

Russia

India

China

Outward Direct Investment

Source: South African Reserve Bank (2018)

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9.3.4 RE in South Africa South Africa’s current electricity generation composition is highly defined by its history and availability of domestic resources. Due to the apartheid policies throughout the latter part of the 20th century, South Africa faced significant economic sanctions, hindering access to external energy resources. South Africa’s energy policy was, therefore, defined based on independence from external suppliers to ensure domestic energy security (Nel 2015). This history, combined with significant coal deposits, led to a heavy focus and investment in coal technologies for electricity generation. The introduction of multiparty democracy in the country witnessed the end of economic sanctions, yet the energy path dependency created by the apartheid legacy remained intact. However, towards the mid-2000s, several factors altered South Africa’s electricity policy. These factors included: • Energy diversification and security. The 2008 energy crisis in South Africa highlighted the need to ensure electricity supply by ensuring that adequate infrastructure be in place. This requires that ageing infrastructure be updated, supply and demand adequately forecasted and balanced, and growing demand supported (Nel 2015). • Climate change. South Africa, which is reliant on 90% of its electricity generation from coal, is a major emitter of CO2. However, the drive towards more sustainable economic growth and ratification of the Paris Climate Agreement have made the government reconsider its CO2 emissions. The IRP 2010–2030 was the first time that an IRP recognised this, incorporating a carbon emissions cap and integrating RE options to address emissions (including procurement of nearly 30 GW of solar and wind electricity by 2030) (Eberhard et al. 2014: 6, 7, 30). • Industrialisation and job creation. RE is also very much driven by the need to create jobs in the country. For example, when South Africa hosted COP 17 in Durban in 2017, there was a commitment by public and private stakeholders to ensure that the government would achieve its goal of creating 300 000 ‘green jobs’ by 2020 (Eberhard et al. 2014: 6, 7, 30). The government also recognised that many RE projects – due to the off-grid/rural location of many – could drive economic growth and development outside traditional main economic activity areas (Eberhard et al. 2014: 6, 7, 30). Nevertheless, estimates indicate that by 2020, a mere fraction of the 230 000 employment opportunities in the energy sector in South Africa were from RE generation, with a notable drop in employment following build phases of RE (Semelane 2021). The Alternate Information and Development Centre estimated that 88 000 jobs were created by 2016 that would last a year. The challenge noted was that many jobs were not sustainable, lasting only the duration of the project (McDaid 2016). • Constrained fiscal space. Low economic growth resulting in a tighter fiscal environment, combined with the constrained position of the main energy utility Eskom, has driven the need for greater private-sector investment in the energy sector in South Africa (Nel 2015).

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South Africa’s Draft IRP 2010–2030, which detailed future electricity demand and supply responses from the government, reflected these changes. The draft IRP noted that South Africa’s future electricity security needed to balance affordable electricity prices and a globally competitive economy. In addition, the economy was to become more sustainable and efficient, and create local jobs. In addition, the policy intended to address the demand for scarce resources such as water and the need to meet nationally appropriate emissions targets in line with global commitments (DoE 2011: 8, 9). In line with these objectives, the ‘high’ projections of the plan estimated that by 2030 South Africa would need to commission 17.6 GW wind power and 11.3 GW solar power (DoE 2011: 39–41). These objectives were updated in the IRP 2019, launched in October 2019, to include 22.53% and 10.52% for wind and solar PV energy (DoE 2019: 39–52). As a result, South Africa introduced two key policy initiatives focusing on RE that would redefine its approach to electricity generation. Driven by the above-mentioned factors, the government created a policy programme of RE feed-in tariffs (REFITs) to incentivise private financiers to enter the RE sector. It was adopted by the National Energy Regulator of South Africa (NERSA) in 2009. Feed-in tariffs (FITs) have the benefit of offering private investors security of investment through long-term supply contracts at predetermined prices. This policy was a popular method globally to incentivise private investors. Yet, one shortcoming of FIT programmes is that they do not offer a competitive bidding process to allow markets to set RE tariffs and has the potential to lower thereby lowering buying costs. As a result, the Department of Energy (DoE) – which sets energy policy in South Africa – abandoned this process in 2011 without a single MW being procured under REFIT, favouring a competitive bidding process. Its replacement, the REI4P, was announced in August 2011 (Eberhard et al. 2014: 2–31). The REI4P was developed and managed by several stakeholders in the electricity sector in South Africa, including Eskom, the DoE, NERSA, the National Treasury and the Development Bank of Southern Africa (DBSA). Under the programme, private firms submitted bids detailing RE generation projects, including the structure; legal qualifications; environmental assessments; financial, technical and economic development details; and a guarantee from a financial service provider that funding for the project had been secured (Eberhard et al. 2014: 7–13). Bids were evaluated on a 70/30 split for price and economic development considerations, including job creation, local content, ownership, enterprise development and socioeconomic development (Eberhard et al. 2014: 12). Eskom, in turn, signed power purchasing agreements (PPA) with successful bidders, and the DoE offered a sovereign guarantee in case Eskom defaulted on PPA payments. The Renewable Energy Independent Power Producer Procurement (REIPPP) Programme worked through successive windows to procure electricity from independent power producers (IPP). Through successive bidding windows, government stakeholders and policy-makers had the opportunity to learn and adjust

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their requirements from the programme. Within four years, the programme managed to procure more than 6 300 MW of renewable electricity, created 110 000 jobs and attracted nearly R200-million-worth of investments in South Africa. The programme has been hailed as one of the best electricity procurement models globally (Eberhard et al. 2014: 13–29).

9.4 Financing energy through a climate lens In the Ufa Declaration of 2015, the BRICS heads of state stated the bloc’s commitment to combating climate change and reiterated its alignment with the UNFCCC. Furthermore, they mentioned the need to focus on energy-efficient technologies and encourage RE investment (BRICS Heads of State 2015: para. 67). In 2019, BRICS further supported these commitments and described the need to pursue the efficient use of fossil fuels (BRICS Heads of State 2019: para. 10). Despite the bloc’s commitment to addressing climate change, BRICS will likely remain reliant on coalbased electricity production. South Africa, India and China are the predominant users of coal within BRICS. Russia possesses large coal reserves that may be used to diversify its energy mix in future. The emissions profile of BRICS is possibly offset by Russia and Brazil’s dependence on natural gas and hydropower for their electricity generation needs. As a bloc, BRICS has set a target of 1 250 GW for installed clean energy capacity between 2020 and 2030, estimated to cost approximately US$975 million. To meet this target, BRICS must spend US$177 billion annually. According to McMullenLaird (2016), BRICS has an annual funding shortfall to meet the projected demand for clean energy of US$51 billion. It should be noted that 4 of the 5 BRICS member states are still among the top 10 countries for RE investment despite falling short of their annual spending on RE. From an inter-BRICS perspective, investment in RE is the highest in China and Brazil while Russia has the lowest RE investment flows (IEEFA 2016: 3–8).

9.4.1 RE financing in South Africa The constrained fiscal space of the state and Eskom was a key driver of the RE sector, and subsequently at the core of the REI4P was to procure electricity from the private sector. Apart from private-sector investment, this offered other advantages. As Eskom highlighted, inviting private stakeholders to the RE sector will ‘reduce the funding burden on government, relieve the borrowing requirements of Eskom and introduce technologies that Eskom may not consider part of its core function’ (Nel 2015). Eskom’s specialisation has long been in coal; thus, it is not necessarily best placed to drive investment and innovation in the RE sector. Nearly 30% of the R200 million investment attracted through REI4P projects came from international sources. This share has increased over various bidding windows

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of the REI4P – from less than 20% in Bidding Window 1 to more than 30% in Bidding Window 4 – as the REI4P was increasingly recognised for its transparency, predictability and efficiency, signalling a high level of confidence from external investors in South Africa (Eberhard et al. 2014: 13–17). Financing was primarily from European countries (67% of external financing) and the US (14%). Investment from other BRICS countries was marginal, with external investment from China 2% and India 1% (DoE 2015: 23, 79). The remaining 70% of the R200-million investment attracted through REI4P projects came from domestic sources, indicating the significant appetite and financial capacity of domestic financiers to support sustainable development projects. South African financial institutions were fundamental to the REI4P’s success. As arguably the most sophisticated financial market on the continent, it had the financial capacity to support projects under the REI4P and technical capacity (understanding project finance and experience with public–private partnerships) to support REI4P projects (Eberhard et al. 2014: 13–17). While South African banks illustrated some level of innovation (offering longer-term loans of 15 to 17 years), there is scope for increasing innovation in this sector, considering that the state remains fiscally constrained but the need for infrastructure investment remains. While institutional investors were also involved, their involvement remained marginal – especially considering that pension funds hold more than R3 trillion worth of investments in South Africa (Sager 2014). Much of the REI4P’s success was based on the impetus from the government to develop RE in South Africa. However, following four highly successful bidding windows, momentum towards public-driven RE development has slowed. According to the DoE’s Director-General Thabane Zulu, the RE sector experienced a period of 'stop-start' policy implementation (Creamer 2018). While PPAs were completed with winning bids from the first three bidding windows within months of award, the government was reluctant to sign the PPAs with the winners in the final round of the REI4P. This reluctance was driven by various factors: Eskom signalling an oversupply of electricity, revisions to the IRP, and labour unions insisting that increased RE sector activity would negatively affect employment in the coal industry they represent. The DoE has renewed its effort to boost confidence in the RE sector, starting by signing the outstanding PPAs of the winning bidders of Bidding Window 4 in April 2018. In addition, the updated IRP 2019 considered revised electricity supply and demand factors to ensure that future planning is more accurate (Creamer 2018). Together with several other factors, this effort will ensure that opportunities abound for South African firms across the RE value chain in future. These factors include an uptick in economic growth forecasts for South Africa, growing domestic industrial and residential markets in the RE sector, support and facilitation offered by other ministries, and significant expansion of opportunities for South African RE firms across the rest of the continent.

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9.4.2 Barriers to energy financing in BRICS There are various barriers to the implementation and financing of RE in BRICS. Sanctions on Russia have created tough investment conditions for RE. Furthermore, public revenue through taxes is highly dependent on the oil and gas sectors, which restrict the political will and desire to transition to an energy mix with a greater portion of RE sources. According to McMullen-Laird (2016), Russia’s goal of 4.5% of RE (excluding hydropower) in the energy mix by 2020 has already been moved back to 2024. In China, despite the country’s significant investment in domestic RE, an effective policy framework has resulted in less use of available wind and solar energy, which has suppressed investor appetite. Moreover, the steadily falling solar and wind prices will help China to meet its 2025 target to supply 33% of national consumption with renewable energy (Xia 2022; McMullen-Laird 2016). In Brazil, there is political will to implement RE projects, with the Brazilian Development Bank stating that it would continue to fund solar PV and wind projects while limiting loans for gas and hydropower (McMullen-Laird 2016). However, the current state of the Brazilian economy may be the most crucial factor in influencing inflows of investment, as these pose significant deterrents to the private sector.

9.4.3 Climate change as an energy financing opportunity According to the Climate Policy Initiative’s 'Global Landscape of Climate Finance 2017' report, most climate finance flows are realised within the RE sector (Buchner et al. 2017: 1–5). This is due to the possibility of greater financial returns being achieved by the sector, as the outputs are tangible (for example, RE output). In this light, climate finance instruments may be a valuable modality to leverage additional flows for RE implementation in BRICS. As illustrated in Figure 9.5, all the BRICS member states have managed to access global climate funds to varying degrees. For example, China has accessed the greatest amount of finance (US$2.2 billion) from the Global Environment Facility (GEF), and Russia has only accessed US$441 million (GEF n.d.). However, comparatively, lower sums of finance were sourced from the GCF and the Adaptation Fund (AF). Considering that most BRICS member states are experiencing harsh economic conditions, the use of climate finance can help address investor risks by developing blended finance models. Blended finance can be defined as the use of development finance, philanthropic funds and other public funds to mobilise private capital (OECD n.d.).

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Figure 9.5 Climate finance received by BRICS member states through international climate funds Brazil Russia India China South Africa 0

500 Green Climate Fund

1 000 Global Environment Facility

1 500

2 000

2500

Adaptation Fund

Source: GCF1 (n.d.), GEF (n.d.) and AF (n.d.)

Even though multilateral and bilateral climate funds are valuable sources of finance for RE investment, the flows from these mechanisms may be limited in future. It was envisioned that the GCF would mobilise US$100 billion per year; currently, the fund has only received pledges worth US$10.2 billion in total (GCF1 n.d.). Future pledges from the US may also be limited owing to changes in political administration. The AF, which is financed partially through sales of carbon credits from the Clean Development Mechanism (CDM), may not continue because the CDM is linked to the Kyoto Protocol, which the Paris Climate Agreement has replaced. In light of these potential restraints, it is essential that other financial instruments that can access different markets be assessed to widen the pool of potential flows for RE investment.

9.4.4 Climate finance instruments for the energy sector The selection of an appropriate financial instrument is usually dependent on the proposed project and related funding participants. The choice of appropriate financial instruments is a highly context-specific exercise that requires careful consideration of the project characteristics, as this will determine the form of financial support to be requested. There are various perspectives from which financial instruments can be compared, and several considerations must be taken into account when selecting financial instruments. From a financial perspective, instruments can be broken down into cost-reducing and risk-reducing categories (Torvanger et al. 2016). Costreducing instruments reduce the financial costs of a project directly. Risk-reducing instruments mitigate investment risk. Both are intended to make projects more attractive to investors.

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Another consideration is whether the intended project is a climate adaptation project or a climate mitigation project. Contrasting instrument use from a mitigation or adaptation perspective focuses on the return on investment, bankability, climate impact and intangibility (Ellis & Pillay 2017). Intangibility refers to the inability to assess the value gained from engaging in an activity using tangible evidence. In adaptation projects, it may be difficult to assess the associated economic costs and benefits to provide insight into the business case, which may deter private investors (Chambwera & Heal 2015: 948). Furthermore, considering that adaptation projects are typically localised and lack a revenue stream, the private sector often favours mitigation projects. Co-financing for adaptation projects can be attained from other financial actors such as MDBs, international organisations and national governments (OECD 2015: 4–13). Going beyond the aspects of project type (mitigation and adaptation), the evaluation of financial instruments within the context of different sectors can illuminate which instruments to focus on to attract increased participation from other financial actors (private sector, MDBs, international organisations and national governments). Different sectors are exposed to various risks (market, commercial, political, physical and outcome risks) and require tailored instruments to ensure efficiency and effectiveness (Ellis & Pillay 2017). For example, the sustainable forestry industry, facing commercial risks, may require grant financing to reduce investment risks. This risk reduction attracts the private sector, whereas the RE sector competing with fossil fuel industries (which may be subsided by governments) may require guarantees to attract other investment. It should be noted that the use of instruments may also differ within a sector and at a subsector level (Castrén et al. 2014). Another example is that within the RE sector, geothermal energy project developers may require guarantees to cover themselves against risks associated with prospecting new drilling sites to ensure private-sector participation, while the solar energy project types may seek loan financing from commercial banks to raise capital for construction and operating costs (Pater Salmon et al. 2012: 24; REEEP 2008: 19.13–19.21). Figure 9.6 provides a global breakdown of financial instruments used to provide support for RE investments. It is clear from the analysis that most financial support is provided in project-level, market-rate debt. This analysis suggests that financing is used to support the capital costs of the hard RE infrastructure instead of creating an enabling environment for private investment. As stated by the Institute for Energy Economics and Financial Analysis (IEEFA), the increased investment risk – coupled with less developed debt and equity markets in BRICS – results in less ability to attract private investors (IEEFA 2016: 1, 7).

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Figure 9.6 RE financing subset by instrument (2013–18)

Grant Unknown Low-cost project debt Balance sheet financing (debt portion) Balance sheet financing (equity portion) Project-level equity Project-level marketrate debt 0

20 2018

2017

40 2016

60 2015

80 2014

100

120

140

2013

Source: International Renewable Energy Agency (n.d.)

9.4.5 Innovative climate finance approaches In light of the vast financing needs, private- and public-sector actors must be involved. Green bonds could be useful investment products to stimulate financial flows. The green bond market has grown substantially, with both the unlabelled and labelled green bonds issued since 2007 estimated to be worth US$754 billion (Climate Bonds Initiative 2020: 2). Green bonds can be described as traditional vanilla bonds with proceeds earmarked for green initiatives. According to the Green Bonds Global State of the Market 2019 report released by the Climate Bonds Initiative, the green bond labelled market was worth US$258.9 billion and growing (Climate Bonds Initiative 2020: 3). The BRICS countries have had considerable involvement in the green bond market. In 2017, China’s total green bond issuances were US$37.1 billion, while Brazilian and Indian labelled green bonds accounted for US$3.67 and US$3.2 billion respectively. Currently, China and India are within the top 10 issuers of green bonds globally. Cumulative issuance of green bonds in China totalled more than US$40 billion, with half of that issued in 2017 alone. India’s cumulative issuances totalled nearly US$10 billion, while Brazil’s green bond issuance exceeded US$3.5 billion through nine issuances (Climate Bonds Initiative 2017: 1, 2). South Africa has also had a strong involvement in the green bond market. Two municipalities (City of Cape Town and City of Johannesburg) issued green bonds (in 2014 and 2017 respectively); Growthpoint Properties issued the first corporate green bond in 2018 (Ngwenya & Simatele 2020).

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One of the major barriers to scaling up the green bond market is global consensus on what is defined as ‘green’. This definition is of critical importance, as it defines the use of proceeds within the Green Bond Framework and the impact indicators used during the measurement, reporting and verification process (International Capital Market Association 2018: 1–4). At present, there are two streams of thought: (i) green should refer to the envisioned solutions in 2050 and (ii) green initiatives can be projects and programmes that deliver any green benefits even if these result in technology lock-ins. For example, in the case of energy financing in BRICS, financing a coalfired power station with carbon capture and storage (CCS) technologies could be considered green even though it prolongs the reliance on coal (Fitzgerald 2012). CCS refers to technologies that allow CO2 to be captured, transported and deposited to a storage site, thereby avoiding emissions into the atmosphere. The lack of consensus on this issue has resulted in varying approaches to labelling green bonds and the verification required by intermediaries, underwriters and issuers (Fitzgerald 2012).

9.4.6 Climate finance in the energy context of BRICS Despite the growing push for greater focus on RE investment by BRICS, nuclear and coal-based energy will likely remain within the energy mix of member states for the short to medium term (Ndlovu & Inglesi-Lotz 2019). Therefore, clean technologies that can reduce the emissions from coal-based electricity must be explored. Clean technologies, in the context of this research, refers to a set of technologies used to reduce the emissions when producing electricity from coal (Jordaan et al. 2017) coupled with an organised examination of existing international, federal, and regional climate policies that advance innovation. Results indicate that investments, from early research and development through to capital expenditures, are heavily weighted towards fossil fuels. Though federal efforts to meet international commitments have been unsuccessful, regions implementing high-carbon-fuel phase-out, renewable portfolio standards, and feed-in-tariffs were found to be successful in reducing emissions. Financing for clean energy projects is readily available; however, there is no complete database available for investors to discover these opportunities. Among the BRICS countries, China and South Africa are leaders in clean coal technology investment. China has invested heavily in such technologies applied in coal-fired power plants that produce over 600 MW of power. The technologies include high-efficiency combustion and advanced power generation, coal transformation, integrated gasification combined cycle (IGCC) and CCS (Chen & Xu 2010). However, the coal-based power stations retrofitted with CCS are widely viewed as inefficient and unfeasible to reduce or curb emissions. Despite this view of many policy actors, some studies have found that the IGCC unit costs are more than those of other technologies. In the long term, it is projected that the per tonne reduction in emissions will be lower due to IGCC with CCS technology (Zhaofeng

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et al. 2011) the implementation of coal-gasification schemes is still hampered with a comparatively low operational availability, and the relative cost imposed by polygeneration is deemed high. First, the capital expenses become higher due to the more comprehensive processing scheme, including oxygen production. Second, the inclusion of CCS will affect the operating cost owing to additional staff and reduced revenues, as there will be less electricity to sell. Third, the maintenance cost tends to grow due to increased complexity. A new virtual IGCC-CCS1 power cycle has been defined, which forms the base case for benchmarking. A reference case has been formed using the prestigious Chinese GreenGen project (phase 1). Concentrated solar power and CCS require higher financing and state support levels through legal and institutional instruments, long-term loan financing and appropriate storage facilities. The financing challenges of CCS have been compounded by MDBs that have limited their funding for these energy technologies. The NDB may be a possible option to finance energy and power generation projects with clean technologies. The NDB has already shown its intentions to finance largescale energy projects in the BRICS countries (Donelly 2016). However, as seen in the NDB’s first round of allocations, these funds were directed to new energy capacity development instead of retrofitting existing infrastructure with clean technologies (NDB 2016). Furthermore, the NDB’s decision to use innovative climate finance instruments such as green bonds will allow the bank to scale its investments in RE technologies in the short term (Reuters 2016).

9.5 Conclusion This chapter has focused on the energy sector, with specific interest in RE financing. Several areas were identified where South Africa could have greater coordination and cooperation with other BRICS member states. Based on the analysis undertaken, the following specific recommendations are made. First, finance from international climate funds should be used within a blended finance framework to leverage greater private participation and investment. This approach could allow for energy projects to be financed while growing the private sector. Second, the NDB’s financing of energy must continue if BRICS is to scale up the RE portion of the energy mix. It is also essential that the NDB supports technologies that reduce emissions from coal through the financing of pre-feasibility, pilot, and research and development projects. Third, the NDB must support green bonds by promoting capacity building to issuers regarding the ability of green bonds to attract new investors to the market. Furthermore, BRICS must effectively outline their definition of green to earmark climate finance for these project types. Fourth, there is a need for more extensive mapping of the complementarity of RE value chains across BRICS. There is significant demand for RE goods in all BRICS countries, and manufacturing capacities are being scaled up. Identifying synergies between BRICS’s efforts in this regard will enhance trading opportunities.

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Lastly, a study on value-chain complementarity will identify avenues for intraBRICS investment in RE value chains. These findings will enhance the overall economic relationship between the BRICS countries and create a more equitable trade relationship. References

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Promoting Financial Technology Partnerships in BRICS Krish Chetty, Jaya Josie, Shenglin Ben and Zheren Wang

10.1 Background Financial technologies (FinTech) have been touted as a means to foster financial inclusion. By promoting financial inclusion, low-income consumers are empowered to build their capabilities and overcome poverty. FinTech innovators tend to target areas of weakness or gaps not catered for by the traditional financial sector. However, in BRICS the pace of advancement among these innovators differs. Each has different strengths and weaknesses, and these innovators could benefit from knowledgesharing activities within their country and across BRICS. FinTech advancement in China, for example, outpaces the rest of the world. The knowledge attained by the giant FinTech operators in China would greatly benefit the FinTech sectors across the BRICS and African countries. The difficulty is the limited institutional space for FinTech innovators to engage and build partnerships. Analogue barriers such as language and culture are pervasive, and sustain fears that small FinTech innovators have when partnering with established FinTech giants. Strategies are needed to counter these fears and promote partnerships across these countries, strengthening the FinTech industry in each BRICS and African country. In this chapter, we describe a series of partnership models and benefits for FinTech innovators in engaging their counterparts across BRICS and Africa.

10.2 Introduction The challenges impeding greater financial inclusion across BRICS differ, given the bloc’s varied country contexts. A solution in Brazil may not be applicable in the Russian context, for example, as multiple stakeholders are affected by the influence and evolution of the FinTech sector. As BRICS countries attempt to advance financial inclusion, China expands its Belt and Road Initiative (BRI) across Asia, Europe and Africa. In 2018, a Chinese venture capitalist opted to invest in the Pan-African FinTech company MFS Africa. This investment was the first by a Chinese investor in the African market, following China’s BRI, where the Chinese government wishes to spread its influence and disseminate financial services among its trading partners (Liquid Africa 2018). In such instances, the BRI may accelerate the development of the BRICS FinTech sector or damage a delicately positioned sector in BRICS and

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African countries if they do not define how they should engage with new potential foreign investors or partners. As President Xi Jinping noted, China recognises the need to invest in infrastructure in the countries targeted by the BRI. This realisation has manifested in investments in railways in African countries and increased Sino-Africa and intra-BRICS trade (Nantulya 2019). In addition to investing in physical infrastructure, the BRI has implications for the affected countries’ financial technologies. A stable FinTech sector provides the foundation for expanding digital commerce and Chinese business travel over the new Digital Silk Road (Sabine 2016). As China embarks on this expansion strategy across Europe, Asia and Africa, BRICS prioritises inclusive growth as a policy imperative. Financial inclusion is a central pillar of an effective inclusive growth policy. Economic growth does not necessarily translate into shared prosperity or poverty reduction unless interventions are made to diffuse the proceeds of growth among the population. However, it is expected that the promotion of financial inclusion is a lever that can influence both economic growth and people’s quality of life (Triki & Faye 2013: 25). The other BRICS countries’ FinTech sectors and policy-makers must ask whether their interests converge with those of their Chinese counterparts and whether Chinese influence in the BRICS markets will result in inclusive growth and the development of the local FinTech sector. As we consider the balance of the BRICS FinTech sector and China’s changing international policy, BRICS must set the terms for potential partnerships to protect the consumer and service provider while supporting economic growth opportunities. Sharing knowledge within the private sector can be challenging, given that knowledge represents one’s intellectual property. To manage this exchange of insights, revised policy frameworks and institutional processes are needed to support the introduction of knowledge intermediaries, introduce regulatory reforms, and simplify the entry of new start-ups into the market, promoting financial inclusion. At present, statistics on financial inclusion tend to exclude the critical factor of usage, referring instead predominantly to consumer access to financial products. The rates of access to financial products/services in Kenya or South Africa, for example, are among the highest in emerging economies but this betrays the severe difficulties experienced by customers (Villasenor et al. 2016). Despite the high access rates to transactional accounts or mobile wallet facilities, poverty rates remain high and the low-income segment has not benefited from these financial services.

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Depending on the local country context, the drivers of financial inclusion differ – requiring investors, policy-makers, regulators and innovators to clearly understand the needs of their market and which challenges need to be resolved. Chinese FinTech operators can make positive interventions across BRICS FinTech sectors, but their efforts may be ineffective or negatively impact a foreign market without local knowledge. A uniform strategy to engage more experienced Chinese counterparts may offer equitable benefits to BRICS countries. As Chinese investors and FinTech companies attempt to access BRICS markets, the interest in partnerships will increase. It is in the FinTech stakeholders’ interests to prepare for these advances and identify how each country can navigate the unbalanced power relations, promote small-scale entrepreneurs’ needs and benefit from sharing intellectual property. In this chapter, we offer partnership strategies with mutual benefit to BRICS FinTech sectors. Accordingly, we outline the research objectives of the study and describe the methodology followed. Thereafter, we describe the FinTech sector and the state of financial inclusion across BRICS. This review is followed by a discussion of BRICS countries’ interest in developing partnerships in the FinTech sector. In light of this interest, we propose a range of partnership models that may be appropriate in different contexts.

10.3 Research objectives 10.3.1 Describe how greater financial inclusion contributes to poverty reduction in BRICS It is important to provide context to the promotion of financial inclusion. As such, we describe the relationship between financial inclusion, FinTech and poverty reduction. This context provides the background to the research and emphasises this study’s importance for policy priorities across BRICS.

10.3.2 Identify the barriers to knowledge sharing In exploring the opportunities for partnerships in the FinTech sector in BRICS, we describe these countries’ multicultural context and its influence on sharing knowledge. Due to these cultural barriers, building partnerships across borders is difficult to achieve, given the challenges when FinTech stakeholders attempt to form shared perspectives on common interests. With a clear understanding of these challenges, clear strategies can be produced targeting the specific barriers faced by FinTech stakeholders.

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10.3.3 Describe how partnerships between innovators can strengthen the FinTech sector Once the barriers to sharing information and knowledge are examined, we present the opportunities linked to building local and international partnerships among FinTech stakeholders and how these opportunities will grow the sector.

10.3.4 Discuss strategies to institutionalise the bonds across the FinTech sector in BRICS Given the importance of building partnerships among FinTech sector stakeholders, we discuss mechanisms whereby BRICS and African countries can institutionalise relationships within the FinTech sector. We also explore partnership models and how such mechanisms promote local and international knowledge sharing, the FinTech sector’s growth, and financial inclusion in BRICS and African countries.

10.4 Methodology 10.4.1 Overview To achieve the study’s objectives, a stepwise approach was followed to describe how the overarching environment within BRICS relates to financial inclusion issues and the factors affecting innovators and entrepreneurs within the bloc. In recognising the value of knowledge sharing within the private sector, and the complexities experienced by FinTech stakeholders attempting to form partnerships, we present potential strategies to foster partnerships in BRICS. These strategies promote both local and international partnerships and protect the interests of local entrepreneurs. To develop the recommendations, as part of the study, we conducted a systematic review of peer-reviewed literature describing the challenges experienced when collaborating or building partnerships in the private sector. In finding strategies to develop partnerships and promote knowledge sharing within the multicultural BRICS environment, we explored the strategies offered by researchers working in this space through a systematic review of recent knowledge sharing and partnership/ collaboration literature. In consolidating the findings, we discuss how various partnership models can serve the interests of FinTech stakeholders in BRICS countries, promoting the formation of partnerships and knowledge sharing.

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Figure 10.1 Overview of the research methodology Challenges in developing partnerships (systematic review)

Tailored strategies for BRICS–African partnerships (consolidation of views)

Environmental context (statistical review)

Recommendations

Strategies to build partnerships (systematic review) Source: Authors

10.4.2 Environmental review: Statistical review of the state of financial inclusion in BRICS To provide a background to the study, we highlight the contextual issues related to financial inclusion in BRICS countries. In outlining the position of BRICS countries, we review statistics describing the state of digital inclusion in these countries. In particular, we use the Information and Communications Technology Facts and Figures 2017 database published by the International Telecommunications Union (ITU), which provides an account of ICT transformation worldwide. In addition, data from the World Bank’s Findex database provide indicators from BRICS countries about financial product access and ownership in further exploring the state of financial access. The data released by the ITU and World Bank are based on statistics released by the countries’ national statistical agencies and further imputed by their algorithms which infer the missing data points in certain periods. Also, data collected by the Human Sciences Research Council (HSRC 2019) in Southern and East African countries from FinTech stakeholders in 2018 and 2019 are used to highlight the interest of FinTech stakeholders in partnerships and knowledge sharing. Lastly, Zhejiang University’s Academy of Internet Finance (AIF) in 2018 released the Global FinTech Hub Index (GFHI), which ranks the performance FinTech advances in cities globally (including major hubs in BRICS). This information provides a valuable comparison to identify how BRICS cities fared and further identifies areas of weakness and strengths that can be better supported through partnerships.

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10.4.3 Systematic review: Fintech collaboration/partnerships – Challenges and solutions The systematic review adopted in this study followed the PRISMA (preferred reporting items for systematic reviews and meta-analyses) guidelines framework (Moher et al. 2009). This framework requires detailing the inclusion criteria, search strategy, data selection and refinement, assessment of quality and analysis process. (1) Inclusion criteria Studies from the period 2008 to 2019 were selected. Many advances within the FinTech sector followed the global economic crisis of 2008, with more attention directed to new technologies that could reduce society’s dependence on the traditional banking sector. Close attention was paid to studies exploring financial inclusion concerns in developing/emerging economies. (2) Search strategy Peer-reviewed journal articles published between 2008 and 2019 were selected from the research databases EBSCOHost, Scopus and Science Direct. On review of the abstracts of the studies, a determination was made on whether or not the study was eligible. The logic operators ‘And’, ‘Or’ and ‘Not’ were used to broaden the search results. The final set of selected articles were English studies describing innovators’ concerns as they entered into partnerships. The selected keywords included ‘technology’, ‘financial technology’, ‘FinTech’ ‘internet banking’, ‘mobile banking’, ‘partnership’ and ‘collaboration’. NOT operators were used to exclude articles related to ‘agriculture,’ ‘health’ and ‘education’. The Scopus search results were further limited to articles within the subject areas ‘business, management and accounting’ and ‘economics, econometrics and finance’, as classified by Scopus. It was found that content related to FinTech was predominantly located in these subject areas. As stated in Table 10.1, 558 studies (excluding duplicates) were found, when searching for journal articles between 2008 and 2019 related to the keywords ‘technology’ and ‘collaboration’ or ‘partnerships’, from the Scopus, EBSCOHost and Science Direct research databases. Due to the limited number of search results describing partnership strategies associated with financial technologies, it was decided to broaden the scope of the search results and identify strategies relevant to all technology forms. On closer review of the titles of the research articles, 49 articles were relevant to this study. After a further study of the abstracts of articles and from a scan of the content, 31 articles were selected to inform the analysis.

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Table 10.1 Relevant studies selected per research database Total search results

Eligible results

Results in review

Scopus

304

27

18

EBSCOHost

220

15

9

34

7

4

558

49

31

Science Direct Total Source: Authors

(3) Selected studies via systematic review As described in the three tables following, 18 articles were selected from the Scopus database; a further 9 articles were chosen from EBSCOHost; and 4 articles were chosen from Science Direct. These articles describe how collaboration has supported knowledge creation, how partnerships were entered into and the challenges experienced. In some cases, the articles include recommendations on how partnerships can be improved. The studies followed a range of methods, from literature reviews to regression models. The studies were international in nature, describing partnerships in a single country and bilateral partnerships across countries with diverse cultural contexts. (4) Describing benefits attributed to Chinese and African FinTech partnerships In collating these views, we show how BRICS FinTech partnerships could help address specific challenges identified during this study. A wide range of interventions emerges pertaining to local and multinational partnerships, their contribution to knowledge creation and the scaling of services. The findings are clustered using the example of how partnerships or collaborative efforts within BRICS can offer mutual benefits to all parties.

10.5 FinTech in BRICS 10.5.1 International policy support The promotion of financial inclusion has been recognised as an international strategic priority, as nations recognise the opportunity that access to and usage of financial products/services offer to develop nations and alleviate poverty. Financial technology is disrupting the traditional financial services sector through innovative applications that take advantage of technological advances, new sources of data and innovators’ insights into the sector (Vives 2019). The UN Environment Programme (UNEP) describes the intersection of FinTech and sustainable development, noting that achieving the 2030 Sustainable Development Goals (SDGs) requires a global financial system that supports the transition to an inclusive economy (Castilla-Rubio et al. 2016: 1–9).

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UNEP further notes how technological innovation is offering opportunities for sustainability that (i) promote the economic growth of unbanked, underbanked and small, medium and micro-enterprises; (ii) mobilise savings for long-term investments; (iii) reduce risks for vulnerable populations; and (iv) provide opportunities to scale such innovation to ensure the long-term realisation of the SDGs. Ozili (2018) discusses the attention that digital finance is receiving among policymakers and states that the reason for this attention follows from the potential that new digital products/services can offer to poor individuals, business owners, the state and the economy at large, if introduced effectively. According to Ozili (2018), the economy grows with more financial transactions. By including greater numbers of those previously excluded, more people will have the opportunity to contribute to and benefit from this growth.

10.5.2 BRICS support for institutionalising collaboration The BRICS heads of state in 2018 concentrated their deliberations on promoting collaboration within the bloc to promote inclusive growth and shared prosperity as the world transitions towards greater technological advancements. Among the commitments made, they stressed the importance of financial cooperation, understanding that such activity serves to grow the economy. In this light, the heads of state committed to ‘facilitate financial market integration through promoting the network of financial institutions and the coverage of financial services within BRICS countries’ (BRICS Heads of State 2018: para. 77). This commitment is subject to the regulatory frameworks of the countries, but the statement intends to foster cooperation opportunities. The countries also established the Partnership on New Industrial Development, which was tasked to facilitate technology advancement partnerships, allowing the bloc to leverage their collective expertise for the group’s benefit (BRICS Heads of State 2018: para. 56). The BRICS Business Council has formed the Digital Economy and Financial Services Working Groups. The role of these working groups is to facilitate business engagement to build synergies and identify opportunities for relevant stakeholders involved in the sector. In these areas, the working group will highlight the competitive strengths of the institutions they represent, promote industrial development and create new jobs (South African Government 2019). In recognising these steps taken in 2018 and 2019, BRICS works towards institutionalised processes that can facilitate networking and business-tobusiness collaboration in the digital and financial sectors. Providing practical recommendations to the BRICS countries will help to accelerate their plans to promote such engagements and facilitate intra-BRICS partnerships.

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10.5.3 State of financial and digital access in BRICS Kostov et al. (2015) identify four prerequisites to access financial services: (i) service availability, (ii) reliability, (iii) flexibility and (iv) continuity. Tambunlertchai (2018) argues that a holistic view of the consumer is needed to promote access in developing and emerging contexts and their socioeconomic and geographic status should be considered. From a socioeconomic standpoint, factors such as the consumer’s age, gender, education and income are relevant. In contrast, from a geographic perspective, one must consider the distance between the consumer and the access point for service. When applying these considerations to the FinTech sector, the medium used to connect consumers and the actual product should be considered. Thus, the device enabling the connection and having access to the internet via this device are particularly important. Furthermore, the consumer’s disposable income is relevant to the product/service that the consumer needs. The ITU reports growing access to the internet within BRICS (Klapper et al. 2018). The percentage of people with internet access steadily increased between 2000 and 2017, as inferred by the ITU’s analysis of country statistics sourced from national statistical agencies. In 2017, Russia had the largest proportion of its population accessing the internet at 76%, while only 34% of India’s population had access to the internet. Mobile technology provides individuals with greater opportunities to get online while broadband access is still limited. -

Figure 10.2 Percentage of population accessing the internet (2000–2017) 80 70 60 50 40 30 20 10 0 Brazil

Russian Federation

India

China

South Africa

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: Klapper et al. (2018)

From the perspective of account ownership, we found an increasing trend between 2011 and 2017. Each BRICS country, apart from South Africa, increased in terms of the number of reported transactional accounts owned by consumers in the bloc. In South Africa, the percentage of account owners decreased slightly from 70 to

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69% between 2014 and 2017, highlighting that South Africa had not fully grown the number of account owners in the market during this period. China reportedly had the highest percentage of account owners in 2018 at 80%, followed by Russia at 76%, Brazil at 70% and South Africa at 69%. However, these trends neglect the importance of account usage in promoting financial inclusion, highlighting how useful these products are to consumers and where the services meet the respective BRICS markets’ needs. Figure 10.3 Percentage of population (age 15+ years) owning an account with a financial institution (2011, 2014 and 2017) Account Ownership (% age 15+ years) 69.22 70.32

ZAF 53.65

67.38

RUS

75.76

48.18

IND

79.88

53.14 35.23

CHN

80.23 78.85

63.82

BRA 55.86 0

10

20

30

40 2011

50 2014

60

70.04 68.12

70

80

2017

Source: World Bank (2018)

A key challenge in low-income countries is that the traditional financial sector has primarily supported the country’s middle- and high-income earners. Providing services for low-value transactions is not profitable, so products have not targeted low-income consumers. For example, the affordability of financial products in Southern and East Africa is a primary barrier to consumer usage. For example, an MPesa user in Kenya who transfers KSH101 to another person pays KSH11, approximately an 11% transaction fee. Similarly, mobile wallet users in South Africa pay between R8.50 and R10.95 when transferring R100 to another mobile wallet

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user; this is a transaction fee of between 8.5% and 10.95% of the transaction value. Unfortunately, low-value transactions continue to be the most expensive and deter low-income consumers from using these products. About 76% of respondents in the HSRC survey of FinTech stakeholders indicated that high transaction fees, together with an irregular income flow experienced by low-income consumers, were significant drivers of financial exclusion (Chetty et al. 2019: 45). Moreover, 72% of the respondents found that the high cost of internet access was a very relevant financial exclusion driver. The Groupe Speciale Mobile Association (Global System for Mobile Communications) identifies the high transaction costs of mobile money as a reason for the dependence on cash payment in East Africa, despite consumers recognising the safety benefits of electronic payment facilities (GSMA 2017). Figure 10.4 Percentage of respondents identifying high transaction fees and irregular income flow experienced by low-income consumers as very relevant drivers of financial exclusion 75 74 74 73 73 72 72 71

High cost of data for internet access

High transaction fees

Irregular income flow

Source: Chetty et al. (2019: 45)

10.5.4 Strength of China’s FinTech industry and opportunities to learn FinTech has gradually become a powerful force to resolve financial inclusion problems in China and worldwide, with financial inclusion attracting the public’s wider attention. FinTech entrepreneurs have significantly impacted financial inclusion in China, drawing on its efficiencies, cost reduction and benefits to the consumer. New technologies have been found to eliminate the physical distance barrier and speed up information processing – and, thus, general efficiency. As new technology is adopted, with a higher number of consumers, the lower will be the marginal costs per consumer. China’s FinTech entrepreneurs have adopted the ‘longtail’ business strategy and have benefited from scaling products, to the extent that it becomes profitable, with very low transaction costs (Mittal & Lloyd 2016: 6–8).

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China’s FinTech strengths tend to congregate within hubs, starting with a city at its core that grows and gradually transforms into more influential FinTech regions. China’s influential FinTech regions include the Yangtze River Delta, the Beijing– Tianjin–Hebei region, and the Guangdong–Hong Kong–Macao Greater Bay Area. These regions are leading in terms of FinTech development. Such progress also helps to drive the growth of the central and western regions. According to research conducted by the AIF, cities like Beijing, Shanghai, Hangzhou, Shenzhen, Hong Kong and Guangzhou rank among the world’s top financial and technology centres (AIF et al. 2018: 7–13). The detailed statistics describing these cities and the performance of other BRICS cities are noted below. The statistics and findings help to identify strategies from China that could be adopted in emerging FinTech hubs in other BRICS countries. Figure 10.5 Scores 100

of BRICS cities in the GFHI (2018)

90 80

90.6 85.2 82.7 84.6 81.2

86.7 82.6 76.8 74.1

80 75.7 74.7

73.1

77.3 71.4 67.4 67

70

63

60

58 49.4

50

53.4 50

51.9

47.6 43.5

43.7

42.5

40

37.3 32

29.9

30

23.3

21.5 19.2

20

16.5

10

GFHI Beijing

Shanghai

Source: AIF et al. (2018: 8–41)

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0

0

0

Fintech Industry Hangzhou

Shenzhen

Guangzhou

Fintech Consumer Experience Sao Paulo

Moscow

Fintech Ecosystem Mumbai

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The AIF has developed an interesting study where they rank the major FinTech hubs in the world through their GFHI (AIF et al. 2018: 8, 9). In compiling the index, the AIF gathers data to examine the state of the FinTech industry, which is informed by regional/city-wide FinTech development and total venture capital investment, among other factors. Also included in the GFHI are consumers’ perceptions about their experience using technology, calculated by measuring the FinTech adoption rate, the acceptance of FinTech services in regions/cities and other indicators. Lastly, the index incorporates the state of the ecosystem, which is based on measuring the potential for future FinTech development, received governmental attention, research and development, and indicators describing the policy and regulatory environment. Furthermore, four Chinese cities feature among the top 10 rankings globally, with Beijing at number 1. The index highlights that much can be learned from China in all aspects of the index. Cities like São Paulo and Mumbai perform strongly in the other BRICS countries. Suppose BRICS FinTech innovators wish to share information and build partnerships. In this case, Chinese innovators are strongest in terms of their industry’s depth and consumers’ appreciation when using FinTech products/services. Cities like Moscow and Cape Town fall short in this area and could benefit from strong partnerships with Chinese counterparts. With a greater examination of such data, various strengths and weaknesses could emerge, guiding FinTech innovators interested in building international BRICS partnerships.

10.5.5 Quantity of FinTech entrepreneurs in BRICS The number of FinTech entrepreneurs in BRICS has steadily increased in recent years. While the absolute number of registered operators is not certain, various analysts have reported names and figures of FinTechs operating within BRICS. Although numbers from China are unclear, the investments received by FinTech operators in the country vastly exceed their counterparts in other BRICS countries. KPMG (2019) reports that China’s FinTech sector received US$18.2 billion in 2018, compared to India (the next highest) with US$1.7 billion and Brazil with US$556 million. Ernst & Young (2017: 13) reports that investment in Russia between 2011 and 2016 was far less than what other middle- and higher-income countries had received, cumulatively amounting to US$75 million during this period. According to findings released by Forbes, South African FinTech operators received over US$59.9 million in 2018 (Shapshak 2019). The investment amount helps to identify how established the FinTech sector has become in these countries. The comparatively lower investment in South Africa and Russia highlights the difficulties FinTech startups face in securing funding. Building international partnerships could assist these countries in accessing additional funding.

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Table 10.2 Investment in the FinTech sector in BRICS Investment (US$ million) Brazil (2018)

Source

556

KPMG (2019)

Russia (2011–2016/17)

75/50

EY Soloviev (2018)

India (2018)

1.700

KPMG (2019)

China (2018)

18.200

KPMG (2019)

59.9

Forbes (2019)

South Africa (2018)

Source: Brazil (Finnovista 2018), Russia (Soloviev 2018), India (Medici 2019) and South Africa (RMB 2019)

Based on the absolute numbers of FinTech companies reported by varied sources in Brazil, Russia, India and South Africa, we find that India has the highest number of FinTech companies. In the absence of statistics from China reported in English describing the number of FinTech companies, we note that Brazil, Russia and South Africa follow India (Finnovista 2018; Soloviev 2018; Medici 2019; RMB 2019). Based on these numbers, one can see that the product areas with the highest number of companies are in the payments, lending and financial management spaces. As FinTech entrepreneurs look to build partnerships with their counterparts in BRICS, these numbers highlight the potential number of partners engaged in this area. Identifying suitable partners in a foreign country is the first challenge when building a partnership. Statistics such as these guide entrepreneurs to narrow down the potential number of partners. Thereafter, further contextual information is needed to assess the suitability of the prospective partner. Table 10.3 Number of FinTech operators in BRICS Brazil

Russia

India

Payments

87

28

375

40

Lending

56

37

338

20

Crypto

China

South Africa

9

12

Insurance

23

11

108

Financial management

86

13

169

Wealth management

25

Crowdfunding

25

6

Digital banks

16

7

Other

34

122

692

47

Total

377

224

2 035

153

303

13 4

Source: Brazil (Finnovista 2018), Russia (Soloviev 2018), India (Medici 2019) and South Africa (RMB 2019)

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10.5.6 FinTech experiences in BRICS As partnerships between the BRICS countries develop, it is crucial to understand the sector’s internal dynamics. Each BRICS country has different areas of expertise and weakness that partnerships could support. As an overview of the sector in BRICS, consider the following: • In Brazil, the financial sector is dominated by the traditional banking sector. As Finnovista (2018) reports, 377 FinTech companies were active in multiple product spaces. The concentration of start-ups was in payments and enterprise financial management. The country is a FinTech leader in Latin America, with its ecosystem at least 1.5 times larger than that of Mexico. Also, the ecosystem in Brazil grew by 48% in 2017/18. In Brazil, 70% of FinTech companies originate in São Paulo. Furthermore, 54% of start-ups are over four years old and 26% are younger than two years. About 63% of FinTech companies seek further fundraising, with 45% receiving funding from angel investors (Finnovista 2018). • In Russia, the financial services sector is expanding by adopting new innovative technologies. The sector has not been dramatically transformed, as the traditional banks seek to adopt and implement innovations. Soloviev (2018) argues that investments in Russia’s FinTech sector have stagnated over several years and remained at US$50 million each year. Soloviev notes that this investment pales in comparison to the billions reported in China. The sector’s growth is led by advances in mobile technology that help FinTechs reach previously unbanked consumers, predominantly not satisfied with the traditional sector’s services. The product areas with the greatest number of entrepreneurs are payments, money transfers and online learning. The innovators in Russia are most interested in artificial intelligence, machine learning and big data technology applications to further develop their product offerings. • Medici (2019) argues that the growth of the Fintech sector in India is due to promoting formalised banking, scalable platforms to move money and providing new innovators with the latitude to produce new services to reach the market. The advances experienced within the FinTech sector have contributed to improving the state of financial inclusion in the country, as the traditional sector previously favoured those deemed to be of higher creditworthiness and were generally from the middle- to higher-income segments. The low-income segment was largely unsupported. Innovators are also targeting small and medium-sized enterprises (SMEs) to develop emerging businesses with services appropriate to their needs. Large technology companies such as Google are also interested in entering the FinTech field in India and are looking to see how they can leverage their large platforms. The most prolific product space is payments, which continue to multiply. Medici (2019) predicts that the Indian digital payments market will reach US$1 trillion by 2023. Given the sector’s growth, the traditional sector is interested in partnering with new start-ups to leverage its technology expertise. • In China, the market continues to expand, enabling opportunities for skilled innovators. The simple user experience drives the choice to adopt a particular technology in China, with most platforms providing a similar high-quality

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service (Mittal & Lloyd 2016: 3–2). Investment in the country’s FinTech sector is the highest among the BRICS countries and reportedly reached US$18.2 billion in 2018 (KPMG 2019: 7–23). The FinTech sector advanced rapidly in China, leapfrogging card payments and adopting mobile payments as the preferred means of payment. The large FinTech giants in China provide highly integrated products via their platforms. Chinese consumers are eager to adopt new products that drive the rapid scaling of new products. This growth is aided by a population that is highly literate digitally. • In South Africa, the traditional financial services sector dominates, with new innovators attempting to compete with established players. Technology advancement assists in providing services that are aligned to the demands of consumers. Still, transaction costs remain too high to make a sizable impact on the low-income segment. There is a new emergence of digital banks aimed at competing against their brick-and-mortar counterparts (Chetty et al. 2019: 21, 45). FinTech entrepreneurs are mainly engaged in payments and lending products. Many operators provide services to develop the SME market, which has been flagged as an area for future growth in the country (RMB 2019: 6, 11, 16). There is great interest in collaboration among new entrepreneurs looking to external partners to help scale their services to reach the country’s masses. However, despite the growth of FinTech operators, the FinTech entrepreneur faces several complex challenges in launching a new product/service at scale. FinTechs across BRICS generally struggle to get a sizable market share, as they compete with traditional banks. Competition is limited, as the traditional sector can monopolise the market. The unbanked tend to have a cash preference and need incentives to transition from cash to digital alternatives. Gaining financial literacy will be valuable, given the consumers’ need to understand digital financial services opportunities in underdeveloped areas. These challenges persist, while China is making rapid advances at such a pace that many believe they could soon reach market saturation – which also drives China’s eagerness to partner outside the country. Table 10.4 Predominant challenges experienced in BRICS Brazil

Russia

India

China

South Africa

• Traditional finance sector has majority market share • FinTechs not gaining market share

• Limited competition • Closed nature of financial institutions • Difficult for FinTechs to expand outside Russia due to the lack of funding • Limited financings for SMEs • Regulation controls the expansion of the market

• Cash preference • Lack of adequate infrastructure and digital literacy • Lack of awareness

• Rapid expansion may mean that it could reach market saturation • Advances in technology reduce work opportunities for low-skill workers • Unsure how to expand/partner outside China

• Cash preference • Limited internet access penetration • Limited access to funding • Limited skilled resources • Regulation considerations to access the market

Source: Brazil (Finnovista 2018), Russia (Soloviev 2018), India (Medici 2019: 3–5), China (KPMG 2019: 7–23), South Africa (RMB 2019: 6, 11, 16)

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10.6 Building the development capabilities of the FinTech sector through partnerships 10.6.1 Weak FinTech incubators In launching their business, FinTech start-ups require assistance to access physical infrastructure, basic business development services and seed funding while transforming their business’s conceptual idea into a tangible product or service. Rand Merchant Bank in South Africa believes the role of incubators within the FinTech sector is essential in South Africa’s economy and will provide the basis for building new skills, enabling innovation and acting as a catalyst to create productive small businesses (RMB 2019: 8, 10). Their role in providing opportunities to engage with potential angel investors and venture capitalists is vital, given the business’s high capital investment to secure an appropriate banking licence. Beyond the need for funding, the incubator provides the start-up with mentoring assistance and nurtures high-potential ideas. In developed economies, incubators have provided significant opportunities for start-ups to engage with government authorities, build strong networks with funders, and build partnerships in the formal and traditional sectors (Lavelle 2017). Despite the vital role of incubators and the seemingly rapid growth of incubators in South Africa, with 105 incubators counted by the Department of Trade and Industry (dti), for example, the country is still beset with a start-up failure rate between 62 and 80% within the first 5 years of their existence. Despite South African incubators’ attempts to intervene in a highly complex market, this high failure rate persists. Giebelmann (2018), in discussions with South African incubators, identified the following concerns not adequately addressed by incubators: • Many new incubators entering the market are themselves start-ups that are not adequately prepared or experienced to train desperate and vulnerable start-ups. • Incubators have tended to underplay the multiple and complex aspects of sustainable entrepreneurship. • The incubator cannot be a sounding board, but must play a fundamental role in transforming the trajectory and shape of the start-up’s business plan. • The incubator’s training in a classroom-type setting does not tackle core business functioning scenarios such as customer acquisition, marketing and developing a value proposition. • There is a perception that new incubators are formed in response to the government’s plans to fund new business formations while not monitoring if the programmes funded are appropriately implemented. Consequently, national incubators have not succeeded in their efforts to develop the capabilities of fledgeling FinTech start-ups. Alternative strategies, such as foreign partnerships, must be pursued to build their capabilities.

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10.6.2 International partnership barriers In South Africa, FinTech start-ups interested in partnering with foreign financial service providers have several concerns that deter them from entering into international partnerships. Apart from the foreign incumbent’s fear of the unknown when doing business in a foreign land, there are various risks that both parties must assess before committing to a partnership. From our systematic review of the concerns that technology innovators have about entering into a partnership, we find the following: • Investors have a low-risk appetite in the countries where they operate. Thus, flexible and patient funders are very rare (Swarup & Carraro 2019: 8). The locally-based innovator must ensure that the partnership risks are not transferred to their customers through increased transactional costs or reduced market competition (Cleasby 2017). • The local innovator is hindered by not having access to talent and technical support to nurture the business (Swarup & Carraro 2019: 4, 5, 8). • There are no guidelines or evidence that innovators can rely on to help navigate starting a business, particularly those targeting low-income consumers and entering into foreign partnerships (Findikoglu & Watson-Manheim 2015; Swarup & Carraro 2019: 4, 5, 8; Vutsova & Ignatova 2014). • FinTech start-ups need to be guided in effectively overcoming seemingly initial asymmetric partnerships by developing a constructive and mutually beneficial relationship (Nepelski et al. 2019). • FinTech start-ups need to be guided in entering into a partnership with an international financial service provider that may have limited knowledge of the local cultural and regulatory contexts. The FinTech start-up lacks knowledge of the foreign market’s social, political, economic and regulatory contexts, contributing to their fears of engaging with entrepreneurs in such markets (Hung & Luo 2016; Pfotenhauer et al. 2016). • Innovators need assistance in overcoming the language barriers between BRICS countries. The South African start-up seeking information about the FinTech sector in China, for example, is impeded by little available information in their local language. Language is also an important barrier in general communication between countries (Nepelski et al. 2019; Saric et al. 2019). • In negotiating partnerships, it becomes apparent that different organisations may have different objectives when entering into the partnership. When negotiating the priority objectives of the partnership, conflicts in priority are challenging to manage, particularly when entering into a partnership with asymmetric power dynamics (Saric et al. 2019; Galan-Diaz et al. 2015; Al-tabbaa & Ankrah 2016; De Freitas et al. 2018). • Various studies have determined that trust is closely correlated to distance. It is easier and more cost-effective to form close relationships with their counterparts if they are in closer proximity. It is also more challenging to share tacit knowledge when not engaging with someone in person (Nepelski et al. 2019; Vines et al. 2017; Moran et al. 2016; Findikoglu & Watson-Manheim 2015; Al-tabbaa & Ankrah 2016; Werker et al. 2019).

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• Start-ups are very protective of their intellectual property, data and customer base. The start-up must be assured that such assets will be protected as partnerships are negotiated (Newell et al. 2009: 1–25).

10.6.3 Knowledge sharing as a first step to building foreign partnerships Given the barriers to building a foreign partnership, one can question how one manages competing interests as potential partners attempt to negotiate a partnership. Sharing knowledge and insights across borders is the first opportunity for international counterparts to find a shared perspective (Chetty et al. 2019: 82–95). Many of the barriers discussed can be addressed by applying knowledge management and knowledge-sharing theories to promote sharing and learning (Newell et al. 2009: 1–25). Sharing insights among peer institutions (both local and foreign) is essential for the growth and development of FinTech sectors. As noted in the HSRC survey: knowledge sharing, collaboration and partnerships are broadly supported by FinTech entrepreneurs to build their capabilities and improve their ability to compete with the financial sector (Chetty et al. 2019: 82–95). Partnering with like-minded local start-ups helps FinTech entrepreneurs to share knowledge and learn from their peers. Knowledge is a valuable commodity in the private sector that provides entrepreneurs with a competitive advantage (Lee-Kelley & Crossman, 2004: 1–4). Within this knowledge-based networked economy, as described by Lee-Kelley and Crossman (2004: 1–4), organisations must be equipped to provide a value exchange and understand the concepts of trust and power. To trade knowledge as a value exchange, this knowledge must be codified and articulated with potential partners willing to share and receive such knowledge. Lee-Kelley and Crossman (2004: 1–4) argue that collaboration and knowledge exchange are needed to build the network’s collective good. Such collaboration helps to strengthen all the organisations within the network. The question that emerges is how one puts such processes into practice. Furthermore, there is a need to provide a higher form of targeted entrepreneurship training that helps to build knowledge pertaining to business management problems instead of generic training programmes that do not address the primary concerns of start-ups. Sharing resources and exchange programmes are a way to share insights across borders.

10.6.4 Need for knowledge intermediaries While the concerns of financial service providers persist, opportunities for foreign and local partnerships stagnate, impeding the overall growth of the FinTech sector. Given these concerns, the FinTech sector requires support in protecting its interests and sharing knowledge. Knowledge intermediaries can help to facilitate international partnerships and provide an opportunity to assist innovators in overcoming the various challenges mentioned in the preceding section.

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Resources are needed that can perform boundary-spanning functions while representing the interests of the sector. The intermediary can build knowledge and sources of information that describe the environmental context and help to understand the various institutions’ roles and companies engaged in the foreign market (Pershina et al. 2019). The intermediary can perform the following tasks: • Strengthen the bonds between FinTech networks across international borders and find suitable partners with shared interests and similar objectives in developing a foreign partnership (Kornfeld & Kara 2015; Vines et al. 2017). • Build knowledge of the local context, including understanding the social, cultural, political, economic and regulatory constraints impacting doing business in a foreign area (De Silva et al. 2018). • The knowledge amassed by the intermediary can be shared among organisations that work with the resource. This sharing helps to build the local entrepreneurs’ capacities as they engage with foreign markets (Al-tabbaa & Ankrah 2016; Nepelski et al. 2019). • Intermediaries can access knowledge and information, and make this more accessible, particularly in a foreign language (Silva et al. 2018). • By engaging closely with a foreign network of operators, the intermediary has the opportunity to build strong forms of trust with their foreign counterparts (Aulkemeier et al. 2019; Leijten 2017). Furthermore, there is a need to support the intermediary with an institution such as a national FinTech association acting on their behalf. The FinTech association provides a platform for FinTech stakeholders to collaborate directly within or across borders. The sector can invest in externalising tacit knowledge gained when meeting and engaging with potential foreign partners by pooling resources. The inclusion of boundary spanners enables greater collaboration and learning within the association and forum (Du & Pan 2013). Knowledge intermediaries allow BRICS FinTech operators to learn from their international counterparts, building their capability and maximising their potential locally before entering into international partnerships.

10.6.5 Potential partnership models for BRICS Given the aforementioned concerns, the following table describes the potential methods for FinTech stakeholders in BRICS to build partnerships that support and develop their access to foreign FinTech markets.

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Table 10.5 Potential Sino–South African FinTech partnership strategies Method

Description

Capital investment and FinTech programmes

The experienced/established partner secures a minor equity stake in a specific start-up (RMB 2019: 31). However, this investment needs to be channelled appropriately to high-potential start-ups. To do so, there is a need to improve the service offered by FinTech incubators and accelerators. For example, China’s experience in rolling out such services will help to structure advanced incubator programmes and provide an institutional mechanism to engage with high-potential start-ups.

FinTech product offerings

The experienced/established partner identifies a high-potential start-up or an established foreign FinTech operator and opts to partner with the operator, providing infrastructure and product/service support (RMB 2019: 31). The foreign partner offers insights into the local market and unique market needs, to which product/services need to be tailored. This strategy leverages the experienced partner’s technological expertise and the foreign partner’s contextual knowledge. Traversing the cultural difference in building the partnership will be a concern, but could be addressed through intermediaries.

Mergers and acquisitions

The experienced/established partner opts to enter the market by acquiring a foreign company quickly. This method is complicated due to legal and regulatory concerns, which will delay a process intended to be quick (RMB 2019: 31). The act of acquisition may have adverse implications, given the need to mesh cultures and retain talent and local insights. For example, Chinese business models are unlikely to succeed in an African developing market context without being tailored to local needs.

FinTech joint ventures

The potential FinTech partners works together to develop a new joint institution separate from their current organisations. The fresh business design allows the partners to build a unique structure unimpeded by legacy business processes. The decision to opt into a partnership may help retain skills but may prove a more costly venture (RMB 2019: 31).

Source: Authors

10.7 Conclusion BRICS countries need to develop holistic strategies to promote greater financial inclusion, spurring growth in their economies while addressing poverty challenges. To expand the financial services offered in BRICS, partnerships among FinTech operators are a potential route to support the supply of FinTech services to the market. There are two routes to achieve this goal. First, FinTech operators could enter into partnerships under the current regulatory frameworks, which remain restrictive. The expense of attaining a banking licence is prohibitive and favours the traditional sector to continue operating with a minimal threat of new competition. Well-funded FinTech operators may be able to carry the burden of these costs, enabling a partnership or joint venture to reach the market and compete with the traditional sector.

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The alternative strategy is to revise the regulatory requirements to enter the financial market. The two-tiered Chinese regulatory approach may well support the needs of BRICS, providing less restrictive requirements to enter the market while the associated risks to consumers are minimised. Introducing national FinTech associations representing the FinTech sector’s concerns is one method to engage international counterparts. The knowledge intermediaries also perform a vital task in sharing cultural practices and product insights, building shared perspectives and performing partnership negotiations. As recognised by China, financial services provide the foundations for the Digital Silk Road. This infrastructure provides intra-BRICS trade facilities, but is dependent on BRICS countries building their internal FinTech capabilities. In South Africa, the incubators tasked to develop new businesses are also new to the market and often ill-prepared to build sustainable enterprises. There is a need to supplement these weaknesses among the incubators, given the continued high failure rate of new start-ups. Each BRICS country has its strengths. China can roll out new products at scale; Brazil is a FinTech leader in Latin America; Russia is expanding new innovative technologies; India is developing strategies to support the formerly financially excluded; and South African start-ups see the value of adopting new technologies to compete with the traditional banking sector. Through knowledge intermediaries, BRICS can share their expertise and form partnerships that leverage their strengths. These partnerships can give start-ups exposure to experienced and established FinTech operators. Sharing knowledge with such institutions can help to strengthen and develop their consumers’ capabilities. References

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Section 4 Addressing Economic Development Disparities and Inequalities in BRICS and Africa

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BRICS and Transformation of Africa’s Infrastructure in the COVID-19 Era: Rhetoric and Reality Robert Tama Lisinge

11.1 Introduction Africa’s ambitious vision for its infrastructure development is eloquently articulated in the AU’s Agenda 2063. Africa aspires to have world-class, integrative infrastructure that criss-crosses the continent by 2063. This infrastructure – transport, energy, water and ICT – is envisaged to support Africa’s accelerated integration and growth, technology transformation, trade and development. Delivering Africa’s infrastructure agenda is a daunting task. In 2018, the African Development Bank (AfDB) estimated the continent’s infrastructure requirements at US$130 to US$170 billion per year, with a financing gap in the range of US$53 billion to US$93 billion annually (AfDB 2018). Africa’s massive infrastructure gap provides an opportunity for the continent to leapfrog to transformational and sustainable infrastructure development that is inclusive, low carbon and resource efficient. However, African governments are grappling with multiple challenges and are, therefore, unable to meet their infrastructure financing requirements. This situation is compounded by COVID-19, which is associated with constrained public resources (particularly a shrinking fiscal space). This has prompted governments to channel resources to sectors deemed to be critically affected by the pandemic, notably the health sector. It is, therefore, imperative to adopt innovative financing mechanisms, particularly those involving the private sector, to complement what African governments themselves already spend on infrastructure development. It is equally important to explore all financing options, internal and external, for the continent’s infrastructure projects. In the above context, this chapter explores BRICS’s role in the development of transformational infrastructure in Africa. The chapter uses an actor-oriented approach and the notion of social interface to analyse the gap between the rhetoric of financing regional and sustainable infrastructure projects in Africa by BRICS countries, collectively and individually, and what happens on the ground. The analysis draws from the theories of interorganisational partnerships, international cooperation and agenda setting. Specifically, there is an attempt to answer the following questions: (i) What is the gap between the policy and practice of BRICS regarding regional infrastructure development in Africa? (ii) What explains this gap and how can it be closed?

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The rest of the chapter is structured as follows. Section 2 presents the status of infrastructure development in Africa, highlighting deficiencies and investment opportunities. Section 3 reviews theories that provide insights into gaps between the intentions of institutions on infrastructure investments and the reality. Section 4 discusses transformational infrastructure from an African perspective and explores the challenges and opportunities the COVID-19 pandemic offers for infrastructure development. Section 5 examines the role of BRICS in transformational infrastructure development in Africa. Section 6 concludes the chapter and provides policy recommendations.

11.2 Status of infrastructure development in Africa: Gaps and investment opportunities Over the years, regional integration, industrialisation, enhanced trade, and economic and social transformation have been among the key objectives of Africa’s development agenda. It is generally acknowledged that adequate infrastructure is a prerequisite for achieving each of these objectives. Yet, available information suggests that Africa’s infrastructure is inadequate, both in terms of quantity and quality, and worse than that of other regions of the world. For instance, only 34% of rural Africans live within 2 km of an all-season road, compared to 65% in other developing regions. Moreover, only half of the existing rural road network is in good or fair condition (AfDB 2021). The Trans-African Highways network conceived in the early 1970s to link different countries on the continent is still incomplete, with missing links constituting more than 20% of the 57 300-km network. Africa’s railway network is also inadequate; it is estimated that rehabilitating the continent’s aging rail networks would cost US$3 billion (AfDB 2021; AUC 2014). In addition, most of Africa’s railways are disconnected lines reaching inland from ports. Many railway structures and some of the tracks are now more than 100 years old. Regarding maritime transport, general and containerised cargo moving through Africa’s ports has tripled since the mid-1990s, but further growth in container traffic will require additional investments. Africa’s energy sector is equally plagued with challenges. The continent remains the least energised region in the world, with only 250 gigawatts (GW) of installed electricity capacity – compared to 7 100 GW globally – and 548 million of the 789 million people globally who lacked access to electricity in 2018. In essence, Africa’s share of the global installed electricity capacity is only 3.5% and its share of the non-hydro renewable capacity of 1 225 GW is only 1% of the global capacity (World Bank 2020). Yet, the continent has a huge demand and abundant renewable energy resources. While high proportions of urban populations have access to electricity in countries within the Maghreb – as well as South Africa, Zimbabwe and many parts of East Africa

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– this proportion is as low as 22% in other countries such as South Sudan. Similarly, a relatively high proportion of the rural population in the countries of the Maghreb has access to electricity while the rest of the continent sees a significant drop, even in relatively well-provisioned countries. In some cases, such as in the Central African Republic, less than 1% of the rural population has access to electricity. More than 70% of the people without access to electricity or modern energy services on the continent live in rural areas. In sub-Saharan Africa, only 28% of healthcare facilities benefit from reliable access to electricity (AfDB & Korea–Africa Economic Cooperation 2019). Gaps in Africa’s infrastructure sector, the continent’s endowment of abundant natural resources and the requirements of its development initiatives make Africa an appealing destination for investment in infrastructure projects. The African Continental Free Trade Area (AfCFTA), for instance, is expected to significantly increase the demand for infrastructure on the continent (particularly crossborder roads and railways as well as ports). The AU’s Agenda 2063 has also been translated into flagship projects, including mega infrastructure projects such as the construction of the Inga Dam in the Democratic Republic of the Congo (DRC) and the African continental high-speed rail project. Moreover, the second Priority Action Plan of the Programme for Infrastructure Development in Africa (PIDA PAP 2) consists of 69 projects in the transport, energy, transboundary water resources and ICT sectors. These projects, to be implemented between 2021 and 2030, are distributed across Africa and estimated to cost US$160.8 billion. This is not only a huge investment opportunity for BRICS countries, but also an opportunity for them to contribute to the achievement of the continent’s trade, industrialisation, regional integration and economic transformation aspirations. Programmes developed to address Africa’s infrastructure deficiencies have so far had limited success. For instance, out of 409 projects of the first phase of PIDA, launched in 2012, only 155 (37.5%) are under construction or already operational; 14.9% are currently in the prefeasibility or feasibility study phases, and 10.1% are still in the project definition stage. Only 6% of energy, 19% of transport and 11% of water projects of PIDA are in operation (AUDA-NEPAD 2020). The next section examines theories that could explain the slow pace of implementation of Africa’s regional infrastructure programmes.

11.3 Theoretical considerations and analytical framework Several theories may provide insights into the performance of partnerships, such as those between Africa and BRICS countries, in the implementation of the continent’s infrastructure projects. This includes the theories of interorganisational partnerships, international cooperation and agenda setting. The actor-oriented approach and the notion of social interface may also shed light on performance in the implementation of projects.

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The theory of interorganisational partnerships explains what drives organisations to work together, as well as the challenges and benefits of collaborative efforts. The formation of a partnership is generally driven by a desire to achieve a shared common goal through mutual cooperation and responsibility with the expectation of a net benefit for each party involved (Ecological Society of Australia 2009). A partnership is partly driven by economic considerations and is viewed as a vehicle for accessing additional resources, specialised skills and funding. It also allows stakeholders with vested interest to participate in the management process, underscoring its importance as a tool for multidimensional/sectoral programmes and projects. Overall, it provides a framework for more inclusive governance (Laing et al. 2009). Moreover, partnership is used as an instrument for gaining political and economic influence regionally and globally. For instance, it is a model for cooperation between emerging powers such as Brazil and China, for example through the BRICS framework (Haibin 2010). However, the shared and divergent partner motivations and outcome expectations can create synergies and challenges in the implementation of partnerships (Jie 2010). The main criticism of development partnerships is that relations between partners are characterised by asymmetries in material and symbolic power. The neo-institutionalism theory provides a different lens of viewing the relationship between organisations. It highlights that, beyond a quest for efficiency and effectiveness, organisations seek legitimacy, which induces them to conform to different isomorphic pressures (DiMaggio & Powell 1983; 1991). Hall and Taylor (1996) distinguish between rational choice institutionalism, historical institutionalism and sociological institutionalism. Rational choice institutionalism is mainly related to economics (for example, transaction cost economics), whereas historical and sociological institutionalism have a more social orientation (De Vaujany et al. 2014). The international cooperation theory is based on the idea that actors with inconsistent aspirations still share common interests that enable strategic interaction and cooperation. Differences between actors over policy choices and preferences raise distributional issues that impact the probability of states reaching a negotiated agreement and their motivation to remain committed to an agreement. This, in turn, leads to a myriad of issues such as the credibility of commitments and issue linkages, the simultaneous discussion of two or more issues for joint settlement (Dai et al. 2017). Several factors affect international cooperation, including the strategies available to the actors, the number of actors, the distribution of power among them and their relative gains, domestic politics and the role of institutions. The actor-oriented approach has been used by development anthropologists concerned with the social life of projects to study the interactions between actors of development projects who have different interests, agendas, and understandings and interpretations of policies. These different perspectives create conflicts, the resolution of which is the focus of most efforts to implement policies rather than

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compliance with predetermined scripts or step-by-step instructions on how to translate intentions into reality (Mosse 2004). Long (1992) introduced the notion of social interface to analyse ‘the often-large gap between the rhetoric of national planning and policy and what happens on the ground’. This entails giving close attention to the interactions and negotiated outcomes that emerge between local and external actors. His idea of interface embraced broad social discontinuities based on discrepancies in values, interests, knowledge and power (Long 1992). Inspired by the actor-oriented approach, Olsen (2012) argues that the real logic of actors is not aligned with the formal ideas and assumptions of projects and that, contrary to project expectations, the inputs of intervention are appropriated by actors in ways that run counter to the objectives and methods of projects. Finally, the theory of agenda setting deals with the ways in which issues get on the national agenda, how they attract the attention of officials or legislators, and how governments prioritise problems. It seeks to explain how agendas are built and who participates in the agenda-building process (Cobb et al. 1976; Green-Persen & Mortensen 2009; Cobb & Elder 1971). The theory of agenda setting could, therefore, be used to explain why priorities of BRICS countries are not necessarily on the national political agenda of African countries, and vice versa. According to Vliegenthart et al. (2013), attention is determined by the interplay of preferences, information and institutions. They argue that policy attention comes about when preferences, information and institutions interact. This chapter contributes to the literature by examining the role of BRICS in Africa’s infrastructure development, focusing on the financing of regional and sustainable projects. In this regard, the gap between the intention of BRICS in Africa’s infrastructure development, based on policy statements, and the reality in terms of actual investment in projects is analysed. Building on the above theories, the chapter argues that BRICS countries (collectively and individually) will contribute more to Africa’s regional infrastructure agenda if: • Their priorities are aligned with Africa’s regional infrastructure priorities and these regional priorities are also aligned with the national political agenda of countries on the continent. • They channel additional resources (specialised skills and funding) to PIDA priority projects. • The interests, agendas, and understandings and interpretations of policies on Africa’s infrastructure development by BRICS and countries on the continent converge. • The thoughts and interventions of officials of BRICS financial institutions as well as institutions in BRICS countries such as the Development Bank of Southern Africa (DBSA), are aligned with the formal ideas and assumptions of these institutions and, in particular, converge with the objectives of project finance instruments of the institutions.

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The next section defines transformational infrastructure from an African perspective. The section also examines the implications of COVID-19 for the continent’s infrastructure development and the opportunities it offers BRICS countries to invest in projects that would transform the sector. A basis for analysing the convergence of BRICS and African infrastructure agendas is provided in Section 11.5.

11.4 Transformational infrastructure development from an African perspective: Building forward better in the COVID-19 era The vision, objectives and selection criteria of priority or flagship projects of Africa’s development initiatives provide insights into the notion of transformational infrastructure development from the continent’s perspective. In this context, transformational infrastructure could be viewed with a lens of continental initiatives such as the AU’s Agenda 2063, where the African Continental High-Speed Rail project and the Inga Dam project (both mentioned in Section 11.2), as well as the Single African Air Transport Market and the AfCFTA, are among the flagship projects. In essence, infrastructure projects that support the achievement of the aspirations of Agenda 2063 could be considered transformational. Transformational infrastructure could also be viewed in the context of PIDA. An integrated corridor approach has been adopted for PIDA PAP 2. The approach entails the integration of transport, energy, ICT and water projects in the same corridor or geographical space. The criteria for selecting PIDA PAP 2 projects are innovative and include gender sensitivity (providing incentives for women in the procurement process for projects), rural connectivity, climate friendliness and corridor planning. It also includes job creation, where a tool has been developed by the AU Development Agency (AUDA-NEPAD) to assess the job-creation potential of projects and their economic impact, financial attractiveness for private-sector investment and use of smart/innovative technologies. In addition, only regional projects that have explicit agreements between concerned countries are included in PIDA PAP 2. In essence, from a PIDA perspective, transformational infrastructure should deepen regional integration, be inclusive and sustainable, and have economic and social impact. Mebratu and Swilling (2019) discuss transformational infrastructure in the context of developing a ‘well-being’ economy in Africa that is aligned to the PIDA PAP 2 project selection criteria. The well-being economy envisages the continuous fulfilment of human well-being, with primary attention given to job creation, poverty eradication and gender equality while mainstreaming the sustainability of the ecosystems. It promotes transformation that is internally driven and responsive to the national context as the critical success factors for development that is inclusive, climate resilient and resource efficient.

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Transformational infrastructure is also linked to the concept of quality infrastructure. ‘Quality’ investment means considering a wide range of factors when making investment decisions, including environmental and social impact, debt sustainability, the safety and reliability of the construction, and the impact on local employment and technical expertise. The G20 has articulated the following principles for quality infrastructure investment: maximising the positive impact of infrastructure to achieve sustainable growth and development, raising economic efficiency in view of life-cycle cost, integrating environmental consideration in infrastructure investment, building resilience against natural disasters and other risks, integrating social considerations in infrastructure investment and strengthening infrastructure governance. The COVID-19 pandemic has had implications for the transformation of Africa’s infrastructure. It has had a devastating socioeconomic impact in Africa, with the UN Economic Commission for Africa (UNECA 2021) estimating the drop in the continent’s GDP in 2020 to be between 1.7 and 5.4%. The International Monetary Fund (IMF 2022) estimated that sub-Saharan Africa’s GDP growth would bounce back to 4.7% in 2021 but growth in 2022 would drop to 3.6%. Africa’s infrastructure sector has not been spared. The impact of COVID-19 on the sector, particularly the construction industry, manifested through delays and increased costs of projects due to travel restrictions (including lockdowns and partial or full closure of borders). Landlocked countries bore the brunt of the impact as a result of delays and cost escalations in the importation of construction material as well as equipment and their spare parts arising from supply chain disruptions. The pandemic also offers opportunities for infrastructure development. In this regard, investment in infrastructure is often an essential component of economic stimulus packages because of the sector’s potential to create jobs. In particular, COVID-19 provides an opportunity to improve the sustainability of Africa’s infrastructure. To that end, resources allocated to the infrastructure sector from COVID-19 relief packages could be used to build the resilience of the sector and invest in green projects. For instance, roads could be constructed using design guides that take into account the increased frequency and severity of extreme climatic events; deficient infrastructure could be retrofitted; new materials that may better resist climate change could be used in construction; and green purchasing could be prioritised. Investment in the digitalisation of infrastructure networks could also be prioritised. The next section examines the BRICS policy on infrastructure development, in general, and in relation to Africa in particular. It also examines BRICS’s investment in Africa’s infrastructure and the extent to which this contributes to the continent’s transformation agenda.

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11.5 BRICS and transformational infrastructure development in Africa 11.5.1 BRICS and infrastructure development The BRICS mechanism aims to promote peace, security, development and cooperation. It also aims to contribute significantly to the development of humanity and establish a more equitable and fairer world. BRICS countries occupy 30% of the global territory, are home to 45% of the world’s population and account for 17% of world trade (Government of South Africa n.d.). South Africa was invited to join the BRIC bloc on 24 December 2010. Infrastructure is an important component of the BRICS agenda. This is underscored in the declarations of various BRICS summits. These declarations provide useful insights into the thoughts of BRICS leaders regarding the rationale for infrastructure development, the challenges that need to be addressed and the solutions to these challenges (BRICS 2021). In the Brasília Declaration of 14 November 2019, for instance, member countries stated their intention to explore ways to promote and facilitate investments in infrastructure and connectivity in order to support economic growth, trade and job creation. In the Ufa Declaration of June 2015, they stressed that investment in infrastructure, logistics and renewable energy is a strategic goal for the sustainable growth of their economies. The Xiamen Declaration of 4 September 2017 specifically underlined the importance of energy for economic development and the leaders’ commitment to strengthen BRICS cooperation in the energy sector. They recognised that sustainable development, energy access and energy security are critical to shared prosperity and the future of the planet, and acknowledged that clean and renewable energy needs to be affordable to all. They committed to work together to promote the most effective use of fossil fuels and wider use of gas, hydro- and nuclear power, which will contribute to transformation towards a low-emissions economy, better energy access and sustainable development. In the Moscow Declaration of 17 November 2020, the BRICS leaders recognised the importance of strengthening infrastructure data sharing to better identify investment opportunities, leverage private-sector investments and meet the infrastructure investment needs of their countries. They highlighted the initiative to explore sharing relevant and existing national data on infrastructure investment projects in a common data room on a voluntary basis. BRICS has also demonstrated the importance it attaches to infrastructure development through initiatives such as the creation of the New Development Bank (NDB), which is discussed at length in Section 11.5.3; the BRICS Railways Research Network; the Working Group on Energy and Energy Efficiency; the Working Group on ICT; the BRICS Energy Cooperation Platform; meetings of the BRICS ministers of energy;

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and the adoption of a document on BRICS good practices regarding public–private partnership (PPP) frameworks.

11.5.2 BRICS and infrastructure development in Africa South Africa is a strong voice for Africa’s infrastructure development in BRICS. It placed the continent’s infrastructure development at the centre of the two BRICS summits that it has hosted so far, namely the 5th and 10th BRICS Summits in Durban and Johannesburg in 2013 and in 2018 respectively. The BRICS leaders reaffirmed their support for sustainable infrastructure development in Africa at both summits, including by addressing the infrastructure deficit on the continent. South Africa has ensured that the discourse on infrastructure investment in the framework of BRICS is based on mutual benefit to support industrial development, job creation, skills development, food and nutrition security, poverty eradication and sustainable development in Africa. South Africa has also ensured that discussions at BRICS about Africa’s infrastructure development are in the context of the continent’s existing regional infrastructure development programmes. The summit in Durban was held under the theme ‘BRICS and Africa: Partnership for Development, Integration and Industrialisation’. In the eThekwini Declaration of the summit, the BRICS leaders – within the framework of the New Partnership for Africa’s Development (NEPAD) – expressed support for African countries in their industrialisation process. They acknowledged that infrastructure development in Africa is important and recognised strides made by the AU to identify and address the continent’s infrastructure challenges through the development of PIDA, the AU– NEPAD Africa Action Plan (2010–2015), the NEPAD Presidential Infrastructure Champion Initiative and the Regional Infrastructure Development Master Plans that identified priority infrastructure development projects critical to promoting regional integration and industrialisation. The summit in Johannesburg was held under the theme ‘BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution’. BRICS leaders, in their declaration at the summit, again acknowledged the importance of infrastructure development and connectivity in Africa and recognised the AU’s role in addressing the continent’s infrastructure bottlenecks. The BRICS leaders have also welcomed the AU’s vision, aspiration, goals and priorities for Africa’s development as enshrined in Agenda 2063. They have reaffirmed their support for Africa’s implementation of its various programmes in pursuit of its continental agenda for peace and socioeconomic development. They have also expressed their willingness to engage in joint endeavours to advance Africa’s solidarity, unity and strength through support measures for regional integration and sustainable development.

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This subsection has shown that infrastructure, not only in the BRICS countries but also in other emerging economies and developing countries, is an important component of the BRICS agenda. In this context, the next subsection discusses BRICS policies and practices regarding investment in Africa’s infrastructure development.

11.5.3 Analysis of BRICS involvement in Africa’s infrastructure development: Policy and practice (1) New Development Bank The NDB (also known as the BRICS Bank) is the main mechanism whereby BRICS countries invest in infrastructure development. The BRICS leaders have consistently linked infrastructure and sustainable development with the NDB. In the Ufa Declaration, they reiterated that the NDB shall serve as a powerful instrument for financing infrastructure investment and sustainable development projects in the BRICS countries, and other emerging market economies and developing countries (EMDCs), and for enhancing cooperation between countries. They recognised the need for the bank to build a strong, balanced and high-quality portfolio of projects. Overall, the NDB is viewed as a global development finance institution that mobilises resources for infrastructure and sustainable development projects in BRICS countries and other EMDCs. BRICS leaders are keen to highlight that the first set of loans given by the NDB were for renewable energy projects in BRICS countries and that the bank has issued green bonds, underscoring its commitment to sustainable development. The BRICS Task Force on PPPs and Infrastructure has been created to facilitate dialogue on infrastructure, including the G20 infrastructure agenda and the NDB’s Project Preparation Facility. This subsection discusses the policy and practice of the bank, viewed through an African prism. Policy The agreement to establish the NDB was reached in July 2014 at the 6th BRICS Summit in Fortaleza (Brazil). The bank officially started operations in July 2015 with authorised initial capital of US$100 billion, and focuses on financing sustainable development and infrastructure projects. It seeks to mobilise resources for such projects in BRICS and other emerging economies and developing countries. The bank dedicated about two-thirds of its financing commitments between 2017 and 2021 to sustainable development and infrastructure projects. This underscores its recognition that physical infrastructure is a critical enabler of faster and inclusive economic growth, and that sustainability criteria are essential to ensure that this infrastructure safeguards the physical and social environment for current and future generations. The NDB (which is based in Shanghai with a regional office in Johannesburg) is designed to use the full range of financing instruments, including long-term loans,

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guarantees, syndicated loans with private investors, equity investments, project bonds, and co-financing arrangements with national and multilateral development finance institutions. Local currency financing is part of the bank’s value proposition, since this mitigates risks faced by borrowers and supports the deepening of capital markets in member countries (Russian News Agency 2017; Coalition for Human Rights in Development 2020). The NDB’s desire to focus on financing sustainable development and infrastructure projects and to mobilise resources for projects, not only in BRICS, but also in other emerging economies and developing countries, underscores its relevance to Africa’s infrastructure development agenda. Practice In 2016, the NDB disbursed US$1.5 billion for infrastructure projects and sustainable development in BRICS countries, including South Africa. Analysis of the allocation of the NDB’s disbursed loans reveals a strong concentration in China and India, the destination of 65% of the total disbursement in 2016, while only 6% was destined for South Africa (BRICS Policy Centre 2018). As discussed in Section 11.3, several factors affect international cooperation, including the distribution of power among actors. China wields strong political and economic power among BRICS countries, which may explain the large share of resources allocated to it compared to South Africa. In 2010, China became the 2nd-biggest economy in the world, Brazil the 6th, Russia the 9th, India the 10th and South Africa the 26th (Government of South Africa n.d.). In 2018, the NDB committed US$500 million to two African infrastructure projects, both in South Africa: one in the energy sector and the other in transport. The first loan to the amount of US$300 million to the DBSA aims to facilitate investments in renewable energy that will contribute to power generation and the reduction of CO2 emissions in South Africa. The second loan to the amount of US$200 million aims to support the development and rehabilitation of maritime and onshore infrastructure of the Durban Container Terminal. This project is to expand and modernise existing facilities to permit an improved mode of operation and to develop infrastructure that fits the trends in the global shipping industry (AfDB 2018).

There seems to be huge scope for the NDB to scale up its investment in Africa given that only 6% of its disbursed loans in 2016 was destined for South Africa. The fact that the two projects that the bank committed to support in Africa in 2018 were in South Africa suggests that there is much room to extend its reach further on the continent. It also suggests that it did not support any regional infrastructure project in 2018. However, the bank demonstrated its commitment to sustainable development by providing a loan to the DBSA to facilitate investment in renewable energy. It should be noted that the NDB successfully registered local currency bond programmes in China (RMB10 billion) and South Africa (R10 billion), and a Ruble programme (RUB10 billion) with India in 2019 (WEF n.d.).

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(2) Involvement of individual BRICS countries in Africa’s infrastructure development Beyond the NDB, individual BRICS countries have policies and have invested in Africa’s infrastructure development. This subsection looks at the involvement of China and South Africa in Africa’s infrastructure development. It focuses on the policies and actual investment of these countries in Africa. China was selected because it is a leading investor in Africa’s infrastructure, while the rationale for selecting South Africa is that it is the only African country that is part of BRICS.

China and Africa’s infrastructure development Policy There are signals that China seeks to strengthen its involvement in Africa’s regional infrastructure development. The premier of the State Council of the People’s Republic of China visited the AU Commission (AUC) in May 2014 and mentioned in his speech that ‘China will get involved in highway, railway, telecommunications, electric power and other projects in Africa to facilitate regional connectivity’. He made several important announcements, including that China would: • assist Africa in building a high-speed railway network; • cooperate with Africa to establish a high-speed railway research and development centre on the continent with a view to sharing relevant technologies, experience and management expertise; • provide an additional US$10-billion credit line to African countries for mutually agreed projects, which will raise the total amount of promised credit to US$30 billion; • put another US$2 billion into the China–Africa Development Fund, thereby raising it to US$5 billion; and • partner with the AfDB to establish a joint fund for financing Africa’s infrastructure development. China’s intention to boost the China–Africa Development Fund and to establish a joint fund with the AfDB could contribute to fast-tracking the implementation of the continent’s infrastructure projects, particularly regional ones, many of which are currently stalled due to lack of dedicated funds. It is interesting that the China Overseas Infrastructure Development and Investment Corporation (COIDIC) was established in 2016 by the China–Africa Development Fund with initial capital of US$500 million to invest in and manage projects from concept to feasibility studies, financial close and commercial operations. Its aim is to enhance China– Africa cooperation on infrastructure, improve Africa’s sustainable development capacity, and promote the transformation and upgrading of Chinese engineering enterprises while encouraging the ‘Going Global’ of Chinese technology, standards and equipment (AfDB 2018). COIDIC’s focus on improving Africa’s sustainable development capacity is compatible with the continent’s desire to develop climate friendly infrastructure.

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The Forum for China–Africa Cooperation (FOCAC) is another avenue for Africa and China to engage in infrastructure development. To this end, in the Beijing Declaration of the 2018 FOCAC Summit, Africa and China agreed to build synergy between the Belt and Road Initiative (BRI) and development strategies of African countries. They also agreed to form a strong synergy between the BRI and the AU’s Agenda 2063, which has a regional infrastructure development component. The fact that China is signing separate memorandums of understanding on the BRI with African countries and organisations indicates that both national and regional projects may be implemented in the context of the initiative (Lisinge 2020). Practice There is evidence that China is translating its rhetoric on Africa’s infrastructure development into reality and that it is involved in both national and regional infrastructure projects on the continent. Moreover, its investment in hydropower generation and railways illustrates that it promotes clean energy and environmentally friendly transport solutions which are in line with Africa’s desire for a transformative and sustainable infrastructure development. The AfDB’s report on infrastructure financing trends in Africa captures China’s involvement in the continent’s infrastructure development quite well (AfDB 2018). China’s investments and construction in African infrastructure amounted to US$25.7 billion in 2018. This was 32% higher than the US$19.4 billion it invested in 2017, and the highest level of commitments recorded since the Infrastructure Consortium for Africa (ICA) started collecting such data, which averaged US$13.1 billion per year for the 2011 to 2017 period. The largest share of Chinese financing (71%) was for the energy sector, which amounted to US$18.3 billion (AfDB 2018). China committed US$5.8 billion to build a hydropower plant in the eastern Mambila region of Nigeria, which will be the largest power plant in the country (AfDB 2018). In the transport sector, China’s commitments amounted to US$6.6 billion in 2018 or 26% of total financing (AfDB 2018). Financing of US$2.3 billion will support the construction of a 390-km railway line in Zambia (AfDB 2018). The line will connect Zambia’s railway with Malawi’s railway at Chipata, the terminus of a 1 067-km line from Malawi (AfDB 2018). Africa’s resource-rich countries, such as Angola and the DRC, have leveraged their commodities to negotiate ‘resource-for-infrastructure’ deals with China. In essence, African countries are taking advantage of China’s huge need for natural resources to attract not only foreign direct investment, but also Chinese expertise and technology for physical infrastructure development on the continent. For example, the EXIM Bank of China agreed to finance more than US$6 billion in infrastructure using a copper and cobalt mining joint venture in the DRC as a guarantee (UNECA & AUC 2012; Forster & Briceno-Garmendia 2010). These are essentially commoditysecured loans, given to countries such as Angola and the DRC, that are not given in

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cash but tied to infrastructure constructed by Chinese companies. Overall, there is evidence of strong Chinese involvement in infrastructure development in resourcerich African countries. For example, between 2011 and 2013, Nigeria received US$8.4 billion in loans for infrastructure projects from Chinese public institutions. Cameroon, another oil producer, received almost US$2.1 billion from China (ICA 2013). The loan to Nigeria was channelled towards the development of airports and railways, while Cameroon was expected to use part of the funds received to build a road linking the country’s capital Yaoundé and its economic hub Douala. China is also funding infrastructure in African countries that are not necessarily rich in mineral resources, and is increasingly supporting the activities of its construction companies in these countries. For example, the Ethiopia–Djibouti railway was constructed by the China Civil Engineering Construction Corporation and the 485km Nairobi–Mombasa railway was constructed by the state-owned China Roads and Bridges Corporation. China has a long history of involvement in Africa’s regional infrastructure projects. For instance, it provided assistance in the construction of the 1 860-km Tanzania– Zambia railway. It was also involved in the construction of the Nairobi–Mombasa railway in Kenya (mentioned above, which was opened in 2017 and is envisaged to be extended to neighbouring countries) and the Addis Ababa–Djibouti railway project (also mentioned above, which was completed in 2018). Another example of China’s involvement in Africa’s regional infrastructure development is its financing of the railway line that will connect Zambia and Malawi. Critics of Chinese investment in Africa’s infrastructure express several concerns, including what they perceive to be a new wave of African debt, lack of transparency and unfair procurement processes, limited or lack of transfer of technology, limited job creation for local people, non-compliance with national design standards and the quality of infrastructure delivered. The onus is on African countries to ensure that they derive maximum benefit from infrastructure partnerships with China and indeed other countries or groups of countries.

South Africa and Africa’s infrastructure development Policy South Africa is uniquely positioned to support infrastructure development in Africa. It was the first African country and the first G20 country to become a member of the ICA in 2013 (AfDB 2018). In addition to being a member of the NDB, it is the base of the DBSA that seeks to play a pivotal role in delivering developmental infrastructure in South Africa and the rest of the African continent. The mission of the DBSA is to ‘advance the development impact in the region by expanding access to development finance and effectively integrating and implementing sustainable development solutions to improve the quality of life of people through the development of social

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infrastructure’. The bank also ‘supports economic growth through investment in economic infrastructure; regional integration; and promotes sustainable use of scarce resources’ (DBSA n.d.). A strategic objective of the DBSA is to provide integrated infrastructure solutions across the value chain and be the partner of choice for infrastructure solutions. The bank plays a key role in the preparation, funding and building phases of the infrastructure development value chain. The DBSA’s clients/markets include municipalities, state-owned enterprises (SOEs), PPPs and the private sector in South Africa, as well as SOEs and PPPs in the rest of Africa. The DBSA has several facilities to help achieve its objectives, including the Project Preparation Fund, the SADC Project Preparation and Development Facility, and the Green Fund. PIDA projects seem to be tailor-made for the DBSA’s funds, as they promote regional integration, are large-scale projects and generally require preparation. These characteristics are in sync with the objectives of the funds; hence, one would expect more PIDA projects to be financed by the DBSA (DBSA n.d.). Practice There is evidence of some consistency in the DBSA’s policy and practice on infrastructure development. In 2018, the DBSA committed US$1.1 billion (more than twice its 2017 commitments of US$497 million) to infrastructure development (AfDB 2018). The highest commitments (US$680 million) targeted the energy sector (AfDB 2018). Commitments of US$90 million in the form of 2 loans supported the 102-megawatt (MW) Copperton Wind Farm project in South Africa that will supply 375 gigawatt hours of clean green energy annually to the national grid for 20 years of operation (AfDB 2018). A loan commitment of US$80 million supports the Lauca Hydropower Project in Angola (the largest such facility in the country and among the biggest in the region), with a planned installed capacity of 2 070 MW (AfDB 2018). Commitments to the water and sanitation sector amounted to US$272 million, compared with commitments of US$5 million in 2017 – a significant increase. Multisector projects attracted US$68 million of commitments (compared with US$81 million the year before) and transport operations attracted US$36 million (compared with US$381 million in 2017), which is a significant drop (AfDB 2018). (3) Explaining the gaps between policy and practice The rhetoric of BRICS countries, individually and collectively, about infrastructure development is generally consistent with Africa’s infrastructure development agenda. For instance, the NDB’s desire to focus on financing sustainable development and infrastructure projects and to mobilise resources for projects not only in BRICS, but also in other emerging economies and developing countries underscores its relevance to Africa’s infrastructure development aspirations.

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The NDB and financial institutions in BRICS countries, particularly the DBSA in South Africa and COIDIC in China, were designed to address project preparation challenges that hamper infrastructure development in Africa. Moreover, the NDB recognises that compliance with sustainability criteria is essential for ensuring that the infrastructure which it finances safeguards the physical and social environments for current and future generations. The fact that the bank dedicated about two-thirds of its financing commitments between 2017 and 2021 to sustainable development and infrastructure projects demonstrates its intention to be a major actor in this area (BRICS Policy Centre 2018). The share of this commitment that is allocated to Africa, beyond South Africa, is an indication of the NDB’s interest in the continent as a whole. From this, it appears that the NDB has so far not shown much enthusiasm to venture into other African countries. There seem to be huge scope for the NDB to scale up its investment in Africa given that only 6% of its disbursed loans in 2016 was destined for South Africa. Moreover, the fact that the two projects that the bank committed to support in Africa in 2018 were in South Africa suggests that it may have limited interest in other countries on the continent so far. It also means that it did not support any regional infrastructure project in 2018. However, the bank demonstrated its commitment to sustainable development by providing a loan to the DBSA to facilitate investment in renewable energy. The bank has also contributed to improving the availability of local currency financing in South Africa, where it has registered a local currency bond programme. It should be noted that the NDB is a new bank, established in 2014, which makes it premature to draw firm conclusions about the depth and breadth of its operations. In addition to policies of BRICS as a bloc, individual BRICS countries such as China and South Africa have policies to address the problem of a lack of bankable projects in Africa. For instance, COIDIC’s goal is to invest in and manage projects at all the stages across the infrastructure development value chain. Its aim to improve Africa’s sustainable development capacity is compatible with the continent’s desire to develop climate-friendly infrastructure. China has also signalled its intention to boost the China–Africa Development Fund and to establish a joint fund with the AfDB. This could contribute significantly to the implementation of projects, as a lack of dedicated funds is a hurdle to regional infrastructure programmes in Africa. As a country, China seems to match its rhetoric on infrastructure development in Africa with action. It is involved in both national and regional infrastructure projects on the continent. China’s investment in hydropower generation also illustrates that it promotes clean energy solutions, which is in line with Africa’s desire for transformative and sustainable infrastructure development. In addition, its investment in railways contributes to Africa’s sustainable development aspiration, as rail transport is widely considered to be an environmentally friendly mode of transport. South Africa (notably through the DBSA) could also be a major actor in Africa’s regional infrastructure development, not only because the geographical scope of

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the bank’s operation is stated to be beyond South Africa, but also because it seeks to be involved in project preparation, which is a major challenge on the continent. The fact that the bank was conceived to serve both the public sector and the private sector, through PPPs, aligns with Africa’s transformative infrastructure development agenda. PIDA, for instance, prioritises projects that have the potential to attract private-sector investment. This suggests that PIDA projects that are located both in South Africa and out of the country are well suited and eligible for funding by the DBSA. In practice, the DBSA’s investment in clean and large energy projects – in and outside South Africa – underscores the bank’s contribution to Africa’s transformational infrastructure agenda. Its investment in multisector projects is also coherent with the integrated corridor approach used to design the second phase of PIDA (PIDA PAP 2). Despite efforts by BRICS countries to invest in Africa’s infrastructure projects, there is room for them to scale up their investments, particularly in regional projects beyond South Africa. Overall, gaps between BRICS policy and practice on infrastructure development in Africa could be explained by several factors. First, projects that are priorities for BRICS countries and their institutions may not necessarily be priorities for African countries. Drawing from the theory of interorganisational partnerships, asymmetries in material and symbolic power – within BRICS and between BRICS and African countries – may lead to priorities of BRICS countries prevailing over those of African countries in terms of projects to be implemented. South Africa, which champions Africa’s course in BRICS, may not be the most influential country in the bloc in terms of political and economic strength. By the same token, African countries may wield less influence than BRICS countries in their relationship. This reduces the chances of Africa’s priority projects getting onto BRICS’s agenda. This may lead to weak ownership by African countries of projects preferred by BRICS, which will stall the implementation process. It may also explain the relatively low level of investment of the NDB in Africa so far. Moreover, BRICS and African countries operate within time and resources constraints, and this affects the number of projects they can address within a given period – what is included on their agenda, as per the agenda-setting theory. In this context, the preference of BRICS may prevail. Second, and drawing from the theory of international relations, the fact that two or more countries are involved in regional projects may explain why BRICS countries and their institutions have implemented more national projects in Africa than regional ones. PIDA projects, for instance, require intergovernmental agreements between concerned countries that could entail delicate negotiations on political and technical issues. Third, differences in interests, agendas, and understandings and interpretations of policies by BRICS and African countries may also account for the NDB’s relatively low

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level of investment in Africa so far. As mentioned in Section 11.3, which introduced the notion of the social interface of projects, these different perspectives create conflicts whose resolution is the focus of most of the effort to implement policies rather than compliance with predetermined scripts or step-by-step instructions on how to translate intentions into reality. It may be helpful to have a mechanism to hold BRICS countries accountable for their commitments to Africa’s infrastructure development. To this end, the accountability framework articulated in the Common African Position for mainstreaming PIDA in strategic infrastructure partnerships could be a useful tool. The framework has key performance indicators to assess the contribution of partnerships to transformational infrastructure development in Africa (UNECA & AUC 2020).

11.6 Conclusion and recommendations BRICS institutions, particularly the NDB, and institutions in BRICS countries (national and regional institutions that finance infrastructure projects) appear to be well attuned to Africa’s regional infrastructure development aspirations. Their design allows for financing or facilitating the financing of infrastructure projects on the continent. Based on infrastructure policies, institutions created, initiatives launched and comparative advantages, one would expect BRICS to be a major actor in regional infrastructure development in Africa. However, apart from China, that is not necessarily the case. Several factors explain why BRICS institutions have not invested more in Africa’s infrastructure development, particularly regional projects, including (i) inconsistencies in priority projects of BRICS and African countries, associated with differences in economic and political power of the countries; (ii) complexity of implementing regional projects involving two or more countries; and (iii) differences in interests, agendas, and understandings and interpretations of policies by BRICS and African countries. Addressing these obstacles could significantly enhance BRICS’s investment in Africa’s infrastructure development. Indeed, it could be the last piece of the jigsaw in the implementation of Africa’s regional infrastructure programmes – a game changer that could provide the much-needed impetus for the implementation of Africa’s regional infrastructure projects. The following recommendations aim to support African countries and organisations to fully harness the potential of BRICS investment in the continent’s infrastructure development: • The AU, AUDA-NEPAD, regional economic communities (RECs) and their member states should mainstream PIDA in partnership with BRICS. They should fully implement the Common African Position for mainstreaming PIDA in strategic infrastructure partnerships.

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• The AUC and AUDA-NEPAD should create an Africa–BRICS Task Force for Infrastructure Development to agree on priority areas for BRICS investment in Africa. • The AUC, AUDA-NEPAD, RECs, UNECA and AfDB should step up advocacy for Africa’s regional projects, particularly PIDA projects, in the context of the BRI and China’s commitments to Africa’s regional infrastructure development. • The AUC, AUDA-NEPAD and UNECA should organise high-level policy dialogues between Africa and BRICS to forge a common understanding and interpretation of infrastructure development policies by both parties. Promoters of Africa’s regional infrastructure projects, the NDB and DBSA should be targeted for the dialogues. These dialogues should constitute a platform to promote Africa’s regional projects and highlight their merits in terms of mutual benefits to Africa and BRICS. • The AUC, AUDA-NEPAD and UNECA should advocate for mutual accountability between Africa and BRICS, using the accountability framework articulated in the Common African Position for mainstreaming PIDA in Africa’s strategic infrastructure partnerships. References

AfDB (African Development Bank) (2018) Infrastructure financing trends in Africa – 2018. Abidjan: AfDB. Accessed 21 November 2022, https://www.icafrica.org/fileadmin/ documents/IFT_2018/ICA_Infrastructure_Financing_Trends_in_Africa_-_2018_Final_ En.pdf AfDB (2021) Africa Infrastructure Knowledge Programme. Accessed 13 February 2021, http:// infrastructureafrica.opendataforafrica.org/chdopr. AfDB & Korea–Africa Economic Cooperation (2019) Study Report: Unlocking the Potential of the Fourth Industrial Revolution in Africa. Abidjan: AfDB. Accessed 21 November 2022, https://www.technopolis-group.com/wp-content/uploads/2020/02/Potential-of-the-fourthindustrial-revolution-in-Africa.pdf AUC (AU Commission) (2014) Intergovernmental agreement on the Trans-African Highway network. Addis Ababa: AUC. Accessed 21 November 2022, https://au.int/sites/default/files/ newsevents/workingdocuments/29705-wd-au-tpt-exp-2c3-i-intergovernmental_agreement_ on_the_trans-african_highways_network.pdf AUDA-NEPAD (AU Development Agency-New Partnership for Africa’s Development) (2020) PIDA Progress Report: 2019/2020. Accessed 21 November 2022, https://www.au-pida.org/ download/pida-progress-report-2019-2020/ BRICS (2021) BRICS information portal. Accessed 12 February 2021, https://infobrics.org/ BRICS Policy Centre (2018) New Development Bank. Accessed 13 February 2021, https:// bricspolicycenter.org/en/new-development-bank/ Coalition for Human Rights in Development (2020) BRICS New Development Bank. Accessed 12 February 2021, https://rightsindevelopment.org/our-work/brics/ Cobb R & Elder CD (1971) The politics of agenda-building: An alternative perspective for modern democratic theory. The Journal of Politics 33(4): 892–915

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Cobb R, Ross J & Ross MH (1976) Agenda building as a comparative political process. American Political Science Review 70(1): 126–138. Accessed 12 February 2021, https://www.jstor.org/ stable/1960328 Dai X, Snidal D & Sampson M (2017) International cooperation theory and international institutions. In N Sandal (Ed.) Oxford research encyclopedia of international studies. Oxford: Oxford University Press. https://doi.org/10.1093/acrefore/9780190846626.013.93 DBSA (Development Bank of Southern Africa) (n.d.) About us. Accessed 15 November 2022, https://www.dbsa.org/about-us De Vaujany F, Carton S, Mitev N & Romeyer C (2014) Applying and theorizing institutional frameworks in IS research: A systematic comparison from 1999 to 2009. Information Technology and People 27(3): 280–317 DiMaggio PJ & Powell WW (1983) The iron cage revisited: Institutional isomorphism and collective rationality. American Sociological Review 48(2): 147–160 DiMaggio PJ & Powell WW (1991) Introduction. In WW Powell & PJ DiMaggio (Eds) The new institutionalism in organizational analysis. Chicago: University of Chicago Press Ecological Society of Australia (2009) Partner or perish through partnering? A workshop report. Ecological Management & Restoration 10(2): 166–168 Forster V & Briceno-Garmendia C (2010) Africa’s infrastructure: A time for transformation. Washington DC: World Bank. Accessed 21 November 2022, https://openknowledge. worldbank.org/handle/10986/2692 Government of South Africa (n.d.) Fifth BRICS Summit – General background. Accessed 12 February 2021, https://www.gov.za/events/fifth-brics-summit-general-background Green-Persen C & Mortensen PB (2009) Who sets the agenda and who responds to it in the Danish Parliament? A new model of issue competition and agenda setting. European Journal of Political Research 49(2): 257–281. https://doi.org/10.1111/j.1475.6765.2009.01897.x Haibin N (2010) Emerging global partnership: Brasil and China. Revista Brasileira de Politica Internacional 53(SPE): 183–192 Hall PA & Taylor RCR (1996) Political science and the three new institutionalisms. Political Studies 57: 936–957 ICA (Infrastructure Consortium for Africa) (2013) ICA Annual Report 2012. Tunis: ICA. Accessed 21 November 2022, https://www.icafrica.org/fileadmin/documents/Annual_ Reports/ICA%20_AnnualReport%202012.pdf IMF (International Monetary Fund) (2022) Regional economic outlook for sub-Saharan Africa. Accessed 15 November 2022, https://www.imf.org/en/Publications/REO/SSA/ Issues/2022/10/14/regional-economic-outlook-for-sub-saharan-africa-october-2022 Jie Y (2010) International partnerships: A game theory perspective. New Directions for Higher Education 150: 43–54. https://doi.org/10.1002/he.389 Laing JH, Lee D, Moore SA. Wegner A & Weiler B (2009) Advancing conceptual understanding of partnerships between protected area agencies and the tourism industry: A postdisciplinary and multi-theoretical approach. Journal of Sustainable Tourism 17: 207–229 Lisinge RT (2020) The Belt and Road Initiative and Africa’s regional infrastructure development: Implications and lessons. Transnational Corporations Review 12(4): 425–438, https://doi.org/ 10.1080/19186444.2020.1795527 Long N (1992) From paradigm lost to paradigm regained? The case for an actor-oriented sociology of development. In N Long & A Long (Eds) Battlefields of knowledge: The interlocking of theory and practice in social research and development. London: Routledge

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Mebratu D & Swilling M (2019) Transformational infrastructure for a wellbeing economy in Africa. 1st Edition. Stellenbosch: African Sun Media and STIAS. Accessed 12 February 2021, https//doi.org/10.18820/9781928480419. ISBN 978-1-928480-40-2; 978-1-928480-41-9 Mosse D (2004) Is good policy unimplementable? Reflections on the ethnography of aid policy and practice. Development and Change 35(4): 639–671 Olsen KR (2012) Political conflict and entangled social logics in the development of institutional capacity: Creating a designated national authority for the clean development mechanism in Uganda. The European Journal of Development Research 24(4): 589–605. https://doi. org/10.1007/s12205-011-1064-5 Russian News Agency (2017) BRICS bank to focus on infrastructure projects – Document. Accessed 12 February 2021, http://tass.com/economy/954323 UNECA (UN Economic Commission for Africa) (2021) Overview of recent economic and social developments in Africa in the context of the Covid-19 pandemic. E/ECA/COE/39/11. Addis Ababa: UNECA. Accessed 21 November 2022, https://www.uneca.org/sites/default/files/ com/2021/E_ECA_COE_39_3_Rev1_E.pdf UNECA & AUC (AU Commission) (2012) Economic report on Africa 2012: Unleashing Africa’s potential as a pole of global growth. Addis Ababa: UNECA. Accessed 21 November 2022, https://repository.uneca.org/handle/10855/21119 UNECA & AUC (2020) Mainstreaming PIDA in strategic infrastructure partnerships: A common African position. Accessed 17 November 2022, https://www.au-pida.org/download/ mainstreaming-pida-in-strategic-infrastructure-partnerships-a-common-african-position/ Vliegenthart R, Walgrave S & Zicha B (2013) How preferences, information and institutions interactively drive agenda-setting: Questions in the Belgian Parliament, 1993–2000. European Journal of Political Research 52: 390–418. https://doi.org/10.1111/j.14756765.2012.02070.x WEF (World Economic Forum) (n.d.) BRICS New Development Bank turns four: What has it achieved. Accessed 14 February 2022, https://www.weforum.org/agenda/2019/09/brics-newdevelopment-bank-four-sustainability/ World Bank (2020) Tracking SDG 7. The Energy Progress Report 2020. Washington DC: World Bank. Accessed 21 November 2022, https://openknowledge.worldbank.org/ handle/10986/33822

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Lessons in Sustainable Development for South Africa from the Affordable Housing Policy of the BRICS Countries Jaya Josie, Krish Chetty and Yul Derek Davids

12.1 Background Twenty-eight years into post-apartheid democracy, housing provision in South Africa remains dominated by the apartheid government’s legacy of spatial and socioeconomic inequality. Social cohesion is poor and environmentally unsustainable living conditions are rife in the country’s informal settlements. Despite the government’s efforts, housing provision is caught between providing housing for the most disadvantaged and vulnerable and those wishing to access the housing market but who cannot because they have limited access to housing finance and also do not earn enough. The latter live mostly in rented accommodation on the edges of homeownership and housing provision. Households from this segment (known as the ‘gap market’) are marginalised, living in slums, with little or no access to shelter, water and sanitation, transport and waste removal. Thus far, government policy for the gap market has resulted in a backlog in the supply of affordable, sustainable housing in general, and affordable housing in particular. This chapter reviews sustainable public housing policy in South Africa and other BRICS countries to report on lessons for improving affordable housing policy in the context of sustainable development.

12.2 Introduction Any current review and assessment of the right to shelter and the provision of sustainable housing and related services in Brazil, Russia, India, China and South Africa (BRICS) cannot ignore the context of the UN Sustainable Development Goals (SDGs) agenda. This context is particularly relevant in many BRICS countries, given their expanding urban slums and increasing demand for sustainable housing exacerbated by a poverty-driven rural exodus and inward migration from bordering countries. This chapter is presented against the background of the COVID-19 pandemic, which has impacted countries in various ways. The devastating impact of the pandemic has forced governments worldwide to implement lockdown measures such as closing businesses and schools, enforcing health regulations such as wearing protective masks and keeping social distance, and a curfew to reduce the movement of people. Consequently, many people have been forced to stay at home and work from there,

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where possible (CAHF 2021: 1). Many of the less fortunate also have lost their jobs and are now permanently at home. COVID-19 has, therefore, placed renewed focus on what life is at home. However, life at home under the COVID-19 lockdown regulations is different for all, depending on their lived context. The University of Johannesburg and the Human Sciences Research Council COVID19 Democracy Survey, conducted in April and May 2020, found that South Africans in the lower-income group were more concerned about their financial situation and the impact of COVID-19 on their children’s education (Alexander et al. 2020). Specifically, 89% of the respondents in the lower-income group (compared to 66% in the middle-income group and 40% in the higher-income group) were very concerned about their financial circumstances. Similarly, 82% of the lower-income respondents, 53% from the middle-income group and 32% with higher incomes, were ‘very concerned’ about their children’s education. The survey also found that a smaller proportion of low-income South Africans could work from home, noting that most lived in densely packed neighbourhoods, used public transport and worked near other people. Therefore, the findings of the survey showed that large proportions of the poor were worse off under the lockdown than those with higher incomes. In understanding the impact of COVID-19, the Centre for Affordable Housing Finance in Africa (CAHF 2021) reported that the risk of infection was aggravated by poor housing conditions such as overcrowding, poor access to water and sanitation, and high densities (especially in inner-city buildings and informal settlements). The CAHF also highlighted that limited healthcare access increased the risk in poorer households, as the sick had to stay at home in inadequate conditions (CAHF 2021). It is, therefore, not surprising that experts argue that children are safer at school than at home, where they face safety issues (Fokazi 2020). This experience is common among more impoverished communities where children often do not have access to online education. In addition, attending school provided access to face-to-face learning and the South African National School Nutrition Programme (Fokazi 2020). Understanding the added burden created by the COVID-19 pandemic, this chapter considers the nexus of development issues engaged when the housing challenge is holistically addressed. This nexus of development concerns highlights the urgency to address these challenges and how affordable housing could be the catalyst to change the current housing paradigm. In South Africa, promoting affordable housing initiatives could accommodate a gap in the housing market currently not sufficiently catered for by government subsidies or mortgage financing. This gap market exacerbates slum settlement conditions, and housing programmes have not successfully reduced the housing shortages. Several social factors, including urbanisation, exacerbate the housing challenges across BRICS. By reviewing BRICS’s collective responses to these housing challenges, South

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African policy-makers may benefit from lessons learned in these countries given that the BRICS countries share several challenges.

12.3 Research objectives This chapter examines how South Africa’s affordable housing policy could promote sustainable development. It draws from experiences in Brazil, Russia, India and China to identify lessons that may benefit how South Africa implements its affordable housing policy. The authors report on how this policy in BRICS has advanced the sustainable development agenda, but do not argue for adopting specific BRICS policies in South Africa.

12.4 Research approach The chapter first explores the South African housing policy, reviewing the intersection of the housing policy and sustainable development to answer the research question. It then explores the origins of the SDGs and the language of South Africa’s constitution and National Development Plan (NDP) in recognising the provision of housing as a conduit to service delivery. Thereafter, recognising the centrality of housing provision in the country’s developmental plan, the chapter reviews the progress made in housing delivery, identifying the primary challenges experienced during policy implementation. Key inputs are sourced from Kecia Rust and the CAHF in describing South Africa’s progress in affordable housing provision. A snowball approach is adopted in collecting further supplementary literature. These challenges in South Africa are then contrasted withthe experiences of Brazil, Russia, India and China in the delivery of affordable housing policy. The primary source of literature for these countries’ experiences are BRICS Academic Forum publications from 2015 to 2020. Again, a snowball approach is adopted to source further supporting information. Points of convergence are highlighted in the chapter’s conclusion, outlining the lessons for South Africa’s policy-makers. To this end, the chapter provides a report on housing in South Africa, drawing lessons from Brazil, Russia, India and China, and does not offer a theoretical and analytic argument.

12.5 Policy intersections of affordable housing policy 12.5.1 International context to South Africa’s affordable housing policy The UN Economic Commission for Europe’s (UNECE) Report on the Guidelines for Social Housing echoes South Africa’s housing policy stance in many respects (UNECE 2006: 1–17). The UNECE report identifies housing policy trends in Eastern Europe following World War II. These policy trends mirror the practices in South Africa:

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• • • •

Housing is considered a social right that the government guarantees. The housing system is costly and inefficient. The provision of housing is highly subsidised. Affordable housing policy options are not prioritised or are non-existent.

In Eastern Europe, affordable housing policy options were not promoted due to a perceived incompatibility with communist policies. However, in South Africa, although the value of affordable social housing policies has been recognised, financing such policies has not followed. South Africa’s Social Housing Policy of 2009 stresses the need for social housing programmes to address the structural, economic, social and spatial dysfunctionalities in the housing system and improve the overall functioning of the housing sector (DHS 2009: 11–22). South Africa’s Social Housing Policy of 2009 notes that social housing had been shown to contribute to urban regeneration (DHS 2009: 11–22). It recommends that housing development initiatives are placed in better locations for service accessibility and local economic development. In addition, the social housing model makes a financial contribution by way of regular payments by tenants. In this respect, a social housing model can be more sustainable than subsidised housing alternatives. Furthermore, according to the Social Housing Policy, its benefits will lead to improved social integration, stabilisation and reduced crime. Thus, it was accepted by the South African government that the social housing model provides a path to achieve a wide array of the government’s macro-objectives (DHS 2009: 11–22). In South Africa, a successful housing initiative would cater to three central policy objectives that the country must support: i. Achieving the SDGs; ii. Meeting the constitutional directives of South Africa’s Bill of Rights; and iii. Implementing core tenets of South Africa’s NDP, Chapter 8 – Human Settlements. However, South Africa’s report on the measures discussed in the International Covenant on Economic and Cultural Rights was limited in terms of the measures adopted in the country, implying limited advancement of the right to adequate housing (Selebalo & Webster 2017).

12.5.2 SDG context for housing provision The SDGs generally aim to sustainably address an individual’s living standards, capabilities and human, socioeconomic and political rights. In many of the urban and rural slums in BRICS countries, this can only be achieved by improving living standards and enhancing human capabilities through massive investment in sustainable physical infrastructure for urban renewal in general, and the provision of the right to shelter and housing in particular (Josie et al. 2014). The SDG campaign began during the Earth Summit in Rio de Janeiro in 1992 and continued at the Rio+20 Summit in June 2012 (Loewe 2012). In 2012, countries argued for integrating

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and extending the Millennium Development Goals (MDGs). This argument led to the development of the post-2015 campaign for global SDGs and culminated in the release in May 2013 of a UN panel report on a post-2015 development agenda. This report focused on launching a new global partnership for eradicating extreme poverty and transforming economies through sustainable development by 2030. Concerning the post-2015 development trajectory, and relevant to the affordable housing discourse, the SDG agenda promotes poverty reduction; food security, nutrition and sustainable agriculture; water and sanitation; energy; sustainable tourism, transport, cities and human settlements; health and population; full and productive employment, decent work for all and social protection; education; and gender equality and the empowerment of women (Loewe 2012). However, attaining the targets for providing sustainable basic infrastructure services explicit in some SDGs requires a long-term commitment to infrastructure investment in physical and social infrastructure. Such investment must be differentiated to address inter- and intra-regional spatial and socioeconomic disparities that militate against attaining the SDGs. Given the SDGs, policy targets are set for a public infrastructure standard that must be reached in 2030. Thus, there is a need for a public infrastructure financing model that progressively closes the gap between the existing norm and the desired SDG standard within this timeframe.

12.5.3 Bill of Rights and NDP South Africa’s Bill of Rights issues a clear directive on citizens’ expectations regarding services that the government should provide. Section 26 of the Bill of Rights states that ‘everyone has a right to adequate housing’. Furthermore, the state must take actions that progressively realise this goal. Section 27 indicates that everyone has the right to access healthcare, while Section 29 indicates that all citizens have the right to basic education. The ability to access these services is prefaced on the locus of where the individual resides. As the Constitution of South Africa guarantees these rights, the state must act accordingly to provide for these services. Towards enacting these rights, the South African government has produced the NDP that details the country’s strategy in providing services to citizens by 2030 (National Planning Commission 2011: 1–66). The NDP dedicates five chapters to programmes on which the country will embark, relevant to social housing initiatives: (i) transforming human settlements; (ii) environmental sustainability and resilience; (iii) inclusive rural economy; (iv) improving education, training and innovation; and (v) healthcare for all. As noted in the Social Housing Policy of 2009, due to the importance attached to the locus of the human settlement, social housing can be used as a policy instrument that acts as a catalyst to address these challenges across multiple socioeconomic sectors. The NDP, therefore, acknowledges that adequate housing is not only about providing shelter, but also about public participation, equality, human dignity and a range of socioeconomic rights such as access to land,

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water, sanitation, electricity, livelihoods, transport, clinics, schools and recreational amenities (National Planning Commission 2011: 1–66). It is against this background that the present chapter highlights the UN Centre for Human Settlements’ (UNCHS) definition of what housing adequacy means: Adequate shelter means more than a roof over one’s head. It also means adequate privacy; adequate space; physical accessibility; adequate security; security of tenure; structural stability and durability; adequate lighting, heating, and ventilation; adequate basic infrastructure, such as water supply, sanitation, and health-related factors; and adequate and accessible location with regard to work and basic facilities: all of which should be available at an affordable cost. Adequacy should be determined together with the people concerned, bearing in mind the prospect for gradual development. Adequacy often varies from country to country, since it depends on specific cultural, social, environmental, and economic factors. Gender-specific and age factors, such as the exposure of children and women to toxic substances, should be considered in this context. (Fuller Housing Centre 2014: 11) Dawson and McLaren (2014) similarly highlight that adequate housing entails more than providing shelter. Their review comments on the NDP, which argues that adequate housing is intrinsically linked to several other cross-cutting rights, including the rights to public participation, equality, human dignity and access to information. Dawson and McLaren (2014) summarise Warren Smit’s matrix to assess the adequacy of different housing typologies in terms of some key criteria. These criteria include: (i) adequacy of location, (ii) adequacy of shelter, (iii) affordability (upfront and ongoing costs), (iv) adequacy of service availability, (v) adequacy of space, (vi) physical security, (vii) security of tenure, (viii) accessibility (transport) and (ix) availability. It is hoped that these explanations will enhance an understanding of what adequate housing means to inform affordable housing policy in the context of sustainable development. Recognising these criteria outlined by Smit, a key concern in solving the housing crisis is affordability. The high costs of entry to the housing or bond market mean that most poor South Africans face considerable barriers to homeownership (Business in South Africa 2018). If ownership is not feasible, alternative strategies that offer adequate shelter are needed. The existing policies require substantial expansion and evaluation to determine if any population groups are not served or underserved.

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12.6 Housing in South Africa 12.6.1 Institutional framework South Africa is a unitary state with three spheres of government (national, provincial and local), each with a clearly defined assignment of powers and functions to deliver constitutionally mandated basic services. However, primary housing and shelter provision is an exception to this general rule and is a concurrent function shared between the national and provincial governments. Furthermore, local governments are responsible for providing secondary output services such as land, housing development, water and sanitation provision, and intermediate service as described in their integrated municipal plans and associated building contracts. The norms and standards for water and sanitation services depend upon the type of settlement (formal, informal, urban and rural). They are limited to systems for potable water supply, domestic waste and sewage disposal, and stormwater management in builtup areas. In some instances, norms for providing services such as potable water and toilet facilities may vary with settlement type. For example, some informal slum or squatter settlements and rural communities may only have access to a collective or communal potable water system such as a tap or collective portable toilet facilities within a fixed radius of a certain number of households. The national Department of Human Settlements (DHS) is mandated to facilitate sustainable human settlements and improve the quality of household life (Selebalo & Webster 2017: 13; Fuller Housing Centre 2014). The DHS is the essential department responsible for developing policy and strategy, determining delivery goals, and monitoring and evaluating the housing sector’s performance. The DHS also establishes the national funding framework for housing development and allocates the housing subsidy budget to provincial governments and public entities. However, the provincial governments are responsible for promoting, coordinating and implementing housing programmes within the framework of the national housing policy. The provincial governments also approve housing subsidies and projects, and support local-government-managed housing development projects (DHS 2009: 73–88). The municipalities and provinces are jointly responsible for releasing land for housing development, land use planning, and land use and building control (Tissington 2010: 11; 2011: 11). Besides the national, provincial and local spheres of government, the public sector consists of regulatory agencies such as the National Home Builders Registration Council (NHBRC), which is mandated to protect housing consumers’ interests and regulate the home-building industry. The Social Housing Regulatory Authority (SHRA) regulates and invests in the delivery of affordable rental homes and renewing communities (Tissington 2010: 74; 2011: 6, 24). Finally, the release of land and landed properties for human settlements development is the responsibility of the Housing Development Agency (Tissington 2010: 31; 2011: 6, 8, 12, 23).

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Thus, the decentralised South African housing function is complex, with several actors responsible for housing delivery. Several financial intermediaries contribute to the sustainability of the housing sector. First, the National Housing Finance Corporation coordinates these financial institutions and ensures that workable models on affordable housing finance for the low- and middle-income target markets are provided. The National Urban Reconstruction and Housing Agency (NURCHA) also targets low- and middleincome categories by ensuring the availability of bridging finance to small, medium and established contractors who build low- and moderate-income housing and related community facilities and infrastructure. NURCHA operates mainly in urban areas, while the Rural Housing Loan Fund is mandated to empower lowincome households in rural areas to access housing credit (Gardner 2008: 11–31; SHRA 2020: 9–57). The private sector comprises service providers and financial institutions. For instance, the Trust for Urban Housing Finance provides access to finance to people with potential and integrity for purchasing, converting or refurbishing buildings in the inner cities of South Africa (SHRA 2020: 59). In addition, several development finance institutions (such as the African Development Bank Group) offer support to financial institutions providing funding for property along the value chain (SHRA 2020: 30–39). Furthermore, some institutions play a catalytic role to make financial markets accessible, sustainable and inclusive by promoting and supporting policy and institutional change across Africa (in the case of FinMark Trust) (Gardner 2008: 11–31). The primary purpose of the Development Bank of Southern Africa (DBSA) is to increase access to development finance and effectively integrate and implement sustainable development solutions to improve the quality of life of people, among many other objectives (SHRA 2020: 30–39). Lastly, the Gauteng Partnership Fund serves as a capital-raising and implementing agent of identified housing projects in Gauteng province (SHRA 2020: 13, 30). It is essential to recognise these actors and their responsibilities to understand the current gaps in housing provision.

12.6.2 Current state of housing provision Housing has consistently been identified as one of the most pressing challenges for post-apartheid South Africa. In the 2016 Community Survey, a question was introduced asking households what they considered was the main problem or difficulty they faced in their municipality. The results showed that inadequate housing (the number of mentions was 1 199 692) was perceived as the fourth main challenge facing municipalities, after lack of safe and reliable water (2 683 048), inadequate employment opportunities (1 963 104) and the cost of electricity (1 706 313) (Stats SA 2017). Each of these functions is central to human settlement development.

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The South African Social Attitude Survey series results between 2003 and 2014 revealed that housing had been rated one of the top 10 problems for South Africa (Davids et al. 2016). The other significant problems were service delivery, corruption, poverty, HIV and AIDS, crime and safety, and unemployment (as Number 1) (Davids et al. 2016). Despite these challenges, South Africa has, over the past 20 years, ensured that the most disadvantaged and vulnerable households (with household income below R3 500 per month) benefitted from public-sector housing in the form of subsidies. However, it should be noted that the progress in providing subsidised housing for the most disadvantaged has been fraught with problems (Khan & Thurman 2001; Charlton & Kihato 2006). Compared to the R3 500 segment of the market, households in the income bracket of R3 500 to R12 500 per month have not been as fortunate. Official reports in South African housing literature have characterised the R3 500 to R12 500 per month segment as a gap market neglected by both the public sector and the private sector (Rust 2012). Many of these households consist of young families, with the head of the household at an average age of 33 years, living in rented shack, township or backyard dwellings (see Figure 12.1) (Cross 2010; Rust 2014). Rust characterises the demand for households into three categories: (i) households that are served and can access mortgage finance, (ii) underserved households due to insufficient supply to meet the demand, and (iii) households that are not served because there are no housing or finance products (Rust 2014). Within these three categories, the 2011 Census data showed that just over 10.7 million households lived in formal dwellings, under 2 million lived in shacks and over 1 million lived in traditional houses (Stats SA 2012). While the first category was classified as the ‘normal’ market, the latter was either served by the FLISP1 subsidy, social housing or the Reconstruction and Development Plan (RDP) subsidy (ownership for household incomes below the R3 500 per month band). Drawing from Census 2011 data, the ‘normal’ market comprises 907 000 households (6.9% of the housing market) earning above R30 000 per month. However, this segment overlaps with the 2.3 million households (17.3%) earning between R10 000 and R30 000 per month at the lower end. The 10.7 million households (with incomes of R3 501 to R15 000 per month) qualifying for the Finance-Linked Individual Subsidy Programme (FLISP) subsidy included 3.8 million households (28.8%) with incomes between R3 500 and R10 000 per month. The lower end of this segment (about 2 million households) overlapped with the households qualifying for the social housing with incomes of less than R7 500 per month; and 6.2 million households (46.9%) with incomes of less than R3 500 qualifying for RDP subsidies, informal upgrading and limited social housing. A combined 3 million households in this category lived in shacks and traditional dwellings (Stats SA 2012; Rust 2014). Based on the balance of the market, there is an adequate supply and resale value of housing for the 6.9% segment of households earning more than R30 000 per month.

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The supply of ownership, resale and rental housing stock for the 17.3% segment (R10 000 to R30 000 per month) is reported as inadequate. In this light, the formal legacy of apartheid’s disparities has transmuted into a familiar pattern of spatial and socioeconomic disparities that exclude and marginalise previously disadvantaged communities (Cross 2008: 2–4; Ngandu et al. 2010: 67–70, 105–117).

12.6.3 Edges of housing provision Rust’s (2014) central argument is that the public-sector provision and private-sector supply of affordable housing to this gap market and the segment earning less than R3 500 per month is inadequate. These households fall on the edges of homeownership and housing provision. There is no new housing construction, limited rental stock and limited resale value for the former; and the supply is entirely inadequate for the latter segment, with virtually no resale value (Rust 2014). With respect to the FLISP grant subsidising the private supply of housing for those on the edges of homeownership, Rust (2012) summarises why the original and the new FLISP schemes failed. The scheme was based on a sliding scale, with households at the bottom end (R3 550 per month) entitled to a higher level of subsidy (R83 000) and those at the top to a lower level. She argues that both versions of the grant did not live up to expectations because they failed to understand the economics of housing affordability. The first version of the subsidy was targeted at households in the R3 500 to R7 000 per month income segment (Rust 2012). It was insufficient to raise an amount to a level where the household could afford to buy the cheapest available new house on the market. Neither did the newer version of FLISP resolve the problem. Assuming the R3 550 per month segment received the full subsidy with a monthly instalment of R1 065 per month at a prime rate of interest of 9%, this would amount to a household mortgage of R118 369.38. With the R83 000 subsidy and savings to cover the transfer, legal fees and other costs, the household should afford a house valued at R201 369.38. However, Rust (2012) argues that no marketbased housing is available at that price in South Africa. Since 2012, the country has seen an increase in the inflation rate and associated increases in labour, material and energy prices. It is improbable that South Africa will see market-based housing at R201 369.38 (Rust 2012).

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Figure 12.1 Housing finance in South Africa

Source: Adapted from Rust (2014)

Despite the evidence and available data, it seems that the post-apartheid public housing policy for disadvantaged households has prioritised financing ownership of housing assets above the provision of housing and shelter as a constitutional right. By and large, subsidy schemes appear skewed towards ownership of RDP and FLISP houses and the upgrading of informal settlements. The consequent housing backlog has meant a decrease in the supply of affordable housing for households falling in the so-called gap market. From this picture, it seems there has been little consideration for social housing as a public good in general, and rental stock in particular, to address the demand for housing and shelter for households falling in the gap market (Ndinda 2014). In South Africa, social housing must be viewed as a public good because it is publicly financed to address the constitutional and legal requirement for the progressive provision of housing and shelter as a right. However, there is no constitutional requirement for the public financing and provision of the ownership of a housing asset. In the long term, the current housing ownership subsidy schemes will not be financially sustainable for the state due to macroeconomic unpredictability. Section 214 of the Constitution also mandates the government to account for

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budget predictability and stability in determining its allocations. Attaining South Africa’s NDP goals presupposes equitable, predictable and stable public-finance allocations (National Planning Commission 2011: 1–66). In contrast to subsidised homeownership schemes, social housing stock as defined in South Africa will always remain a public asset, even as it provides a catalyst for the upward mobility of the targeted housing market.

12.7 Lessons from Brazil, Russia, India and China Given the challenges experienced in implementing South Africa’s affordable housing policy, the experiences of Brazil, Russia, India and China highlight opportunities to revise the weaknesses in South Africa’s implementation of affordable housing policy.

12.7.1 Understanding Brazil’s housing deficit Before 1930, housing stock in Brazil consisted essentially of rental houses (known as corticos). These corticos were generally of poor build quality and low sanitary standards. These rental options were the first option offered to citizens moving to urban areas. Initially, the policy measures introduced were intended to regulate the rental housing market and protect tenants’ rights. In 1942, however, Brazil introduced the Inquilinato Law, which tackled the increase in rental prices, intended to discourage the rental market and incentivise rental housing alternatives considered more favourable to boost industrial development. At this stage, rental housing accounted for 75% of the housing stock in the country. This ratio gradually reduced over the following decades and by the 1990s accounted for only 22% of housing stock (UN Habitat 2013: 10; Tiwari et al. 2016: 26, 27). The National Housing Bank was established to manage the National Housing System. From 1964 to 1986, the bank financed approximately 25% of all new developments. Gradually, however, the bank distanced itself from low-income earners and was dissolved in 1986. In the mid-1990’s social housing programmes were decentralised to municipalities. The function was severely constrained due to a lack of funds at a municipal level. In this period, informal settlements grew substantially (UN Habitat 2013: 10; Tiwari et al. 2016: 27, 28, 44, 45). In 2000, a constitutional amendment was made that approved the social right to housing. A new legal and political paradigm for urban land use and development was introduced after various initiatives. Centralised and individualistic urban and land planning was replaced with a range of legal, urban and fiscal instruments available to municipal administrators to regulate the urban land and property market following social inclusion and environmental sustainability principles (UN Habitat 2013: 12; Tiwari et al. 2016: 46–48). The ‘My House My Life’ programme is aimed at producing new housing units for the low-income population. These units are made available by providing incentives to the private sector and designing innovative subsidy arrangements

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for the beneficiaries (UN Habitat 2013: 31–51). The allocation of resources to the programme is informed by the national housing deficit, thereby allowing the lowerincome households and the regions most affected by the housing deficit to receive more investment. The programme delivered 1 million housing units between 2009 and 2010 and was expected to contribute to economic growth and promote access to housing. The scale of this initiative in Brazil is key and is an important point for South African policy-makers to appreciate. Despite the impact of the My House My Life programme, Brazil still contends with a large housing deficit. This deficit is a controversial issue, with differing opinions on the scale of the problem. The João Pinheiro Foundation estimated that if the population in the favelas (slums) was excluded, there was a deficit nationally of 7.2 million housing units. However, if the favelas were included, the deficit increased to approximately 30 million housing units in 2009. Alternatively, a Caixa Economica Study identified 9 million units as a deficit; while the Getulio Vargas Foundation, using data from the Brazilian Institute of Geography and Statistics, estimated 5.4 million units as a deficit in 2011. These estimates differed due to the inconsistent definitions of housing deficit and the unknown quality represented by the favela phenomenon. Affordable housing projects have focused on capturing surplus land to address the housing deficit, followed by offering private developers incentives to offer affordable housing within a market-oriented development framework that follows a public–private partnership (PPP) model (Santoro 2019) specifically in São Paulo, Brazil and Bogota, Colombia. These cities were pioneers in the conception of ‘inclusionary housing policies’, which use urban planning instruments to produce affordable housing by capturing the land value generated by real estate dynamics. In these cities land values are stimulated by incentives that incorporate affordable housing into market-rate developments using different models of public-private partnerships. The paper analyses the use of urban instruments such as land reserves and those that require percentages of land, building rights or financial resources to go to private builders willing to produce affordable housing. It shows the unquestioned incorporation of international affordable housing agendas. From a struggle to guarantee the right to housing, the issue of creating affordable housing has been appropriated to expand frontiers for real estate-financial markets. The dimension and complexity of housing needs have been ignored, raising serious questions about the sole solution currently provided (housing as private property. Santoro (2019) believes that a broader range of housing policies are needed to upgrade slums and regulate land access, given the scale of dilapidated housing with poor access to basic services. Furthermore, market-oriented housing policies fail because they do not recognise the pressures facing cost-burdened households that trade off living conditions for daily expenses. Like South Africa, it is noted that the housing opportunities through market functions are unaffordable to those trapped in poverty. It is also noted that these market-oriented programmes have been unable to respond to the scale of the challenge in Brazil’s cities (Tiwari et al. 2016: 52, 53).

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Another concern recognised in Brazil is the placement of affordable housing projects. As new housing projects are located where empty plots of land are available, many sites are further away from city centres. While some housing projects subsidise the housing rental costs, living on a city’s periphery results in residents spending more on travel, and the city effectively develops a parallel housing market (Libertun de Duren 2018). The location challenge is shared in South Africa, with land in prime economic centres of activity becoming unaffordable for public housing projects. In this respect, new projects outside economic centres also need to be supplemented with affordable transport programmes. On the positive side, Brazil’s subsidy programmes have supported the poor. The country has managed to develop appropriate institutions and frameworks that respond to the housing challenge. By providing funds directly to the poor, its housing policy promotes upward social mobility (Tiwari et al. 2016: 54). With South Africa sharing these challenges, Brazil’s social grant system could be investigated as a solution to counter the immense challenges of poverty in the country.

12.7.2 Post-Soviet-era housing challenges in the Russian Federation In the Soviet Union, the state mainly owned the housing stock. For instance, 79% of the stock in urban areas was owned by the state, given that the country’s Soviet ideology required the state to heavily subsidise rent and housing costs (Struyk 1997). In cities, housing was allocated according to the so-called sanitary norms regulating living space per person. In 1987, Russia had a housing backlog that constituted 23.2% of households (Andrusz 1990). Given the scale of the backlog, privatisation was introduced in addition to mortgage financing to address the challenge. As a result, privately-owned housing stock increased substantially from 15% in 1990 to 61% of all housing in 2003. Thereafter, the liberal Housing Code introduced in December 2004 reduced the state’s commitment to social housing. The government no longer took responsibility for the maintenance and repairs of social forms of accommodation. From 2000 to 2012, substantial reduction of state- and municipal-owned properties was complemented by growth in owner-occupied properties. However, much of the Russian population still lives in ageing Soviet-era housing stock. More than half of all homes are in need of repair, with many apartments not repaired in over 40 years. The 2006 Housing Code made owners responsible for maintaining their property, but this was a burden for owners of Soviet-era housing. Furthermore, local municipalities do not have sufficient funds to support the housing stock in rented accommodation (UNECE 2006: 1–17). The housing shortage in Russia is measured in square metres (m2) per person. The sanitary norm for most of the Soviet era was 9 m2 per person (Vihavainen 2005: 1–13). In 2006, the government reported that 93 million m2 of housing were in a state of disrepair (3.1% of the total). It was found that poor living conditions led to

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poor health and poverty. In turn, this directly affected economic activity and the state of the labour force. To address these concerns, the 2006 Housing Policy was aimed at addressing an estimated 100 to 130 million m2 of new housing stock to the market each year, with a boom expected in the construction industry, employment and overall economic activity (Euromonitor International 2007). Thus, the Russian approach appreciated national metrics and provided a housing response proportional to the scale of the problem. The housing challenge in Russia differs from those in the other BRICS countries, as it is one of quality instead of quantity. With small living spaces and poorly maintained buildings, government programmes have been unable to support the maintenance of formerly state-owned buildings or to address the overcrowding caused by small living areas. These challenges impact fertility, leading to an ageing population. Given these challenges, when the right to housing is discussed, arguments focus on housing quality. Thus, closer attention is paid to reforming Soviet-era norms and reassessing ideas of fairness in housing distribution (Tiwari et al. 2016: 57, 71, 72). In 2017, the government introduced the My Street project, which focused on repairing and improving the aesthetics of the urban landscape. Other projects propose demolishing housing estates in poor condition, but there have been no agreements on replacing the demolished housing projects. Moreover, as in Brazil and South Africa, new projects are dependent on available land, leading developers to focus on constructing high-rise buildings (Gunko et al. 2018: 307). To accommodate the poor in social housing projects in St. Petersburg, the government has promoted PPPs to secure private investment in social projects. The difficulty experienced in these projects is overcoming rigid budgetary frameworks through innovative financing models (Gunko et al. 2018: 1121). For South Africa’s benefit, it is important to grapple with ideas of housing fairness or adequacy. The Russian housing policy response is informed by national metrics that define adequate housing provision. While the measure may differ in South Africa, policy-makers should again note the scale of the response offered by the Russian government to address the housing challenge based on the agreed norm.

12.7.3 Defining the scale of housing challenges in India The government has addressed the housing challenges in India in 5-year cycles since 1951, with the first 6 plans focusing on the role of the public sector. The 1st cycle focused on institution building and constructing houses for government employees. The Industrial Housing Scheme was also initiated, subsidising up to 50% of land or construction costs. The 2nd cycle (1956–1961) widened the scope of the Industrial Housing Scheme to cater for rural housing, slum clearance and town planning. The 3rd cycle was to improve coordination between all agencies of housing provision, and the fourth plan (1969–1974) attempted to reduce the effects of urbanisation by

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developing smaller towns. The Scheme for Environmental Improvement of Urban Slums was undertaken in 1972/73 to provide a minimum level of services in areas such as water and sanitation. The 5th plan reiterated the efforts of the previous plans and emphasised the effects of urbanisation. In contrast, the 6th plan (1980–1985) expanded the focus on providing services to the poor (MHUPA n.d.). Post-1985, the 7th plan (1985–1990) first focused on shifting the responsibility of housing construction to the private sector. After that, the public sector took responsibility for mobilising resources for housing, providing subsidised housing for the poor and acquiring and developing land. The 7th plan concentrated on the needs of the urban poor, introducing an urban poverty alleviation programme known as Urban Basic Services for the Poor. The 8th plan (1992–1997) focused on developing the urban sector to grow the national economy, recognising the link between housing adequacy, inclusion and economic growth. While the employment growth rate in urban areas averaged around 3.8% per annum, it dropped to 1.6% in rural areas. This plan recognised that the supply of services fell far short of the demand, which was most acute in urban areas. However, the rapid growth of the urban population increased the housing backlog, resulting in the expansion of slums (MHUPA n.d.). India’s definition of acceptable housing and its housing shortage are unique to their context. There are varying degrees of acceptability of housing which are determined by the solidity of the materials used in construction. The housing shortage is quantified in these terms. Historically, due to the country’s immense population, the housing deficit statistics were calculated using a formula and not an actual count. This formula integrated varied levels of housing acceptability in addition to congestion and obsolescence factors. In 2001, for the first time, the Census of India was able to describe the state of the housing in these terms and identified a housing shortage of 10.5 million households (approximately 19% of households) (Office of the Registrar General and Census Commissioner 2013: 1–9). However, the shortage could be measured differently if acceptability standards were modified. A few statistics can place the housing challenge in context, with varied interpretations of housing adequacy. It was found in 2013 that 1.77 million Indians live as houseless people; a further 7 million people live in ‘unliveable’ conditions in 2011. In addition, 10 million houses were found to be in dilapidated conditions that required urgent improvement. Potentially, 26 to 37 million people lived in informal conditions (Jha 2020; Kumari 2020). The scale of the Indian challenge dwarfs the experiences of Brazil and South Africa. India’s Observer Research Foundation argues for a broad suite of housing policies to respond to the scale of the challenge and the range of aspects that inform housing poverty. India is in a similar position as South Africa, dealing with an immense housing backlog proportional to its population. However, policy analysts agree that the scale of the housing response must be responsive to the size of the problem.

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In the interim, affordable housing development projects must be supplemented with other efforts that provide basic services such as electricity, water supply and sanitation in homes without such amenities. In addition, when affordable housing projects are launched, private-sector partners must be incentivised to support lowincome communities. As in South Africa, Brazil and Russia, it was found that the project’s location is also a critical concern of residents. When housing projects are positioned on the peripheries of cities, demand for such units reduces significantly, detracting from sustainability of the project (D’Souza 2019: 5, 11, 18). With projects located on the outskirts of cities, some large-scale projects in Jawaharlal Nehru remained unoccupied by 22% and other smaller projects were 69% empty (King et al. 2017: 24). Rental housing strategies support a crucial gap in the market for people who relocate or cannot afford house ownership. Homeownership is generally impossible for low-income households, as they face financial constraints, difficulties accessing a mortgage and generally irregular earning patterns. To respond to the scale of the Indian challenge, the broad mechanisms of the Indian government must act in concert to implement the 2015 Draft National Urban Rental Housing Policy and the 2021 Model Tenancy Act, given that states are responsible for implementing policy.

12.7.4 Rapid urbanisation and mass social housing in China Before 1949, most urban housing in China was offered as private rentals provided by landlords. This trend changed through the 1950s, socialist transformation, where most properties owned by big landlords were nationalised. Like India’s first housing policy cycle, government-owned institutions built public housing which they distributed directly to their employees. Housing reforms were implemented in the 1980s, when a public housing provision system was established in all cities and large towns. House building was carried out by commercial developers rather than the public sector. Housing privatisation was a central aspect of these reform programmes. By 2002, 80% of public housing was sold to its occupiers (Zenou 2011: 19, 20). The socialist housing distribution system gave way to a market-based approach with mortgage financing options for middle- to high-income households. This system has remodelled the social housing provision for low-income households. One of the requirements for having access to social housing was that at least one household member should have local, permanent or non-agricultural hukou registration (the registration of an individual in the system) for more than five years. Initially, it was assumed that subsidised rental housing was a temporary measure. However, with increasing unemployment, poverty has become a priority concern and the number of households needing housing in urban areas has increased. China’s housing challenge is exacerbated by a significant proportion of the poor living in cities as migrants and not holding hukou registration. As a result, these migrants have almost no access to the urban formal housing market and mainly rent in the informal sector.

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Consequently, these policies have resulted in severe spatial segregation between the rich and the poor (Zenou 2011: 21). Like South Africa, rapid urbanisation substantially impacted China’s approach to housing policy. The rural population decreased from 74% in 1990 to 64% in 2001. In 2001, about 94% of the population lived on approximately 46% of the land. At the end of 2008, China’s total population was 1.33 billion, with 723 million (54%) and 607 million (46%) residing in rural and urban areas respectively. With a deficit of 40 million housing units out of 361 million households, the shortfall amounts to 11% of households. Therefore, the scale of the housing deficit is significant even though it is masked by the massive population numbers of the country. Furthermore, due to the effects of rapid urbanisation, over 8 million new families add to the housing deficit each year. The increase in slum conditions is partly attributed to the hukou system of home registration which restricts permanent migration to cities but allows for temporary migration (Kim 2007). China’s social housing model was largely supply-side subsidy driven, with local governments given the discretion to determine the appropriate placement of affordable housing communities. This practice is similar in Brazil and India, and maintains high housing prices in centrally located areas. While this housing supply has been rapidly implemented at scale, new social housing projects located in remote locations disadvantage low-income migrants who need housing (Ma et al. 2018). Therefore, it is crucial for South Africa and BRICS that when new affordable housing projects are developed, attention is given to the housing demand and spatial access of services that these communities need, as well as access to employment opportunities (Zeng et al. 2019). Despite the progress made in China, the country still faces a housing shortage. With the supply-side driven approach, many housing projects do not meet the demands of those seeking housing. Wang et al. (2018) have found that despite the progress made in a city like Hangzhou, there is still a need to reform land allocation and regulate housing price regulations. In addition, to meet the needs of those seeking affordable housing in China, the policy could be improved by integrating a sustainability framework (Wang et al. 2018). Such integration should factor in economic, environmental and social sustainability concerns (Gan et al. 2017). Given China’s progression and pace of development, these recommendations are valuable for the other BRICS countries that wish to develop a holistic affordable housing policy.

12.8 Conclusion As the UNCHS noted, the definition of adequate housing differs from country to country. Our review of the various reports and literature shows that this trend is clearly discernible among BRICS countries. For instance, Russia’s approach to measuring square meterage per person, India’s definition of liveability or China’s

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views on internal migration are all unique to these countries. However, policymakers and analysts have agreed that housing policy initiatives need to be made at a scale proportional to the housing backlog. Affordable rental housing projects provide an opportunity to deliver mass housing to poor people if subsidised. These initiatives have succeeded in reducing housing backlogs in China and Brazil. In addition, from the perspectives of these countries, it has been found that one cannot assume the market will miraculously produce housing stock at prices that the poor majority can afford. Therefore, the state must intervene to address these backlogs. From Brazil, one learns that the market is unable to address the housing backlog, as the system cannot cater to the needs of the poor. Thus, market is a poor instrument for affordable housing delivery. In South Africa, it is noted that the ‘gap market’ is inadequately supported in housing support for financial assistance. Promoting social housing initiatives could support these households on the ‘edges of housing provision’. Although the government has recognised the need to prioritise such projects, the corresponding response is not found in the housing budgetary allocations. In developing these affordable housing projects, finding a central location is crucial to the project’s sustainability and the demand for units developed. Projects located outside economic centres are less in demand if few opportunities exist to access economic activity. Specifically, projects in Brazil and China both suffered when built on the outskirts of cities with poor supplementary access to infrastructure and services such as transport, education or health. Thus, when central locations are unavailable when designing such programmes, the state must also supplement the housing project with an adequate and affordable transport programme. While programmes are implemented to cater for those migrating to the cities, it is equally important to develop rural towns and encourage people to stay. The development of smaller towns in India to address migration to the cities must, therefore, be coupled with employment creation and investment in the rural towns. Social housing represents a sustainable human settlements approach that can address a number of BRICS’s key challenges. By addressing the right to shelter, as espoused in South Africa’s constitution, one will also cater for access to complementary services such as access to water, sanitation, education and healthcare via the need for a holistic settlement planning approach. As Chinese analysts have noted, economic, environmental and social sustainability concerns must be integrated into the designs of these programmes. If a holistic approach to housing development is not followed, poor living conditions can impact the health of the workforce and country’s productivity – as reported in this chapter, in the case of Russia. Although the root causes of the housing challenges in BRICS may vary and the countries may differ in how they estimate the size of the housing deficit, many of the present-day challenges are consistent. For example, Brazil’s constitutional amendment affords its citizens the right to social housing, which echoes the right

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to shelter identified in South Africa’s constitution. Like South Africa, India’s efforts to curtail its housing backlog are generally negated by the continued effects of urbanisation. In China, it would seem that due to the policy requirements of hukou registration, social housing projects seem best placed to fit the temporary nature of the housing problem. This chapter has highlighted various convergences among the affordable housing policies of the BRICS countries. Each nation grapples with issues of adequacy and scale. Urbanisation will continue to increase the housing backlog challenges in urban areas, requiring greater-scale interventions. Crucially, South Africa and BRICS will note that the market fails to supply housing to the poor and those falling in the ‘gap market’ (as described by Rust), requiring BRICS to identify alternative mechanisms to finance the supply of affordable housing. Within BRICS, a new financing alternative has emerged to target development projects. The mandate of the New Development Bank (NDB) requires the bank to identify development priorities and direct funds to projects targeting such priorities. Accessing funding in South Africa has been a primary challenge to develop a housing response proportional to the housing backlog. Affordable housing projects, as highlighted earlier, target a nexus of development priorities. By introducing a targeted funding model informed by socioeconomic disparities within the NDB, the bank could begin to support the funding gap present in South Africa and possibly within BRICS. We recommend that this study be extended and a review of the financing of housing development across the BRICS countries be theoretically and analytically unpacked, and an analysis of the housing budgets be compared to the priorities stated in the housing policy of each BRICS country. The findings of this study could help the NDB to identify funding gaps related to development priorities. Endnote 1

In 2007, the DHS introduced the FLISP to close the homeownership affordability gap by reducing the actual amount that such households required to pay back the loan.

References

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CAHF (Centre for Affordable Housing Finance in Africa) (2021) Housing Finance in Africa – 2021 Yearbook. Accessed 9 November 2022, https://housingfinanceafrica.org/app/ uploads/2021/11/2021-cahf-yearbook.pdf Charlton S & Kihato C (2006) Reaching the poor: An analysis of the influences on the evolution of South Africa’s housing programme. In U Pillay, R Tomlinson & J du Toit (Eds) Democracy and delivery: Urban policy in South Africa. Cape Town: HSRC Cross C (2008) Housing delivery as anti-poverty strategy: Is South Africa on the right track? Accessed 12 January 2022, https://www.researchgate.net/publication/236144314_ Housing_delivery_as_anti-poverty_is_South_Africa_on_the_right_track/ link/0f317531df4b16bd2e000000/download Cross C (2010) Shack settlements as entry to the labour market: Toward testing upgrading paradigms. Cape Town: HSRC D’Souza R (2019) Housing poverty in urban India: The failures of past and current strategies and the need for a new blueprint. Accessed 12 January 2022, http://center4affordablehousing.org/ wp-content/uploads/2019/08/ORF_Occasional_Paper_187_HousingPoverty.pdf Davids YD, Roberts B & Struwig J (2016) Fostering an inclusive development agenda in South Africa: Citizen voices and government policy responses. HSRC Policy Briefs. Pretoria: HSRC. Accessed 12 January 2022, http://www.hsrc.ac.za/en/research-outputs/view/7929 Dawson, H. and McLaren, D. (2014) Monitoring the right of access to adequate housing in South Africa. An analysis of the policy effort, resource allocation and expenditure and enjoyment off the right to housing. Johannesburg. Accessed 17 February 2023, http://spii.org.za/ wp-content/uploads/2018/02/Working-Paper-8_Monitoring-the-right-to-adequate-housingin-SA.pdf DHS (Department of Human Settlements) (2009) The National Housing Code: Social and Rental Interventions – Social Housing Policy. Accessed 12 January 2022, http://www.dhs.gov.za/sites/ default/files/documents/national_housing_2009/6_Social_Rental_Interventions/3 Vol 6 Social Housing Policy.pdf Euromonitor International (2007) Housing Russia becomes a state priority. Accessed 24 June 2021, https://blog.euromonitor.com/housing-russia-becomes-a-state-priority/ Fokazi S (2020) Many children better off at school than at home. Accessed 15 June 2020, https:// www.timeslive.co.za/news/south-africa/2020-06-12-many-children-better-off-at-schoolthan-at-home-says-child-expert Fuller Housing Centre (2014) Housing Delivery in South Africa. Draft Report. Accessed 12 January 2022, https://fullercenter.org/wp-content/uploads/sites/default/files/Housing delivery - South Africa.pdf Gan X, Zuo J, Wu P, Wang J, Chang R & Wen T (2017) How affordable housing becomes more sustainable? A stakeholder study. Journal of Cleaner Production 162: 427–437. https://doi. org/10.1016/j.jclepro.2017.06.048 Gardner D (2008) Housing microfinance in South Africa: Status, challenges and prospects. Accessed 12 January 2022, https://www.findevgateway.org/sites/default/files/publications/ files/mfg-en-paper-housing-microfinance-in-south-africa-status-challenges-and-prospectsdec-2008_0.pdf Gunko M, Bogacheva P, Medvedev A & Kashnitsky I (2018) Path-dependent development of mass housing in Moscow, Russia. In DB Hess, T Tammaru & M van Hamm (Eds) Housing estates in Europe – Poverty, ethnic segregation and policy challenges. Geneva: Springer Nature. Accessed 12 January 2022, https://library.oapen.org/bitstream/handle/20.500.12657/25712/2018_Book_ HousingEstatesInEurope.pdf?sequence=1#page=297

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Rust K (2012) Mortgage loan performance in South Africa. Accessed 5 September 2014, https:// www.finmark.org.za/wp-content/uploads/pubs/Mortgage_loan_NPL_3_12_2012.pdf Rust K (2014) Affordable housing finance in South Africa: Understanding the market performance. Presentation for the Financial and Fiscal Commission, Johannesburg Santoro PF (2019) Inclusionary housing policies in Latin America: São Paulo, Brazil, in dialogue with Bogotá, Colombia. International Journal of Housing Policy 19(3): 385–410. https://doi. org/10.1080/19491247.2019.1613870 Selebalo H & Webster D (2017) Monitoring the right of access to adequate housing in South Africa. Accessed 9 November 2022, http://spii.org.za/wp-content/uploads/2018/02/Right-toHousing_2017.pdf SHRA (Social Housing Regulatory Authority) (2020) The State of Social Housing Report. Accessed 12 January 2022, https://shra.org.za/sites/default/files/SHRA SOSH Report %283103-21%29_compressed.pdf Stats SA (Statistics South Africa) (2012) Census 2011 – Statistical release. Pretoria: Stats SA. https://doi.org/10.1016/s0022-5223(11)01322-5 Stats SA (2017) Community Survey 2016 – Statistical release. Pretoria: Stats SA. Accessed 12 January 2022, http://cs2016.statssa.gov.za/wp-content/uploads/2016/07/NT-30-06-2016RELEASE-for-CS-2016-_Statistical-releas_1-July-2016.pdf Struyk R (1997) Restructuring Russia’s housing sector. Washington DC: The Urban Institute Tissington K (2010) A review of housing policy and development in South Africa since 1994. Accessed 12 January 2022, http://spii.org.za/wp-content/uploads/2013/12/review-of-theright-to-housing.pdf Tissington K (2011) A resource guide to housing in South Africa 1994–2010 – Legislation, policy, programmes and practice. Accessed 12 January 2022, https://www.seri-sa.org/images/stories/ SERI_Housing_Resource_Guide_Feb11.pdf Tiwari P, Rao J & Day J (2016) Development paradigms for urban housing in BRICS countries. London: Palgrave Macmillan. https://doi.org/10.1057/978-1-137-44610-7 UN Habitat (2013) Scaling-up affordable housing supply in Brazil – The ‘My House My Life’ Programme. Accessed 12 January 2022, https://unhabitat.org/sites/default/files/downloadmanager-files/Scaling-up Affordable Housing Supply in Brazil.pdf UNECE (UN Economic Commission for Europe) (2006) Guidelines on social housing. Geneva: UNECE. Accessed: 12 January 2022, http://www.unece.org/fileadmin/DAM/hlm/ documents/Publications/guidelines.social.housing.pdf Vihavainen R (2005) Housing in Russia – Policies and practices. Accessed 12 January 2022, https:// blogs.helsinki.fi/respublica/files/2008/08/rp05_interim_housing.pdf Wang W, Wu Y & Sloan M (2018) A framework and dynamic model for reform of residential land supply policy in urban China. Habitat International 82(October): 28–37. https://doi.org/10.1016/j.habitatint.2018.10.006 Zeng W, Rees P & Xiang L (2019) Do residents of affordable housing communities in China suffer from relative accessibility deprivation? A case study of Nanjing. Cities 90(January): 141–156. https://doi.org/10.1016/j.cities.2019.01.038 Zenou Y (2011) Housing policies in China: Issues and options. Accessed 12 January 2022, http://ftp.iza.org/pp24.pdf

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Women Entrepreneurs in the BRICS Informal Economy: A Transformative Agenda Amid the COVID-19 Pandemic Obianuju E. Okeke-Uzodike

13.1 Background Globally, a growing list of research studies in entrepreneurship focuses on the importance of the informal economy as a theatre for the rapid growth of women’s economic activities and socioeconomic transformation. Generally, scholars of entrepreneurship acknowledge the legitimacy of the informal economy as a safety net for women entrepreneurs and as a major contributor to national economic growth and socioeconomic transformation and development. Indeed, extant literature recognises entrepreneurship as one of the most useful options available to women seeking life-changing economic opportunities. There is a broader consensus among academics on the study of women entrepreneurs, for their various contributions across spheres and for being one of the fastest-growing categories of entrepreneurship globally. Thus, BRICS member states have been keen to advance policies and implement strategies and initiatives targeting women and entrepreneurship development within the bloc. The support notwithstanding, women entrepreneurs have continued to face various serious challenges. Since the outbreak of COVID-19 and the associated consequences, many business sectors and firms have been affected negatively – albeit unevenly. This situation is evidenced increasingly by a growing number of studies showing the enormous negative effect of COVID-19 on the informal economy, which caters to a greater percentage of women entrepreneurs. In essence, because the pandemic has significantly and disproportionately affected women entrepreneurs, it has exacerbated their existing challenges. In part, this is due to a few factors: they operate small businesses, have limited capital and are mostly self-employed. In light of the above, this chapter identifies the importance and high value of existing policies supporting women’s entrepreneurship. It highlights the importance of maintaining earlier levels of support while introducing (post-)COVID-19 intervention strategies aimed at mitigating the impact of the pandemic.

13.2 Introduction Globally, the informal sector plays a significant role from any nation’s political, social and economic perspectives. The informal economies are pervasive, innovative and

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significant to national development (Lee & Hung 2014). As explained by FernandezKelly (2006), the informal economy or informality, as the case may be, is envisaged to be part and parcel of modernisation. It is characterised by increasing economic activities and is noted for its role in transitioning emerging economies and people’s well-being (Liang et al. 2016). The economic activities in the informal sector account for 10% to 20% of GDP for developing countries and 50% to 60% for developed countries (ILO 2018; Webb et al. 2013; Godfrey 2011). Brazil, Russia, India, China and South Africa (BRICS) are collectively recognised for strong development patterns and dynamic economic changes (Okeke-Uzodike 2019); and in these contexts, the informal economy cannot be underestimated. For example, the size of Brazil’s informal economy is estimated at 39.8%; it contributes to 16% of the GDP, provides up to 36.8% of employment and is mostly dominated by women (BTI 2018; OECD 2018; IBGE 2017; XinhuaNet 2017). Similarly, the Russian informal sector is estimated to be up to 46.1% in size; it contributes 6.5% to the country’s GDP and provides employment for more than one-fifth of the workforce (The Cable 2017). In India, the informal economy provides 81% of the workforce; females represent 48.5% of the population, and 90% work in the informal sector as noted in the article by Bhatt in the Entrepreneur (2018). China is regarded as the largest emerging economy, with over 60% of its workforce operating in the informal economy; females represent 48.8% of the population and 25% of entrepreneurs (National Bureau of Statistics of China 2019; China Daily 2015). Lastly, South Africa’s informal economy is up to 12% in size; it contributes 5% to the GDP and employs up to 41.1% of the workforce, with 51% of the country’s population being females and 47.6% of them earning a living from the informal economy (Stats SA 2014; 2018). An article in the Financial Times (2018) states that BRICS has been noted to contribute to 50% of the world’s economic growth. Indeed, the informal economy is considered a sizeable and expanding feature of the BRICS nations and the contemporary global economy (Williams 2011; Jütting & Laiglesia 2009; Rodgers & Williams 2009). It provides avenues for new ventures and various activities such as entrepreneurship. Nevertheless, the informal economy fends for and harbours those at the bottom of the socioeconomic ladder and the most vulnerable in society. The International Labour Organisation (ILO 2018) notes that 61% of the world’s employees, including over 740 million women, are in the informal sector. Most research studies have explored not only the positive contribution of women entrepreneurs, but also various challenges in relation to social well-being and development. In recognition of the existing challenges, particularly in this era, this chapter uniquely addresses the challenges for women entrepreneurs exclusively within the BRICS bloc, bringing the COVID-19 pandemic into the limelight. In light of the above, a document analysis and a systematic online search across BRICS countries were conducted, using the key phrases ‘transformation/development’,

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‘challenges facing women entrepreneurs in BRICS’, ‘women entrepreneurs in BRICS informal economy’, ‘BRICS informal economy’ and ‘COVID-19 and BRICS’. The focus was on research studies and publications from 2010 to 2021 in each BRICS member state. The rationale was that South Africa joined the bloc in 2010, changing the acronym from BRIC to BRICS. To ensure the validity and reliability of the literature, only peer-reviewed publications were used, retrieved from reputable databases (such as Google Scholar, Emerald Insight, Scopus, Academia.edu, ProQuest and ScienceDirect) and government publications. Following this introduction, the concepts of transformation and development are explained from a feminist perspective. In the next section, literature on women and the concept of entrepreneurship are presented. The methodological approach allowed for the reviewed literature to be organised systematically, with common constraints women entrepreneurs face in the informal economies of the bloc summarised in tabular form. The aim is to draw analytical generalisations about the state of women entrepreneurs in the informal economies of BRICS countries. Next is an extensive discussion on the COVID-19 pandemic and its impact on BRICS with respect to each BRICS country’s GDP, infection rates, death rate and overall economic activities. This is followed by a discussion on the concept of transformation and development in light of COVID-19. Finally, concluding thoughts are offered, bringing recommendations for policy-makers into context.

13.3 Conceptualising transformation and development within the feminist paradigm In recent years, the notion of transformation has gained ground globally in academic, development and policy discourses. The word ‘transformation’ has been viewed as a complex concept (Venter & Tolmie 2012), with multidisciplinary approaches to develop its definition. Although contributions to the concept of transformation may be multidisciplinary, they incorporate aspects of change in one form or another (O’Brien 2012). According to Feola (2015), transformation is a process of structural change involving fundamental patterns, elements and interrelations in the system. In essence, transformation implies a routine change that fundamentally alters the object’s state (Tschakert & St Clair 2013; Feola 2015). The focus of this chapter is on transformation from the perspective of social scientists within the developmental discourse. Brand (2016) notes that transformation could be seen as a strategic and analytical concept. From the strategic viewpoint, transformation paves the way for dealing with problems and crises deemed effective and socially desirable. From the analytical concept, it addresses the asymmetrical and hierarchical social structural dimensions inscribed by power relations due to class, gender, race, economic, political and cultural belief systems (Brand 2016).

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The ideological discourse on transformation is increasingly gaining momentum within the feminist paradigm. Given Brand’s definition of transformation, women’s transformation is addressed from both the strategic and analytic underpinnings. From the strategic dimension, issues pertaining to women’s empowerment have remained a vital component in various countries and their economic and social development agendas. This stems from the established strategic roles women play in developing economies across all nations (Bayeh 2016; Saleh & Razilan 2016; Omorode 2014; Akyeampong & Fofack 2013; Stevens 2010). It has been argued and established that societies marred by gender discrimination experience fewer economic outcomes and face more developmental challenges (Bradshaw et al. 2013; WBGDG 2003). Given the poor representation of women in economic activities, Vossenberg (2013) asserts that women remain untapped sources of economic growth, and their potential benefits are not fully enhanced. Similarly, from the analytical point of view, women have historically been subordinated to societal structures (Sarumi et al. 2019) – an ideology of exploitation that devalues and oppresses women, preventing them from attaining their full potential (Singh 2007; Walker & Thompson 1984). This is evident in the aspects related to worldviews and socioeconomic and political power relations on the existentialism of the general state of women. Transformation is not only a process of structural change – which entails a change of fundamental patterns, elements and interrelations in the system (Feola 2015) – but a promising, far-reaching, incremental change permeating a transformative system for an inclusive gendered society (Brand 2016). This supports the idea of deconstructing the contexts and barriers for potential systematic changes, hence social transformation. Khondker and Schuerkens (2014) note that social transformation entails a fundamental gradual or incremental change in society over a period of time. The concept of social transformation is not new in development discourses. Although a complex concept in social sciences, social transformation takes a critical stance towards the older notions of the idea of development (UNESCO 2017). The development concept has attracted a rich debate due to emerging philosophical thinking within the discourse. Thornton et al. (2012) posit that developmental thinking has been extended beyond academics and professionals, even to ordinary people. Therefore, development is viewed from different perspectives, and various schools of thought have emerged incorporating social, economic, political and sustainability dimensions into its meaning. The development discourse focuses on causes of deprivation (Babacan 2019), which may be traced to challenges of poverty, unemployment, racial discrimination policies, and economic and social inequalities within and beyond the global context (Barbosa et al. 2014). Drawing from a social sciences perspective, development refers to how societies change over time (Currie-Alder et al. 2014), which may reflect an improvement

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generally within the system or in some of its constituents (Bellù 2011). Barder in an article published by the Centre for Global Development, adds that development manifests in the interaction between the components of the system (people, firms, technologies and institutions) and the environment (economic, social and political). That development entails the capacity of those systems to provide self-organising complexity. From a gendered lens approach, such systems would provide circumstances for the continued well-being of women. Given this, development is envisaged to have a direct relationship with women empowerment, defined by the levels of access to variables such as health, education, earning opportunities and rights (Duflo 2011), which may commonly reflect as transformation. Thus, transformation entails an ideologically-driven change of society’s systemic characteristics emanating from women’s cultural, economic and political disposition. Such transformation seeks to change social systems with power relations by addressing a range of responses to social institutions, values and practices that support, shape and ensure various forms of gender-based oppression that subordinate women. The standpoint theory acknowledges that knowledge is embedded in oppressed and marginalised groups, and that research on power relations should focus on such groups (Woodman 2018; Harding 2004; Wylie 2003). Accordingly, a radical social transformation would influence the general perception of women, throwing light onto the roles and contribution of women in development. However, achieving women’s transformation and development entails the existence of the three interrelated strategic pillars of institutions, structures and capabilities. From O’Neil and Domingo’s (2015) perspective, institutions address the rules and norms that shape people’s behaviour and interactions. O’Neil and Domingo (2015) posit that structures exist in the aspects that shape society through social, economic and political endowments, groupings and patterns. In essence, structures are built within the institutional frameworks that support the social system. The transformation process in such systems draws on ideas, practices, roles of structure, policies, legislation and institutional culture (Du Preez et al. 2016). Similarly, Raghuvanshi and Garg (2018) argue that capabilities constitute knowledge that enhances skills. Such knowledge could enhance an individual’s expertise through education and awareness, and empower women in building and improving their capabilities (O’Neil & Domingo, 2015). A proposed framework depicting such an arrangement is presented in Figure 13.1.

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Figure 13.1 Proposed conceptual framework for promoting women entrepreneurs Pillars

Instruments

Social System Values, Ideas, Practices, Institutional Culture, Policies, Legislation, Norms and Education

Institutions

Structures

Outcomes

Entrepreneurship improvement

Women transformation and development

Capabilities Direct effect Control variable

Source: Author

In Figure 13.1, institutions, structures and capabilities are the supportive intertwined pillars for entrepreneurship improvement. These pillars exist within the social systems and directly affect entrepreneurship development in every nation. The components of these pillars are located within the countries’ social systems. The extent to which these components are strategically implemented reflects the level of entrepreneurial success or failure. A successful outcome would entail an improvement for women entrepreneurs vis-à-vis the achievement of transformation and development. One may rightly conclude that institutional structures and capabilities are inseparable in transformation processes. This is because transformation encompasses a wide range of measures for change to occur. In view of this, the BRICS bloc has implemented various strategies to support women entrepreneurs using institutions, structures and capabilities. These are evident in each country’s policies supporting small and medium-sized enterprises (SMEs) and women empowerment, integration of entrepreneurship education, various training and development opportunities in the small business sector to support women, and changing the traditional norms and transforming women. The extent to which these pillars have transformed women entrepreneurs within the bloc remains debatable. In addition, the devastating impact of COVID-19 highlights the need for the BRICS countries to jointly prioritise issues of transformation and development within their respective policy frameworks.

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13.4 BRICS: Women and entrepreneurship The contribution of entrepreneurship to the global economy is well recognised in enhancing production, creativity and competitiveness (Sajjad et al. 2020; Zanjirchi et al. 2019). This is not an exception to the BRICS countries, where entrepreneurship is viewed as one of the drivers of future economic growth, repositioning the strategic role of BRICS in the global economy. The concept of entrepreneurship is not new to development economics, and many writers have alluded to a strong relationship between the two (entrepreneurship and economic development). In addition, history has noted the strong relationship between women and entrepreneurship, which is affirmed by the Global Entrepreneurship Monitor’s (2019) report indicating that in 2018/19 over 400 million women engaged in entrepreneurial activities globally. Such entrepreneurial activities have been linked to job creation, wealth, poverty reduction, human development, education, health and national development. In addition, Chambwera et al. (2011) identify entrepreneurship as a pathway to poverty alleviation, gender equality, and women’s transformation and development. Thus, it is important that research among academics, policy-makers and the development community recognise the importance and positive impact of women entrepreneurs on economic growth and development as well as achieving sustainable and durable peace (Okeke-Uzodike 2023 in-press; Sajjad et al. 2020; World Bank 2017; Cuberes & Teignier 2015; Fetsch et al. 2015; Woetzel et al. 2015). With ongoing, dynamic changes in the world economy, BRICS continues its mandate of building ties and relationships for sustainable economic and social development within and beyond its periphery. This is evident in the bloc’s adoption of the Economic Partnership Strategy 2021–25, aimed at enhancing cooperation in trade, investment, digital economy and sustainable development vis-à-vis improving the business environment for SMEs (IGD 2020). BRICS has not relented in its pursuit of inclusive economic and social development by implementing policies, programmes and platforms. For example, the BRICS Gender and Women’s Forum was established to address gender-related factors that continue to inhibit meaningful participation and empowerment of women (DIRCO 2018). There was also the establishment of the BRICS Women Parliamentarians’ Forum to improve women’s political participation. Acknowledging the role and significance of entrepreneurship in economic well-being, especially for the poor masses of society and the growing proportion of women entrepreneurs in the informal economy, BRICS governments are implementing programmes and initiatives to enhance women’s economic development. In recognition of the tremendous impact of entrepreneurship as a development instrument, BRICS has established the BRICS Women’s Business Alliance – a platform dedicated to developing entrepreneurship support programmes and networking women entrepreneurs within the bloc (Women Business Alliance 2017; Russia Beyond 2016). The BRICS Chamber of Commerce and Industry (CCI) also focuses on women empowerment initiatives and creating enabling support

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systems for female entrepreneurs (NIHSS 2020). There is a partner network to the BRICS CCI (called sheatwork.com) for knowledge sharing among women entrepreneurs (NIHSS 2020). Irrespective of these efforts, women entrepreneurs within the bloc continue to face social, economic and political challenges. The social challenges emerging from research studies across the BRICS bloc affecting women’s entrepreneurship performance range across behavioural profiles, mental/emotional barriers, cultural norms, networks, alliances, work–life balance and inequality. The economicallyrelated challenges to BRICS women and entrepreneurship performance emerge in terms of access to finance, low investment and competition. At the political level, there are challenges relating to government policies and business climate. The impact of globalisation and technological changes on the business environment has added to women entrepreneurs’ continuing challenges. These challenges reflect education/knowledge, skills transfer awareness and time management. A review of research studies conducted across the BRICS bloc attesting to the above is presented in Table 13.1. Table 13.1 Pre-COVID-19: Studies across BRICS on challenges for women entrepreneurs Country

Sample research studies

Brazil

De Castro Krakauer et al. 2018; ILO 2018; OECD 2018; CE100 Brazil Network 2017; Costa et al. 2016; Holland 2014

Russia

ILO 2018; Vasileva 2018; Smirnov & Cheberko 2018; Hodges et al. 2015

India

ILO 2018; Goodrich et al. 2018; Warnecke 2016; Sengupta et al. 2013; Mohan Kumara et al. 2013

China

ILO 2018; Xu et al. 2018; Goodrich et al. 2018; Firoz 2015; Kelley et al. 2013; Hernandez et al. 2012

South Africa

ILO 2018; Henning & Akoob 2017; Meyer & Mostert 2016; Hodges et al. 2015; Siqwana-Ndulo 2013

Source: Author

13.4.1 COVID-19 pandemic in BRICS countries: Women entrepreneurs and the informal sector Worsening the global economy and the business environment was the outbreak of the Severe Acute Respiratory Syndrome Coronavirus-2 (SARS-CoV-2), which causes the contagious disease commonly referred to as COVID-19. Membership of the BRICS bloc includes four of the worst-hit countries in the world in terms of the origin of the disease, infection rates, death rates and economic impact (see Table 13.2).

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Table 13.2 BRICS countries in the face of the COVID-19 pandemic GDP growth rates (%) Forecast

COVID-19 cases (Cumulative) 3 February 2021

2020

2021

2022

Infection (Million)

Brazil

-4.5

3.6

2.6

9.2

Russia

-3.6

3.0

3.9

3.9

74

India

-8.0

11.5

6.8

10.7

154

2.3

8.1

5.6

0.1

4

-7.5

2.8

1.4

1.4

44

China South Africa

Death (Thousand) 225

Source: IMF (2021); WHO (2021)

In Table 13.2, each of the BRICS countries (except China) had a negative GDP (forecast) in 2020. However, it is important to note that China, being the originator of the disease, recorded a historical decline in GDP in the first quarter of 2020 (Focus Economics 2020). This was due to the negative impact of the COVID-19 pandemic on the Chinese economy in the fourth quarter of 2019. The Chinese economy contracted by 6.8% and was forecast to improve in the first quarter of 2021 by 2.3% (Statista 2021), as shown in Table 13.2. The forecast Chinese GDP improvement for the first quarter of 2020 was attributed to the strategic policy decisions implemented to control the spread of the coronavirus. The infection and death rates were also overwhelming for each BRICS country. The rollout of COVID-19 vaccines was expected to reduce infection and death rates, while allowing for increasing economic activity in these countries. The fast spread and severe effects of COVID-19 led to governments instituting various mitigating measures to contain the virus and reduce infection rates. The mitigating policies included total national lockdowns, workplace closures, travel bans and social isolation of workers, which led to the total shutdown of economic activities. The COVID-19 pandemic affected all spheres of life economically, socially and otherwise. It affected the economy and livelihoods. SMEs were the hardest hit in the business world, being vulnerable to fewer resources and operating with razor-thin margins. For example, Reuters (2020) reported a total closure of 522 700 firms in Brazil, of which 99% were small businesses with at least 49 employees each. In addition, the Financial Times (2020) reported that SMEs (considered critical to Russia’s service, hospitality and retail sectors), accounting for one-fifth of the nation’s GDP and representing a significant number of employers, were severely hit by the pandemic. In a similar vein, The Economic Times (2020) reported that SMEs, which employ about four-fifths of India’s labour force, were battered by COVID-19 lockdown measures. China (the world’s second-largest economy) halted business activities, which severely affected smaller enterprises that generate 90% of employment, constitute 80% of exports and account for

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70% of GDP (Zhang 2020). In South Africa, COVID-19 lockdown measures and business closure left an indelible impact on SMEs that represent 98% of businesses, employ between 50 and 60% of the country’s workforce, and generate one-fifth of the nation’s total turnover (McKinsey & Company 2020; Stats SA 2020). Indeed, all the BRICS countries shared the devastating effects of the COVID-19 pandemic on the economy due to governments instituting mitigation measures and policies to prevent the spread of the coronavirus. The impact of the pandemic on the informal economy has been disproportionate, nuanced and multilayered, with various types of shock ranging from extensive economic dislocation and long-term livelihood shocks/human repercussions to occupational and social displacement. For example, more than 90% of India’s population are in the informal sector and the impact of COVID-19 has seen a massive migration of workers to home villages in search of a social support net (Pachauri 2020). With an estimated 5 million SMEs operating in South Africa’s informal economy, the pandemic destroyed many businesses, jobs and income (IOL 2020). As a result, many small businesses have experienced slow or no turnover, struggled to pay their workers and, in many cases, permanently closed down their businesses. Many small businesses operate in the informal economy, making the sector very vulnerable to the COVID-19 pandemic. Similarly, a good percentage of the population of the BRICS countries are represented in the informal sector. Women are actively involved in the informal economy, which is not an exception for BRICS nations (as noted earlier in the introduction to this chapter). In addition, many women in the informal sector are found in SMEs, either as employees or practising entrepreneurs. For many in this sector (including women), livelihoods depend on daily wages for basic needs. Recent studies showed that the pandemic has disproportionately affected women economically and productively (UN Women 2020; Grown & Sánchez-Páramo 2020; CGAP 2020; ILO 2020). As reported in IOL (2020), many women-led small businesses were also found vulnerable to closure, while others permanently closed down their businesses because the sector lacks a safety net and struggles to cope with the effects of the pandemic.

13.5 Transformation and development in light of the COVID-19 pandemic The potential link between transformation and development has become a subject of discourse, especially within feminist ideology. This chapter focuses on various intervention techniques purposefully meant to bring about change for women through the promotion of entrepreneurship. As such, the positive impact of entrepreneurship and the informal sector on any nation’s development is no longer contestable. Studies have shown that entrepreneurship can drive change in women’s position, resulting in social and economic empowerment, emancipation, improvement and development (Lock & Lawton Smith 2016; De Vita et al. 2014;

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Poggesi et al. 2015; Marlow 2014). In addition, entrepreneurship has the potential to assist women in redefining themselves, becoming independent and challenging questionable oppressive norms and value systems (Modarresi et al. 2016; Hughes et al. 2012). This justifies various stakeholders, such as governments, donor organisations, development agencies and NGOs, implementing policies, programmes and strategies to promote entrepreneurship. This is also evidenced in the joint programmes and initiatives of the BRICS governments driving women’s entrepreneurship within the bloc. However, despite these efforts, the literature review has shown common challenges for women entrepreneurs in the BRICS informal sector, including social, economic, technological and political dimensions. Furthermore, the COVID-19 disruption has affected BRICS countries and, in particular women entrepreneurs Although these challenges are common, there is a country perspective on the degree of impact and the rate of entrepreneurial progress. BRICS governments have implemented various COVID-19 relief strategies, such as an interest-free period for borrowed monies, tax reduction and loans, beneficial only to small businesses in the formal sector. Because the informal sector lacks a safety net, is not registered and is unregulated (Horn 2011), businesses operating within the sector are excluded from most COVID-19 government support programmes (International Trade Centre 2020; Schwettmann 2020). The COVID-19 relief packages for businesses in the informal sector have been mostly in the form of income assistance programmes, food relief and ease of lockdown to allow such businesses to re-open and ease the impact of the pandemic and related response measures. As BRICS economies gradually re-open, efforts to address the challenges for women entrepreneurs should be those of shared interests and solutions that may bring on par the BRICS member states lagging behind. The solution suggested in this chapter is to appropriately integrate the three interrelated strategic pillars of institutions, structures and capabilities. According to Williams and Shahid (2016), these pillars influence the degree of informalisation. Although institutions that stimulate entrepreneurship may be formal or informal, informal institutions are considered in line with this chapter. According to Rugina (2019), informal institutions generally refer to socio-cultural factors (values, norms and stereotypes) that influence society, thereby shaping the feasibility, desirability and legitimacy of entrepreneurial career choices. Therefore, informal institutions are deeply embedded in society and its cultural belief systems that impact the desirability, nature and extent of entrepreneurship for women (Ahl 2006). Because structures are built within institutional frameworks, their barriers are rooted in socio-cultural norms and stereotypes. Research studies have demonstrated that structural barriers manifest in social interactions and expectations (Holland 2014; Klapper & Parker 2010), limiting the realisation of women and constraining their entrepreneurial activities (Seshie-Nasser & Oduro 2018; Bianco et al. 2017; UN Women 2017; Marlow 2014). Similarly, capabilities entailing knowledge and skills enhancement have been identified as challenges for women in general and women entrepreneurs in particular. Studies have demonstrated that women entrepreneurs

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lack managerial skills, network support and the ability to grasp entrepreneurial opportunities (Mastercard 2019; TechinAfrica 2017; Entrepreneur 2017; Adom & Asare-Yeboa 2016; Neves & Du Toit 2012). These challenges are reflected in the BRICS countries, as shown in Table 13.2. Accordingly, Rugina (2019) posits that components of informal institutions such as values, norms and stereotypes influence society’s general attitude. Such an attitude may reflect positively or negatively; however, in the case of women, negative perceptions far exceed the positive aspects, given the documented evidence presented so far in this chapter. To address these challenges requires the existence of a supportive framework. Such a framework entails the ability of the government to create conducive conditions, which, in turn, provides a foundation for innovative and productive entrepreneurship (Aidis 2017). Such conditions may exist in the form of gender equality legislation/policies (Markham 2013) and financial grants, subsidies, training and counselling (Munoz & Kibler 2016), which improve women’s entrepreneurial efforts and economic empowerment (Yousafzai et al. 2015). In this regard, informal institutional structures could also play a vital role in addressing women entrepreneurs’ challenges and driving productive entrepreneurial activities. Research studies have shown that appropriate institutional structures have the potential to offer access to innovative ideas, experiential learning, shared trust, social capital, connections and networking platforms for women entrepreneurs (Kazumi & Kawai 2017; McGowan et al. 2015; Katalin 2015). Quiñones (2016) adds that the networking platform could also serve as a source of clients, information and support groups for women entrepreneurs. Furthermore, it has been asserted that entrepreneurial institutional support systems could boost the confidence, willingness and vision of women entrepreneurs (Yousafzai et al. 2015; Lim et al. 2010). Such an arrangement, in turn, would boost women entrepreneurs’ business ambitions, competence and ability to exploit market opportunities. In view of the foregoing, the World Economic Forum (WEF 2020) has noted the improvement in women’s transformation across the globe. According to the WEF, the top 5 most-improved countries in terms of women’s transformation in the overall index are Ethiopia, Spain, Mali, Albania and Mexico. Added to this is the International Finance Corporation’s (IFC 2020) assertion about the leading role that women entrepreneurs play in Rwanda. Accordingly, Rwandan women entrepreneurs represent 42% of enterprises, comprising 58% of enterprises in the informal sector and accounting for 30% of the nation’s GDP (IFC 2020; Davis College 2019). This is a milestone referred to as ‘feminisation’ by the Mastercard Index of Women in Entrepreneurs (Mastercard 2019). Evidence in these reports includes the use of strategic pillars of institutions, structures and capabilities in driving entrepreneurial intentions, thereby transforming women’s lives in these countries. This evidence highlights the need for BRICS countries to reassess their existing policies and strategies for women’s transformation and development, especially in the wake of the COVID-19 pandemic.

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The entrepreneurial mindset and behaviour are largely shaped by the regulatory, normative and cognitive institutional structures and systems (Lim et al. 2010). Kibler et al. (2014) state that entrepreneurs tend to achieve economic gains by conforming to the rules, laws and social norms within the environment. In accordance with the IFC, increasing the share of women entrepreneurs is a major catalyst for development and manifests in income generation, poverty reduction and economic growth (IFC 2011). Driving such initiatives would strengthen power relations and women’s ability to control their own lives, socially, economically and otherwise. When this happens, it shows an element of positive change in the present status of the individual. Porter (2013) argues for the need for structural changes to overcome the challenges for women and instigate transformation with positive development outcomes. From this perspective, development is considered to be dynamic and assumes a continuous transformation and movement towards a better and improved condition (Balasundaram et al. 2010). In the case of women entrepreneurs, it may be rightly said that the promotion of entrepreneurship should be considered a transformative mechanism reflecting women’s development in the long run. In this light, women are generally considered weak and vulnerable in society. Their dominant nature and growth in the informal sector call for hastened efforts to promote entrepreneurship as an instrument of transformation and development.

13.6 Conclusions This chapter has explored the challenges women entrepreneurs face in the informal sector of BRICS countries, bringing to light the devastating effects of the COVID-19 pandemic on the economies and women of these countries and entrepreneurship in the informal sector in particular. One of the 2018 key visions of BRICS was to put women at the centre of transformation and development, thereby promoting entrepreneurship to achieve such a goal. Such combined efforts by the governments of the BRICS countries are centred on gender parity to ensure broader inclusion across social divisions. This resonates directly within the feminist transformation agenda of women’s development discussed earlier in the chapter. According to BRICS-Russia (2020), entrepreneurship generates employment and innovation, and the participation of women to reap such benefits depends on how well the inhibiting challenges are reduced. Before the COVID-19 pandemic, women entrepreneurs in the informal sector in BRICS countries faced various challenges limiting the level of transformation and development envisaged by their various governments. The COVID-19 pandemic and its economic impact have brought unprecedented uncertainties, adding to the challenges for BRICS countries and humanity. The SMEs in the informal sector of BRICS countries have been severely affected by the pandemic, resulting in women entrepreneurs suffering insolvency, business discontinuation and loss of income, with increasing poverty levels. BRICS governments’ easing of the COVID-19

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lockdowns to allow for economic activities and navigation through the waves of the pandemic serve as a lesson and an opportunity to reflect on how best to address the consequences of the pandemic and how to drive better the improvement of the economic participation of women entrepreneurs. This is particularly important, as the informal sector and women entrepreneurs have generally borne the most harmful consequences of the pandemic in terms of financial and government relief welfare. Women entrepreneurs in the informal sector are in a precarious situation; their businesses survive with thin profit margins, putting them at greater risk from prolonged economic restrictions.

13.6.1 Key recommendations for informal women entrepreneurship postCOVID-19 Advancing women’s transformation and development are essential for inclusivity. The BRICS governments have implemented various policies, programmes, initiatives and strategies for women and entrepreneurship development. However, the UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP 2018) has noted the inadequacy of government policies and implementation for entrepreneurship generally. The constraints on women’s entrepreneurship are costly. Therefore, increasing women’s economic participation would allow them to benefit from the bloc’s economic integration, enjoy quality economic and social development, and add to the bloc’s global output. Given the impact of the COVID-19 pandemic, the following are recommended to fully realise women entrepreneurs driving transformation and development: i. BRICS’s collective commitment to women’s transformation and development is needed to address the COVID-19 crisis. The respective countries need to design and implement sound economic policies. Such policies should be built along with institutional structures and capabilities. The promotion of women entrepreneurs requires that policy-makers make effective use of institutional structures to enhance capacity building for women’s development. Such structures would create opportunities for women entrepreneurs to become resourceful agents of change (Jabeen 2014: Gabrielsson & Ramasar 2013) and contribute to economic development. Entrepreneurship responds to change and innovation, and represents a suitable mechanism for driving women’s transformation and development. It can dismantle the stereotypes and perceptions of women, thereby providing a pathway for women to develop themselves (Adom & AsareYeboa 2016). ii. There is a need to incorporate specific countries’ COVID-19 priorities and address the needs of women entrepreneurs in the informal sector with the relevant national legislation, policies and programmes. iii. BRICS must create an enabling environment for advancing transformation and development by removing barriers to entrepreneurship in the informal sector and women entrepreneurs in general. BRICS should ensure a platform that

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provides skills training, shared business knowledge, networking and technology support that would be beneficial to the informal women entrepreneurs within the bloc. The possibility of adopting an informal cluster management concept should be considered. iv. The effects of the COVID-19 pandemic pose a constantly evolving trade-off between physical and economic well-being, which requires that the governments of BRICS countries continually reassess policies. This chapter demonstrates the relevance of giving analytical attention to entrepreneurship as a roadmap for policy-makers to improve the environment for developing women’s entrepreneurship, particularly in the informal sector and especially in a pandemic. The findings of the study add to the existing literature on the state of women entrepreneurs in the informal sector. The chapter makes a novel contribution to the ongoing discourse on women’s transformation and development within the BRICS bloc. Given the many challenges presented in this chapter, a concerted effort is needed in implementing specific gender support programmes in entrepreneurship, with special consideration given to the effects of COVID-19.

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BRICS: Finding and Funding the Nexus Between Peace, Security and Development Buntu Siwisa

14.1 Introduction This chapter is a rethink of searching for ways to turn the indivisibility of peace and security challenges into tangible and sustainable development outcomes. It proposes an overhaul of the traditional funding approach to resolve peace and security challenges. This approach usually addresses security and development challenges in piecemeal ways and terminates financial interventions at the formal resolution of the conflict. This chapter proposes that BRICS should financially intervene systematically and comprehensively from conflict to peace building and state building. In this way, it will transcend its stakeholder involvement in conflict resolution to play a more holistic role. The chapter begins by setting out new post-COVID-19 governance challenges in Africa. Development strategies need to be dynamic and pliable to post-COVID-19 challenges. The pandemic strains state–society relations, increasing the likelihood of more conflicts between people and local state institutions. The pandemic will continue to test state service delivery and social welfare capacities. The chapter then traces the historical roots of BRICS and its rich legacy of Global South institutional predecessors from which it draws foundational roots. BRICS emerges from a history of Global South multilateral institutional mobilisation. Past rallying calls for a multipolar system underpin and inform the current oeuvres of mobilisation adopted by BRICS half a century later. BRICS continues to advocate for an in-depth and functional multipolar system. However, these historical patterns reveal an inherited preoccupation with a reformist agenda held by international institutions in the Global North. Rather, an interventionist agenda is needed to promote peace building, peacemaking and state building. In this light, the chapter explores the challenges and opportunities BRICS faces in a multipolar world system, particularly in the absence of this interventionist agenda. The chapter first traces BRICS’s commitment to the indivisibility of peace, security and development through the annual BRICS summit declarations. The chapter then describes a model whereby BRICS funding should facilitate and operationalise this nexus practically. The thrust of this chapter is to explore the

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means of translating peace and security challenges into development opportunities. Funding is central to conceptualising development initiatives and is key in designing conflict resolution processes. This chapter explores how funding can and should consolidate links between peace, security and development. It suggests that central to achieving effective development is funding provision through all the phases of conflict resolution. It argues that BRICS should avoid the role of a once-off finance dumper to development projects at the end of conflicts and transition to participatory funding. Stakeholders involved in all the phases of conflict resolution inevitably assume ownership of the conflict setting beyond conflict resolution. Their involvement moves on to peace building and state building. This meaningful and holistic intervention carries the potential of embedding sustainable development outcomes in post-conflict settings. In this way, BRICS will move beyond a traditional funding role, injecting once-off financial assistance. The chapter then outlines a functional and systematic model whereby this can be achieved. The chapter refers to the India, Brazil, South Africa Forum’s (IBSA) examples of how to address the socioeconomic drivers of conflict successfully. These measures promote tangible development outcomes. IBSA has produced visible development outcomes focusing on food security and environmental degradation underpinning poverty, crime and violence. The AU and the Association of Southeast Asian Nations (ASEAN) have worked out policies to connect peace and security challenges to development in detail. The chapter then examines the problematic current funding model and proposes an innovative funding model mindful of the intersection between development, peace and security. A three-phased models is then proposed, advocating for an approach cognisant of the expertise of the five BRICS development agencies and how they might be collectively leveraged to implement the proposed three-phased model.

14.2 BRICS and governance in Africa post-COVID-19 The COVID-19 pandemic has long-term adverse repercussions for economies, livelihoods and quality of life. The attendant shutdown of economic and social activities severely crippled economies. The effects are likely to endure, shifting scrutiny closer to state capacities for services delivery and social welfare services (Gisselquist & Vaccarro 2021). The implication is that peace and security challenges will move towards state–society relations, effectively altering the conflict map of Africa. In such a scenario, the following should be considered: What conflicts are likely to be generated from tenuous state–society relations? And how should BRICS locate itself in terms of state building and peace building in this context of crises in governance and public institutions?

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With the exposure of the biases and weaknesses of state capacities, the likelihood of a marked resurgence of local state–society conflicts will escalate. Also, conflicts over natural resources and border management, among others, are likely to surge (Neat & Desmidt 2021). Current paradigms on peace and security are predominantly shifting from prioritising ‘hard’, state-centric security challenges to ‘softer’ or the ‘human security sensitive approach’ (BTTC 2014). This approach underscores the centrality of poverty eradication, promoting sustainable livelihoods, and food security. These are widely accepted as underlying drivers of conflicts and violence (Mathur 2014). Concerns and contestations on equal life chances, inclusivity and social justice, human rights and equality, redress and transformation will become more pronounced conflict areas that will require developmental support (Levy & Scobie 2015). With shrinking economies and fragile state–society relations, they will increasingly become predominant drivers of conflicts, displacing the prominence of inter-state conflicts on the conflict map. Such changes will demand dynamic conflict resolution and development interventions, more focused on socioeconomic drivers of conflicts. Operationalising the BRICS development mandate in this context becomes more pressing. Its development agenda should be anchored on UN Sustainable Development Goal (SDG) 16: 'To promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable and inclusive institutions' (UNDP 2016). The broad tabulated four targets under Goal 16 are: (i) the rule of law, justice and human rights; (ii) inclusive political processes; (iii) responsive and accountable institutions; and (iv) conflict prevention and peace building (Dilip 2009). These essentially encompass state building and peace building in conflict and post-conflict societies. They seek, among others, to address governance crises and strains exerted on the governance of public institutions.

14.3 Legacy of BRICS BRICS hails from a well-heeled history of collective Global South mobilisation, wrestling against the toxicities of the unipolar world system. These manifested in colonialism, imperialism and racism, defining and shaping the enduring effects of underdevelopment. The unipolar world system was a system that engineered an escalation of many conflicts in the 20th century. For instance, between the collapse of the Berlin Wall in 1989 and the US invasion of Iraq in 2003, there were ten largescale military interventions, ‘one occurring every fifteen months’ (Dilip 2009). To that effect, Russian President Vladimir Putin poignantly asserted, ‘The myth about the unipolar world fell apart once and for all in Iraq’ (The Colombo Plan n.d.). The Bandung Conference, or the Asian–African/Afro–Asian Conference, of 1955 laid the first concrete step towards this unity. The conference’s roots partly sprouted from the Asia-Pacific Colombo Plan of 1950, which advocated for regional,

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economic and cultural cooperation among its 26 member states (History.com n.d.). Almost half a century later, BRICS continues to call for improved multipolarity in a similar spirit. While BRICS represents almost 3 billion people or 40% of the world’s population (Selig 2014), the Bandung Conference embodied 29 countries – nearly one-quarter of the world’s population. It comprised about 1.5 billion people, roughly 54% of the world’s population (History.com n.d.). The Bandung Conference’s Ten-Point Declaration is unambiguously similar to the foundational principles and aims espoused in all the declarations of the BRICS summits. The Ten-Point Declaration affirmed respect for fundamental human rights, the centrality of the UN Charter, respect for sovereignty, non-interference in domestic affairs, respect for equality among nations, the amicable settlement of disputes, the promotion of mutual interests and cooperation, and respect for justice and international obligations (Yoo 2009). All these principles, values and commitments are foundational pillars of BRICS. After the Bandung Conference, calls for a multipolar world system were further echoed at the Afro–Asian People’s Solidarity Conference of 1957 and at the formation of the Non-Aligned Movement (NAM) at the Belgrade Conference of 1961. The NAM’s five principles, arguably lifted from the Ten-Points Declaration, were (i) mutual respect for sovereignty, (ii) mutual non-aggression, (iii) mutual noninterference, (iv) equality and mutual benefit, and (v) peaceful co-existence (South African History Online 1982). Inherent in these declarations and points is a desire to reform international relations systems within the recognised boundaries of the UN Charter. It was, and continues to be, a reform appeal through the norms and values of international law. While the Bandung Conference and NAM rallied against colonialism, imperialism and racism, BRICS steadfastly demanded reforms and inclusivity in the UN Security Council (BRICS Heads of State 2011; 2012; 2013; 2014; 2015; 2016; 2017; 2018). In addition, BRICS calls for transformation in the World Bank and the International Monetary Fund, equitable climate change laws, non-proliferation of arms, and inclusive and representative conflict resolution mechanisms (Armijo & Roberts 2014). The Sanya (BRICS Heads of State 2011), New Delhi (BRICS Heads of State 2012), eThekwini (BRICS Heads of State 2013) and Fortaleza (BRICS Heads of State 2014) BRICS declarations reaffirm their misgivings about the ‘nonimplementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts the IMF’s legitimacy, credibility and effectiveness’ (BRICS Heads of State 2014: para. 18). At no point does BRICS or any of its forerunners champion radical South–North institutional transformation in a separatist spirit – a ghettoisation of the international relations system. BRICS, therefore, takes after the reformist legacy of its predecessors.

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This legacy of preoccupation with reforms of the Bretton Woods Institutions and the UN blindsides BRICS from formulating its home-grown interventionist agenda. These are important concerns, but not more than formulating peace-building, statebuilding and peacemaking intervention measures for the Global South.

14.4 BRICS in the current multipolarity: Challenges and opportunities BRICS advocates for a multipolar world built on the principles of interdependence, mutual prosperity and universally shared values. This advocacy continues despite indicators portraying its member states in an economic counter-balancing posture. With a combined nominal GDP of US$16.04 trillion in combined foreign reserves (Selig 2014), BRICS wields the ‘capacity to conduct sovereign public policies’ (Tautz 2013) due to the increase in raw materials prices and their huge demand in international markets. During this period, China amassed US$1.95 trillion in foreign reserves by the end of 2008 (Zhongping 2009). Despite all these indicators, BRICS is not amenable to overhauling the existing international relations system. But the bold economic indicators have instead emboldened the narrative that BRICS intends to overturn the international relations system. It is an imperception to overlook the synergies and interdependence between the Global South and the Global North multilateral development institutions. For instance, the World Bank estimates that US$1 trillion is required to fund the infrastructure development gap in developing countries. It also maintains that Global North multilateral development banks can fill about 40% of this gap (Desai & Vreeland 2014). This estimation acknowledges the formidable role emerging Global South institutions need to fulfil in addressing peace, security and development challenges. BRICS, therefore, carries the potential to steer its development policies in favour of the Global South. Despite this, BRICS remains as reformist as its forerunners. In all its declarations, BRICS insists on the interdependence of the world system. The Sanya Declaration (2011) acknowledged that the world system was experiencing ‘far-reaching, complex and profound changes, marked by the strengthening of multipolarity, economic globalisation and increasing interdependence’ (BRICS Heads of State 2011). The New Delhi (2012) Declaration affirmed that BRICS ‘stand ready to work with others, developed and developing countries together, on the basis of universally recognised norms of international law and multilateral decisionmaking, to deal with the challenges and opportunities before the world today’ (BRICS Heads of State 2012). In the eThekwini Declaration (2013), BRICS noted: [W]e reaffirmed our commitment to the promotion of international law, multilateralism and the central role of the United Nations (UN). Our

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discussions reflected our growing intra-BRICS solidarity as well as our shared goal to contribute positively to global peace, stability, development and cooperation. (BRICS Heads of State 2013, para. 4) The Fortaleza Declaration (2014) further confirmed: Our shared views and commitment to international law and to multilateralism, with the United Nations at its center and foundation, are widely recognised and constitute a major contribution to global peace, economic stability, social inclusion, equality, sustainable development and mutually beneficial cooperation with all countries. (BRICS Heads of State 2014) The Ufa Declaration (2015) similarly called for the need for ‘comprehensive, transparent and efficient multilateral approaches to addressing global challenges, and in this regard underscored the central role of the UN in the ongoing efforts to find common solutions to such challenges’ (BRICS Heads of State 2015: para. 2). The Goa Declaration (2016) reiterated its support for defining a ‘common vision of ongoing profound shifts in the world as it transitions to a more just, democratic, and multipolar international order based on the central role of the UN, and respect for international law’ (BRICS Heads of State 2016: para. 4). The Xiamen Declaration (2017) also committed to ‘[u]pholding development and multilateralism…working together for a more just, equitable, fair, democratic and representative international political and economic order’ (BRICS Heads of State 2017: para. 6). Similarly, the Johannesburg Declaration (2018) restated its ‘determination to work together to strengthen multilateralism and the rule of law in international relations, and to promote a fair, just, equitable, democratic and representative international order’ (BRICS Heads of State 2018: para. 2). In this multipolar world, BRICS runs the risk of political irrelevance if it continues to mould itself primarily as a regional economic body, with the political interventionist agenda taking an almost invisible stance. There are various reasons that account for the absence of an interventionist agenda in BRICS. These reasons mainly point to systems and institutional deficiencies within BRICS militating against the formulation of this interventionist agenda. The first challenge is a distinct chasm between Track I and II of BRICS fora. Track I comprises state ministers, particularly ministers of foreign affairs, finance, health, education, state security, homeland security and defence. Track II comprises the BRICS Academic Forum, whose national representatives come from the BRICS Think Tanks of the member states and comprise the intelligentsia, professionals and civil society groups. The BRICS Academic Forum thematically clusters its deliberations and reports into five or six categories, with slight annual variations depending on current global developments. These are: (i) The Emerging Geo-

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Political Order, (ii) The Emerging Global Trade Architecture, (iii) International Finance and Technology, (iv) BRICS Partnerships, (v) Health Challenges, and (vi) Peace and Security Challenges. Meeting annually, the BRICS Academic Forum reports to Track I (South African BRICS Think Tank n.d.). Track II is mandated to inform and advise Track I on priorities and methods to address peace, security and development challenges, and other areas. However, the priorities of Tracks I and II never correlate and are often not tabled, let alone considered (BRICS Heads of State 2018). Rather, preconceived ‘hard’ state security prerogatives (considered sensitive) are reserved for deliberations and resolutions at state, bilateral or multilateral fora, or regional economic bodies (Pant 2013). Instead, there is a closer relationship between Track II and Track III bodies. The latter comprises universities, research institutes and civil society bodies of BRICS member states. There is a transparent scholarly and scientific exchange of knowledge and research outputs. However, even there, the exchanges are inconsistent, unsystematic, with no centralised control. The second obstacle relates to the isolationist work modalities of the development agencies of BRICS member countries. Table 14.1 below is a typology of the BRICS member states’ development and peace-building expertise niche areas. The development agencies have carved out development and peace-building niche areas, working in siloes, with no pursuit of linkages and partnership formations (Tjonneland 2014). China’s financial aid prioritises poverty reduction. India focuses on infrastructure development, education, health, and the role of information communications technology (ICT) in facilitating development in South Asia and Africa. Brazil’s financial aid aims to rehabilitate infrastructure and technical training linked to agricultural and rural development, tropical health and associated social welfare. Russia has had a negligible development aid imprint in Africa. RusAid (Russia’s development agency) focuses on financing technical expertise deployment and exchange for infrastructure development (Tjonneland 2015). Instead, historical affinities drive directives and agendas between development agencies and the countries in which they work. For instance, Brazil’s development agency traditionally undertakes research and development in African Portuguesespeaking countries (Angola, Mozambique, Guinea-Bissau, Cape Verde, São Tomé and Príncipe). India has a strong relationship with East Africa, particularly Kenya. In this disconnectedness, it becomes more challenging to identify a role for funding linkages between peace and security challenges with development opportunities.

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Table 14.1 Description of the development and peace-building practice areas of the BRICS development agencies Brazil

Russia

India

China

South Africa

• Agência Brasileira de Cooperação: • Strong institutional fragmentation and a plurality of actors. • The constitution excludes transfer of material, financial or other means to third countries. • Does not implement projects, but acts at a political steering level. Line ministries, government agencies and other specialised institutions are implementing agents. • The six guiding development cooperation principles are: (i) diplomatic solidarity, (ii) demanddriven approach, (iii) recognition of local expertise and adoption of Brazilian experiences, (iv) no imposition of conditionalities, (v) no attachment of commercial or profit interests, and (vi) non-interference in the internal affairs of partner countries. • Strong and traditional areas of development cooperation are agriculture, bioenergy, tropical medicine, public health development, HIV/AIDS and social protection.

• Developing its agency towards Russ Aid. • Development cooperation is mainly pursued through bilateral cooperation and is based on a technical transfer of expertise. • Main traditional areas of development cooperation are energy and infrastructure development.

• The Development Administration Partnership streamlines and complements the Indian Technical and Economic Cooperation. • Packages deals of loans, technical assistance and resource or other business agreements. • Main and traditional areas of cooperation in Africa are the Pan-African e-Network and ICT Programme (shared with the AU).

• Upgrading organisational capacities from the Department for Foreign Aid, hosted by the Ministry of Commerce, to a full-fledged agency or even a ministry dedicated to international cooperation. • Package of loans, technical assistance and resources or other business agreements.

• South African Development Partnership Agency: • Based on nine programmes: (i) humanitarian assistance, (ii) peacekeeping, (iii) election support, (iv) IBSA Poverty Alleviation Fund, (v) bilateral partnerships, (vi) trilateral partnerships, (vii) regional partnerships, (viii) decentralised partnerships and (ix) multilateral partnerships, • The programme budget structure is based on (i) the Humanitarian Fund, (ii) the Good Governance Fund, (iii) the Post-Conflict and Reconstruction Fund, (iv) the Micro-Grant Fund, (v) the Technical Support Fund, (vi) the IBSA Poverty Alleviation Fund and (vii) multilateral support. • Types of support are: (i) budgetary, (ii) programme, (iii) project, (iv) sector (v) Sector-Wide Approaches (SWAPs), and (vi) basket or pooled funding. • Financial instruments: (i) microgrants, (ii) grants, (iii) technical assistance, (iv) loans and (v) joint ventures; and public–private partnerships through commercial partners,

Source: Author

There is a vast scope for cohesive and systematic joint working ventures on funding long-term development opportunities. Despite a myriad of research activities and

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partnerships within BRICS, almost no visible research outputs are implemented. For instance, in 2017, the National Institute for Humanities and Social Sciences, in partnership with academic institutions from some BRICS member states, developed joint research projects in the following areas, among others: • Africa–BRICS maritime security cooperation; • food governance/security; • cybersecurity; • the political economy of water and food security nexus in BRICS; • state delivery programmes as determinants of the rule of law in BRICS; and • inclusive approaches to sustaining livelihoods. However, there is little or almost no transparency in implementing these research outputs. The next section outlines the need to recognise the importance of linkages between peace, security, and development opportunities and challenges.

14.5 Connecting peace and security with development in IBSA, ASEAN and the AU: A comparative perspective A comparative study of how other multilateral groups, such as IBSA, ASEAN and the AU, have pursued interconnections between peace, security and development provides a much clearer understanding of how BRICS could make this undertaking. It provides a policy and practice perspective. Thus, in various ways, it provides a learning basis for BRICS. The IBSA Dialogue Forum was launched in June 2003, following the adoption of the Brasília Declaration by the member states (White 2005). The declaration focused on areas of common concern, namely UN reforms, security threats, social equity and inclusion, racial discrimination and gender equality (Arkhangelskaya 2010). IBSA ‘over time…has evolved into a group aimed at addressing development and social problems of developing countries through South–South cooperation’ (Arkhangelskaya 2010). It coalesced on constructively and practically addressing social challenges of the Global South (Agarwal et al. 2010), and its development approach nurtured ‘constructive home-grown development initiatives’ (White 2005). Similar to BRICS, IBSA has a three-tiered track layout. Track I consists of heads of state meeting in summits. Ministers constitute Track II, organised in 16 joint commissions, ranging from science and technology to human settlements. Senior officials constitute Track III, meeting in focal points. It converges in various other fora, namely the IBSA Academic Forum, IBSA Parliamentary Forum, IBSA Women’s Forum and IBSA Editors’ Forum (Arkhangelskaya 2010). With each member state pledging US$1 million annually to a central fund administered by the UN Development Programme (UNDP), IBSA has steered and delivered development projects on food security, agricultural development, access

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to health and environmental improvement in Haiti, Guinea-Bissau and Palestine. In Guinea-Bissau, IBSA’s fund Development of Agriculture and Livestock helped to improve the agricultural yield by training over 4 500 farmers, including 2 600 women. With a budget of US$500 000, the project began in February 2006 and was completed in April 2007. Farmers received new seeds and water management and control training that allowed agricultural production to continue throughout the rainy season (Arkhangelskaya 2010). Cape Verde’s IBSA fund Support to Infrastructure on the Island of São Nicolau, with a budget of about US$37 000, contributed to the rehabilitation of two health units in the isolated community of Covoada (Arkhangelskaya 2010). In Haiti, the programme Collection of Solid Waste as a Tool to Reduce Violence in Carrefour Feilles, with a budget of approximately US$550 000, is aimed at collecting and recycling waste materials in one of Haiti’s most impoverished and violent communities. It employed more than 285 people, including 207 women. In addition, it reduced environmental degradation, prevented flood risk from garbage-clogged canals and reduced disease incidence (Arkhangelskaya 2010). IBSA extended its programmes to Burundi, Cambodia and Palestine. In 2009, it held its exhibition of development projects in Nairobi, New York and Washington DC. Its effectiveness was recognised internationally. In 2006, IBSA was awarded the UN South–South Partnership Award. In 2010, the UN awarded IBSA the UN Millennium Development Goals Award (Arkhangelskaya 2010). ASEAN has evolved significantly from its position of non-interference in domestic affairs and embrace of state-centric development to a human development approach. Established on 8 August 1967, with a secretariat based in Jakarta (Indonesia), ASEAN’s member states include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam (ASEAN 2009). Structurally, it comprises three pillars: the ASEAN Political-Security Community, the ASEAN Economic Community and the ASEAN Socio-Cultural Community (ASEAN 2009). Evolving towards embracing a human development approach to peace and security, ‘it subscribes to a comprehensive approach to security, which acknowledges the interwoven relationships of political, economic, socio-cultural and environmental dimensions of development’ (ASEAN 2009: 2). From the 1990s, ASEAN’s security concerns were predominantly outlined by transnational crime, terrorism and man-made environmental disasters (Howe & Park 2017). It moved towards embracing a ‘comprehensive security’ approach, recognising both the state and people-centred security approach as points of reference. However, this was criticised as remaining principally an approach that referenced the state as a prime security concern. As argued: Human security suggests that international security, traditionally defined with its territorial emphasis, does not necessarily correlate with the concept

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of security for the individuals who comprise the state, and that an overemphasis upon state security can be to the detriment of human welfare needs. (Howe & Park 2017: 4) In 2003, in the Bali Concorde II, the body moved towards adopting a ‘people-centred ASEAN’. This term was introduced in the ASEAN socio-cultural community (Howe & Park 2017). In 2007, the ASEAN Ministerial Conference adopted principles, including the rule of law, good governance and respect for fundamental freedoms in the ASEAN Charter. This led to the founding of the ASEAN Intergovernmental Commission on Human Rights. Member states signed into effect the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers. In addition, it established the Commission on the Promotion and Protection of the Rights of Women and Children (Howe & Park 2017). However, the AU has developed a more granular approach to appreciating ‘interwoven relationships’ between peace, security and development. It sets its approach on finding the nexus in the development of post-conflict societies. This approach is set out in the AU’s Post-Conflict and Reconstruction Development (PCRD) Policy, adopted in Banjul (The Gambia) in July 2006 (AUC 2006). The PCRD sets out its development indicators in post-conflict societies as (i) security; (ii) humanitarian/emergency assistance; (iii) socioeconomic reconstruction and development; (iv) political governance and transition; (v) human rights, justice and reconciliation; and (vi) women and development (AUC 2006). In this way, ‘the PCRD Policy is a comprehensive document that strives to effectively address the root causes of conflict and provide broad benchmarks and indicators of progress for activities undertaken to bring about sustainable peace and stability to countries emerging from conflict’ (AUC 2006: viii). The AU infuses normative elements of democracy in its approach, which is a strong indication of supporting peace building and state building. IBSA provides the boldest examples of creating linkages with tangible development outcomes. With drivers of conflict predominantly located in local socioeconomic development, it indicates how commitment to addressing such drivers of conflict can yield development outcomes.

14.6 Model on funding peace, security and development The departure point here is defining and developing a systematic and mandate-driven form of funding. It is in integrating funding in all the meaning-giving stages of conflict resolution, making funding inherent in the entire spectrum of conflict resolution and development. Funding should refrain from funding individual ‘low-hanging’ development fruits, usually appearing at the tail-end of conflicts (for example: food, humanitarian disaster relief, health, social and infrastructure challenges).

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This form of funding is often disconnected from a comprehensive and holistic conflict assessment. Injections of funding in this piecemeal form are not wholly integrated into the vision of the spectrum of conflict resolution. Also, developing a systematic form will counteract the criticism that BRICS rarely acts as a collective in political interventions, thus addressing the criticism that BRICS has minimal collective leverage in multilateral fora on peace and security matters (Mathur 2014). The provision of funding should be organised around three priorities: (i) security, justice and human rights; (ii) core government functionality; and (iii) socioeconomic revitalisation. This system will necessarily self-produce an evidence-based monitoring and evaluation system. At best, this model is carried out through South–South and South–North cooperation models. South-South cooperation has flourished in endowment and performance. In 2010, South-South cooperation foreign direct investment flows, technology transfer, movements toward regional integration and other exchanges reached between US$12.9 billion and US$14.8 billion (Mathur 2014). This partnership guides and ensures the transfer of knowledge, skills, resources and technical expertise through regional and interregional collective actions. They produce evidence of monitoring and evaluation in a multistakeholder environment (Mathur 2014). In leveraging the development agencies’ competencies (please see Table 14.1) in addressing peace, security and development challenges and development opportunities in Africa, BRICS has the potential to make significant inroads through participatory funding.

14.7 Defining funding Funding, in this context, is defined as the provision of finance to facilitate the transfer, movement, monitoring and evaluation of the performance, resources, skills, knowledge and expertise to conflict and post-conflict areas. It is undertaken to pursue holistic development needs at any period through the stages of conflicts. In breaking the cycle of conflicts, funding has to be normatively and practically inculcated in all the stages of conflict – from the beginning to the aftermath. As Mathur better explains: It came to be recognised that, to break the vicious cycle of conflict, sustainable peace-building perspectives would have to be mainstreamed from the very first stages of peace initiatives in fragile societies, furthering national ownership, the development of national capacities and empowerment of people affected by conflict. (Mathur 2014) It is proposed that funding should follow three stages, as illustrated in the following diagram:

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Figure 14.1 Stages of funding peace, security and development 1. Funding political processes: dialogues, negotiated settlements, reconciliation and peace consolidation (e.g. Lesotho. South Sudan, Zimbabwe and Burundi)

2. Funding political inclusivity: local ownership of institutions and foster building confidence in institutions (e.g. DRC, Libya, Somalia and Madagascar)

3. Funding capacity building in civil society organisations and state institutions; coordinated and formulaic exchange of knowledge, skills, resources and expertise to generaate shared mutual development (e.g. CAR)

Source: Noll (2012)

14.7.1 Stage 1: Funding political processes Political processes involve systems and mechanisms to analyse, design and implement solutions to address the causes of conflicts. They aim to bring together warring elements in peacemaking, mediation and negotiations at the negotiation table. It examines ‘values and processes involved in transforming difficult and intractable conflicts’ (Noll 2012). Peacemaking offers an opportunity to explore and discover ‘truth telling’ and ‘truth seeking’ from all stakeholders involved and affected (Noll 2012). It is creating an exploratory environment, ‘where people from different backgrounds know they will be heard and understood, where their needs and ideas will be respected, and where they can safely do the difficult work of reconciling their differences’ (Noll 2012). By bringing hostile parties to an agreement (Boutros-Ghali 1992), peacemaking ensures that they can ‘engage in conflict resolution, healing, support, decision-making or other activities in which honest communications, relationship development, and community building are core desired outcomes’ (Pranis et al. 2003). In this process, peacemaking is conceived based on compromise, bargaining and an aim to achieve a ‘win-win’ solution. It should not be derived from a ‘struggle-based approach’ (Greig & Diehl 2014). It is usually in the absence of a vision for peace wherein the prospects of the recurrence of conflicts loom large. Therefore, funding should be integral in designing the vision of peace and security resolution processes. As development projections should be tied to conflict resolution processes from the beginning, it is imperative that funding is bonded to the visualisation of conflict resolution processes.

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The process of conceptualising conflict resolution should answer questions about how, what forms and what kinds of development are needed. In this conceptualisation process, funding is built in from the onset. Meaningful, systemic and continuous participation of funding in all the conflict resolution processes adds value in profound ways. In the design of peace and security resolution processes, funding prioritises development debates on the causes of conflicts. With its involvement at the conceptualisation stage, there is a constant reminder of socioeconomic drivers of conflict, with development as the outcome that will seal and prevent relapses of conflicts. Participatory funding attaches itself to debates on how development should be linked to peace and security challenges. For instance, as part of confidence-building measures during conflicts, truces are developed and implemented on massive rollouts of vaccines. These truces are designed to soften the impact of conflicts, such as ensuring the non-bombardment of civilian targets and the development of safety, humanitarian, emergency and development initiatives (Greig & Diehl 2014). These can be effectively achieved with the involvement of participatory funding – not as sudden injections of finances. They should be phased in from the design and planning phases of conflict resolution. Often, however, post-peace agreements produce an ‘unhelpful constellation of factors creating new uncertainties’ (Cousens 2015). These include changes in international political personalities, institutional handovers, the establishment of new implementation mechanisms and new flows of resources (Cousens 2015). Other bottlenecks in this phase are obstinate issues avoided during the mediation process, in the anxieties of securing agreements on core areas of disputes. Some of these are disputes over the interpretation of an agreement, while others are new issues arising after the formal conclusion of peace agreements. The meaningful involvement of funding during the design of conflict resolution often gives some form of guarantee that these challenges can be resolved to the satisfaction of the stakeholders. Also, the likelihood of the eruption of localised conflicts is always present. Localised conflict is rendered more complex by the involvement of foreign interests. It may be further problematised by the entry of parties that were initially excluded from the peacemaking process (Cousens 2015). Often marginalised, micro-socioeconomic development issues, neglected initially in the peacemaking processes, metamorphose into imposing conflicts. Many of these eruptions come with demands related to socioeconomic development. Often, such conflicts ricochet into other intractable dimensions. These are likely to further complicate conflict resolution processes in the post-peace agreement phase. It is, therefore, strategic for funding institutions to participate in the expectation of such eruptions. It ensures that localised conflicts do not stall conflict resolution indefinitely by addressing some of the socioeconomic challenges. The absence of

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funding institutions in development discourses during these phases of conflicts leads to the swelling of conflicts.

14.7.2 Stage 2: Funding political inclusivity Political inclusivity is central to ensuring the achievement of legitimate peace and security. It emphasises all-embracing and comprehensive stakeholder participation in all the conflict resolution phases. For peace durability (De Soto 2007), citizen participation is crucial (Paffenhotz et al. 2015). In conflict resolution: A key element in the solution of a conflict should be that it will withstand the test of time i.e. that it will be durable. Rather, durability should be the result of a negotiated solution which addresses perceived as well as underlying issues and provides for channels for the resolution of future disputes that make it unnecessary or unappetising to resort to arms. (Paffenhotz et al. 2015) Inclusivity lends authenticity to conflict resolution processes through a broader representation of voices. This representation brings with it a reflection of broader constituencies. For example, an examination of 83 peace agreements in 40 countries from 1989 to 2004 showed that the inclusion of civil society actors increased the durability of peace, particularly in non-democratic societies. Peace agreements were 60% less likely to fail when both civil society actors and political parties participated in conflict resolution processes (Nderitu & O’Neill 2015). The wider participation of various stakeholders in the conflict resolution processes gives the outcomes more legitimacy, thus contributing to the durability of the peace agreement (Paffenhotz et al. 2015). Civil society participation is ensured through its direct involvement in the conflict resolution processes. Alternatively, it participates through a parallel civil society forum with a consultative mandate. The wider participation of civil society brings more voices into the process, thus increasing the public ‘buy-in’ to the peace process. Its involvement also brings needed expertise and localised knowledge, giving it more authenticity to the ‘hidden’ or obscure communities that would have been otherwise not represented during Track I mediation processes. Bringing in local knowledge provides a deep contextual understanding of barriers to and opportunities for achieving peace and security. Inclusivity also introduces a richer set of interests, bringing in more accountable and representative stakeholders. These create value and help to develop innovative and comprehensive solutions to conflicts. Inclusivity also provides for more effective public communications. Here, civil society organisations can help to explain conflict resolution processes more effectively to their constituencies than Track I actors. They also enhance the healing of societal divisions, as they can bring to the surface key social issues necessary for rebuilding broken societies.

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Put better: [D]emocratically structured civil society groups can help bring together disparate, social cleavages within their organisations to negotiate new understandings and to teach new ways of interacting with each other. Civil society can be the ‘laboratories’ of peace programming that can spread new social norms throughout post-war communities. (Paffenhotz et al. 2015) A broader representation of stakeholders also ensures a more extensive inclusion of norms. These integrate gender, human rights, justice, democracy and other norms into the conflict resolution processes (Hellmuller et al. 2015). Funding facilitates the drawing of political inclusivity into the conflict resolution processes. Logistics concerning the coming together of disparate civil society groups, their expertise and skills, involve substantive funding, possibly over long periods. Often, many civil society stakeholders lack funding to bring their participants into the often longrunning conflict resolution processes. Also, funding facilitates the transfer of knowledge and expertise from various stakeholders in these fora. Funding, therefore, makes it practically possible to wield and manage logistical aspects of conflict resolution.

14.7.3 Stage 3: Funding capacity building Capacity building involves formulaic and systematic forms of enhancing and patching capacities of resources, skills and expertise in the conflict resolution processes. The objective is to coordinate efforts of state institutions, civil society bodies and multilateral development institutions. In many ways, capacity-building efforts appear throughout all the phases of conflict resolution and peace consolidation. It straddles the peacemaking, conflict resolution, and post-agreement, peace-building and state-building phases. Capacity building offers ownership of the conflict resolution processes and development work to local stakeholders that are directly affected. In this way, it ensures the longevity and durability of conflict resolution and development outcomes. Capacity building locates skills and knowledge-production lacunae, providing technical and conceptual capacity building. Funding assumes importance in this role, particularly in ensuring impartiality in the provision of funding. Building capacities often involves policymaking or an appraisal of policymaking processes. These processes, in turn, are linked to institution building, which, in turn, affects the forms of development stakeholders desire, particularly in the post-peace agreement phases. Strategic, technical and financial capacity building supports early confidencebuilding measures. It also supports the design and drafting of country systems aimed at building core government functions during the post-peace agreement phase. In other words, ‘achieving peace and long-term development requires making progress across security, the rule of law, political and economic institutions’ (Hearn 2015).

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This form of capacity building applies to conflict resolution processes involving peacemaking and post-peace agreement or peace-building phases. It is also relevant to other countries, such as South Sudan, the Democratic Republic of the Congo (DRC), the Central African Republic (CAR) and Mali. Sustaining capacity building over a protracted period requires stable, consistent and impartial funding. Without funding, capital-intensive capacity-building processes will fail, invariably leading to the collapse of the conflict resolution processes. Capacity building also links peace agreements to recovery and institutional peacebuilding efforts. In the post-peace agreement phases, funding is crucial in financing the provision of international experiences in improving processes of the informal justice system or expanding access to justice in post-conflict settings. It is also required in fostering inclusive political agreements. If not patched up, experience has shown that the existence of these gaps leads to flawed international efforts, from protracted UN missions (DRC), to faulty institutional and peace-building efforts (Afghanistan) and the redeployment of UN missions after relapses (Timor-Leste) (Hearn 2015). Therefore, funding capacity building ensures the durability of peace and security by ensuring continuity of the functions of capacity-building measures. This provides a stable environment to plan and effect sustainable development projects. Funding, such as that provided by the New Development Bank, will offer new approaches sensitive to the trajectories of peace and security challenges.

14.8 Conclusion BRICS is regarded as collectively irrelevant in resolving peace and security challenges in multilateral fora. Much of the ineffectiveness is attributable to the isolationist operational modalities of the three diplomatic track tiers. Amid this internal disconnectedness, the nexus between peace, security and development has been hampered. Funding needs to play a more palpable role in linking these institutions, providing them with more institutional power to address peace and security challenges for development outcomes. BRICS has developed sufficient policies to support effective linkages. This chapter has outlined the strategic importance of making funding inherent in conflict resolution processes. It has outlined the underlying importance of slotting funding in all the phases of conflict resolution. This should deconstruct the long-practised norm of dumping finance at development opportunities that tend to appear at the tail-end of conflicts. It should disable the traditional perception of funding institutions, as injectors of finance into development projects at the post-peace agreement phase, or low-hanging peace-building fruits. ‘Participatory funding’ should be included in all the phases of conflict resolution, from the design and visualisation phases of conflict resolution, the peacemaking processes and the actual conflict resolution phases through to the post-peace

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agreement and peace-building phases. This integration acknowledges that it is often precisely development-related concerns that are the key drivers of conflicts. In this way, it plays a meaningful role in policy designs of conflict resolution and development outcomes. BRICS development agencies should undertake the three-phased programme linking funding and peace and security challenges to development. It should be a vehicle for South–South and South–South–North cooperation models. The different competencies, expertise and skills of these development agencies complement each other. Particularly in peace-building projects, BRICS development agencies have acquitted themselves well in South Asia, Africa and Latin America. Research partnerships among BRICS academic fora and other research entities have produced a body of work from which to premise some of these principles in strengthening the nexus between funding peace and security challenges and development. References

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BRICS Heads of State (2017) Xiamen Declaration. Accessed 19 April 2022, https://www.brics. utoronto.ca/docs.170904-xiamen.html/ BRICS Heads of State (2018) 10th BRICS Summit. BRICS in Africa: Collaboration for Inclusive Growth. Accessed 19 April 2022, https://www.gov.za/speeches/10th-brics-summitjohannesburg-declaration-27-jul-2018-0000 (BRICS Think Tanks Council) (2014) Towards a long-term strategy for BRICS. Accessed 15 November 2022, http://repositorio.ipea.gov.br/bitstream/11058/5255/1/Towards%20a%20 long-term%20strategy%20for%20BRICS.pdf Cousens E (2015) It ain’t over till it’s over: What role for mediation in post-agreement contexts. In K Papagianni (Ed.) On peacemaking: A decade of reflections 2006–2015 – A compendium of Oslo Forum background papers. Oslo: Norwegian Ministry of Foreign Affairs. Accessed 20 January 2022, https://www.ethz.ch/content/dam/ethz/special-interest/gess/cis/center-forsecurities-studies/resources/docs/HI Desai RM & Vreeland JR (2014) What’s the new bank of BRICS is all about. Accessed 26 September 2018, https://www.washingtonpost.com/news.monkey-cage/wp/2014/07/17/ what-the-new-brics-bank-is-all-about/ De Soto A (2007) A mediator’s view from here: Vision, strategy and other elements of peacemaking. Geneva: Oslo Forum Dilip H (2009). After empire: The birth of a multipolar world. New York: Nation Books Gisselquist RM & Vaccarro A (2021) COVID-19 and the state. WIDER Working Paper 2021/80. Helsinki: UN University World Institute for Development Economics Research. Acccessed 05 April 2021, https://www.wider.unu/wp2021-80-covid-19-and-the-state.pef/ Greig JM & Diehl PF (2014) The peacekeeping-peacemaking dilemma. International Studies Quarterly 49(4): 21–45 Hearn S (2015) Peacebuilding and institution-building. Thematic Paper submitted to the Advisory Group of Experts. Review of the UN Peacebuilding Architecture. Accessed 26 September 2018, https://www.collections.unu.edu/eserv/UNU:3221/unu_cpr_peacebuilding_and. institution.pdf/ Hellmuller S, Federer JP & Siegfried M (2015) Norm-pushers or deal-brokers? Normative challenges or modern-day mediators. In K Papagianni et al, (Eds) On peacemaking: A decade of reflections 2006–2015 – A compendium of Oslo Forum background papers. Oslo: Norwegian Ministry of Foreign Affairs History.com (n.d.) The Bandung Conference Concludes. Accessed 29 September 2018, https:// www.history.com/this-day-in-history/the-bandung-conference-concludes Howe B & Park MJ (2017) The evolution of the ‘ASEAN way’: Embracing human security perspectives. Asia-Pacific: Social Science Review 16(3): 1–15 Levy MA & Scobie MA (2015) Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. In Review of targets for Sustainable Development Goals: The science perspective. Paris: International Council for Science & the International Social Science Council. Accessed 21 April 2022, https://council.science/wp-content/uploads/2017/05/SDGReport.pdf/ Mathur A (2014) Role of South–South cooperation and emerging powers in peacemaking and peacebuilding. Accessed 30 September 2018, https://www.emergingpowerspeacebuilding. files.wordpress.com.2015/08/Mathur-role-of-south-south-cooperation-and-emergingpowers.pdf

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Nderitu AM & O’Neill J (2015) Getting to the point of inclusion. Seven myths standing in the way of women waging peace. In K Papagianni et al. (Eds) On peacemaking: A decade of reflections 2006–2015 – A compendium of Oslo Forum background papers. Oslo: Norwegian Ministry of Foreign Affairs Neat A & Desmidt S (2021) Simmering tensions: The long-term impact of COVID-19 on fragility and conflict in Africa. Accessed 5 April 2022, https://www.edpm.org/wp-contents/uploads/ Simmering-Tensions-Long-Term-Impact-COVID-19-Fragility-Conflict-Africa-ECDPMBriefing-Note-127-January-2021.pdf Noll D (2012) Ten principles of peacemaking. Accessed 7 October 2018, https://www. mediationtools.com/articles/ART Paffenhotz T, Darren K & Wanis-St John A (2015) Civil society and peace negotiations: Why, whether and how they could be involved. In K Papagianni et al. (Eds) On peacemaking: A decade of reflections 2006–2015 – A compendium of Oslo Forum background papers. Oslo: Norwegian Ministry of Foreign Affairs Pant HV (2013) The BRICS fallacy. The Washington Quarterly 36(3): 91–105 Pranis, K., Stewart, B. & Wedge, M. (2003) Peacemaking Circles: From Conflict to Community, St. Paul, Living Justice Press. Accessed 15 November 2020, https://livingnjusticepress. directfrompublisher.com Selig W (2014) BRICS as a counterbalance to US and Europe. Accessed 30 September 2018, https://www.upf.org/peace-and-security/washington-dc-forum-6015-washington-dc-peaceand-security-forum-to-focus-on-brics/ South African BRICS Think Tank (n.d.) BRICS engagement. Accessed 19 April 2022, https://sabtt. org.za/south-african-brics-think-tank-sabtt/engagement-programme/brics-engagement/ South African History Online (1982) The Non-Aligned Movement. Accessed 30 September 2018, https://www.sahistory.org.za/archive/non-aligned-movement Tautz C (2013) Watchdogging the BRICS Bank. In P Bond (Ed.) BRICS in Africa: Anti-imperialist, sub-imperialist or in-between? A reader for the Durban Summit. Accessed 26 September 2018, https://www.ccs.ukzn.ac.za/files/BondCCS Brics booklet, 22 March 2013. pdf The Colombo Plan (n.d.) The history of the Colombo Plan. Accessed 30 September 2018, https:// www.colombo-plan-org-history Tjonneland BEN (2014) Rising powers and the African security landscape. New York: ICMI–CHR Michelson Institute, Norwegian Peacebuilding Resource Centre Tjonneland BEN (2015) African development. What role do the rising powers play? Accessed 26 September 2018, https://www.files.ethz.ch/isn/187491/ fa8aeed1b5911794106c324bf90d0e009.pdf/ UNDP (UN Development Plan) (2016) UNDP: Support to the implementation of the 2030 Agenda for Sustainable Development. Accessed 19 April 2022, https://www.undp.org/content/dam/ undp/library/SDGs%20Implementation%20and%20UNDP_Policy_and_Programme_Brief. pdf White L (2005) Developing IBSA into a coalition of the willing. Accessed 20 January 2021, https:// www.saiia.org.za/wp-content/uploads/2008.04/FPM_Sep_2005.pdf Yoo JA (2009) Bandung Conference concludes. Accessed 29 September 2018, https://www. blackpast.org/global-african-history/bandung-conference-1955 Zhongping F (2009) China’s new security perceptions and practice. In L Peral (Ed.) Global security in a multipolar world. Chaillot Paper No. 118. Brussels: Institute for Security Studies, EU. Accessed 26 September 2018, https://www.iss.europa.eu/sites/default/files/EUISSFiles/ cp118pdf

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African Low-Income Countries’ Leapfrogging Development and the Role of the BRICS Countries: A Case Study of Ethiopia and Rwanda Ai Ping and Zhong Weiyun

15.1 Background Many low-income countries have a common aspiration to gain rapid economic growth and catch up with middle-income countries in a short period, especially the BRICS countries. It is also a recurrent topic in development economists’ discussions. Since the 1950s, some low-income countries have successfully jumped into the ranks of the developed world, most notably the emerging industrialised economies in East Asia. Several African countries have also ‘graduated’ from the least developed to the middle-income countries. This chapter adopts the theoretical framework proposed by the American economist and Nobel Laureate in Economics W. Arthur Lewis in his book  The Theory of Economic Growth (2015) to analyse African low-income countries’ leapfrogging, using the development of Ethiopia after 1991 and Rwanda after 1994 as case studies, and to explore the role that the BRICS countries played in their development.

15.2 Introduction In recent years, the BRICS countries have expanded their involvement in Africa. Their share in foreign direct investment (FDI) inflows and trade volume has surged rapidly. The BRICS countries are now Africa’s largest trading partners, with trade expected to reach more than US$500 billion by 2015 (60% from China) (AfDB 2013). The BRICS countries are also becoming significant investors in Africa, especially in the manufacturing and service sectors. Ethiopia and Rwanda used to be the two least developed countries in Africa. To some extent, they were the embodiment of Africa’s poverty and misery, deeply inflicted by hunger, inadequate development, conflicts and violence. Ethiopia is the only African country exempted from colonisation. The country experienced decades of autocratic monarchy after World War II. Then it adopted a far-left ideology after the socialist revolution led by Mengistu Hailemariam in the 1970s. The Ethiopian Workers’ Party established a one-party autocracy with a harsh crackdown on the political opposition. The economy was centrally planned while the private sector weakened. At the same time, the internal ethnic tensions worsened, with Eritreans, Tigrayans, Oromos and Somalis forming their own anti-government

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forces one by one and fighting guerrilla wars against the government. The country was in a constant, cruel civil war. Ethiopia’s extremely backward economy further deteriorated due to far-left economic policies, political suppression, ethnic tensions, civil wars and a poor international environment. Two severe famines hit the country in the 1970s and the 1980s, claiming millions of lives and shocking the world. Ethiopia became the poorest country by 1991, when Mengistu’s socialist regime was overthrown. According to the World Bank and the International Monetary Fund (IMF), the country’s GDP per capita in 1990/91 was only US$90 – the lowest across the globe. That was the broken state inherited by Meles Zenawi’s Ethiopian People’s Revolutionary Democratic Front (EPRDF) in 1991. The new ruling party and the government faced the difficult task of rejuvenation and development. Similar to Ethiopia, Rwanda has been haunted by poverty, ethnic conflicts and civil wars since its independence. The long-standing tensions between Hutus and Tutsis sparked multiple civil wars. The chaotic political environment dragged down economic growth, resulting in hardship for the people. In 1994, the world was astonished by the Rwandan Genocide, a massacre of Tutsis and moderate Hutus by ethnic Hutu extremists, with 800 000 to 1 million civilians slaughtered in 3 months (World History EDU 2020). The genocide devastated the country’s already extremely backward economy and largely damaged its infrastructure, causing millions of people to be internally or externally displaced. The Rwandan Patriotic Front (RPF), led by Paul Kagame, came to power in 1994. Rising from the ashes of the genocide, the new government faced various challenging tasks, including restoring peace, promoting ethnic reconciliation, rebuilding the economy and securing people’s basic livelihood.

15.3 Africa’s two success stories Many African countries gained independence in the 1960s, but few of them secured successful postcolonial development. Nevertheless, Ethiopia and Rwanda (two unpromising African countries back then) have written their own success stories of development, at least for the time being. The two countries successively stopped their respective wars and restored governance, which was previously regarded as an impossible mission. Ethiopia convened a national conference of different political forces to establish a broadly representative transitional parliament and transitional government. The country held its first multiparty democratic elections in accordance with its new constitution in 1995, where the EPRDF won the majority of seats in the parliament. After that, general elections have been held every five years. Although opposition parties have disputed election results, even leading to large-scale riots and conflict in the north and western regions, governance has prevailed at a national level.

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Rwanda’s road to effective governance has been much more difficult than that of Ethiopia. The former Hutu forces were not wiped out completely. Instead, they retreated to the neighbouring Democratic Republic of the Congo and formed a base there to continue their fight against the RPF. The RPF government took a series of measures to promote ethnic reconciliation, including establishing civil courts and removing tribal marks on identification cards. After more than 10 years of efforts, peace returned to Rwanda in general. Building on a stable environment led by effective governance, the two countries entered the fast lane of restoration and development. Ethiopia’s economic growth started to accelerate in 2002/03, yet it was from a very low base: the economy did witness relatively fast growth from 1991 to 2000, but the country still fell short of effectively eradicating poverty. In 2001/02, the GDP per capita was merely US$120 (Zhong 2006). However, from 2006/07 to 2016/17, the average annual growth rate of GDP was over 10% (Donnenfeld 2020), surpassing that of China (a major economy). In his address to the National Assembly in October 2020, Ethiopia’s Prime Minister Abiy Ahmed announced that the country’s GDP in 2019 surpassed US$100 billion for the first time, with a per capita GDP of over US$900. Given that the population has risen to 107 million, from around 50 million in 1991, the increase of GDP per capita from less than US$100 to over US$900 in less than 30 years is indeed a marvellous achievement (New Business Ethiopia 2020) Although economic growth has slowed in recent years, the country remains one of the fastest-growing economies in the world. Along with economic growth, Ethiopia made remarkable progress in the social domain. According to the 2002 Human Development Report produced by the UN Development Programme (UNDP), the country’s Human Development Index (HDI) ranked 168 out of 173 countries and areas – the sixth lowest on the list. In the 2018 Human Development Report, Ethiopia stood in 173rd position out of 188 in terms of the HDI ranking. Life expectancy in Ethiopia was 65 years in 2019, four years higher than in the average African low-income countries, rising from 145th in the world in 2005 to 100th in 2018 (UNDP 2019). Since 1991, the child mortality rate has been reduced by 65% and maternal mortality by 70% (Donnenfeld 2020). The government has built 16 440 new health posts, 3 547 health centres and 311 hospitals over the last 3 decades. In terms of education, the primary school enrolment rose from 32% in 1990/91 to 94.4% in 2008/09 and that of middle school from 15.6% in 2004/05 to 22.5% in 2008/09 (Donnenfeld 2020). The number of secondary and vocational education institutions rose from 199 in 2004/05 to 458 in 2008/09 and that of higher education institutions from 23 to 72. The poverty rate dropped from 45.5% in 1995/96 to 27.8% in 2011/12 (Zhong 2006). Both authors of this chapter worked and lived in Ethiopia in the 1990s and early 2000s, and have since returned to the country to visit on several occasions.1 It is a very different state now from what it was in the early 1990s, transitioning from an

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agricultural economy to a manufacturing one. Industrial parks are being built one after the other in the capital Addis Ababa and the capitals of regional states, while economic activities are booming. This is unprecedented in Ethiopian history. Many foreigners who have visited Rwanda are surprised by the impressive change in this small country in Central Africa. A Chinese netizen wrote in an online article: I visited Kigali, the capital of Rwanda, for the first time in March 2016. Despite all the research I had done, I was still amazed by the city’s urban development, public security, sanitation, and people’s hospitality when walking along the street. Kigali had cleaner streets than most Chinese cities. It was very different from what you would expect from a typical African country. (Yang 2021) Another Chinese blogger wrote: ‘Relatively poor as it still is, Rwanda today is standing in an entirely new light. When you walk on the streets, you would be impressed by the clean environment, and the new buildings shooting in the sky. It does not match the image of Africa in people’s minds’ (Bobu Africa 2017). The authors of this chapter have visited Rwanda several times and witnessed its development over time. The average annual GDP growth from 1995 to 2000 was 8.1%. Since the beginning of the 21st century, the country has secured rapid economic growth, with average GDP growth of 8% from 2001 to 2015; one of the fastest-growing economies over the same period (Musabyemariya 2020). Rwanda’s rapid economic growth has stimulated significant social progress. The poverty rate decreased from 45% in 2011 to 38% in 2017. Given the country’s fast population growth during this period, it was quite an impressive achievement. The country aimed to reach middle-income status in 2020, with the vision of becoming the Singapore of Africa. Needless to say, Rwanda and Ethiopia’s rapid rise, while different from BRICS countries, could serve as a lesson for some countries on the continent. BRICS countries’ experiences could also contribute to facilitating the continent’s rapid rise in the future. In recent years, BRICS countries have demonstrated a model of economic growth that has a global impact. BRICS exercises power as a bloc – not individually – thanks to their resources, territory and population on a large scale. For example, in the recent past, China boasted a booming economy with unprecedented levels of industrialisation and poverty reduction. Despite global financial and economic instability, the Chinese economy remains the largest recipient of foreign capital inflows (especially FDI) to the amount of US$124 billion, of which the flow of capital to the service sector exceeds the flow of capital to the manufacturing sector (Streltsov et al. 2021). Evidence suggests that China’s current economic power is based on its unique macroeconomic policy initiative, which centres on Deng Xiao Ping’s approach to economic liberalisation through export-oriented industrialisation, with a unique taste of liberalisation dubbed ‘market socialism with Chinese characteristics’.

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China’s example demonstrates how a booming economy with unprecedented levels of industrialisation, poverty reduction and macroeconomic policy initiative can be realised through the right economic growth ingredients. More importantly, it is important that African countries, such as Rwanda and Ethiopia, in fast-tracking their economic growth, maintain home-grown models made for their countries – as was the case of China’s socialism with Chinese characteristics. Brazil and India have also managed to facilitate their growth industry through models tailored to their environments.

15.4 Factors leading to success The developmental success of Ethiopia and Rwanda can be attributed to the following factors.

15.4.1 A peaceful environment Effective governance and stability are the premises of national development. It is common sense that no country can flourish in wars and chaos. One of the major contributors to Ethiopia and Rwanda’s prior lagging development was that the two countries were trapped in civil wars and chaos for a very long time. However, the stability provided by the governance of the EPRDF and the RPF have laid an essential foundation for routine economic activities in the two countries.

15.4.2 Market economy with a plan Ethiopia and Rwanda have both abandoned the command economy and embraced a free market economy. However, they also value the role of the plan and the government instead of leaving the economy entirely unchecked. Mengistu Haile Mariam’s regime once tried to transform Ethiopia into a planned economy, but it failed. The EPRDF has taken a gradual route to privatisation, retaining some stateowned enterprises (SOEs) and letting them dominate in critical areas (including telecommunications, banking, aviation, railways and postal services), as well as opening other sectors (such as catering, small-scale tourism and retailing) to private domestic investors. However, Rwanda has a relatively small economy, with only a few SOEs. Considering that the genocide significantly damaged the economy, the RPF government has encouraged the private sector to participate in economic development since the beginning. Rwanda is regarded as one of the economies in Africa with the most freedom. While adhering to free-market principles, both countries published development plans and objectives. Ethiopia devised and implemented a series of restructuring plans in the 1990s with the help of the World Bank and the IMF, and then rolled

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out two five-year plans focusing on peace, democracy and development. The most important plans for Ethiopia, however, were the Growth and Transformation Plan (GTP I) in 2010 and the second Growth and Transformation Plan (GTP II) in 2015. Both plans set ambitious goals: The GTP I aimed to achieve annual economic growth of 11.2% to 14.9% and reach a per capita GDP of US$700 in 2015 (Green Policy Platform 2011); the GTP II intended to secure average annual GDP growth of 11%, with a 20% annual increase in the industrial sector (Green Policy Platform 2011). The Ethiopian government has had a clear vision of the implementation of these plans, whose development strategy has been envisaged in terms of what is called agricultural development-led industrialisation. According to the strategy, Ethiopia (a backward agricultural economy with a large population) should first develop its agricultural industry to feed its population and prepare for industrialisation. Building on agricultural development, the country can leverage its abundant and cheap labour to appeal to domestic and foreign investors and develop labourintensive industries. Newly-built industrial parks and special economic zones have been powerful levers for the country’s economic transformation. Over the last two decades, many industrial parks have been built in Addis Ababa and local states, successfully attracting a large number of investors from all around the globe. The two GTPs also boosted infrastructure development in Ethiopia, constructing the first highway in East Africa, the first urban rail transit system, the first wind farm and a new electrified railway from Addis Ababa to Djibouti. Rwanda implemented two successive economic development and poverty reduction strategies, and issued Vision 2020. The vision aimed to move the country to middleincome status, with a GDP per capita of US$1 240, in 2020; transform the agrarian economy into a knowledge-based one, with the information and telecommunications industry the development focus; achieve a 100% literacy rate; and reduce the poverty rate to less than 30% (Kigali City 2012). The information and telecommunications industry lay at the centre of Rwanda’s industrial policies. The government proposed to transform Rwanda into the information and telecommunications hub of Africa, first raising the idea of building smart cities on the continent. At the time, it seemed to be an objective too ambitious to achieve for such a landlocked country without decent phone coverage. Nevertheless, Rwanda made concrete progress against all the odds. The Rwandan government constructed an industrial park and many incubators in Kigali, which became an inviting destination for national and international investors. Carnegie Mellon University established a technology institute there to cultivate talent for the information industry. In 2018, the government established Africa’s first international e-commerce platform in the capital in partnership with the Alibaba Group. In the same year, the first high-end smartphone factory in Africa was completed in Rwanda. In 2019, the country witnessed the production of the first all-electric car in Africa. So far, it has almost achieved national 4G coverage. Also, sharing bicycles

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and electric bicycles are appearing in Rwandan cities. Alipay plans to build its African headquarters in Kigali, which will benefit the country’s digital economic development. All these achievements are attributed to the government’s planning. Lewis argues that national development plans are necessary for a backward country to catch up with the advanced countries because they can avoid detours by learning from the successful practices and plans of others. In this way, it would be less likely for them to make mistakes (Lewis 2015: 303). The examples of Ethiopia and Rwanda illustrate the importance of sound planning for national development.

15.4.3 Role of the government Only with good implementation can visions and plans be translated into tangible achievements. African countries have never fallen short of ambitious visions and plans, but not all are competent enough to carry them out. Thus, many plans have been left as empty words on paper or ended up in failure. The development of emerging industrialised countries in East Asia is testimony that the government has an essential role to play in underdeveloped countries’ leapfrogging. According to Lewis, the more backward the country, the more pioneering work the government can do, such as supporting scientific research, inviting foreign investors to build factories, protecting infant industries, facilitating foreign trade, establishing an agriculture promoting system and reducing the barriers to loans. However, he also emphasises that the mission can only be completed by a clean and sensible government. If the government is corrupt and obtuse, the more it does, the more damage it will cause to economic growth (Lewis 2015: 325, 326). In the case of Ethiopia and Rwanda, both governments have played a significant role. As developmental governments with strong motives, they have established institutions to lead the development and mechanisms to mobilise resources. The Rwandan government established the Rwanda Development Board to attract businesses and investments, coordinate between the government and the private sector, and create a favourable environment for investors across the world. According to the World Bank, Rwanda is the most business-friendly country in Africa, ranking 38th in the world, even higher than the Netherlands (42nd). The federal government and state governments of Ethiopia regard economic development as a priority, and different states are competing for the favour of businesses and investors. Both countries’ governments are clean enough. The Rwandan government is considered to be the cleanest in Africa. There are occasional reports of corruption among Ethiopian government officials, but the country still has a clean government overall.

15.4.4 Authoritarian but open-minded leadership In his book, Lewis states that if a country is lucky enough to have the right leader at

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the right time, it may be able to open a brand new chapter of development (Lewis 2015: 329). A frequent change of government and the leadership is not necessarily a blessing for a backward country because without a mature democratic political culture and sound checks and balances of power, the change may lead to policy inconsistency and even predatory ruling. However, if a party or leadership were to stay in power for too long, the risk of corruption and bad governance would soar. African countries have never had a shortage of political strongmen, but openminded ones are rarely found. Some strongmen have brought more harm than good to their countries. In the cases of Ethiopia and Rwanda, Zenawi and Kagame were inseparable from their countries’ governance practices. With great talent and wisdom, both were authoritarian but open-minded, competent enough to lead the country to formulate and implement clear development plans, and therefore, reach the expected goals. It would be unimaginable for Ethiopia and Rwanda to have developed at such an impressive speed for over 10 years without the two leaders. They are what we call ‘the right leader at the right time’. Zenawi was regarded as the ‘genius of Africa’. Tony Elumelu, a Nigerian billionaire, praised Kagame as ‘the pride of Africa’ (LouwVaudran 2020).

15.5 Role of BRICS in Africa’s development There are two aspects to the role of BRICS in Ethiopia and Rwanda’s development. The growing economic links between BRICS and the two countries contribute to the development and industrialisation of the countries. BRICS can also learn from the Ethiopian and Rwandan experience in its policy formulation, especially its cooperation policy with African countries. With South Africa a member of BRICS, there are bound to be more commitments in BRICS to support African countries, and the increasing strength of the bloc means an extended infrastructure commitment for African countries. For example, topics of African development were included in the BRICS summits, and Ethiopian and Rwandan leaders were invited to the summits. While a full survey of the relationship between BRICS and Ethiopia and Rwanda is beyond the scope of this chapter, the authors wish to point out that BRICS can help to accelerate economic growth and the industrialisation process by way of trade, investment, experience sharing and human resource development, among other means. In the area of trade, data of recent years show a drastic increase in trade volume between Ethiopia, Rwanda and BRICS – largely accounted for by China, South Africa and India. According to a study conducted by the South African Institute of International Affairs, BRICS countries hold major shares in Ethiopian imports (especially manufactured goods, and plant and machinery). China and India alone

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accounted for about 47% and 40% respectively of total imports of manufactured goods and machinery (Ademuyiwa et al. 2014). The trade between South Africa and Ethiopia grew from US$42 million in 2004 to over US$100 million in 2016 (Ethiopia News Agency 2017). Like most other African countries, both Ethiopia and Rwanda’s trade with BRICS reflects a typical North–South pattern. While they export mainly crude materials, food and live animals to BRICS, their major imports are manufactured goods (particularly machinery, vehicles, metal and iron goods, electrical and telecommunications appliances, and consumer products). The Ethiopian and Rwandan economies could benefit from strategic and complementary trade relations by strengthening their growth and development. Thus, BRICS’s rising demand for agricultural products is timely because it offers Ethiopia and Rwanda opportunities to earn the foreign exchange they need to pay for imports. The inflow of investment from BRICS helps to promote the industrialisation process in Ethiopia and Rwanda. Again, China, South Africa and India lead the way in investment in both countries. Ethiopia and Rwanda’s cheap and abundant labour, privileged access to high-income markets, and growing domestic and regional markets add to their attraction as FDI host countries. Both countries have adopted a strategy of attracting FDI to boost economic development. Ethiopia has absorbed a large amount of Chinese investment in recent years. According to the figures released by the Ethiopian Investment Commission from 1998 to March 2020, Chinese investors invested in 1 564 projects in Ethiopia, with a total value of US$1.152 billion, of which 1 133 were manufacturing projects (Ethiopia News Agency 2017). Another study showed that the FDI inflow from India and China had an increasing trend with an average rate of 82% and 202% respectively during the two-decade period (1996–2016) (Ergano & Rambabu 2020). India has also expanded its investment in African countries in recent years, especially in East Africa, leveraging its linguistic, cultural and geographical proximity to the region. There has been a constant increase in investment from the Indian private sector to Africa in industries such as information and communications, energy, power, healthcare, agriculture, pharmaceuticals, wholesale and retail, and tourism. By 2015, India had become the fifth-largest foreign investor in Africa, after the US, France, Malaysia and China. Ethiopia and Rwanda are two major destinations of India’s investment in Africa. In his historical visit to Rwanda in July 2018, India’s Prime Minister Narendra Modi announced that the country would extend a US$200-million line of credit to Rwanda (The India Express 2018). The development of the shoemaking industry in Ethiopia is an example. Huajian, a Chinese shoemaking company, has two plants in Ethiopia. The company employs more than 4 000 Ethiopians and exports Ethiopian-made shoes to the EU and US markets. Having established a plant in the Dukem industrial zone, 37 kilometres south of Addis Ababa, Huajian is building a massive 138-hectare international light

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industry city in Addis Ababa. With the completion of this city, Huajian foresees increasing its export revenue from US$30 million in 2016 to US$4 billion by 2022 (Freeman 2017). The BRICS countries can share their development experience with Ethiopia and Rwanda. Emerging industrialised countries in East Asia were important benchmarks for Ethiopia and Rwanda when the two countries devised their own development plans. Ethiopia’s then prime minister, Zenawi, drew inspiration from China’s experience in developing his democratic developmental state model (Zenawi n.d.). Kagame had Singapore in mind when designing the development blueprint for his country. The stories of these Asian countries and areas were not only a great encouragement for the two countries, but also a rich source of inspiration to learn lessons from. Alibaba sharing experience with African businesses is an interesting case. Alibaba, the Chinese e-commerce giant, established the African Netpreneur Prize in 2018, aimed at boosting e-commerce in African countries. The programme, which is financed by Jack Ma, awards US$1.5 million to the top 10 winners every year, with prizes ranging from US$65 000 to US$250 000 each (Velluet 2020). The top 100 winners become the ‘seeds’ of the Alibaba business model, granted access to essential instruments such as financing to develop their e-commerce business in the next 10 years. Ever since the establishment of the programme, tens of thousands of young African e-commerce entrepreneurs have participated in the competition every year with Jack Ma as their mentor. It is hoped that the experience sharing will have a positive impact on the African e-commerce industry. The development experience of Ethiopia and Rwanda also provides enlightenment for the development of BRICS countries and their cooperation. First, faced with the mission of accelerating development and industrialisation, BRICS countries should better define the role of government in their development. Ethiopia and Rwanda’s experience shows that a purely free-market economy may not solve the problem of leapfrog development in African countries. An effective government is very important for accelerating development. This is a lesson to be learned. Second, in their cooperation with African countries, BRICS countries should respect the indigenous and home-grown development programmes of African countries. BRICS countries should encourage African countries to formulate their own development programmes according to their national conditions and provide assistance in this respect. The BRICS countries should also help Ethiopia and Rwanda to gain more understanding and support from the international community, especially from Western countries. Third, considering that Ethiopia and Rwanda can be role models for other African countries, BRICS countries should consider establishing a platform within their cooperation mechanism to promote the exchange of development experience between themselves and African countries as well as between African countries.

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15.6 Future challenges Ethiopia and Rwanda’s roads of leapfrogging have been bumpy and rocky. The two countries are still faced with many difficult challenges, among which the following are considered the most urgent: i. How far should the government go? As previously mentioned, the government’s role is of vital importance for the leapfrogging of low-income African countries. However, as Lewis (2015: 296) puts it, the government should do neither too much nor too little, as either may result in failure. How far should the government go? The cases of Ethiopia and Rwanda do not provide a one-size-fits-all answer to this question. The two countries are still on the path of exploration. ii. What’s next after the strongmen? The strong and open-minded leadership of Zenawi and Kagame was critical to the success of Ethiopia and Rwanda respectively. But what is next? Is such leadership sustainable or replicable? After Zenawi’s sudden death in 2012, the EPRDF seemed to be disoriented. His successors have lacked the necessary authority and wisdom to tackle the thorny ethnic problems in Ethiopia. In Rwanda, theoretically, Kagame would be able to extend his term to 2034 if he were to revise the constitution. But what will happen after 2034? Will he repeat the old stories of other African political strongmen? These are all issues worth worrying about. iii. The pain of transition. Every transitioning country has a large number of unsolved problems, such as the polarisation between the rich and the poor – a democratic deficit. In general, rapid economic growth widens the gap in income distribution between different social classes. However, if the gap were to become too large, social unrest – sometimes even social revolution – might occur. The economic growth of transitioning countries often comes at the cost of political democracy. People will tolerate a certain amount of loss of political freedom in exchange for economic growth in the short run, but how long will their tolerance of undemocratic governance last? A democratic deficit exists in both Ethiopia and Rwanda. The Ethiopian government is often accused of suppressing freedom of speech and association, and the press and citizens’ political participation. As for Rwanda, some say the country has in fact become a one-party state (Reyntjensjuly 2017). Will economic growth continue despite the wealth inequality and the lack of democracy and broad political participation? The BRICS countries can play a role in the future development of both Ethiopia and Rwanda. On the one hand, the BRICS countries can assist Ethiopia and Rwanda in their efforts at maintaining political stability and crisis management. For example, they can encourage political dialogue between the government and opposition forces. On the other hand, the BRICS countries can play a role in facilitating cooperation between Ethiopia, Rwanda and the broader international community, especially developed countries. More room for action should be given to the leadership of Ethiopia and Rwanda in addressing their challenges.

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15.7 Conclusion Can low-income African countries catch up? Yes, Africa’s low-income countries can leapfrog to be middle-income countries and climb even further. However, not all of them can reach this goal in the foreseeable future. The cases of Ethiopia and Rwanda show the importance of the necessary preconditions during the process, such as effective governance, a clear vision, strong but open-minded leadership, and international aid. The deterioration of a country’s political environment is very likely to interrupt its development and even reverse it. So far, Ethiopia and Rwanda have been successful in national development, but the future is never truly set. In November 2021, the BRICS Summit took a stand in defence of dialogue and diplomacy for conflict resolution and peace building, which should be revisited when conflicts stir up in the region. The BRICS countries could support South Africa in this process as an AU member to promote continental peace in order to help fasttrack economic growth. BRICS countries have already played a role in Ethiopia and Rwanda’s rapid growth. They can contribute more in this process, and they can also learn more. The BRICS countries could assist countries such as Rwanda and Ethiopia through critical infrastructure to be implemented through the New Development Bank’s (NDB) policies, which could also feed into regional initiatives such as the African Continental Free Trade Area (AfCFTA). BRICS financially opening to other countries in terms of the integration of the NDB for economic development could be a win-win for the continent and BRICS members that have major investments on the continent. Finally, given the high levels of BRICS FDI in Africa, it is critical that the bloc develops some kind of mechanism that promotes industrial development, particularly manufacturing, that would increase job creation and economic development. Endnote 1

Ai Ping was China’s ambassador to Ethiopia (2001–04), and Zhong Weiyun was a third secretary in the Chinese Embassy in Ethiopia (1993–97).

References

Ademuyiwa I, Onyekwena C, Taiwo O & Uneze E (2014) Ethiopia and BRICS: A bilateral trade analysis. Accessed 23 February 2022, https://saiia.org.za/research/ethiopia-and-brics-abilateral-trade-analysis AfDB (African Development Bank) (2013）Africa and the BRICS: A win-win partnership. Accessed 11 April 2022, https://blogs.afdb.org/fr/afdb-championing-inclusive-growthacross-africa/post/africa-and-the-brics-a-win-win-partnership-12098 Bobu Africa (2017) Is Rwanda the country you thought? Accessed 2 November 2020, https://www. sohu.com/a/124759875_374748 Donnenfeld Z (2020) Emerging giant: Potential pathways for Ethiopia to 2040. Accessed 20 October 2020, http://www.issafrica.53.amazonaws.com/site/uploads/ear-25-1-pdf Ergano D & K Rambabu (2020) Ethiopia’s FDI inflow from India and China: Analysis of trends and determinants. Accessed 24 February 2022, https://journalofeconomicstructures. springeropen.com/articles/10.1186/s40008-020-00211-7

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Ethiopia News Agency (2017) South African companies eyeing investment in Ethiopia. Accessed 24 February 2022, https://semonegna.com/south-african-companies-eyeing-investmentethiopia Freeman L (2017) BRICS, China and Ethiopia promote industrialization. Accessed 12 October 2020, http://lawrencefreemanafricaandtheworld.com/2017/08/01/brics-china-and-ethiopiapromote-industrialization Green Policy Platform (2011) Ethiopia Growth and Transformation Plan I. Accessed 16 February 2022, https://www.greengrowthknowledge.org/national-documents/ethiopia-growth-andtransformation-plan-i Kigali City (2012) Republic of Rwanda: Rwanda Vision 2020 (revised 2012). Accessed 15 February 2022, https://kigalicity.gov.rw/fileadmin/templates/Documents/policies/Rwanda_ Vision_2020__revised_2012_.pdf Lewis WA (2015) Theory of economic growth. Chinese translation – Translated from the English by Guo Jinxing. Beijing: China Machine Press Louw-Vaudran L (2020) The price to pay for Rwanda’s development miracle. Accessed 12 November 2020, https://issafrica.org/iss-today/the-price-to-pay-for-rwandas-developmentmiracle Musabyemariya F (2020) Social, economical and political reform in Rwanda post-genocide. Accessed 12 December 2020, https://cdmd.cnki.com.cn/Article/CDMD-10384-1017111514. htm New Business Ethiopia (2020) Ethiopia GDP surpasses $100 billion says PM Abiy. Accessed 21 October 2020, https://newbusinessethiopia.com/economy/ethiopia-gdp-surpasses-100billion-says-pm-abiy Reyntjensjuly F (2017) Rwanda’s election outcome is already decided. Accessed 14 November 2020, https://africanarguments.org/2017/07/11/rwanda-election-outcome-has-already-beendecided Streltsov ES, Rozhin AA, Vosiev SS & Kosnikov SN (2021) The economic potential of the BRICS countries as a challenge to modern world realities. Propósitos y Representaciones 9(3): e1143 The India Express (2018) PM Modi’s Africa visit: All that happened before BRICS summit. Accessed 25 January 2022, https://indianexpress.com/article/india/pm-modis-rwanda-visitall-that-happened-in-the-african-country-5276934 UNDP (UN Development Programme) (2019) Human Development Report 2018. Accessed 25 October 2020, http://hdr.undp.org/sites/default/files/hdr_2019_cn_0.pdf Velluet Q (2020) Chinas Jack Ma: An Africa strategy of connect and influence. Accessed 30 October 2020, https://www.theafricareport.com/49512/chinas-jack-ma-the-chess-game-herefuses-to-lose-in-africa World History EDU (2020) Rwandan genocide – Summary, death toll & facts. Accessed 16 February 2022, https://www.worldhistoryedu.com/rwandan-genocide-summary-death-tolltribunal-and-facts Yang X (2021) What kind of country is Rwanda? Accessed 2 November 2021, https://baijiahao. baidu.com/s?id=1694173295982014367&wfr=spider&for=pc Zenawi M (n.d.) African development: Dead end and new beginning. Preliminary draft. Accessed 1 November 2020, http://www.meleszenawi.com Zhong W (2006) Ethiopia and Eritrea: A country profile. Beijing: Social Sciences Academic Press

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Section 5 BRICS and the Health Industry in Africa

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An Innovation-Sharing Platform for Vaccine Research in BRICS: Strategies for the Sustainable Financing of Innovation Krish Chetty and Charles Hongoro

16.1 Introduction Policy-makers increasingly recognise the importance of vaccines in contending with global health challenges and improving people’s living conditions, particularly the poor and vulnerable. The COVID-19 pandemic has highlighted the importance of vaccine research for the continuity and welfare of society. The growing global demand for vaccine research emphasises the need for strengthened vaccine research and development (R&D) capacities in emerging countries (Homma et al. 2013). As Rappuoli et al. (2011) discuss, healthcare is perhaps the most important factor driving one’s quality of life in society. Vaccines play a central role in eliminating childhood diseases, increasing longevity and generally protecting people’s health. Furthermore, as these authors state, technology and innovations are essential for identifying medical solutions to address the challenges of the 21st century related to new infections and the vulnerabilities related to poverty. Vaccine research has historically been linked to progress and new capabilities afforded to researchers due to new waves of technology. As the Fourth Industrial Revolution (4IR) becomes more pervasive, technology provides new avenues to communicate, collaborate, share innovations and build knowledge. The BRICS Think Tanks Council’s (BTTC) recommendations in 2013, 2014 and 2016 repeatedly stressed the importance of knowledge and innovation sharing in BRICS (BTTC 2014: 5, 6; 2015). The Long-Term Strategy for BRICS presented knowledge and innovation sharing as a pillar of the BTTC research agenda, referring to methods of knowledge sharing and cooperation among the countries in the bloc (BTTC 2014: 5, 6). The BTTC and other BRICS fora regularly call for collaboration across boundaries, governments, business, academia and civil sectors. In 2018, BRICS established the BRICS Partnership on the New Industrial Revolution (PartNIR), tasked to deepen cooperation in innovation and knowledge sharing to boost the productivity and transformation of BRICS countries (BRICS Heads of State 2018: para. 56). With respect to people-to-people cooperation, the BRICS heads of state specifically highlighted the need to coordinate vaccine research development activities in the bloc and announced the development of the BRICS Vaccine Research and Development Centre (BRICS Heads of State 2018: para. 90).

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Hence, there is an opportunity to take advantage of new technologies to further vaccine research while building research partnerships across BRICS. Historically, vaccines were developed in the Western world by the pharmaceutical industry and thereafter distributed in the developing world after considerable delays. In 2013, more than 75% of the world’s vaccine production was concentrated in a few multinational corporations, limiting the supply of vaccines that reached those most affected by poor health in developing countries (Homma et al. 2013). Over time, vaccine production has moved to emerging countries while the developed world leads the manufacturing and innovation processes. Potentially, BRICS can take the lead in increasing the transfer of knowledge across developing and emerging countries (Hendriks 2012). For example, in the early 2000s, Europe recognised the importance of new technologies and the knowledge-based economy, pledging to become a global leader in the knowledge-based economy by 2010. The European Council of Lisbon developed the European Research Area, which concentrated on developing their competitiveness to address the collective scientific challenges of the continent. Vaccine R&D was identified as a critical contributor to Europe’s developed knowledge-based economy (Leroy et al. 2014). As a result, the European Vaccine Research and Development Infrastructure (EVRI) was established and tasked to advance innovation and indirectly promote socioeconomic development in Europe through the impact of its vaccines on public health (Leroy et al. 2014). Through this strategy, EVRI encourages cooperation in vaccine research and ensures that vaccine research in Europe is sustainably financed and that social benefits from the initiative are directed towards European society (Leroy et al. 2014). The European example highlights the value that the EU places on promoting vaccine research and the subsequent benefits that society reaps from the initiative. Similar coordinated efforts could benefit BRICS, which has reached a similar conclusion as Europe, several years after the European example. While the European example exists, technologies have advanced, and the challenges for collaboration among the BRICS countries are different. The question emerges as to what practical steps can be taken to enable innovation sharing across BRICS, supporting intra-BRICS knowledge production, innovation sharing and new knowledge dissemination. What resources are required to allow for such practices? If a programme similar to the European example is adopted, there are models that can be followed which identify how to consolidate the funding and management of research across varied international organisations.

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However, beyond centralising research activities, how could BRICS build on this idea and provide a suitable platform for sharing data and knowledge across culturally diverse contexts while establishing revenue-sharing agreements to finance the initiative? This chapter explores whether the proceeds from patent registration can help fund the arrangements required to establish an innovation-sharing platform appropriate for vaccine research across BRICS. Furthermore, it assesses whether such arrangements will sustainably support the creation and continued usage of such a platform. Given BRICS’s interest in promoting knowledge-sharing activities, and the need to provide avenues for BRICS scientists and innovators to build a common base of knowledge and potentially profitable ideas in the area of vaccine research, this chapter endeavours to answer the following questions: i. What is the rationale for a vaccine research innovation-sharing platform for BRICS? ii. How might a vaccine development innovation-sharing platform facilitate knowledge and innovation sharing while overcoming distance and language barriers? iii. How does one finance the initial launch and continued sustainability of the platform? What methodology is most appropriate to calculate the rates of return associated with shared investment entered into by BRICS vaccine research partners? The following sections of this chapter describe the methodology used to obtain the necessary information and the modelling used to determine the financial sustainability of the platform. It then discusses the value of knowledge and innovation sharing in the context of the pharmaceutical industry. This discussion is followed by a review of the vaccine development cycle, highlighting where an innovation-sharing platform can support activities in this cycle. Thereafter, the rate of return model is applied to show how an investment in staff and infrastructure can be profitable in the medium to long term.

16.2 Methodology The methodology has two parts. First, a review of literature on vaccine research is conducted, and an estimation is made of the rates of return from any drugs or vaccines produced through collaboration facilitated by a BRICS vaccine research innovation-sharing platform. Second, an estimation is made of the rates of return from an investment in an innovation-sharing platform.

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16.2.1 Vaccine research literature review The review of vaccine research literature involved exploring articles published in the Vaccine Journal and included in the Science Direct Database. First, a selection of articles was extracted based on two keyword searches on (i) ‘open access’ and ‘innovation’ and (ii) ‘profit-sharing’ between 2001 and 2020. As Figure 16.1 shows, 99 articles were found related to ‘open access’ and ‘innovation’ in this period. After examining the titles of these studies, 15 articles were selected due to their relevance. The selection was further reduced to 8 after the abstracts of the articles were reviewed. After searching for ‘profit-sharing’, 196 articles were found. Again, based on the titles of the articles, 13 articles were found to be related to this study, and 12 were selected from this set after reviewing their abstracts. The articles pertaining to ‘open access’ and ‘innovation’ presented examples of studies where vaccine research infrastructure had been shared, supporting accelerated R&D activities. The eight articles that were chosen related mainly to vaccine research technologies adopted in Brazil and India (Milstien et al. 2008; Homma et al. 2013), tools for accelerating vaccine innovations for AIDS and other diseases (Endo et al. 2016; Clark et al. 2011; Pagliusi et al. 2020) methods for promoting research collaboration in Europe (Torcel-Pagnon et al. 2019; Leroy et al. 2014; Medaglini et al. 2018; Pagliusi et al. 2019) and technology transfer related to vaccinology (Hendriks 2012). Among the selected ‘profit-sharing’ articles, some of the main themes that emerged related to the financing of vaccinations (Blecher et al. 2012; Batson et al. 2006) and the economic opportunities of vaccine research (Endo et al. 2016). Other themes that were relevant related to how collaboration contributes to cost reduction in vaccine production (Blanchard 2009; Sturkenboom et al. 2019) market-size estimation (Dubois et al. 2015), the Global Alliance for Vaccines and Immunisation’s (Gavi) financing task force (Milstien et al. 2008) and how licensing intellectual property (IP) can improve access to vaccines (Mehta 2001).

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Figure 16.1 Systematic review results from the Vaccine Journal

Source: Authors

16.2.2 Estimating the rates of return of an investment in an innovation-sharing platform To estimate the potential returns from an investment in a vaccine research innovationsharing platform, an internal rate of return model was developed using a standard econometrics method as constructed by the Department of Human Services Victoria (2010) which calculated the rates of return following investments by the Melbourne Metropolitan Municipality in the development of the capital investment project Affordable Housing Projects in the City. This model was adapted to calculate the rates of return linked to an investment in an innovation-sharing platform. Equation 1 describes the basic formulation of the model as it is applied in this chapter. Equations 2 and 3 describe possible refinements to the basic model (which are not used in this study but are available if the implementers of the platform require a deeper assessment).

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Refinements can be performed where one includes factors in such rates of depreciation, rates of taxation and debt repayments, if needed. The basic model can be described as follows: Box 16.1: Internal rate of return 1 (basic model) The internal rate of return is the discount rate R which ensures (ignoring sales proceeds, taxation, debt, transaction costs and subsidies that are introduced later) that: Where:

(1)

R1, R2…Rn = Future expected stream of income generated from registered vaccine patents Assumptions are needed to quantify the scale and value of returns from patent registration. V0 = Initial acquisition price or value on sale This price will be informed by quotations received from system developers familiar with the development processes involved in building a web-based innovation-sharing model. C1, C2…Cn = Operating costs that include maintenance, taxes and other expenses incurred daily For the purposes of this example, we will make an assumption related to which costs apply. N = Expected holding period, which refers to the number of years over which the rate of return calculation is conducted. Box 16.2: Internal rate of return 2 (including marginal income tax rate) The basic model can be refined by including the marginal rate of taxation on returns received from patent registration. Let: = The marginal income tax rate for returns from patent registration earnings Then:

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Box 16.3: Internal rate of return 3 (including loan repayment) A loan from a borrowing institution could also fund the platform; if so, the model can be refined with a factor for debt repayments. REPAYt = Repayments in period t on an interest-only loan Where:

(3)

Lo = The loan outstanding at the onset (time = zero) (possibly determined by the cost of the initial investment) The factors involving the marginal income tax rate, loan value and monthly repayments value have not been factored into the current model. The calculations made could be further revised in future, including the terms and algorithms.

16.3 Value of knowledge sharing and cooperation in vaccine research As noted earlier, knowledge and innovation sharing are central concerns of BRICS and specifically the BTTC. To further explore the importance of innovation sharing in the context of vaccine research, the following section outlines the importance of cooperation, the necessary infrastructure required for exchanging research, the barriers to research cooperation and the rationale for revenue sharing.

16.3.1 Rationale for vaccine research cooperation Collaboration among vaccine researchers is essential to stimulate innovation and vaccine development. In particular, multidisciplinary collaboration is needed for innovation promotion. During Europe’s FP7 project (Innovation Partnership for a Roadmap on Vaccines in Europe), these benefits were experienced, bringing together leading vaccine experts engaged in a shared platform promoting vaccine innovation (Medaglini et al. 2018). Sharing data and information can accelerate the research process, as it reduces redundant testing and contributes to the harmonisation of quality standards related to drug and vaccine production. Successful partnerships have been found to advance vaccine innovation, clinical trials, World Health Organisation (WHO) qualification and vaccine access (Pagliusi et al. 2019). Furthermore, the economics of scientific innovations show that optimal knowledge production requires high levels of cooperation during R&D (Hendriks 2012).

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Importantly, as described by Dubois et al. (2015) who studied the relationship between financial returns and innovation in the pharmaceutical industry, innovation is expensive. They suggest that, on average, it costs US$2.5 billion to produce a new chemical entity in the pharmaceutical industry. Blanchard (2009) argues that collaboration is key to reducing the costs of innovation. Collaboration can reduce the time required to produce a new idea and advances the creation of new knowledge needed for problem solving. Similarly, Gaskell (2018) highlights the reduced time to enter a market. Collaboration with fellow experts can help to refine an idea and improve the product, service or process required. Traditionally, noncollaborative firms tended to increase the number of people working on a problem to find a novel solution; however, this approach inflates the costs considerably. Collaboration can save on R&D expenditure while sharing new insights and knowledge from disparate sources. Partnerships between the private and public sectors and multinational companies can also reduce the costs of vaccine production due to WTO enforcing safeguards regarding IP rights (Mehta 2001). According to Homma et al. (2013), the growth of the Brazilian vaccine research sector was mainly due to partnerships between the public and private sectors. In addition, partnerships can help each party to access and share technologies required during the vaccine R&D process (Mehta 2001). EVRI, for example, promotes access to information and experts from the European vaccine development community, including academics, the public sector, non-profit organisations, small and medium enterprises, product development partnerships, vaccine pharmaceutical industry, regulatory authorities and patients’ organisations (Leroy et al. 2014). Partnerships between the academic, public sector and private sector in Brazil have also shown that such collaboration can ensure that vaccines developed through such partnerships have a better chance of reaching vulnerable people (Homma et al. 2013). However, vaccine researchers and developers in India and Brazil are concerned about infringing patent restrictions due to an inability to understand or master the patent landscape. This limited understanding of the patent landscape has tended to delay the development process or resulted in underdeveloped products (Milstien et al. 2008). As another example of success through partnerships, Gavi was launched in 2000 and brought together donors, vaccine producers, non-governmental organisations and international organisations engaged in vaccine and immunology R&D. Gavi’s financing task force promoted organisational change by supporting partnerships as all institutions began to adopt Gavi policies related to the vaccine development process. The Gavi model was expected to increase investment in the sector and support greater financial sustainability. In this instance, financial sustainability referred to the ability of member states to enable self-sufficiency in their ability to mobilise resources required to meet current and future target levels for immunisation

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performance (Milstien et al. 2008). The Gavi approach was best suited to developing policies and a financing framework for immunisation. The financing database also supported the collection and sharing of information among the partners. Furthermore, knowledge and data sharing have been pivotal for the success of the Accelerated Development of Vaccine Benefit-Risk Collaboration in Europe (ADVANCE) project, where collaboration helps partners to increase their capacities to determine risks and benefits related to vaccine development and production (Sturkenboom et al. 2019). The ADVANCE project has been in operation since 2008 and has contributed to the financing of nearly 100 collaborative projects engaged in the early phase of drug and vaccine development (Torcel-Pagnon et al. 2019). The success of these projects in Europe and Brazil highlights the value of collaboration in accelerating innovation. However, an essential element of such success is developing appropriate infrastructure to exchange research, as described in the following section.

16.3.2 Required infrastructure for exchanging research Research infrastructure is essential for advancing vaccine research collaboration across borders. This infrastructure includes resources, systems, facilities and services required by researchers during the R&D process. In addition to general communication and collaborative tools, the digital tools and platforms for vaccine research must support bio-informatic data, microarrays, in-vivo imaging technology and systems for vaccinology (Leroy et al. 2014). Thus, an innovation-sharing platform in this context must transmit and process advanced multimedia data. An example of such a platform was adopted in Europe. As mentioned previously, EVRI was established to promote cooperation among vaccine experts and organisations from both the private sector and the public sector. It provides online digital tools and platforms in addition to data from animal models and immunological assays. The platform also gives researchers access to expertise related to early clinical trials, vaccine-specific project management and technical skills, as well as project management consultants (Leroy et al. 2014). The infrastructure supported includes compatible expression systems, vaccine formulation systems, advanced good manufacturing practice (GMP), manufacturing platforms and GMP production. As another example of how a platform has supported research in the pharmaceutical sector, tuberculosis research has benefited from an open, integrated database platform developed by Stanford University. This database houses information about genome sequence data for several strains of tuberculosis. The data are publicly shared if approved by the author or following a publication of an affiliated researcher. The search feature provided by the platform offers quick access to vital genetic information, experimental data and information about the author of the related study (Reddy et al. 2009) These features make it easier for researchers to access

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information and build partnerships with relevant experts in the field. In the vaccine research space, access to antigen data and the test methods and results are critical enablers for research (Kristensen & Chen 2013). To roll out the infrastructure required for the EVRI initiative, the legal and administrative framework had to be defined first, followed by political and financial commitments made by the public and private institutions engaged in vaccine development (Leroy et al. 2014). Once the frameworks and commitments were made, EVRI was able to begin operation in 2017 (European Commission n.d.). New vaccine research platforms and delivery technologies expedite the research process and improve access to immunisation in low-income countries. Collaboration on the ADVANCE project has been impeded by differences in languages, coding systems and diverse implementations in response to regulatory requirements related to reusing health data for research purposes. Thus, sharing data alone has been insufficient, as these differences can contribute to a higher level of mistrust among partners (Sturkenboom et al. 2019). A shared platform that can overcome these barriers, common among the BRICS countries, when communicating and interfacing data will help to build trust among partners and contribute to improved knowledge-sharing practices. To make further advancements in BRICS, the bloc would benefit from greater collaboration among their public and private sectors to advance the use of technologies in the early product development process. Innovation-sharing platforms can help to facilitate communication and data exchange. Sharing data and information is also valuable, as it allows partners to make better decisions (Kristensen & Chen 2013). The comparatively low capital costs of drug and vaccine research platforms also help to advance engagements between local and regional manufacturers and linkages between vaccine researchers (Pagliusi et al. 2019). In countries such as China and India that are recognised for their strength in vaccine manufacturing, such collaboration facilitated through an innovation-sharing platform may prove beneficial. Public–private partnerships (PPPs) established through engagements enabled by an innovation-sharing platform should be supported by sustainable funding arrangements to take advantage of these technological capacities in these countries (Homma et al. 2013). The following section details how such arrangements could be made.

16.3.3 Potential benefits of an IP-sharing agreement To make informed decisions in the sphere of vaccine development and innovation, it is important to analyse the patenting landscape and its implications for product development and collaboration strategies. IP rights and patent barriers tend to limit collaboration and data sharing (Clark et al. 2011). By sharing the commercial

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proceeds from patent registration related to a drug or vaccine, the platform owner or investors can help to finance the platform’s development and operation sustainably. To reap such a benefit, arrangements should be made between the platform owner and affiliated researchers to channel a portion of the commercial proceeds back to the platform, providing the investors with a return on their investment. The Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) developed by the World Trade Organisation sets the minimum standards for protecting IP internationally. In some developing countries, there are restrictions on patent protections. India, for example, has refused to grant pharmaceutical product patents, as they have tended to limit local innovations – as opposed to process patents. India’s actions in this respect helped to develop its local pharmaceutical industry (Milstien et al. 2007; Cullet 2003). Although TRIPS compliance could stifle innovation and access to patented information, potential investors in vaccine research should be assured that their investments in R&D could produce new research and new patented information, thus supporting innovation. Potential IP-sharing agreements between the platform, researchers and manufacturers could help to satisfy investors’ concerns (Milstien & Kaddar 2006). As an example of a potential IP-sharing agreement, EVRI works with the partners in the vaccine development process and establishes guidelines for how IP rights should be shared (Leroy et al. 2014). The sustainability of EVRI is dependent on a sustainable income stream related to EVRI’s impact on public health over the medium to long term (Leroy et al. 2014). The Coalition for Epidemic Preparedness Innovations (CEPI) is a partnership of public, private, civil and philanthropic institutions in Europe, primarily funded by public monies. CEPI was able to determine the pricing of products produced through the CEPI business model in keeping with its equitable access policy. This was done to ensure that vaccines developed through this form of collaboration were produced affordably (Huneycutt et al. 2020). The CEPI process did not seek to take ownership of the patents produced via their model, as the patents covered issues of broad usage beyond the original purpose of the CEPIfunded programme (Huneycutt et al. 2020). Historically, the public sector often invested in and covered the costs of vaccine research, while the private sector took responsibility for the vaccine development process and ownership of the resultant patents (Batson et al. 2006). Such PPPs can play an important role in sharing the risks and costs of developing a vaccine and coordinating future investment efforts in R&D. Private-sector investments in vaccine research and manufacturing follow the manufacturer’s capability, track record and ability to leverage data and corporate finances. The investor is interested in competitive returns from their investment as well as the contribution to global health (Pagliusi et al. 2020). Where innovation sharing results in a commercially viable drug or vaccine production, the platform investors would appreciate it if a share of these sales is channelled back into the platform.

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By adapting advanced market commitments (AMCs), donors can agree to fund targeted vaccine research if the vaccine meets specifically agreed to standards (Batson et al. 2006). The AMC is an agreement that binds funders legally to purchase a certain amount of a vaccine at a given price. The AMC aims to ensure that the vaccine manufacturers invest in the research and manufacturing capacity required to develop a vaccine (WHO 2006). In this instance, the innovation-sharing platform is one of the technological enablers that could be funded through an adapted form of an AMC. Technology transfers from the public sector require donor financing and partners from the pharmaceutical industry to absorb and scale new knowledge. National institutes dedicated to vaccine research tend to prioritise national concerns over an international need, limiting funding for research in fields outside national priorities (Hendriks 2012). A BRICS platform can prioritise common health priorities shared by the BRICS countries and help to coordinate the financing and future research plans of researchers affiliated to the platform. The platform may also help to facilitate research into neglected diseases that may have had limited commercial value but high importance for public health in the past (Pagliusi et al. 2020). Focusing on neglected diseases may contribute to public health. Still, through an appropriately structured commercial revenue-sharing agreement, the platform may benefit from the proceeds of such research and may remain a financially viable investment.

16.4 Vaccine development 16.4.1 Vaccine development cycle Vaccine development can take on average over 10 years following the initiation of the product development to the licencing of the vaccine. The associated expenditure for developing the vaccine, which meets all regulatory requirements, can amount to over US$100 million (Ellis 2001). Barrett and Beasley (2009) discuss the vaccine development cycle for biodefence vaccines and state that the process usually takes from 18 to 20 years, costing between US$200 million and US$500 million. Their development phases include the basic science and discovery stage, where one develops the concept, followed by preclinical development (clinical trial), clinical study and development, and the post-licensure phase. The preliminary phase of vaccine development, when the basic research is conducted, results in the preparation of a product development plan that specifies the claims of the vaccine. The planning phase also involves defining the disease target – how the market’s needs will be met from an epidemiological and immunobiological perspective. Thereafter, the plan must specify the technologies to be adopted and selected antigens involved. The preclinical phase involves preclinical evaluations

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and process development, which may last between three and four years. This stage is followed by clinical evaluations and manufacturing, which lasts between four and six years. The final step of the process is licensure, which may take one to two years (Ellis 2001). Sharing knowledge and information is vital to the basic science discovery phase, where antigens are identified, new delivery methods are discovered and new strategies for testing are found. In this phase, scientists monitor ongoing research conducted by governments, institutes and research-oriented laboratories (Barrett & Beasley 2009). While collaboration is vital during this phase, researchers tend to protect their IP. Figure 16.2 Vaccine research cycle • Ideation and hypothesis • Mechanistic analysis • Proof of concept • Product development plan

• Review licensing agreements • Monitor efficacy of vaccine rollout

4. Post - licensure

3. Clinical study and development

1. Basic research

2. Clinical trial

• Natural infection • Biomarket identification • Data sharing

• Vaccine testing • Safety, efficacy and biomarker idenfication • Data sharing • Develop product

Source: Barrett & Beasley (2009)

16.4.2 Contribution of an innovation-sharing platform Before any development of the BRICS vaccine research innovation platform can commence, interested parties wishing to contribute to, participate in, and benefit from the platform, will need to agree – upfront – to share data and be agreeable to IP-sharing agreements. These partnerships should preferably represent a crosssection of interests, within the vaccine research space, across BRICS. In addition,

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the partnership must define the financial commitments to be made as well as the expectations of how the returns will be shared among investors/contributors after development and during the operation of the platform. Within the vaccine life cycle, the innovation-sharing platform can contribute to various collaborative activities. Within the basic research phase, the process of collaboration towards ideation can be facilitated by the platform. The input and output data from models developed in the analysis process can also be shared via the platform. This data may even exist in the form of high-quality multimedia data that will require storage and the ability to be identified through a search facility. The creation of documents for the proof of concept and product development plan can also be facilitated through the platform. During clinical trials, clinical study and the post-licensure phases, the act of sharing data and communicating with all the relevant parties can be further facilitated through the platform. While the clinical trial occurs offline, the results of the trials must be openly shared among the study partners via the platform. The platform must provide such services and allow for the sharing of data in a protected manner. This sharing of data supports acts of analysis, validation and modelling. In particular, a BRICS innovation-sharing platform has a few unique requirements to promote collaboration among researchers across BRICS. First, the platform is needed to facilitate communication, overcoming distance and language barriers. Thus, during the ideation stage, new ideas posted to the open platform must be presented in the user’s preferred language. Second, advances in technology have allowed developers to embed language translation facilities in the designs of systems, which effectively makes possible non-verbal communication between system users (Nakamura 2009; Kohn 2019). There are several use cases for such services, which system developers could further explore. For example, such uses transform businesses that embrace the technology, allowing them to compete internationally and build working foreign partnerships (Bary 2019). Another possible use for this service would be translating raw data, where appropriate, to ensure that the researcher can infer meaning from the information. Also, when communicating in an open web forum or when exchanging notes, such content should pass through a language translator service. In addition, the platform must offer facilities for document creation and management, data sharing and crowdsourcing funding. These facilities will allow a researcher to post an idea, collectively brainstorm the idea online with potential partners, test the idea, share relevant data, construct a proposal in a protected space, seek funding and begin the project. At the same time, all information passes through an appropriate language translator and is stored for future access and continued usage.

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Figure 16.3 Support features of an innovation-sharing platform

Post idea

Collective brainstorm

Construct proposal online

Crowdsource funding

Develop innovation collaboratively

Source: Authors

16.5 Calculating rates of return for vaccine research This chapter attempts to demonstrate how an innovation platform developed to support vaccine research among the BRICS countries can be structured to sustainably redirect the proceeds of revenue shared from patents registered due to new drugs or vaccines created via the platform. The calculations that follow are based on revenuesharing agreements, assumed costs and assumed sources of revenue. The specification, design and development of the BRICS vaccine research innovation platform can be developed following one of several software development methodologies. For the initial entry into the market, if one assumes that a staged waterfall approach is taken, it will require that the entire platform team is employed from the first day of operation. During this process, the team needs to develop a project plan, define system requirement specifications, develop a system design, design the associated user interface and conduct the web development of the platform. Thereafter, the team must test the platform, employ patent advisers to register patents and manage the ICT infrastructure for such work. These tasks require the employment of a senior project manager, a solutions architect, a senior requirements analyst, a user interface experience designer, web developers, quality assurance specialists, legal patent advisers (patent attorneys) and a system administrator.

16.5.1 Estimating the cost of development The total cost of development can be presented based on the salaries of personnel located in each BRICS country, as reported by SalaryExpert.com (n.d.). These salaries are converted to the US$ equivalent to assist with comparisons. SalaryExpert.com (n.d.) reports on the mean salary for positions based on data collected in November 2020. The US$ equivalent for staff is converted to ZAR

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using the exchange rate R15,36 to US$1. The total development costs are based on the cumulative value of staffing costs, ICT infrastructure costs and software costs. Staff costs are based on the annual salary costs for one senior project manager, one solutions architect, two senior requirements analysts, two user interface experienced designers, three web developers, two quality assurance specialists, three legal patent advisors (patent attorneys) and two server administrators. The composition of this team is informed by the positions of resources following the waterfall approach to software development, assuming that all resources are employed for the first day of operation. We can then collectively determine the total cost of a team based in any of the BRICS countries. Using average salary costs sourced from SalaryExpert.com (n.d.), we see that the annual cost of an entire team is more cost-effective if paid in INR and located in India. The yearly staff cost in India is US$110 585 compared to the total cost in the other BRICS countries (see Table 16.1). Comparatively, it is approximately three times more expensive to locate the team in China than in India. It is most cost-effective in India, Russia, Brazil, South Africa and then China, in ascending order. For illustration purposes, for this exercise, the costs of ICT infrastructure are assumed to be the same across BRICS given the US$-based pricing. The costs of infrastructure are based on a quote from the company DataTegra, which establishes the ZAR value of the infrastructure based on the fluctuating ZAR/US$ exchange rate at the time. The assumed necessary ICT infrastructure includes 16 laptops for the team (approximate high-end specification using 2018 prices), 16 supplementary screens, 1 development server, 1 production server and 1 disaster recovery server. These prices are based on an investment in the physical procurement of such equipment. For this exercise, we have not considered the cost of opting for cloud-based services. Software costs are based on the licence fees for 2 software programmes, with 16 licences each. These programmes are Microsoft Development Studio and Microsoft Visio. In South Africa and the US, the assumed cost of the ICT infrastructure amounts to US$65 857.

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Table 16.1 Staff costs in US$ equivalent Staff costs

Quantity

Brazil

Russia

India

China

South Africa

Senior project manager

1

43 158

17 699

17 369

51 317

48 436

Solutions architect

1

25 853

18 438

16 751

43 178

33 332

Senior requirements analyst/engineer software requirements

2

20 741

14 792

13 439

34 641

26 742

User interface, experience designer/web interface designer

2

19 380

13 572

11 584

36 777

27 295

Web developers

3

19 380

13 572

11 584

36 777

27 295

Quality assurance analysts/specialists

2

16 723

11 711

9 996

31 734

23 553

Legal patent adviser (patent attorney)

3

39 007

24 930

20 223

70 703

73 268

Server administrator

2

18 591

11 882

9 638

33 697

34 919

202 833

126 596

110 585

338 825

294 840

Total annual staff cost Source: SalaryExpert.com (n.d.)

Table 16.2 ICT infrastructure and software costs in US$ ICT infrastructure

Units

Unit price US$

Laptops (high end)

16

2 082

33 310

Screen

16

173

2 776

Development server

1

9 924

9 924

Production server

1

9 924

9 924

Disaster recovery server

1

9 924

Total ICT infrastructure Software costs

US$ Annual US$

9 924 65 857

Units

Unit price US$

Microsoft development studio licences

16

887

Microsoft Visio licences

16

536

US$ Annual US$ 14 192 8 576

Total software

22 768

Infrastructure and software costs

88 625

Source: SalaryExpert.com (n.d.)

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Table 16.3 Total costs for the first year of operation in US$ US$ equivalent Staffing costs (India)

110 585

ICT infrastructure

65 857

Software costs

88 625

Total costs – Year 1

265 067

Source: SalaryExpert.com (n.d.)

Assuming that ICT and software are replaced every 5 years, over 20 years, the initial investment in the platform’s software and ICT costs amounts to US$88 625, with an assumed constant inflation percentage of 6%. Furthermore, assuming that staff costs also increase by the constant inflation rate of 6%, staff costs in the first year of operation amount to US$110 585 if we choose India-based resources, which were found to be more cost-effective. Table 16.4 Operating and ICT costs for 20 years in Rands Year

Operating cost (staff cost)

ICT cost (5 years)

2021

8 421 420

2022

8 926 705

8 926 705

2023

9 462 308

9 462 308

1 415 013

Total cost 9 836 433

2024

10 030 046

10 030 046

2025

10 631 849

10 631 849

2026

11 269 760

1 893 606

13 163 366

2027

11 945 945

11 945 945

2028

12 662 702

12 662 702

2029

13 422 464

13 422 464

2030

14 227 812

14 227 812

2031

15 081 481

2032

15 986 370

15 986 370

2033

16 945 552

16 945 552

2 534 072

17 615 553

2034

17 962 285

17 962 285

2035

19 040 022

19 040 022

2036

20 182 423

3 391 160

23 573 584

2037

21 393 369

21 393 369

2038

22 676 971

22 676 971

2039

24 037 589

24 037 589

2040

25 479 845

25 479 845

Total

309 786 919

Source: Authors

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16.5.2 Estimating the value of returns According to Pullana (2015), there are three methods to estimate the value of a drug. The first is based on patient build-up, where one counts the potential number of patients who could benefit from the drug. The second method is where one infers potential revenue based on the performance of a similar drug. The third method requires one to estimate the share of the market that the drug is likely to assume. As Pullan (2015) notes, revenue estimation is complex and the trends in the market change from year to year. To develop a more refined estimate, one must consider the variables that are likely to impact the valuation of the drug’s success. These parameters include a peak sales target, a potential success rate, the time to market, a discount rate and the development cost. Furthermore, the time required to produce a vaccine can range from a few months to several years (Plotkin et al. 2017). A drug such as Cervarix (used to treat cervical cancer) was found to make US$2.9 billion in gross revenue, far exceeding the input costs for development and manufacturing (which amounted to US$300 million) (Clendinen et al. 2016). Given that the innovation-sharing platform supports the development of vaccine research, patents based on research enabled through the platform have the potential to provide a revenue source to the collective owners of the platform. In a review of studies indicating the potential earnings from vaccine research, Torjesen (2015) found that returns from drug research in a laboratory were only achieved after 12 years of research. This process includes the initial engagement on the platform whereby the idea is formed, nurtured and transformed in new vaccine research. The 12-year process requires work in a laboratory creating a new molecule or compound. Over 10 000 compounds may be tested before 10 or 20 versions are identified as potentially viable during this period. Thereafter, these 10 to 20 compounds are tested for safety through computerised models, followed by animal testing. After various protocols are followed, human testing is carried out. Following a lengthy clinical trial process, the drug undergoes marketing. The drug company supporting the initiative approaches drug administrations worldwide to have the new drug enter the market. After a licence to sell the drug is granted, clinical trials continue with the involvement of appropriate regulatory authorities. Finally, before the drug reaches the market, it is patented. A patent lasts 20 years, during which the associated drug company can recoup the investment costs of the research. As shown in the following table, the top 10 prescription drugs earned the following revenue between 2014 and 2019.

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Table 16.5 Top 10 prescription drugs revenue earned between 2014 and 2019 Five years (US$)

Annual (US$)

Humira

233 932 800 000

3 046 000 000

Keytruda

194 918 400 000

2 538 000 000

Revlimid

183 244 800 000

2 386 000 000

Opdivo

172 800 000 000

2 250 000 000

Eliquis

161 894 400 000

2 108 000 000

Imbruvica

146 841 600 000

1 912 000 000

Ibranc

127 180 800 000

1 656 000 000

Dupixent

123 801 600 000

1 612 000 000

Eylea

104 755 200 000

1 364 000 000

99 379 200 000

1 294 000 000

Stelara Source: Pharmaceutical-Technology.com (2019)

If one follows Pullan's 2015 second suggestion, which is estimating the value of a drug from the proceeds of a similar drug, one can make the following assumptions to estimate the potential earnings of a drug developed through collaborative processes facilitated by the innovation-sharing platform. Assuming that a drug developed through the innovation platform earns 3% from Stelara and 15% of that revenue is shared with the platform owners, the platform may receive US$11 053 793 in the first year of revenue earning. With an annual inflation rate of 6% and the cumulative increases associated with those earnings, such earnings will increase to US$18 675 150 after 10 years. Thereafter, it is assumed that the platform continues to receive income from the registration of the associated patent. Cumulatively over this period, the platform gets US$145 697 772. Table 16.6 Potential calculated revenue earned from a new drug or vaccine, in US$ Year

Income (US$)

2031

11 053 793

2032

11 717 020

2033

12 420 041

2034

13 165 244

2035

13 955 158

2036

14 792 468

2037

15 680 016

2038

16 620 817

2039

17 618 066

2040

18 675 150

Total

145 697 772

Source: Authors

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Based on the parameters below, using the Victoria model described previously, it is possible to calculate the profit-earning potential of the innovation platform over 20 years. Table 16.7 Rate of return on investment model’s input parameters Parameter

Value

Years for drug R&D

12 years

Assumed return relative to #10 drug in world

3%

Total revenue sharing

15%

Inflation rate

6%

Exchange rate (US$ to ZAR)

14.41 ZAR

Software/Hardware lifetime

5 years

Source: Authors

16.5.3 Determining the rate of return on the investment Using the base version of the Department of Human Services Victoria’s (2010) model, which inputs variables (including revenue per period, operational cost per period and total initial investment cost), it is possible to calculate the cumulative cost, cumulative income, associated profit and rate of return of the investment. As shown in the following table and noted by Torjesen (2015), income is generally only received after 12 years. By factoring in the initial investment (which includes the 1st-year salary costs, infrastructure and software costs), we note that by 2031 (the 12th year of operation assuming that research began in 2020), the platform receives its first instalment of income from a single patent registered. In this year, the platform can recoup the cumulative associated costs amassed between 2020 and 2031. In this year, the platform earns US$11 053 793 in profit with an associated rate of return of 395%. In the years before 2031, the platform would accept no return on the costs incurred. With the cumulative profit earned by 2040, the platform makes a return in the amount of 2.657% on the original investment, with the total profit amounting to US$140 412 620. If the platform can produce an additional patent with earning potential, the rates of return will increase. The model to make such calculations could be refined by assuming when new patents could produce other income returns. However, through the registration of a single patent in 20 years, assuming a 15% revenuesharing agreement with the platform owners and the earnings amounting to at least 3% of the 10th top-performing prescription drugs, the platform achieves a 2.657% rate of return.

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Table 16.8 The calculated rate of return over 20 years based on input costs and potential revenue earnings, in US$ Year

Cumulative cost (US$)

Cumulative income (US$)

Profit (Income less cost) (US$)

Return on investment (%)

2020

-199 210

-

-199 210

-100

2021

-316 430

-

-316 430

-100

2022

-440 683

-

-440 683

-100

2023

-572 391

-

-572 391

-100

2024

-712 001

-

-712 001

-100

2025

-978 589

-

-978 589

-100

2026

-1 135 456

-

-1 135 456

-100

2027

-1 301 734

-

-1 301 734

-100

2028

-1 477 990

-

-1 477 990

-100

2029

-1 664 820

-

-1 664 820

-100

2030

-2 021 574

-

-2 021 574

-100

2031

-2 231 497

11 053 793

8 822 295

395

2032

-2 454 016

22 770 813

20 316 797

828

2033

-2 689,885

35 190 854

32 500 969

1 208

2034

-2 939 906

48 356 098

45 416 191

1 545

2035

-3 417 324

62 311 256

58 893 932

1 723

2036

-3 698 248

77 103 724

73 405 475

1 985

2037

-3 996 028

92 783 740

88 787 712

2 222

2038

-4 311 674

109 404 557

105 092 882

2 437

2039

-4 646 259

127 022 622

122 376 363

2 634

2040

-5 285 152

145 697 772

140 412 620

2 657

Source: Authors

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Figure 16.4 Graphic presentation of the profit earned and rate of return on investment over 20 years Profit Earning (ZAR) 180 000 000

3 000%

160 000 000 2 500%

140 000 000

120 000 000

2 000%

100 000 000 1 500% 80 000 000 1 000%

60 000 000 40 000 000

500%

20 000 000 0%

0

-20 000 000 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 Cummulative cost

Cummulative income

Profit

Return on investment

Source: Authors

16.6 Conclusion BRICS countries have long supported the need to collaborate and share knowledge. This idea has contributed to the establishment of the PartNIR advisory group, tasked to facilitate BRICS cooperation and collaboration as well as the BRICS Vaccine Research and Development Centre. Thus, knowledge and innovation sharing on vaccine and drug research is a core priority for the group. In line with these initiatives, BRICS continues to call for further networking and people-to-people cooperation. This chapter offers a tangible solution to implement such collaboration in a financially sustainable manner. The proposed solution promotes ideation, communication across borders, and overcoming distance and language barriers, and contributes to developing knowledge and expertise within BRICS through collaboration. An innovation-sharing platform, tailored to pharmaceutical research,

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has potential financial rewards for the owner and investors in the platform. By entering into IP-sharing agreements, there is an opportunity to redirect a fair portion of the proceeds back to the platform, which will support future developments and reimburse the initial investors of the technological platform. This chapter presents a potential method for sharing knowledge and innovation, supported by ICT infrastructure, which enables communication and collaboration while doing so in a financially sustainable manner. Technological advances such as AI have made it feasible to embed language translation services into web-based platforms that can facilitate communication and collaboration. Based on the average salaries captured on SalaryExpert.com, developing such a platform will be more cost-effective if the team is located in India, compared to the other BRICS countries. If one assumes that cooperation will result in a new drug or vaccine, in 12 years, the initial investment in the infrastructure may show a positive reward. As shown in the example, if the newly patented drug produces 3% of the 10th most-successful drug, with a 15% share in profits directed to the platform, the rate of return to the platform will show a 395% return in the 12th year of operation. This example highlights the need for long-term investment in such resources and technology. It calls for an investment in the collective research strengths of BRICS, and the collective commitment to sharing data, information and knowledge on an open platform. If such commitments can be secured, these investments will bear fruit in the long term. The collective knowledge of BRICS is a strength that must be leveraged. This proposed platform provides a means to externalise this knowledge, promote collaboration and build new knowledge to address the social ills of the globe. The cooperative model requires a change in mindset to business-as-usual pharmaceutical research processes and helps to prioritise research on the core priorities of BRICS. In addition, this platform has uses in multiple industries. While there are financial incentives for applying this model within the pharmaceutical industry, a knowledge and innovation-sharing platform can add value to every industry that shares common interests across BRICS. This is possible if the public sector (a neutral agent) owns this platform. It may be co-financed through proceeds from pharmaceutical sales, but expanded to allow other researchers and experts to gain entry to the platform and engage with their counterparts across BRICS.

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References

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Pagliusi S, Dennehy M & Homma A (2020) Two decades of vaccine innovations for global public good: Report of the Developing Countries’ Vaccine Manufacturers Network 20th meeting, 21–23 October 2019, Rio de Janeiro, Brazil. Vaccine 38(36): 5851–5860. Accessed 15 November 2022, https://doi.org/10.1016/j.vaccine.2020.05.062 Pharmaceutical-Technology.com (2019) The top-selling prescription drugs by revenue: Ranking the top ten. Accessed 15 November 2022, https://www.pharmaceutical-technology.com/features/ top-selling-prescription-drugs/ Plotkin S, Robinson JM, Cunningham G, Iqbal R & Larsen S (2017) The complexity and cost of vaccine manufacturing – An overview. Vaccine 35(33): 4064–4071. Accessed 15 November 2022, https://doi.org/10.1016/j.vaccine.2017.06.003 Pullan L (2015) Valuation of your early drug candidate. Los Gatos, CA: Bio International Convention and ShareVault. Accessed 15 November 2022, https://cdn.ymaws.com/www. michbio.org/resource/resmgr/BioToolBox_-_Commercialization/Valuation_of_Drug_ Candidate.pdf Rappuoli R, Mandl CW, Black S & De Gregorio E (2011) Vaccines for the twenty-first century society. Nature Reviews – Immunology 11: 865–872. Accessed 15 November 2022, https:// www.nature.com/articles/nri3085.pdf Reddy TBK, Riley R, Wymore F et al. (2009) TB Database: An integrated platform for tuberculosis research. Nucleic Acids Research 37(SUPPL. 1): 499–508. Accessed 15 November 2022, https://doi.org/10.1093/nar/gkn652 SalaryExpert.com (n.d.) Research job salaries. Accessed 24 November 2020, https://www. salaryexpert.com/salary. Sturkenboom M, Bahri P, Chiucchiuini A et al. (2019) Why we need more collaboration in Europe to enhance post-marketing surveillance of vaccines. Vaccine 7(81): 1–7. Accessed 15 November 2022, https://doi.org/10.1016/j.vaccine.2019.07.081 Torcel-Pagnon L, Bauchau V, Mahy P et al. (2019) Guidance for the governance of public–private collaborations in vaccine post-marketing settings in Europe. Vaccine 37(25): 3278–3289. Accessed 15 November 2022, https://doi.org/10.1016/j.vaccine.2019.04.073 Torjesen I (2015) Drug development: The journey of a medicine from lab to shelf. Accessed 15 November 2022, https://www.pharmaceutical-journal.com/publications/tomorrowspharmacist/drug-development-the-journey-of-a-medicine-from-lab-to-shelf/20068196. article?firstPass=false WHO (World Health Organisation) (2006) Advanced market commitments for vaccines. Accessed 15 November 2022, https://www.who.int/immunization/newsroom/amcs/en/

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Assessing COVID-19 and Telemedicine Collaboration on Energy and Internet Communications Technology: Implications for Health in Africa Yazini April and Li Mengdi

17.1 Background COVID-19 has propelled us all faster towards a digital world as we adapt to distance learning, working from home, telehealth and online shopping, putting technology at the centre of economic life. The pandemic has also exposed Africa’s weak healthcare system, weak infrastructure and dependence on the BRICS countries (in particular India and China for imports of critical products like personal protective equipment and pharmaceuticals). The majority of patients in sub-Saharan Africa have very limited or no access to healthcare clinics and basic healthcare services. Health development remains a continental challenge, as approximately 12% of the total population worldwide lives in Africa, yet Africa bears the highest disease burden worldwide (AfDB 2013). Moreover, Africa has 71% of the global distribution of communicable diseases that can be addressed through telemedicine (AfDB 2013). The main challenge of the COVID-19 outbreak has been how to manage threatened human life and the impact on the continent’s national healthcare systems. Poor healthcare systems have an impact on the continent’s economic growth and Agenda 2063. In recognition of Africa’s healthcare challenges, in 2011, the BRICS countries committed to mobilising what resources they could to empower African countries to best meet their health needs despite their limited financial resources. The question was how would this happen. For years, China and South Africa have played a critical role in public health in Africa. The BRICS Global Health Security Initiative report cites three key examples of South Africa’s contributions to health innovations that could be defined as knowledge transfer rather than financial assistance (New African 2012). For example, the Technology Innovation Agency launched by South Africa in 2010 actively funds multiple health research and development initiatives in South Africa, including the Drug Discovery and Development Centre, and has supported several clinical research trials (New African 2012). However, China is the main BRICS country that has made significant inroads into public health on the continent through various measures such as medical training and building hospitals in countries such as the Democratic Republic of the Congo. China will, therefore, be the main focus of this discussion as a BRICS country on promoting health in Africa.

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China has proposed its Health Silk Road for countries of the Belt and Road Initiative (BRI), which could be a facilitator of telemedicine on the continent. President Xi Jinping first used the term ‘Health and Silk Road’ during a visit to Geneva in January 2017, where he signed a memorandum of understanding with the World Health Organisation (WHO) committing to its construction aimed at improving public health in countries along the BRI (An 2017). The BRI is a global infrastructure development strategy adopted by the Chinese government in 2013 (Kuo & Niko 2018). In April 2020, China’s official BRI website listed 42 African countries that had signed an agreement or understanding with the One Belt One Road Initiative (National Development and Reform Commission 2020; Olinga-Shannon et al. 2019). Africa is considered a key part of China’s One Belt One Road efforts due to its potential for rails, roads and energy. Needless to say, many African countries need better infrastructure, which is still seen as a major barrier to medical development in the region. In 2018, only 40% of Africans had access to electricity, 33% had access to paved roads, and 5% of agricultural land was irrigated (Jiang 2018). China has become the largest funder of infrastructure projects in Africa, financially backing around a fifth of all projects and constructing a third of them (Herbling & Li 2019). Health cooperation has been absorbed into the BRI as part of the Forum on China– Africa Cooperation (FOCAC). It consists, inter alia, of providing medical supplies and training programmes, and building hospitals and support for combating infectious diseases such as malaria di in the FOCAC Johannesburg Action Plan (2016–2018) (Moritz 2021). The 2018 FOCAC agreement remains very timely given the global context of COVID-19 in Africa and globally. Section 4.2.1 of the FOCAC Action Plan on Medical Care and Public Health indicate that both China and Africa plan to address challenges presented by any sudden outbreaks of major communicable diseases. The issue is whether these FOCAC measures should be considered for continental collaboration, as the COVID-19 crisis has shown that telecommunications and emerging technologies like the Internet of Things and artificial intelligence (AI) are not just tools but have become essential structures for measures such as telemedicine that assist the functioning of our societal health and economy. According to the WHO, telemedicine is defined as the delivery of healthcare services where distance is a critical factor by all healthcare professionals using ICTs for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries, research and evaluation, and the continuing education of healthcare providers – all in the interest of advancing the health of individuals and their communities (WHO 1998). COVID-19 has demonstrated how telemedicine has become very useful in pandemics, as telemedicine consultations can prevent infection of healthcare workers through physical contact with infectious and carrier patients of such diseases. To achieve this, telemedicine involves a network

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of service providers that work with remote clinics through information and digital technologies to connect patients with healthcare workers. In this way, telemedicine provides access to tailored-made and on-demand healthcare services with mutual financial benefits to both the service providers and the patients. Telemedicine has arisen to fill the void created by the dearth of medical personnel in many parts of Africa. More than 400 million people live on the continent with little or no access to healthcare (AUDA-NEPAD 2020). Telemedicine is therefore essential for good health, which is a precondition for African development. The AU’s Aspiration 1 of Agenda 2063 envisions a ‘prosperous Africa based on inclusive growth and sustainable development (Chinye-nwoko et al. 2020). To achieve this ambition, one of the key goals for Africa is to ensure that its citizens are healthy and well nourished, and that adequate levels of investment are made to expand access to quality healthcare services for all people (AU n.d.; AU 2019). However, there are challenges to effective telemedicine in Africa, as the continent continues to encounter infrastructural hindrances such as electricity, internet access and cellular network coverage. This chapter, therefore, examines the potential prospects and challenges of telemedicine in Africa and strategies that could be considered through China–Africa collaboration. It provides lessons on which to draw regarding BRICS and telehealth in Africa in the post-COVID-19 era. This chapter assesses prospects and challenges by addressing two key areas that are required for telemedicine to succeed: electricity and ICT. The chapter is divided into five sections: (i) background, (ii) introduction, (iii) challenges regarding energy and telemedicine in Africa, (iv) ICT infrastructure challenges and telemedicine in Africa, and (v) strategies for telemedicine through the Health Silk Road: Way forward. Broader issues could have been addressed, such as regulatory systems and telemedicine; however, due to space, the chapter focuses on the two selected areas.

17.2 Introduction More than two years ago, no one could have guessed that a tragic health and economic crisis such as COVID-19 was looming. In a matter of months, the world was turned upside down, and innovation became the one hopeful, promising solution to counter the complete decline of our societies. This global health challenge has forced African governments to urgently evaluate and upgrade their healthcare options. To bring Africa to the general standard of public healthcare, it is estimated that the continent would need at least 15 000 new modern hospitals constructed, containing 4 million new hospital beds (Askary 2020). This would require approximately 25 000 megawatts (MW) of new power generation capacity and 3.5 billion cubic meters of clean water (AU 2022; Askary 2020). Africa will also need to build an industrial capacity to produce ventilators, personal protective equipment and medicines in huge quantities. It will require vast amounts of electricity and clean

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water. And, of course, increasing the food production capacity would be another major contribution to better health for the population. This too would require massive investment in infrastructure and machinery. Hence, telemedicine is viewed as one bridge to address the massive health gap. Globally, telemedicine, which has become a 21st-century medical tool, is the future of medicine and Africa is no exception given its health status. The telemedicine services available in Africa include neonatal care; maternal and child healthcare; intensive-care services; trauma care; occupational healthcare, especially for farmers and factory workers; mental-health services; geriatric medicine; nutritional health; radiological services; and e-pharmacy services. However, as indicated earlier, telemedicine in Africa is limited in terms of the availability of basic infrastructure such as steady electrical power, cellular network coverage and broadband internet service. Sadly, most African countries rank among those with the slowest internet speeds in the world. In addition, the cost of virtual consultations is currently affordable only to persons in the middle and upper classes of African society (Chinyenwoko et al. 2020). In Nigeria, for example, it costs between US$6 and US$26 per session (Chinya-nwoko et al. 2020). This may not sound like a lot, but in a country where 40% of the population live below the poverty line, it makes telehealth services inaccessible to the lower class (Chinye-nwoko et al. 2020). Moreover, in Nigeria – as in most of Africa – the role of the government or market actors in the development of e-health is not defined explicitly by any policy or legal framework. Furthermore, for most African countries, there is no governance and policy mechanism in place at the national, regional and local levels to ensure implementation, support and monitoring of the strategy. This is also true regarding telemedicine and health insurance (Tilman et al. 2021). However, considering the lack of doctors in rural areas, e-health is a vital component of addressing the continent’s healthcare needs and accomplishing Agenda 2063. China’s BRI health initiatives can be buttressed by its Health Silk Road, which seems to be a viable option for fast-tracking the continent’s health development standards. The foundation of the Health Silk Road can be established by means of the 2015 document, A Three-Year Implementation Plan for Advancing BRI Health Cooperation, (Tilman et al. 2021). This is a comprehensive policy document for international health cooperation that emphasises strengthening health cooperation between China and the BRI countries, and jointly working to address public-health crises to assist in protecting the health security and social stability of China and BRI countries, which will also protect the construction of the BRI (Tilman et al. 2021). The cooperation document portrays Health Silk Road objectives that propose that China should engage in capacity building and talent training for medical and health professionals from the BRI countries. The document also speaks to institutionalising medical aid to BRI countries (especially poor countries), such as dispatching short-term and long-term medical teams,

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constructing basic medical infrastructure, donating drugs and other health equipment, and providing training projects and digital connectivity (Tilman et al. 2021). This kind of cooperation is essential in strengthening telemedicine on the continent. It would be strategic for China’s Health Silk Road practitioners and BRICS health specialists to also examine a variety of health development strategies to address public-health challenges and needs on the continent. Sustainable strategies could be developed in collaboration with African practitioners to evaluate actionable evidence-based policy decisions; design improved public telehealth programmes; and formulate effective strategies to detect, prevent and control health problems through telemedicine (Tambo et al. 2019). Both China and the BRICS bloc could also bring into play a common platform to improve the capability of handling regional publichealth emergencies through epidemic information sharing, exchange of preventive and interventional methods, training of health professionals, empowerment and community-based resilience projects (Liu et al. 2014). China, through the BRI, has already pledged a massive US$1-trillion investment of foreign assistance that stresses infrastructure (for example, health, energy, transportation and information technology) and trade, which are critical for telemedicine to thrive (Tambo et al. 2019). A strategy aligned with the Health Silk Road, is therefore, essential in determining a way forward in telemedicine.

17.3 Challenges regarding energy and telemedicine in Africa Energy services are key to preventing disease and fighting pandemics, from powering healthcare facilities and supplying clean water for essential hygiene to enabling information and communications technology (ICT) services that connect people over distance. Energy development has not kept pace with the rising demand in developing regions, placing a large strain on the continent’s existing resources over the first decade of the new century (Foster & Briceno-Garmendia 2010). Energy access matters more than ever in the time of COVID-19. First, energy access is closely linked to the ability to respond to the pandemic. In particular, energy is key to healthcare services. Second, the nationwide lockdown measures in numerous countries and regions across the world impacted disproportionately those who already struggled with energy access. Third, COVID-19 will influence the delivery of sustainable energy access, as medical health and technology depend on a globally interconnected world that no longer seems practicable (Schiffer 2020). The importance of building Africa’s power sector cannot be overstated. Energy is the ‘oxygen’ of the economy and the lifeblood of growth, particularly in the mass industrialisation phase that emerging economic giants are facing today as their per capita GDP moves between approximately US$5 000 and US$15 000 (Energy Capital Power 2018).

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In sub-Saharan Africa,  only 28% of healthcare facilities benefit from reliable electricity and only  43% of the population is electrified at all (Puliti 2020). Many hospitals and clinics across Africa do not have access to reliable electricity – if they have any access at all (Mutiso & Hill 2020). This leads to serious problems, including the spoiling of medicines and the inability to use essential medical and diagnostic devices; even the lack of basic lighting and communications can complicate treatments, especially emergency procedures (Mutiso & Hill 2020). Moreover, despite its unreliability, electrical service in sub-Saharan Africa costs more than in other parts of the world. Lack of electricity limits working hours and inhibits the deployment of medical technology, as most technology requires a reliable source of electricity and that is often lacking (Mutiso & Hill 2020). Even in areas (Zimbabwe) covered by the electrical grid, power is often unreliable: the manufacturing sector loses power on average 56 days of the year (Davidson & Mwakasonda 2004). In Senegal, power is out 25 days a year; in Tanzania, 63 days; and in Burundi, 144 days (Davidson & Mwakasonda 2004). Frequent power outages damage sales and equipment, and discourage international investment (Urbach 2012). South Africa is not an exception, as it has experienced loadshedding over the years. South Africa’s state-owned national power utility  Eskom  dominates the country’s electricity sector, with 27 operational power plants generating over 95% of the country’s electricity and over 40% of all electricity on the African continent (Urbach 2012). South Africa has 1 of the 10 largest power utilities in the world (Hlongwane 2012). However, a lack of government investment has meant that the government has been unable to ensure that Eskom’s generating capacity keeps up with economic and population growth, leading to an energy shortage, which became an energy crisis in late 2007 (Hlongwane 2012). This has forced Eskom to implement loadshedding in the country at certain times to reduce pressure on the national grid. The issues surrounding Africa’s electricity shortages are multifaceted and include decades of neglect in building up countrywide infrastructure, a lack of international investment, poor regulatory frameworks and the difficulty surrounding bankability of power projects. Africa’s power problem is a transcontinental issue, and most regions have been struggling to catch up with the rest of the world in terms of power infrastructure. West Africa’s electricity access rate is 47%, Southern Africa is 43%, Central Africa is 25% and East Africa is 23%. In comparison, China’s access rate is 100% and India’s access rate is 82% (Energy Capital Power 2018). Again, these factors are many and multidimensional, but a foundational problem is the unequal footing on which African countries have had to base their modern infrastructure development due to the inequitable and often cruel legacy of European colonialism (AfDB 2019; Energy Capital Power 2018). The impacts of colonialism vary from country to country but the underdevelopment of infrastructure and human resources, as well as the export of African resources from the continent

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(both natural resources and people) for the betterment of Western economies, is a recurring theme in Africa’s development progress (Energy Capital Power 2018). Many African countries did not begin serious work on public electricity infrastructure development until the 1970s (Zeufack 2021). Not only did subSaharan Africa start its infrastructure development after other nations, but it also faces modern issues like corruption and bureaucracy, slow economic growth and extreme poverty, political instability, difficult bankability of projects and a lack of international investment – issues that are woefully intertwined (Zeufack 2021; AfDB 2019; Energy Capital Power 2018). Moreover, the consequences of energy underinvestment (as in the case of countries such as South Africa where Eskom struggles with high debts) have a negative impact on a country’s growth outlook (Sguazzin et al. 2022; Trace 2020). Tanzania’s state-owned Tanesco is another example tof a power utility hat heavily subsidises its power sector. A 2007 World Bank report estimated that Tanesco operated at an annual loss of US$50 million per year, selling power at 7c per kilowatt hour (kWh), compared with an average cost of 10c per kWh (Energy Capital Power 2018). By 2017, Tanesco had debt of US$363 million, could not afford to generate new capacity and was seeking a loan of US$200 million from the World Bank to cover old debt (Zeufack 2021; Energy Capital Power 2018). In 2018, the World Bank approved a US$455-million loan for Tanzania’s power problem (Zeufack 2021; Energy Capital Power 2018); in the same year, Credit Suisse loaned the government US$200 million for its power sector. Still, the utility operates at a loss, losing about SH265.30 per unit (or about US$0,12 per unit), and its overall indebtedness has only increased (Energy Capital Power 2018). Nevertheless, reliable energy in Africa is not an impossible task, as demonstrated by Kenya. Kenya, which is a BRI country, has turned its power sector upside down and inside out – transforming its electricity framework in terms of regulatory policy and investment, and strategically building up both generation capacity and transmission infrastructure (COMESA 2021). Kenya’s electricity access rate stands at 75%, which is a major achievement. It took the US more than a decade to accomplish the same task in 2016 (Energy Capital Power 2018). There are also significant benefits of facilitating energy in Africa in the post-COVID-19 era, as Africa has tremendous sources of clean energy such as geothermal, wind, solar, hydroelectric and biomass – all grossly underdeveloped. A case in point: only 1% of geothermal and 10% of hydroelectric potential have been tapped (AfDB 2019; Powanga & Giner-Reich 2019). Africa could generate 10 000 gigawatts (GW) from solar energy, 350 GW from hydroelectric power and 400 GW of natural gas – totalling more than 11 000 GW in power-generating potential (Powanga & Giner-Reich 2019).

17.3.1 What FOCAC says about energy in Africa If China plans to successfully implement the BRI health strategy or initiatives such as the Health Silk Road in Africa, it will have to consider the state of energy capacity

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in the African BRI countries. In 2018, Chinese infrastructure commitments in Africa exceeded US$25.6 billion, making it by far the largest single source of financing after African governments themselves (Prinsloo 2021). As the continent continues to face a significant infrastructure financing deficit (currently estimated at US$108 billion annually) with growing debt stocks and servicing costs, these are pertinent dimensions of Africa–China infrastructure relations (Prinsloo 2021). Fortunately, China has been heavily engaged in the African power sector. Between 2010 and 2015, it injected US$13 billion into the African power sector, accounting for at least 30% of new productive capacity (Powanga & Giner-Reich 2019). Power generation in sub-Saharan Africa rose from 95 GW in 2010 to 115 GW in 2015; 30% of these additions brought about by Chinese contractors alone. Chinese projects added 4.2 GW in West Africa, 5.5 GW in East Africa, 1.3 GW in Central Africa and 5.5 GW in Southern Africa (Powanga & Giner-Reich 2019). There are, of course, other exemplary initiatives such as the 1 860-km Tanzania– Zambia Railway that has symbolised China’s presence in Africa since the 1970s. Africa could leverage China’s expertise, and that of other countries, to use the emerging technologies to advance a variety of initiatives designed to provide reliable and resilient electricity services. It seems evident that telemedicine on the continent stands a chance through the health and road initiatives, particularly since China already has a strong infrastructure footprint on the continent. China has already ensured that energy is one of its priorities. Section 3.4.1 of the FOCAC Beijing Action Plan (2019–2021) indicates that China and Africa will enhance policy dialogue and technological exchanges on energy and resources, coordinate one another’s energy and resource strategies, and work together for the establishment of the China–Africa Energy Cooperation Centre in Africa to further advance energy exchanges and cooperation (FOCAC 2018). Section 3.4.2 indicates that China will support the development of renewable energy, mainly solar energy in Africa as well as using battery storage and strengthening the electricity grid (FOCAC 2018). Moreover, Section 3.4.5 indicates that both regions will actively consider the establishment of the China–Africa Geoscience Cooperation Centre for joint research on national resources sustainability and the environment in order to gain greater ability for the sustainable development and use of national resources by the respective countries (FOCAC 2018). China’s development of health assistance and energy investment funds would complement and reinforce telemedicine by developing infrastructure in particular. However, to improve China–Africa cooperation on energy infrastructure, as well as with other financiers, African countries need to prioritise institutional capacity to manage fiscal matters (Prinsloo 2021).

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17.4 ICT infrastructure challenges and telemedicine in Africa ICT, as a form of information infrastructure, offers connectivity like other physical infrastructure in that it can link landlocked countries or poverty-ridden regions with the outside world (Ng & Tan 2018). However, internet coverage is still bottlenecked in many developing countries, especially in rural and remote areas. Most rural areas do not have the financial capital to independently invest in a broadband network that would provide high-speed internet to their inhabitants. Most telemedicine applications require high-speed and reliable internet bandwidth to run smoothly. Telesurgery, real-time tele-ophthalmology, real-time teleradiology and emergency consultation are some examples of such applications (Bali 2018). Unreliable and low wideband internet pose barriers to the smooth delivery of telemedicine service (Bali 2018; Ng & Tan 2018). As Xiang (2017) suggests, ICT is meant to help broaden the possibilities for economic development, narrow the digital divide in terms of accessibility and unequal quality among developing countries and, at the same time, provide good-value-for-money products and services such as telehealth for people. In essence, ICT has become an enabler of developmental health and an intrinsic part of FOCAC, the BRI and continental development. Mobile technology in healthcare is a good example of the role of ICTs in improving basic healthcare to patients in remote areas. This is particularly the case, since mobile penetration rates in many African countries are rapidly getting close to exceeding 80%, and the population is starting to use mobile phones not only for basic communication, but also to improve and integrate business and services (Crul 2014). It is, therefore, critical in this section to present China’s Digital Silk Road, which could be aligned with its BRI or Health Silk Road in promoting ICT in telemedicine. Digital infrastructure has become more essential to modern economies with the arrival of faster networks, cheaper sensors and the proliferation of connected devices. The potential for growth in telemedicine is, therefore, vast if implemented wisely. Asia and Africa, where demand for international bandwidth is growing the fastest, are expected to account for 90% of global population growth through 2050 (Hillman 2021). Han (2018) estimates that the better performance of the BRI countries can be attributed to the rapid construction of ICT network infrastructure and technical cooperation between China and participating countries (Han 2018). Tanzania serves as an example where China Telecom helped the country to install a fibre-optic transmission network. Huawei signed a US$182-million deal for constructing landline and mobile ICT networks. Basically, Tanzania was upgraded from ‘no internet application’ to ‘world-class’ access, which has also resulted in the development of local ICTs and internet industries (TanzaniaInvest 2015). Also, as part of the BRI, the Digital Silk Road is an add-on to the conventional physical infrastructure that could facilitate the Health Silk Road. By linking countries with

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fibre-optic cables, mobile structures and e-commerce links, and introducing common technical standards in participating nations, the Digital Silk Road can complement or supplement physical infrastructure. The Digital Silk Road encompasses a vast array of technology projects: building the physical infrastructure for 5G networks, laying fibre-optic cable, and constructing and equipping data centres. By design, it includes promoting China’s standards for telecommunications, satellite navigation, AI, quantum computing and electronic payment systems throughout the countries where Digital Silk Road projects are underway (Capril 2020). Huawei has been actively involved in promoting ICT infrastructure development through the Digital Silk Road, especially on the continent through the FOCAC umbrella. In 2018, Huawei announced a three-year memorandum of understanding with the AU to improve the technical expertise of the AU and cooperate on key issues related to ICTs (Dahir 2019). Moreover, in 2012, Huawei built a ‘desktop cloud’ project for the AU to help the organisation communicate and conduct its business more effectively (Gachania 2019). Furthermore, Huawei is expected to partner with the continental body to strengthen sectors, including the Internet of Things, cloud computing, broadband, rolling out 5G networks and AI. The initiative will also train young people in technological skills and offer AU departments support in dealing with cybersecurity, as well as digital health and education (Gachania 2019). Moreover, Sections 3.3.2 and 3.3.5 of the 2018 FOCAC Action Plan state that China will work with Africa to undertake a number of key connectivity projects in recognition of the strategic and far-reaching impact of ICT on economic and social development. In Section 3.3.8, China and Africa agree to enhance cooperation with the International Telecommunications Union and other international organisations; step up coordination on training; cooperate on strategic consultations regarding ICT policymaking and development; and work together to narrow the digital divide and promote the building of an information society in Africa (FOCAC 2018). This narrowing of the digital divide and promoting the Internet of Things will have a significant impact on facilitating China’s Health Silk Road in African countries. However, there are challenges that both regions need to strategically consider before implementing a critical industry such as telemedicine on the continent. These are discussed below.

17.4.1 ICT challenges for telehealth Telemedicine is a hybrid system involving the medical domain as well as the ICT domain in telemedicine solutions and delivery. There is a serious lack of technical persons who can run the day-to-day business of telemedicine (Zhang et al. 2021). To run any telemedicine system properly, trained technical human resources are required. It is a common fact that many physicians and clients cannot fix the technical problems arising from a computer system and ICT network. So, for the proper and smooth functioning of a telemedicine system, the continent needs trained and

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expert human resources to establish stable and continuous communication during teleconsultation (Bali 2018). There are very few institutions in developing countries that train and develop this special group of technicians. In fact, it is very difficult to find a person who has undergone training in medicine and information technology (Zhang et al. 2021; Bali 2018). It is essential to point out that the issue of telemedicine skills is not just a challenge for the African continent. Bali provides Madhya Pradesh (India) as a good example, where there was lack of technical champions in telemedicine (especially in healthcare) and only voluntary champions here and there were visible (Bali 2018), creating challenges. The mismatch between software and hardware is another challenge. Failure of the telemedicine network in India is an important example, where the Indian Space Research Organisation sponsored cameras, television sets and other equipment, as well as software that had not been used for a long time and became outdated and non-functional (Bali 2018). Because repair and replacement of this equipment and software was so costly, the government was not willing to get it repaired and the whole telemedicine network collapsed. The African continent faces the same time gap in acquiring hardware, and the customised software that needs to be developed is so extensive that by the time the software is ready, the hardware becomes obsolete. This mismatch between software and hardware also creates a bottleneck in the development of effective telemedicine solutions (Chitungo et al. 2021; Bali 2018). Notwithstanding the fact that telemedicine technology needs to be upgraded constantly due to rapid technological advancement, many state-of-the-art facilities and equipment (software and hardware) become obsolete and outdated. Complex and often unwieldy technical infrastructure may yield disappointing evaluations until it becomes more ubiquitous and user-friendly (Zhang et al. 2021; Chitungo et al. 2021; Bali 2018). People working with these outdated technologies become demotivated and frustrated, and lose interest in providing services through an old technology system (Bali 2018; Ng & Tan 2018). The shortage of well-educated healthcare professionals is another serious problem. The public system is heavily underfunded, and poor management of healthcare professionals and the inability to provide high-quality training cause low staffing levels. The inadequate infrastructure in sub-Saharan Africa means healthcare staff has to work under difficult conditions. Travel distances are long and the buildings in rural areas are poorly maintained, while disease surveillance, drug supply systems, pharmaceutical management and drug stock management are weak (Space in Africa 2020; Huawei 2018; Huawei 2017). However, it is not all doom and gloom because, through FOCAC, the Huawei Telemedicine Solution has made care-at-a-distance a reality and extends the reach of quality healthcare to remote locations with remote expert consultation, remote medical education, remote monitoring and more (Huawei 2018; Huawei 2017). For example, in Lamu County (a remote area in east Kenya stretching across the

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mainland and over 65 islands), residents have extremely limited access to healthcare. Many medical professionals prefer to work in cities such as Nairobi or Mombasa, and there is a lack of specialists, with just 2 doctors for every 10 000 patients (Space in Africa 2020; Huawei 2018; Huawei 2017). Some of the biggest problems of healthcare systems today are unevenly distributed medical resources, costly services and difficulty in providing training to health workers. It is hoped that in the future, the East African Community members will be able to collaborate closely to enable the sharing of medical experts between facilities through video conferencing, thereby lowering costs and improving care for patients across the region. In Huawei’s socioeconomic estimates, the deployment of telemedicine solutions can afford the economy significant cost savings by reducing travel time by up to 12 hours and travel costs by US$20 per patient (Huawei 2017). These costs are per person; often a patient needs to go with accompanying family members and even stay overnight, incurring greater costs. In fact, frequently the time and financial costs are so high that half of the patients who need referrals for non-emergencies are put off and do not go for their referrals (Huawei 2017). But now Lamu’s residents will have access to care-at-a-distance through the telemedicine project initiated by Huawei, Safaricom and local partners. This project allows local healthcare workers and patients to consult remotely with specialists in towns and cities. The Lamu case demonstrates that access to digital technology may help to improve access to social services such as education and healthcare (Gong & Bingqin 2019), and significantly shape the Health Silk Road – as demonstrated in the Huawei–Lamu case study. Companies such as Huawei can also promote telemedicine through m-health, which is the practice of medical and public health supported by mobile devices such as mobile phones, patient monitoring devices, personal digital assistants and other wireless devices (Gong & Bingqin 2019). M-health has the potential to deliver healthcare to patients in the most remote areas (Crul 2014). Under the FOCAC umbrella, South African mobile communications companies such as Vodacom should be included, as they are already engaged in telehealth. Vodacom provides emergency medical assistance 24 hours a day, with 14 specialised medical assistance services and medical professionals at R29.00 (US$2.07) per month (Vodacom Now 2021).

17.5 Strategies for telemedicine through the Health Silk Road: ICT and energy – Way forward Health is a vital pillar of developmental growth. Strong economic growth in the postCOVID-19 era requires effective health interventions through telecommunications, technology and energy, which, in general, are boosting Africa’s growth (Sharif 2017). The implementation of telemedicine on the continent in partnership with China’s Health Silk Road is possible through a strategised industrial model. Effective energy resources and advanced innovation technology are key to make telemedicine a

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reality (Sharif 2017). Kenya, which has one of the highest energy connections on the continent, is a good example that it is possible. Ethiopia is another country that is implementing wide-scale electrical production to relieve the country’s acute energy shortage and to export to neighbouring countries through its Grand Ethiopia Renaissance Dam, with a projected installed capacity of 5 600 MW. The overall economic activities of health institutions largely depend on the use of advanced communications technology. In developing countries and in many emerging economies, development of telecommunications is urged. This is one of the vital factors to enhance overall economic development and be a part of the global village (WHO 2004). The question is: What is the strategic way forward for both China and the continent to fast-track telemedicine, if any? Moreover, how would this collaboration become a win-win for both sides and contribute to BRICS strategies for continental health? The preceding sections established how China and the continent, through FOCAC, have already passed measures addressing both energy and ICT development. While implementation remains the crux, China has already established a strong unrivalled continental infrastructure footprint on the continent. In addition, China already supports public-health programmes and agendas on the African continent, including the Africa Centre for Disease Control and Prevention (Africa CDC), which are essential for telemedicine to thrive (Tambo et al. 2019). Furthermore, between 2015 and 2018, China issued a series of policy commitments that cut across global health endeavours while aligning such plans with global commitments like the Sustainable Development Goals (among other WHO and UN areas of priority) with the aim of advancing global health in the context of Sino-Africa (Tambo et al. 2019). However, the Health Silk Road cannot implement the required infrastructure on the continent without political will from African countries. African governments will have to be willing to invest from the financial and governance sides. Efficient and reliable ICT, internet and broadband infrastructure can significantly enhance the dynamic digital technology environment in Africa, and ease the adoption and adaptation of the Fourth Industrial Revolution (4IR) technologies for the African citizenry. Telemedicine is the future of medicine and is worth harnessing by Africa (Nduna & Signe 2021; AUDA-NEPAD 2020). Reliable energy is also key to unlocking telemedicine potential, especially since it tends to draw in more international investors to do business, thereby raising the country’s GDP. African countries need to adapt fast to global economic rules that dictate that consistent energy creates an environment attractive to financial investors. To speed up the domestication of telemedicine as process innovation, it remains crucial to pay attention to regulatory framework considerations at the national, regional and continental levels. Policymakers are also encouraged to adequately address the challenges related to human skills capacity and unreliable energy, as well as ethical, privacy and policy challenges that telemedicine may pose to Africans (Nduna & Signe 2021; AUDA-NEPAD 2020).

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Digital infrastructure is even more essential for the Health Silk Road to have an impact on the continent. Compared to large transport and energy projects, digital infrastructure projects tend to take less time to deliver, cost less and are less disruptive to their immediate surroundings (Hillman 2021). It is also important to note how the positive impact of the 4IR and its related emerging technologies will be fully realised through the wide-scale deployment of 5G communication networks in combination with other connectivity solutions. The key functional drivers of 5G will unlock a broad range of opportunities, including the optimisation of service delivery, decision-making and end-user experience in telemedicine (Hillman 2021; Nduna & Signe 2021; Remmert 2020). Technological 5G applications, enabled by a set of key functional features, will both facilitate industrial advances and citizen health experiences, as demonstrated in Table 17.1. Table 17.1 5G potential for telemedicine in Africa 5G objective

Industrial advance

Citizen experience

• Increasing consumer attention on well-being • Increasing cost to meet sociodemographic changes • Increasing demand for quality, patient safety and data storage • Changing consumer behaviour, freedom of choice and alternative service providers

• Remote patient • monitoring • Internet of medical skills/ remote surgery • Image transfer AR/VR-enabled healthcare • Disease management • Wearables and ingestibles • Drone-enabled medical service delivery

• The wide introduction of telemedicine results in increased accessibility to quality healthcare. • Preventive healthcare measures (wearables and ingestibles) lead to decreased long-term healthcare costs. • Identification of high-impact areas.

Source: Hillman (2021); Remmert (2020)

Based on the above table, when designing telemedicine business models, both China and Africa may not only maximise the benefits to society, but may also strengthen the business case for 5G deployment by, for example, attracting sustainability-driven investments or better aligning with government agendas prioritising GDP growth. Moreover, if the Health Silk Road is to be effective, both regions need to determine how to bring in other stakeholders of telehealth such as pharmaceutical companies through proper alignment. Other complex procedures that could be resolved through successful 5G incorporation include cloud-based solutions for data collection and storage as well as special home monitoring devices that, for example, measure blood glucose levels to increase self-treatment (Crul 2014). The other BRICS countries, particularly India, could also contribute significantly to ICT development in Africa. The ICT market in India is estimated at US$180 billion and is projected to grow to US$350 billion by 2025 (India Country Commercial Guide 2020). As indicated earlier in this chapter, the key question then is whether a collaborative strategy with the BRI and Health Silk Road initiative will succeed against the

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backdrop of limitations of energy and ICT that require extensive investment and infrastructure development. First, for China’s health strategies to succeed on the continent, a clear continental health agenda is required. Second, China will need to scientifically establish itself as a credible global health actor. The WHO’s interim recommendations for the use of the inactivated COVID-19 vaccine BIBP developed by Sinopharm (China’s national pharmaceutical group) (WHO 2021) also serve as a great boost for the Health Silk Road, and its BRI objectives on the continent are a good start. However, China will still need to do more because this industry remains very competitive. Given strong relations between China and Africa, joint manufacturing and collaboration in the telehealth industry should be considered. South Africa, as mentioned earlier, already ranks among the 10 largest energy producers in the world and is already engaged in the telehealth industry. Given FOCAC and South Africa’s relations, more headway should be made in research and development cooperation in the health industry, including telemedicine, which could be a win-win for BRICS and African health development. The Extraordinary China–Africa Summit on Solidarity Against COVID-19 was held in June 2020 (Zefei 2021), and acknowledged the establishment of the AU COVID19 Strategy and the appointment of special envoys to mobilise international support for Africa’s efforts to address the economic challenges faced as a consequence of the pandemic (Chinese Ministry of Foreign Affairs 2020). This positive move by the African states demonstrates their capacity to enforce critical health measures such as telemedicine on the continent if necessary. China also reaffirmed its commitment to expedite the construction of the Africa CDC headquarters, which is essential for strengthening health infrastructure on the continent. In the statement, China and Africa state that they: [R]ecognize the importance of digitalization in the post-COVID-19 era and support efforts to speed up the development of Africa’s digital economy and expand exchanges and cooperation on digitalization, information and communication technologies, especially telemedicine, tele-education, 5G and big data. (Chinese Ministry of Foreign Affairs 2020) All these measures are key in promoting continental telemedicine because, increasingly, Africa–China health cooperation will be defined by the need to not merely develop but to develop sustainably (Prinsloo 2021). This is pertinent in the post-COVID-19 era, where for many countries the emphasis is not merely on health recovery and mitigating the short-term economic impact of the pandemic, but also on using this as an inflection point (Prinsloo 2021) to rebuild sustainable development more inclusively.  Finally, based on China–Africa health cooperation, it is critical to draw best practices for BRICS efforts to assist continental telemedicine.

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17.6 Conclusion As indicated in the introduction to this chapter, BRICS countries in 2011 made commitments to assist the continent in meeting its health needs. First, the BRICS countries should use a roadmap such as the BRI, which in this case, could be premised on the African Continental Free Trade Area, and support infrastructure development such as railways, roads, hydroelectric dams and telecommunications. Infrastructure development in Africa is essential for the adoption of hygienic practices, delivery of health services through telemedicine, energy and smart technology through initiatives such as 5G. Second, the BRICS countries and African health players should consider conducting training workshops with critical healthcare stakeholders like healthcare practitioners and decision-makers on the potential role of telemedicine in providing quality healthcare in Africa, among other benefits. This will address issues of limited knowledge and the skills gap, as required for telemedicine. Third, given that the digital divide in Africa skews the chances of the success of telemedicine, especially in rural areas due to unreliable electricity supply, BRICS countries could collaborate with international partners to fast-track energy development. Fourth, the BRICS countries – through their private companies and state-owned enterprises – could promote investments in health-related 4IR technologies that could have great returns in terms of business and, more importantly, health outcomes. Fifth, based on China–Africa health experiences, the BRICS countries should acknowledge that Africa’s telehealth challenges require good governance and a coordinated energy–ICT approach by policy-makers, business leaders, international institutional investors, local actors and civil society for telemedicine to succeed on the continent. In conclusion, the following strategies are recommended: i. African economies will need to increase investments in healthcare and publichealth infrastructure. Without proper public-health infrastructure, particularly energy and ICT, the countries’ readiness to cope with pandemics will continue to be limited. ii. BRICS countries should use telehealth from a practical and strategic perspective, particularly from an energy and ICT perspective. Issues of telemedicine training and technical know-how, along with the sourcing of relevant equipment, need to be facilitated effectively. iii. African countries should invest more financially and politically in energy and ICT infrastructure in order for China’s Health Silk Road to work.

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iv. Countries such as South Africa that are listed in the top 10 energy producers in the world, Ethiopia (which is investing in regional energy infrastructure) and Kenya (which has successfully transformed its energy sector) should be roped in as key testing and implementation points before widespread implementation. v. Digital infrastructure through 5G should be fast-tracked through companies in BRICS countries such as Huawei and MTN, in partnership with African partners, to place African telemedicine at the 4IR level. References

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Mutiso R & Hill K (2020) Why hasn’t Africa gone digital? Accessed 3 December 2020, https:// www.scientificamerican.com/article/why-hasnt-africa-gone-digital/ National Development and Reform Commission (2020) Profiles. Belt and Road Portal. Accessed 15 October 2020, https://eng.yidaiyilu.gov.cn/info/iList.jsp?site_id=CMSydylyw&cat_ id=10076&cur_page=1 Nduna N & Signe L (2021) The Fourth Industrial Revolution and digitalization will transform Africa into a global powerhouse. Accessed 22 November 2022, https://www.brookings.edu/ research/the-fourth-industrial-revolution-and-digitization-will-transform-africa-into-aglobal-powerhouse/ New African (2012) BRICS pledge healthcare support for Africa. Accessed 2 May 2021, http:// https://newafricanmagazine.com/3148/ Ng E & Tan B (2018) Achieving state of the art ICT connectivity in developing countries: The Azerbaijan model of technology leapfrogging. Electronic Journal of Information Systems in Developing Countries 84(2): 1–14 Olinga-Shannon S, Barbegaard SM & Vervest P (2019) The Belt and Road Initiative. Accessed 3 November 2020, https://www.tni.org/en/publication/the-belt-and-road-initiative-bri Powanga L & Giner-Reich I (2019) China’s contribution to the African power sector: Policy implications for African countries. Accessed 15 September 2020, https://www.hindawi.com/ journals/jen/2019/7013594/ Prinsloo C (2021) New dimensions of growth and development in Africa–China cooperation. SAIIA Policy Briefing No 232. Accessed 1 July 2021, https://www.africaportal.org/ documents/21284/Policy-Briefings-232-prinsloo_2.pdf Puliti R (2020) Energy access takes center stage in fighting COVID-19 and powering recovery in Africa. Accessed 20 June 2021, https://www.worldbank.org/en/news/opinion/2020/04/22/ energy-access-critical-to-overcoming-covid-19-in-africa Remmert H (2020) 5G and the future of telemedicine and remote surgery. Accessed 15 September 2020, https://www.digi.com/blog/post/5g-and-the-future-of-telemedicine-remote-surgery Schiffer A (2020) Reframing energy access: Insights from The Gambia. Oxfordshire: Routledge Sguazzin A, Naidoo P & Burkhardt P (2022) The dysfunctional company that’s wreaking South Africa’s economy. Accessed 20 November 2022, https://businessmirror.com.ph/2022/10/02/ the-dysfunctional-company-thats-wrecking-south-africas-economy/ Sharif SH (2017) Telecommunication and its impact over the development of SAARC countries. International Research Journal of Interdisciplinary & Multidisciplinary Studies 3(1): 114–124 Space in Africa (2020) Africa needs telemedicine to overcome its healthcare challenges. Accessed 20 October 2021, https://africanews.space/africa-needs-telemedicine-to-overcome-its-medicalchallenges/ Tambo E, Khayeka-Wandabwa C, Muchiri GW, Liu Y, Tang S & Zhou X (2019) China’s Belt and Road Initiative: Incorporating public health measures toward global economic growth and shared prosperity. Global Health Journal 3(2): 46–49 TanzaniaInvest (2015) Tanzania and Chinese telecom companies sign USD 182 million deal to build landline and mobile networks. Accessed 12 July 2021, https://www.tanzaniainvest.com/ telecoms/tanzania-telecommunications-limited-huawei-technologies-sign-usd-182-milliondeal Tilman H, Ye Y & Jian Y (2021) Health Silk Road 2020. A bridge to the future of health for all. Accessed 15 July 2021, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830380

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Trace S (2020) South Africa’s crippling electricity problem. Accessed 15 July 2021, https://www. opml.co.uk/blog/south-africa-s-crippling-electricity-problem Urbach J (2012) The electricity crisis: From bad to terrible. Accessed 12 December 2020, http:// https://www.moneyweb.co.za/archive/the-electricity-crisis-from-bad-to-terrible/ Vodacom Now (2021) Medical assistance for Vodacom customers. Accessed 1 October 2021, https://now.vodacom.co.za/article/medical-assistance-for-vodacom-customers WHO (World Health Organisation) (1998) A health telematics policy in support of WHO’s HealthFor-All strategy for global health development: Report of the WHO Group consultation on health telematics. Accessed 15 September 2020, https://apps.who.int/iris/handle/10665/63857 WHO (2004) Macroeconomics and health: Investing in health for economic development. Accessed 15 September 2020, https://apps.who.int/iris/handle/10665/42435 WHO (2021) The Sinopharm COVID-19 vaccine: What you need to know. Accessed 2 November 2021, https://www.who.int/news-room/feature-stories/detail/the-sinopharm-covid-19vaccine-what-you-need-to-know Xiang K (2017) Essence, structure, and path to construction of digital silk road from the perspective of digital economy. West Forum 27(6): 11–16 Zefei W (2021) China–Africa cooperation prospers against Covid-19. Accessed 30 January 2022, http://mu.china-embassy.gov.cn/eng/zgxw_1/202101/t20210105_6480090.htm Zeufack A (2021) An analysis of issues shaping Africa’s economic future. Accessed 15 September 2020, https://openknowledge.worldbank.org/entities/publication/2293a0d4-8d89-566e-9628e5cbd62c658d Zhang T, Mosier J & Subbain V (2021) Identifying barriers to and opportunities for telehealth implementation amidst the COVID-19 pandemic by using a human factors approach: A leap into the future of health care delivery. JMIR Human Factors 8(2): e24860

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China–Africa Health Cooperation and its Implications during the COVID-19 Pandemic Zhaoyi Liu

18.1 Introduction International, multilateral cooperation for health and disease prevention and control has been recognised as a vital approach to, and instrument of, the global health agenda (Li 2012: 9). This cooperation is vital because emerging threats and epidemics of infectious diseases can strike anywhere, irrespective of race, religion and financial capacity of any country. These threats have precipitated growing opportunities in the internationalisation of South–South and South–North health cooperation in changing outcomes (Vermander 2008: 21). International bilateral or multilateral cooperation on health development has been evolving rapidly since the late 20th century to meet the world’s growing health needs (Wang & Sun 2014). In addition, in the face of health and epidemiological transitions, collaborative diplomacy on health security has become more vital than ever, saving lives, improving public health and the quality of the environment, and providing long-term benefits for social development. These consequences and issues have raised the need for international cooperation and foreign assistance agreements on direct delivery of services, capacity transfer or implementation of health interventions such as the Global Fund to Fight AIDS, tuberculosis and malaria (State Council of the People’s Republic of China 2011). As globalisation continues, the interest in global health partnerships and foreign assistance effectiveness has grown in importance. These initiatives improve funding for health systems priorities, including scaling up access to essential medicines and service delivery, universal health coverage and building new primary healthcare facilities (Lee & Gómez 2011: 62). International cooperation and aid are of the most effective weapons in reshaping and transforming regional and national health capabilities, which benefit by providing global public-health products, infectious disease control and poverty alleviation (Bliss 2005). In the last three decades, China’s rapid economic growth has made it an important global economy player. In addition to growing foreign trade and investment, China has become an influential stakeholder in the global health sector. Its international health development cooperation initiatives since the 1980s, health privatisation and reforms, and expectations and outcomes from international coalitions aim to

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address the global challenges involving infectious diseases, poverty and inequality. In responding to the global financial crisis, reducing mass unemployment and the public burden of poverty-stricken people with infectious diseases, the pursuit of China’s multilateral cooperation is becoming more important (Françoise 2008: 22). China’s current stable political environment and its commitment to solving native and international health problems have created unprecedented opportunities for bilateral health cooperation between China and Africa. China–Africa strategic health development cooperation has played an extremely important role in strengthening the health systems of African countries, expanding the transfer of medical skills, achieving a wider range of health coverage, and improving high-quality healthcare services for African people. In addition, China–Africa health cooperation is widely recognised as a model of mutual benefit and a win for international cooperation. The major measures of health cooperation proposed and implemented by China are of great significance to the fight against the COVID-19 pandemic in Africa (Liu 2020). China and Africa are communities of common interests and destiny, and their cooperation is conducive to the development of both China and Africa as well as the unity and cooperation of all developing countries.

18.2 Overview of China–Africa health cooperation 18.2.1 Favourable implementation environments for China–Africa health cooperation Compared to Chinese and African cooperative relationships in the energy, mining, infrastructure, manufacturing and transportation sectors, their cooperation in the health sector began relatively late. Therefore, having favourable implementation environments has greatly promoted China–Africa health cooperation, allowing it to achieve today’s current positive situation. Maintaining favourable implementation environments will be an important aspect in the further development of China– Africa health cooperation. Health cooperation between China and Africa is implemented on three levels: (i) the level of African countries themselves, (ii) regional cooperation and (iii) international cooperation. Eight African countries (Côte d’Ivoire, Ethiopia, Ghana, Kenya, Morocco, Malawi, Rwanda and South Africa) have emphasised the importance of national, medium and long-term development plans for the health and medical industry (CCCMHPIE 2020a). For example, Ethiopia has claimed the health industry as one of seven major industries in their national growth and transformation plan. Nigeria marks the health and medical industry as one of its pioneering development industries, and Kenya lists the

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production of pharmaceuticals and medical equipment as a priority industry under the government’s export promotion plan. The efforts of these countries to develop their health and medical industries have increased the possibilities for China–Africa health cooperation. In addition, the COVID-19 crisis is affecting the entire world economy, including Africa. Some key sectors of the African economy experienced a critical slowdown due to the pandemic. For this reason, the demand for China– Africa health cooperation is unprecedentedly high at present. On the level of regional cooperation, under the framework of Agenda 2063, the AU encourages members to strengthen collaboration in the health sector (AUC 2015). The AU approved the start of trading under the Africa Continental Free Trade Area (AfCFTA) on 1 January 2021, the world’s largest free trade area since the establishment of the World Trade Organisation (Tralac 2020). With the COVID-19 pandemic still raging, the AfCFTA will be central to recovery and resilience building with its capital investment, policy coordination and unified market construction (Oxford Business Group 2020). In addition, as the leading regional organisations for regional integration in Africa, the Southern African Development Community (SADC), the East African Community (EAC), the The Common Market for Eastern and Southern Africa (COMESA) all announced the intention to develop health and pharmaceutical industries in their regional development plans. They are all willing to provide policy and financial support (UNOSAA n.d.). These policies and trends have prepared a favourable climate for China–Africa health cooperation. At the level of international cooperation, China’s Belt and Road Initiative (BRI) has attracted widespread attention and active participation from African countries (Kaczmarek 2019). At the end of January 2020, China signed BRI cooperation documents with 44 African countries. In future, it expects to achieve full coverage of the African continent (Business Report 2020). China has been Africa’s biggest trading partner for the 11th consecutive year and is one of the main investment sources for African countries (Embassy of the People’s Republic of China in the Islamic Republic of Iran 2020). On Africa’s side, Agenda 2063 is a long-term plan for the future development of Africa adopted by the AU in 2015. Its aim is to build a new Africa with regional integration, peace and prosperity within 50 years (AUC 2015). China stands ready to work with Africa to enhance synergy between the BRI, Agenda 2063 and the development strategies of African countries to achieve common development and build a closer China–Africa community (Embassy of the People’s Republic of China in the Islamic Republic of Iran 2020). Moreover, these all provide a sound base for future China–Africa health cooperation.

18.2.2 Chinese cooperation policies and mechanisms for China–Africa health cooperation The Forum on China–Africa Cooperation (FOCAC) is an official forum between the  People’s Republic of China and all countries in  Africa,  except  Eswatini (US–

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China Economic and Security Review Commission 2020). FOCAC, founded in Beijing in 2000, plays an important role in developing China–Africa cooperation. In the past two decades, FOCAC has been targeting win-win mutual assistance under a multilateral framework, thereby strengthening cooperation in health, agriculture and food security (FOCAC 2015). Five ministerial conferences and three summits have been held to date (FOCAC n.d.): • 2000 Beijing Ministerial Conference; • 2003 Addis Ababa and Ethiopia Ministerial Conference; • 2006 Beijing Ministerial Conference; • 2009 Sharm el-Sheikh and Egypt Ministerial Conference; • 2012 Beijing Ministerial Conference; • 2006 Beijing Summit; • 2015 Johannesburg Summit; and • 2018 Beijing Summit. The most recent summit, the 2018 Beijing Summit, launched the Beijing Declaration on Building a Closer China–Africa Community with a Shared Future and the FOCAC–Beijing Action Plan (2019–2021). The action plan names key areas of future China–Africa cooperation and introduces eight major actions: (i) industry promotion, (ii) facility connectivity, (iii) trade facilitation, (iv) green development, (v) capacity building, (vi) health and hygiene, (vii) cultural exchanges, and (viii) peace and security. Both the 2015 FOCAC Summit in Johannesburg and the 2018 FOCAC Summit in Beijing emphasised the importance of health cooperation. First, the government will encourage Chinese enterprises to invest in Africa and carry out local health and medicine production to increase the availability of medical services in Africa. Second, China will promote cooperation with African countries in disease control and prevention, such as medical rounds and donations of medicines, to ensure that African people benefit from China–Africa health cooperation. Third, China will promote the construction of Friendship Hospitals, jointly built by China and Africa, and strive to enhance cooperation in staff training, operation management and equipment provision. Finally, China promises to provide Africa with US$60 billion to support the implementation of China–Africa cooperation, especially to provide financial guarantees for the development of key projects (FOCAC 2018). Through FOCAC programmes, China has established a series of other China–Africa health-related cooperation instruments. These instruments include the African Human Resources Development Fund in 2000, the first China–Africa Forum on Traditional Medicine in 2002 and the first Ministerial Forum on China–Africa Health Development in 2013. The ministerial forum was timed to commemorate the 50th anniversary of the first Chinese medical teams sent to Algeria in 1963 (Lin et al. 2016: 83). In addition, FOCAC introduced the second Ministerial Forum on

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China–Africa Health Development in 2015. The first Ministerial Forum on China– Africa Health Development released the Beijing Declaration, which heralded in a new era of cooperation on health between China and Africa. The second Ministerial Forum on China–Africa Health Development adopted the Cape Town Declaration, in which both China and Africa agreed on the framework of implementation for China–Africa health cooperation (Hong Kong et al. 2015).

18.3 Recent achievements in China–Africa health cooperation The cooperation between China and Africa regarding health has a long history and is an important part of China–Africa relations. China’s health assistance to Africa has achieved the most remarkable results and has covered most countries in Africa.

18.3.1 Policy-related health aid and assistance From 2006 to 2009, China and the Comoros jointly launched a malaria-eliminating project to bring the malaria mortality rate in the Comoros down to zero within eight years through artemisinin (Chakir et al. 2017: 387). From 2010 to 2012, China built 27 hospitals in Ghana and Zimbabwe, and sent 43 medical teams to 42 African countries and regions, treating over 5.57 million patients (State Council of the People’s Republic of China 2014). Since Beijing successfully hosted the first China–Africa Ministerial Forum on Health Development in August 2013, the Chinese government has built 38 medical institutions on the African continent and provided 50 batches of medical equipment and supplies to African countries (Li 2015). In 2013, China launched the Brightness Action campaign in 6 African countries and provided free cataract surgery to more than 2 000 patients (State Council of the People’s Republic of China 2014). So far, China has established ophthalmic centres in four African countries and paired with Chinese hospitals in six African countries for medical and health cooperation. It has built Chinese traditional medicine clinics in 10 African countries (where the Chinese medical teams are located) and has organised 100s of health-related training courses for 1000s of African health and medical staff (Li 2015). Schistosomiasis (bilharzia) is a global public-health problem endemic in 78 countries and regions in Asia, South America, the Middle East and Africa (WHO 2020). In 2014, China, Zanzibar and the World Health Organisation (WHO) jointly signed a memorandum of understanding on implementing schistosomiasis prevention and control cooperation projects in Zanzibar (Wang et al. 2019). From 2016 to 2018, China dispatched five teams of experts to the front line of the epidemic area to carry out comprehensive and systematic schistosomiasis control work (Cao et al. 2020). In May 2020, the WHO announced the success of China’s aid to Zanzibar’s schistosomiasis control project (People’s Daily Online 2016).

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In 2014, an Ebola epidemic broke out in West Africa. Comprehensive and pragmatic efforts and assistance by China were once again significant. The Chinese government cooperated with the international community, immediately offering emergency relief to Liberia, Sierra Leone and Guinea – the three West African countries most affected by Ebola. It also offered assistance to 10 neighbouring countries: Ghana, Mali, Togo, Benin, the Democratic Republic of the Congo (DRC), the Republic of Congo, Nigeria, Cote d’Ivoire, Senegal and Guinea-Bissau (UN High-Level Panel on Global Response to Health Crises 2016). With the situation turning more serious, and based on the needs of epidemic regions, China later announced 3 consecutive rounds of assistance, including 4 batches of aid worth US$120 million, more than 1 200 medical personnel and a pledge of an additional US$5 million to the UN (Bah 2018). To help affected countries improve their public-health capabilities, China helped local government to build the Africa Centres for Disease Control and Prevention’s headquarters in Addis Ababa (Ethiopia). China also helped by sending a mobile biosafety laboratory to Sierra Leone and established a permanent P3 experiment laboratory (a containment facility that enables the isolation and manipulation of dangerous biological agents transmitted through aerosols) to improve the country’s ability to detect the Ebola virus (Kargbo 2018). The Ebola epidemic in West Africa from 2014 to 2016 caused a net loss of US$ 6.2 billion in the GDP of the three most affected countries (Vierck 2017). As these countries began to recover and rebuild, China pledged to strengthen health systems, capacity building, infrastructure and equipment support.

18.3.2 Pharmaceutical trade Pharmaceutical trade is one of the main forms of China–Africa health cooperation and has maintained steady growth for many years. The trade volume of medicines between China and Africa increased from approximately US$1.31 billion in 2010 to US$2.931 billion in 2019, more than doubling in 10 years (Lixin n.d.). Egypt, South Africa, Nigeria, Kenya and Algeria are China’s traditional major pharmaceutical trade partners, with annual imports and exports exceeding US$100 million (Jonker & Robinson 2018). China’s pharmaceutical trade partners list has remained stable in recent years. Taking the year 2019 as an example, Egypt ranked first with US$471 million, South Africa followed with US$461 million and Nigeria ranked third with US$368 million (CCCMHPIE 2020a). Restricted by factors such as the development level of the pharmaceutical industry in China and Africa and their comparative advantages, China exports raw medical materials and Western medicines to Africa. These exports accounted for more than 90% of the total China–Africa pharmaceutical trade volume. At the same time, Africa exports herbal medicines, raw materials of Western medicine and medical

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equipment to China, accounting for less than 10% of the total China–Africa pharmaceutical trade volume (Naik 2015). In 2019, China’s largest health-related export products to Africa were Western medicine products at US$1.596 billion, followed by medical device products at US$1.173 billion and Chinese traditional medicine at US$75 million (CCCMHPIE 2020a). Africa’s largest export product to China was herbal products at US$52 million (CCCMHPIE 2020a). China’s pharmaceutical trade with Africa is dominated by enterprises and has developed rapidly. The number of Chinese enterprises engaged in pharmaceutical trade with Africa rose from 5 000 in 2010 to more than 10 000 in 2019 (Sun 2020). In terms of the types of enterprises, private, state-owned and foreign-funded enterprises are the main forces, and private enterprises complete nearly 70% of the trade volume (Liu 2019).

18.3.3 New highlights of China–Africa health cooperation In recent years, a trend can be observed in which China has adjusted its health aid focus towards a more diversified approach aimed at developing local health systems (Wang et al. 2013: 9). This shift may have been motivated by the outbreak of the Severe Acute Respiratory Syndrome (SARS) in China in 2002, which prompted China’s recognition of the importance of public health as a domestic issue and a global public good (Chan et al. 2010). Various forms of health assistance to Africa have brought convenience and benefits to African people, including building hospitals, financing local medicine factories, establishing disease prevention and treatment centres, dispatching Chinese medical teams, training African medical personnel, and providing African countries with medicines and medical supplies. The importance of China–Africa health cooperation is constantly increasing. It is reflected in the increase of the China–Africa pharmaceutical trade and the continuous expansion of China’s pharmaceutical market share in Africa. In 2019, the China–Africa pharmaceutical trade increased by 20.17% year on year, much higher than the 2.21% growth rate of China–Africa trade during the same period (Lixin n.d.). China has become one of the most important sources of medicines in many African countries. For example, Madagascar’s largest source of medicines is China (CCCMHPIE 2020a). African countries are becoming more enthusiastic about health cooperation with China. This cooperation has become an important development decision and trend in many African countries in recent years. For instance, Ethiopia, Egypt, Uganda, Côte d’Ivoire and Mozambique have sent delegations to China to discuss launching health cooperation projects such as the Pharmaceutical Industrial Park to deepen China–Africa health cooperation further (CCCMHPIE 2020a). China–Africa health cooperation has benefited African people and has become a positive international health cooperation case. In the anti-malaria project with

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China mentioned earlier, the Comoros achieved 0 mortality from malaria. China’s anti-malarial products have become the first choice for treating malaria in many African countries. In addition, Chinese pharmaceutical factories in Mali led to a drop of 30% in medicine costs, which greatly increased the affordability of medicines for local people (CCCMHPIE 2020b).

18.3.4 Disputes over China–Africa health cooperation China’s health assistance has been perceived as opportunistic by some and altruistic by others. On the one hand, many Westerners believe that China uses health assistance to Africa to exchange political-diplomatic loyalty and resources. Therefore, the purpose of China’s health assistance to Africa is questionable. On the other hand, many people in China believe that it is wrong that China has launched large-scale health assistance to African countries before its people are completely out of poverty. (1) Opportunistic viewpoint A distinctive feature of China’s health assistance that is often discussed is ‘no strings attached’ and ‘never impose ideology, values, and development models on other countries, especially African countries’, as announced in the China Foreign Aid White Paper in 2011 (People’s Daily Online 2013). Critics in Western countries have expressed concern that despite China’s ‘unconditional assistance’ approach, China has expectations from recipient countries (including diplomatic loyalty on issues such as Taiwan) (Weston et al. 2011). In response to such criticism, the Chinese government has announced that Taiwan is an inseparable part of China and that the People’s Republic of China is the only legal government of China in the world. The One-China principle is China’s solemn stand and position on international foreign affairs. All acts that do not respect this principle and interfere with China’s sovereignty are flagrant violations of international law and the principle of national sovereignty. The Chinese government firmly opposes such behaviour. Some Western countries claim that China’s health assistance to Africa is given to ensure a stable supply of oil and other natural resources (Eisenman 2007). They point out that in 2020, more than 58% of Africa’s total exports to China were primarily mineral products such as crude oil, natural gas and copper. The major exporting African countries to China are South Africa, Sudan, Angola, the DRC and Equatorial Guinea, which are relatively abundant in natural resources and minerals (Miao et al. 2020: 47). China denies that it has any intention of plundering African resources (Ministry of Commerce of the People’s Republic of China 2014). It did not colonise Africa, but is helping Africa to escape its predicament as soon as possible and achieve development.

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Moreover, as evidence of Chinese support, research shows a lack of evidence that China preferentially targets health aid in resource-rich countries (Grépin et al. 2014). The China–Africa relationship is not an exchange of interests but an equal, friendly and mutually beneficial partnership. China–Africa pragmatic cooperation has improved African countries’ infrastructure and people’s lives, greatly benefiting the continent. In this light, African leaders know that China is a true friend. (2) Altruistic viewpoint Doubts about China’s health assistance to Africa sometimes arise within China. Chinese critics claim that China is still a developing country and that tens of millions of poor people in rural areas are struggling to survive. They claim that China has not prioritised eliminating poverty in the country, but has launched a series of largescale health assistance to African countries that is described as ‘irrational altruism’ (Jia et al. 2019). First, China has not relaxed its supervision or promotion of poverty reduction within its own country. In the past 40 years, China’s achievements in poverty reduction have attracted the world’s attention. Statistics show that from 1978 to the end of 2018, the absolute poverty population in China’s rural areas decreased from 770 million to 16.6 million. China’s poverty population decreased overall by more than 700 million (Jia et al. 2019). China has contributed more than 70% to global poverty reduction, becoming the first country to complete the UN Millennium Development Goals (Jia et al. 2019). Second, foreign aid is mutually beneficial. When China provides development support to African countries, Chinese enterprises, products and standards all gain opportunities in ‘going global’. This is in line with the original intention of South– South cooperation and is the ultimate goal of China–Africa cooperation. Third, according to relevant UN regulations, foreign aid is the responsibility and obligation of developed countries. As the largest developing country globally, China’s assistance to other developing countries is commendable and beneficial in building humankind into a community with a shared future and promoting global governance.

18.4 Application of China–Africa health cooperation in the COVID-19 pandemic Humankind has been experiencing its most serious global public-health emergency since the end of World War II – the COVID-19 pandemic. COVID-19 is caused by the Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2). Previously scientists believed that the first outbreak occurred in December 2019 in Wuhan (China), but later studies pointed out that the coronavirus had appeared in European countries such as France before December 2019 (BBC News 2020b).

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The WHO declared the outbreak a public-health emergency of international concern in January 2020 and a pandemic in March 2020. On 15 February 2022, more than 414 million cases had been confirmed, with more than 5 million deaths attributed to COVID-19 (Worldometer 2022). Despite being the first country with a large population to be hit by COVID-19 and the first reported worldwide, China responded effectively to the pandemic from the very beginning. A unique public-health emergency governance model was used. Several mechanisms were involved, including a full government response and accountability, setting up a multisectoral cooperation platform, swiftly scaling up epidemic emergency capacity, and all-encompassing social actions with the engagement of social organisations and citizens in epidemic prevention and control (Ning et al. 2020: 34). China’s model has been proven to be effective. As the epidemic evolves, other countries worldwide can learn from China to build their models for better outcomes in fighting the virus. The pandemic reached Africa on 14 February 2020, with the first confirmed case announced in Egypt (BBC News 2020a). Early estimates were pessimistic about the impact of the pandemic on the African continent. However, the number of COVID19 cases reported to date is still under control, and African countries have adopted active prevention and control measures. Nevertheless, recent viral mutation incidents have brought unexpected difficulties, especially the newly identified virulent strains known as B.1.1.7 in the UK and 501.V2 in South Africa (Saunokonoko 2021). The research and understanding of the coronavirus and its virulent strains is still incomplete. Therefore, the future direction of the pandemic is not yet known. By 20 January 2021, 96.2 million people worldwide had been infected and 2.06 million people had died (Worldometer 2021). On that day, the figures in Africa were 2.3 million confirmed cases and 24 464 deaths (WHO Regional Office for Africa 2021). It should be noted that the number of people tested in Africa was still small, related to the local governments’ capacity and financial status. This meant that the official figures did not fully reflect the actual number of COVID-19 cases in Africa. Nevertheless, the reported number of infections and deaths were shocking, and the positive cases were increasing every day.

18.5 China–Africa health cooperation during the COVID-19 pandemic In the fight against COVID-19, Africa and China again showed fraternal solidarity and the spirit of mutual assistance. In the most difficult period of China’s fight against the virus, the African nations provided valuable material and spiritual support to China to the maximum extent of their abilities. More than 50 leaders of African countries with diplomatic ties to China expressed their sympathy and support, donating money and medical supplies. For instance, Egypt provided 10

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tonnes of medical supplies to China; Equatorial Guinea donated US$2 million to China; Ghana donated 10 000 N95 masks to Wuhan in Hubei, the first major hub of the COVID-19 outbreak in China (FOCAC 2020). Although some donations were not large, Chinese people were moved by the African support and the spirit of friendship. Political parties, media and think tanks in African countries spoke up for China and opposed the stigmatisation of the country throughout the COVID-19 pandemic. The support from African countries warmed the Chinese people’s hearts. Likewise, since the emergence of the first confirmed case of COVID-19 in the African continent, China stood firmly with Africa and took swift action to deliver assistance to African countries. On the one hand, the Chinese government, enterprises and social organisations provided rounds of capital and numerous essential medical supplies to all African countries. These included diagnostic instruments and equipment, face shields, test kits, protective clothing, medical gloves, ventilators, thermometer guns and goggles. Furthermore, China sent 148 anti-epidemic medical professionals to 11 countries, held more than 30 video conferences and conducted nearly 400 training activities in various fields. On the other hand, China called on the international community to increase the strength of its efforts to fight the pandemic in Africa, support the WHO’s work, and actively participate in the G20 debt relief initiative (Zhongshan Daily 2020). In addition, numerous Chinese enterprises and citizens stationed in Africa actively assisted their host countries in fighting COVID-19. As is well known today, one of the most effective measures to control the virus is vaccination, which provides significant protection against serious illness, hospitalisation and death (WHO 2022). Unfortunately, some Western countries hoarded a large number of vaccines and then ‘donated’ or sold vaccines that were on their expiration date to developing countries (Global Times 2022). China responded differently regarding vaccine assistance to developing countries. In fact, in early February 2022, China supplied more than 2.1 billion doses of COVID-19 vaccines to more than 120 countries and international organisations (Xiao 2022). One out of every two doses of COVID-19 vaccine used globally was ‘Made in China’. The first vaccines received by many countries, especially developing countries, came from China. Many Chinese vaccines are still being shipped to every corner of the world in need, continuing to provide important support for the local fight against the pandemic and to protect people’s health.

18.5.1 Extraordinary China–Africa Summit on Solidarity Against COVID-19 On 17 June 2020, the Extraordinary China–Africa Summit on Solidarity Against COVID-19 was successfully held (Xia 2020b). This summit was a special gathering between the leaders of China and African countries to discuss the joint response to COVID-19 and further cooperation concerning the pandemic.

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It was jointly initiated by China and South Africa (as the chair of the AU), with Senegal as the co-chair of FOCAC. President Muhammadu Buhari of Nigeria (along with the presidents of Egypt, the DRC, Algeria, Gabon, Kenya, Mali, Niger, Rwanda, Zimbabwe, the prime minister of Ethiopia and the chairperson of the AU Commission) attended the summit (Nan 2020a). The UN secretary-general and the WHO’s director-general were also invited to the summit. Chinese President Xi Jinping presided over the summit and delivered a keynote speech proposing an array of important initiatives and proposals to chart the course for fighting COVID-19 together. The proposals enhanced China–Africa cooperation, further upholding multilateralism and taking the China–Africa friendship forwards to demonstrate China’s responsibility and proactivity as a major country (Nan 2020b). The Joint Statement of the Extraordinary China–Africa Summit on Solidarity Against COVID-19, released at the summit, became the action agenda for developing China–Africa relations under the new world situation. As the pandemic spread and raged worldwide, threatening people’s lives and health, ‘political viruses’ (People’s Liberation Army Daily 2020), rumours, slander and stigmatisation were also spreading worldwide. Isolationism, unilateralism and populism were reviving, and international fairness and justice faced challenges. Against this background, China and Africa jointly voiced their solidarity and cooperation at the summit to safeguard international fairness and justice. Both China and Africa highly praised and actively supported the WHO in its leading and coordinating role in responding to the pandemic, and opposed the politicisation and labelling of the virus. The summit also emphasised the importance of global cooperation and highlighted that constructing a community of human health is the only way to finally defeat the virus. At the summit, President Xi announced a series of new measures to support African countries throughout the pandemic. These measures included material assistance, material procurement, dispatch of medical expert teams, construction of hospitals, development of vaccines and extension of debt relief periods. China will cooperate with Africa to implement health actions within the framework of FOCAC to jointly build a China–Africa health community. In addition, President Xi pledged that once the development and deployment of the COVID-19 vaccine were completed in China, African countries would be among the first to benefit (Xia 2020a). Currently, China and Africa are also facing the arduous task of stabilising their economy and safeguarding people’s livelihoods due to the impact of the pandemic. With this in mind, the summit strongly supported the establishment of the AfCFTA. It proposed that in the post-pandemic era, China and Africa would have more and deeper cooperation in developing digital, information and communications technologies, especially in terms of telemedicine, remote education, 5G and big data (Tralac n.d.). China will work with Africa to build the BRI into a road of cooperation to promote economic and social recovery, protect people’s health and release development potential.

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This summit demonstrated that China and Africa’s friendly and positive relationship remains solid. No matter how the international landscape evolves, China is committed to strengthening unity and cooperation with Africa.

18.6 Problems exposed by the COVID-19 pandemic and suggestions for future China–Africa health cooperation 18.6.1 Fragile public healthcare system in African countries Africa’s public healthcare system has played an important role in the COVID-19 pandemic, but the pandemic also exposed the system’s shortcomings, highlighting the urgency of strengthening public disease prevention and control systems in African countries. A shortage of medical resources and underinvestment in healthcare infrastructure by governments directly caused the public health departments of some African countries to be overwhelmed by the pandemic. In addition, the shortage of funds and resources made it difficult for these countries to retain well-trained medical workers. In contrast, existing medical workers cannot fully perform their duties, especially during medical runs caused by the pandemic. Therefore, it is fair to say that establishing and improving the public-health systems of African countries under the framework of China–Africa cooperation is of considerable importance. First, there is an urgent need to improve Africa’s overall public health system. So far, most African countries have not established a sound, responsive and effective public disease prevention and control system, which poses a huge challenge to health security in Africa. China should support African countries in improving their public health systems and provide Africa with more assistance in preventing and controlling diseases such as AIDS, malaria, tuberculosis and COVID-19. Such cooperation is vital to enhance Africa’s health capabilities and promote medical services in general. Second, China should assist Africa in promoting the development of public health building, technology and production. China needs to vigorously support the construction of African medical centres for disease control and prevention and continue to build African hospitals. Furthermore, China should emphasise the application of high technology in healthcare and medical services, help Africa develop medicines and vaccines locally, and seek local production to help Africa expand the accessibility of medicines and vaccines in the current and future publichealth crises. Third, China and Africa should work together to cultivate African public-health talents by training more qualified medical personnel on the continent. Over the years, China has trained many medical and health professionals for Africa, but there is still a sizeable gap to meet the needs of African countries. In future, China and

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Africa should strengthen human resource development and promote technology transfer to help African countries achieve self-reliance in public health. Finally, additional China–Africa cooperation models should be gradually developed. China’s aid to Africa should add more investment elements to practise China–Africa cooperation. In this regard, China should motivate Chinese medical enterprises to invest vigorously in Africa and encourage Chinese medical institutions to open hospitals, produce medicines and provide medical services in Africa. Simultaneously, health industry development in African countries should be combined with the Fourth Industrial Revolution and industrialisation. New trends and technologies will be considered and applied in developing the health industry in African countries. These new models will help Africa to improve its medical and healthcare capabilities and promote China’s medical industry joining the African health industry, thereby accelerating the positive development of Africa and deepening China–Africa health cooperation.

18.6.2 Fragile international environment and unfair criticism of China In recent years, China–Africa cooperation has developed rapidly, created worldrenowned achievements and established tremendous international significance and influence. However, major changes have occurred in the international environment since the outbreak of the pandemic, negatively influencing Africa’s anti-pandemic efforts, China–Africa relations and China–Africa cooperation. The world faces the challenges of a global health governance deficit and weak international cooperation. Since the outbreak of COVID-19, the international community has not effectively cooperated in fighting the pandemic but has fallen into disagreement, suspicion and even conflict. Many Western countries are overwhelmed with their pandemic issues. Global health governance cooperation is critically weak and lacks coordination. Furthermore, COVID-19 is the common enemy of all humankind, regardless of country, gender and ethnic background. However, some leading Western politicians are still playing the ‘blame game’ and trying to shirk governmental responsibilities instead of actively controlling and managing the situation in their own countries. Overcoming the pandemic must rely on effective national governance and supportive international cooperation, which all countries should recognise and accept. China’s anti-pandemic support actions in Africa encountered some unfair treatment and criticism. At the beginning of the pandemic, China expressed concern that the virus may spread to areas with weak public-health systems, such as Africa. China then continuously and actively supported the actions of the WHO in Africa. After achieving the staged victory in the prevention and control of the virus in China, the Chinese government increased support to help Africa fight the pandemic. The mainstream public opinion has been positive and constructive concerning the bilateral health cooperation between China and Africa, and the joint battle against

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COVID-19. However, some scepticism and criticism were voiced regarding China’s anti-COVID-19 efforts and China–African cooperation. For example, some Western politicians and the media claimed that the pandemic situation in China had not been transparent and that the government’s incompetence led to failure in the fight against COVID-19 (Geneva et al. 2020). Furthermore, China was accused of using its cooperative stance in the pandemic to increase its influence in Africa, providing substandard medical supplies to Africa and claims were made that the assistance to Africa did not benefit ordinary African people. These examples of stigmatising propaganda were unfortunate, frustrating, disturbing, and had negative influences on many audiences in Africa and China. The extent of mutual knowledge and understanding between the Chinese and African people is limited, which means that they are more susceptible to the influence of external media. Moreover, such biased reporting will surely deepen people’s prejudice against one another. For this reason, there is a need for both China and Africa to promote exchanges and mutual understanding to narrow and bridge the perception gap between China and Africa. In addition, COVID-19 is a new virus that globally threatens all lives. In the face of such a challenge, no single country can stand aloof or politicise the pandemic, as these behaviours will not solve any problem in combating the virus. At this moment, the only correct option is to maintain solidarity and promote international cooperation.

18.7 The BRICS countries in the COVID-19 pandemic During the COVID-19 pandemic, almost all the BRICS countries (excluding China) were the most severely affected countries globally. According to the World Health Organisation (2022), by 15 February 2022, India had 42.69 million confirmed positive cases and 509 000 deaths, ranking 2nd globally in terms of cases. Brazil had more than 27.53 million confirmed positive cases and 638 000 deaths, ranking 3rd in the world; and Russia had 14.48 million confirmed positive cases and 341 000 deaths, ranking 6th in the world. South Africa had 3.64 million confirmed positive cases and 97 000 deaths, making it the most severely affected country in Africa, ranking 20th in the world. Fighting COVID-19 was the most urgent task that the BRICS countries faced. Strengthening health cooperation became the top priority.

18.7.1 BRICS response to COVID-19 (1) China China was the first country to detect the novel coronavirus. At the end of 2019, a sudden epidemic spread quietly in the central Chinese city of Wuhan. The outbreak made China the leader in the number of cases for the first months. However, by 2022, the situation in China has generally stabilised as a result of implementing the ‘dynamic clearing’ policy. When a local COVID-19 case occurs, the group of close

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contacts is quickly screened, and the transmission is quickly interrupted (Zhang 2021). China is the last significant economy still trying to eliminate COVID-19 – a task becoming increasingly difficult in the face of more transmissible variants such as Delta and Omicron. China has relied on vaccines developed by two Chinese companies, Sinovac and Sinopharm; at the beginning of 2022, the vaccination rate in China exceeded 83% (Shan 2022). According to the assessment, China has theoretically achieved a certain degree of herd immunity (Shan 2022). (2) Russia After the virus invaded Russia at the end of January 2020, Russia temporarily suspended the entry of Chinese citizens and restricted air traffic with Iran (TASS 2020). In March 2020, the restrictive measures were expanded in response to the spread of infection. It was forbidden to hold events with more than 50 participants. The borders were closed without exception to all foreign citizens and stateless persons, and traffic was restricted at all border checkpoints (including roads and railways) (Vedomosti 2020). Since June 2020, Russia actively developed vaccines, with the Russian Direct Investment Fund allocating 300 million Rubles to drug manufacturers to make Avifavir viable for treating COVID-19 patients (Osborn 2020). Sputnik V was the world’s first well-studied human, adenoviral, vector-based vaccine that exhibited high virus-neutralising activity against the Omicron strain and was expected to prevent severe illness and hospitalisation (Sputnik V n.d.). Only about half of Russia’s population has been vaccinated so far, even though the country was among the first to roll out COVID-19 shots (Litvinova 2022). (3) India The first case of COVID-19 in India was identified on 30 January 2020. On 24 March 2020, the Indian government (led by Prime Minister Narendra Modi) declared a lockdown across the country. Since then, India experienced a slow-paced increase in infections, especially in urban areas. Following the lockdown, India’s economic crisis developed on two fronts. First, the rising COVID-19 cases particularly affected migrant workers and unorganised labourers sectors, and thereafter, the impact on both the demand and supply sides of the economy led to severe job losses (Torgalkar 2022). When India eased lockdown restrictions to a minimum, the country experienced a significant rise in COVID-19 cases. By early February 2022, India had managed to administer at least two vaccines against COVID-19 to three-quarters of its adult population (COVID Digest 2022). (4) Brazil The first confirmed case of COVID-19 in Brazil was reported on 26 February 2020 in São Paulo. In the first stages of the SARS-CoV-2 pandemic in the country, the infection largely arose from imported cases. Brazil announced a lockdown policy, and a special committee was established composed of 45 scientists to synthesise the available scientific evidence to facilitate decision-making by the control panel.

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It was widely believed that the state of the pandemic in Brazil could be attributed to government failures at the federal level. For instance, in March and April 2020, Jair Bolsonaro’s administration twice changed its health minister. After that, the Brazilian government decided to stop disclosing comprehensive data on COVID-19 cases and deaths (Phillips 2020). By early February 2022, more than 70% of Brazilians had been fully vaccinated (Kirby 2022). (5) South Africa The first case of COVID-19 in South Africa occurred on 5 March 2020. On 15 March, with 61 confirmed COVID-19 cases, President Cyril Ramaphosa declared a national state of disaster and the National Command Council was created to combat the crisis. The South African government subsequently implemented several rounds of lockdowns at different levels and introduced wearing masks and maintaining a safe social distance in the form of laws, which achieved excellent results in preventing the virus from continuing to spread rapidly and widely. However, South Africa’s lockdown policy triggered massive job losses and caused social crises, such as the major looting and rioting events in KwaZulu-Natal in July 2021. Influenced by anti-vaccine ideology in Western countries, the country’s vaccination rate was only 30% (Business Tech 2022).

18.7.2 Inspiration from China–Africa health cooperation for the BRICS countries First, the BRICS countries should help one another and strengthen their health cooperation. Vaccine cooperation was the fundamental path for the BRICS countries to fight COVID-19 and survive the pandemic. With vaccinations undertaken globally, a huge ‘immunity gap’ emerged in Russia and South Africa. Insufficient overall vaccination coverage means insufficient protection of people’s health, which must be corrected as soon as possible since people’s lives and health are extremely important to national development and social integrity. Therefore, the BRICS countries need to strengthen mutual support, share information, exchange experiences, and jointly develop and produce vaccines. Second, BRICS countries should strengthen economic cooperation. Over the past 15 years, economic and trade cooperation has been the strongest endogenous driving force for BRICS cooperation. However, given the impact of the pandemic, the world economy (including BRICS countries) has suffered the worst recession since the Great Depression in 1929. According to statistics of the International Monetary Fund (IMF) in 2020, the GDP growth rates of China, India, Russia, Brazil and South Africa were 2.3%, -7.3%, -3.0%, -4.1% and -7.0% respectively (Wu 2021). The economic situation in most BRICS countries is unsatisfactory. Therefore, expanding trade and investment, conducting scientific and technological innovation, and implementing the BRICS Economic Partnership Strategy 2025 are the only correct way for BRICS countries to achieve national development and reshape the global economy.

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Third, the BRICS countries should learn from one another by increasing peopleto-people and cultural exchanges. An increase in such exchanges between the five countries means the collusion, fusion and integration of different civilisations. These exchanges are conducive to the co-construction and development of civilisation, and can build stronger trust and unity among the BRICS countries. Facing the current wave of unilateralism, conservatism, hegemonism and de-globalisation, the BRICS countries should unite; respect one another’s independence, sovereignty and equality; practice multilateralism; strengthen communication and coordination; and build a community with a shared future for humankind.

18.8 Conclusion China has become the world’s second-largest economy. With this rapid economic development, China’s participation in global affairs has become increasingly powerful. The China–Africa partnership is one of the most important geopolitical and economic relations in the 21st century. For decades, no matter how the international situation has changed, the China–Africa friendship has remained unshakable, passed on from generation to generation. The cooperation between China and Africa is deep and is an integral part of China–Africa relations. However, although China–Africa health cooperation has brought real benefits to both Chinese and African people, some disputes have emerged internationally and within China. A rectified understanding will help to develop China–Africa cooperation, benefit humankind in building a community with a shared future and promote global governance. The COVID-19 pandemic in 2020 was a major test for China–Africa relations and cooperation. After the outbreak, China and Africa supported each other and worked closely together, demonstrating a traditional friendship and solidarity. The pandemic further highlighted the importance and urgency of strengthening health cooperation between China and Africa. Two main problems exposed by the pandemic were the fragile public healthcare systems in African countries and a fragile international environment. To solve these problems, African countries need to establish and improve their public-health systems under the framework of China–Africa cooperation. Western countries need to recognise that COVID-19 is a common enemy to all. Overcoming the pandemic must be based on international cooperation; seeking blame and shirking responsibilities will not help. The application of China–Africa health cooperation in the COVID-19 pandemic is sound practice and a valuable treasure for the world’s people. The BRICS countries have responded differently to the COVID-19 pandemic, and the results are also different. BRICS countries need to draw inspiration from China–Africa health cooperation to strengthen overall health cooperation, increase economic interactions,

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learn from one another and promote cultural exchanges. Through unremitting efforts, the friendship between BRICS countries will last, the comprehensive strategic cooperative partnership will develop, and ultimately a common future for all humankind can be achieved. References

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Liu H (2020) China–Africa cooperation in the ‘post-epidemic era’ has a bright future. Accessed 20 December 2020, http://m.news.cctv.com/2020/08/14ARTIbLtW3SGZflwWAsX diUAA200814.shtml Liu L (2019) From ‘gold digger’ to ‘good friend’: Chinese private enterprises account for 70% of investment in Africa, boosting local industrialization. Accessed 18 January 2021, https://www. yicai.com/news/100247226.html Lixin (n.d.) Information. Accessed 20 January 2021, http://www.sxlxsw.com/index.php?m=Article&a=show&id=45 Miao M, Yushi J & Borojo DG (2020) The impacts of China–Africa economic relations on factor productivity of African countries. Economies 8(2): 47–77 Ministry of Commerce of the People’s Republic of China (2014) Ministry of Commerce holds briefing on measures for administration of foreign aid. Accessed 20 January 2012, http:// english.mofcom.gov.cn/article/newsrelease/press/201412/20141200851923.shtml Naik S (2015) SA exports to China to flourish. Accessed 10 Jan 2021, https://www.iol.co.za/ business-report/economy/sa-exports-to-china-to-flourish-1955734 Nan Y (2020a) Action Agenda Hailed as the Beacon for China-Africa Unity, Cooperation and Development on Khartoum today. Accessed 22 December 2020, http://www.yingyushijie. com/exam/detail/id/6971/category/60.html Nan Y (2020b) The strength of China–Africa solidarity in defeating COVID-19. Accessed 23 December 2020, http://www.yingyushijie.com/exam/detail/id/ 7083/category/60.html Ning Y, Ren R & Nkengurutse G (2020) China’s model to combat the COVID-19 epidemic: A public health emergency governance approach. Global Health Research and Policy (5): 34–38 Osborn A (2020) Russia to roll out its first approved Covid-19 drug next week. Accessed 15 January 2022: https://www.reuters.com/article/us-health-coronavirus-russia-exclusive/ exclusive-russia-to-roll-out-its-first-approved-covid-19-drug-next-week-idUSKBN2381FR Oxford Business Group (2020) Covid-19 and AfCFTA: Africa’s path out of recession? Accessed 18 January 2021, https://oxfordbusinessgroup.com/news/covid-19-and-afcfta-africas-path-outrecession People’s Daily Online (2013) Why does China’s foreign aid not attach conditions? Accessed 25 January 2021, http://theory.people.com.cn/n/2013/1114/c371516-23543865.html People’s Daily Online (2016) WHO: China’s aid to Zanzibar’s schistosomiasis prevention and control project succeeded. Accessed 20 January 2021, http://world.people.com.cn/ n1/2019/0514/c1002-31082792.html People’s Liberation Army Daily (2020) Where is the source of the ‘political virus’? Accessed 25 January 2021, http://www.xinhuanet.com/mil/2020-05/22/c_1210629061.htm Phillips D (2020) Brazil stops releasing Covid-19 death toll and wipes data from official site. Accessed 15 January 2022, https://www.theguardian.com/world/2020/jun/07/brazil-stopsreleasing-covid-19-death-toll-and-wipes-data-from-official-site Saunokonoko M (2021) What the super strain mutants mean for the world in 2021. Accessed 20 January 2021, https://www.9news.com.au/national/coronavirus-will-vaccine-work-againstuk-and-south-africa-super-strains/4deba6e3-a356-4830-9dcc-030e9f69bc79 Shan X (2022) China has theoretically achieved herd immunity goal. Accessed 09 May 2022, https://news.cgtn.com/news/2022-01-08/China-has-theoretically-achieved-herd-immunitygoal-Zhong-Nanshan-16EiPgz1tYs/index.html Sputnik V (n.d.) About Sputnik V. Accessed 15 January 2022, https://sputnikvaccine.com/aboutvaccine/

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State Council of the People’s Republic of China (2011) China’s foreign aid. Beijing: State Council Information Office State Council of the People’s Republic of China (2014) China–Africa economic and trade cooperation. Accessed 18 January 2021, http://za.china-embassy.org/eng/zfgxss/gk/t1224092. htm Sun Z (2020) Botswana is expected to become the ‘new favourite’ of investment in Southern Africa. Accessed 13 Jan 2021, https://www.thepaper.cn/newsDetail_forward_7512049 TASS (2020) Russia introduces a temporary restriction on the entry of Chinese citizens to Russia. Accessed 15 January 2022, https://tass.ru/obschestvo/7800949 Torgalkar V (2022) Long after COVID lockdowns, India’s youth struggle to find work. Accessed 15 January 2022, https://www.aljazeera.com/economy/2022/2/3/after-lockdowns-indias-youthstill-struggling-to-find-work Tralac (Trade Law Centre) (n.d.) Joint Statement of the Extraordinary China–Africa Summit on Solidarity Against COVID-19. Accessed 20 January 2021, https://www.tralac.org/news/ article/14670-joint-statement-of-the-extraordinary-china-africa-summit-on-solidarityagainst-covid-19.html Tralac (2020) African Continental Free Trade Area legal texts and policy documents. Accessed 12 January 2021, https://www.tralac.org/resources/our-resources/6730-continental-free-tradearea-cfta.html UN High-Level Panel on Global Response to Health Crises (2016) Protecting humanity from future health crises: Report of the High-Level Panel on Global Response to Health Crises. New York: UN. Accessed 15 November 2022, https://digitallibrary.un.org/record/822489?ln=en UNOSAA (UN Office of the Special Adviser on Africa) (n.d.) The Regional Economic Communities of the African Union (RECs). Accessed 18 January 2021, https://web.archive. org/web/20210219140833/https://www.un.org/en/africa/osaa/peace/recs.shtml US–China Economic and Security Review Commission (2020) Hearing on China’s strategic aims in Africa. Washington DC: US–China Economic and Security Review Commission. Accessed 25 December 2020, https://www.uscc.gov/sites/default/files/2020-06/May_8_2020_ Hearing_Transcript.pdf Vedomosti (2020) Foreigners will be banned from entering Russia from March 18. Accessed 15 January 2022, https://www.vedomosti.ru/politics/news/2020/03/16/825338-inostrantsam Vermander B (2008) Taiwan after the elections. Lettre du Centre Asie 21 Vierck L (Ed.) (2017) The governance of disease outbreaks. International health law: Lessons from the Ebola crisis and beyond. 1st Edition. Baden-Wuerttemberg: Nomos Verlagsgesellschaft. https://doi.org/10.5771/9783845286006 Wang X & Sun T (2014) China’s engagement in global health governance: A critical analysis of China’s assistance to the health sector of Africa. Journal of Global Health, 4(1): 010301 Wang XY, He J, Juma S, Kabole F, Guo J, Dae J, Li W & Yang K (2019) Efficacy of China-made praziquantel for treatment of schistosomiasis haematobium in Africa: A randomized controlled trial. PLoS Neglected Tropical Diseases 13(4): e0007238. https://doi.org/10.1371/ journal.pntd.0007238 Wang Y, Fan X & Cao G (2013) Strengthening health systems: New course in China–Africa health collaborations. Chinese Journal of Health Policy (6): 8–14 Weston J, Campbell C & Koleski K (2011) China’s foreign assistance in review: Implications for the United States. US–China Economic and Security Review Commission. Accessed 17 December 2020, https://www.uscc.gov/sites/default/files/Research/9_1_%202011_ ChinasForeignAssistanceinReview.pdf

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WHO (World Health Organisation) (2020) Schistosomiasis. Accessed 18 January 2021, https:// www.who.int/news-room/fact-sheets/detail/schistosomiasis WHO (2022) Coronavirus disease (COVID-19): Vaccines. Accessed 15 January 2022, https:// www.who.int/emergencies/diseases/novel-coronavirus-2019/question-and-answers-hub/q-adetail/coronavirus-disease-(covid-19)-vaccines?adgroupsurvey={adgroupsurvey}&gclid=Cj0 KCQiAu62QBhC7ARIsALXijXSuWAcI22p 3Ksfa5Oz_lZ4H2CRrpAA2W61YuowQM40XZvnpC4DMP4aAmS0EALw_wcB WHO Regional Office for Africa (2021) Alive: Media briefings on COVID-19. Accessed 20 January 2021, https://www.afro.who.int/health-topics/coronavirus-covid-19 Worldometer (2021) Alive: Coronavirus cases. Accessed 20 January 2021, https://www. worldometers.info/coronavirus/ Worldometer (2022) Alive: Coronavirus cases. Accessed 15 February 2022, https://www. worldometers.info/coronavirus/ Wu H (2021) Guiding the direction of BRICS cooperation in a changing world. Accessed 15 January 2022, https://theory.gmw.cn/2021-09/14/content_35162410.htm Xia H (2020a) Defeating COVID-19 with solidarity and cooperation: Keynote speech by President Xi Jinping at the Extraordinary China–Africa Summit on Solidarity Against COVID-19. Accessed 04 January 2021, http://www.xinhuanet.com/english/2020-06/18/c_139147084.htm Xia H (2020b) Extraordinary China–Africa Summit on Solidarity Against COVID-19 starts, Xi chairs. Accessed 20 January 2021, http://www.xinhuanet.com/english/202006/17/c_139146645.htm Xiao X (2022) Join hands to fight the epidemic and build an immune barrier. Accessed 15 January 2022, http://cpc.people.com.cn/n1/2022/0214/c64387-32351320.html Zhang J (2021) What is ‘dynamic reset’? Why can China always insist on ‘dynamic clearing’? Accessed 15 January 2022, http://www.stdaily.com/index/kejixinwen/2021-12/11/ content_1238302.shtml Zhongshan Daily (2020) Medical road without boundaries. Accessed 20 January 2021, http:// www.zsnews.cn/news/index/view/cateid/39/id/650050.html

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Resilience of Health Systems to Disease Outbreaks: COVID-19 – A Comparative Analysis of South Africa and Other BRICS Countries Using the Global Health Security Index Charles Hongoro, Emmanuel Sekyere and Wilfred Lunga

19.1 Background COVID-19 and other recent disease outbreaks, such as Influenza A, Ebola, Nipah and Zika, have brought to the fore the fragility of health systems around the world, irrespective of income category or level of development of countries. In the case of COVID-19, which entered various phases in most parts of the world, the worst hit were developed countries in the Global North and Europe which had more sophisticated health systems than emerging, developing and less developed countries. Although a few developing countries like Brazil, India and Russia also had high levels of infection, China (the purported origin of the virus) recovered at a rather fast pace but was hit again with outbreaks in cities like Wuhan in 2022. In Africa, the pandemic did not have the same severe effect in terms of infections and deaths as expected. This has been attributed to several factors that have not been scientifically proven, such as the hot climate, herd immunity to malaria fever, and the role of indigenous knowledge systems (IKS) and traditional medical remedies (Sanogo 2020). A typical example is Artemisia Annua, which is being tested for its efficacy and side effects as a potential treatment for COVID-19 in Brazzaville with the support of the World Health Organisation (WHO 2020). However, it is suspected that the absence of comprehensive mechanisms for testing and contact tracing due to poor physical and health infrastructure could be the reason for the low levels of known COVID-19 incidence, recoveries and deaths in Africa and other developing or less developed regions (Soy 2020). The exception in Africa is South Africa, where infections exceeded the one-million mark; several phases of the pandemic emerged with unique strains of the virus; and the death toll kept rising, with official estimates of deaths suspected to be more mooted than the reality. Several explanations and theories have been given as to why South Africa experienced severe challenges of the COVID-19 pandemic compared to other countries. First is that the relatively more sophisticated health system allowed for better testing, tracking and treatment of cases, unlike in other countries where more cases remained unidentified and testing coverage was low. Second is that access to quality healthcare in South Africa is highly differentiated, such that the most vulnerable who relied on public services did not receive the same attention at the beginning of the pandemic. Therefore, the challenges and resilience of South Africa’s health system

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are comparable to those of other emerging market economies (including other BRICS countries), most of which were also struggling with controlling the COVID19 pandemic and whose populations had similar vulnerability profiles arising from existing social determinants of health. The framework for this comparative analysis is the Global Health Security (GHS) Index. The GHS Index analyses the quality of health systems and their levels of resilience to disease outbreaks. It is the first comprehensive assessment of health security and other capabilities for 195 countries that are party to the International Health Regulations of 2005 (AfDB 2019). It is basically a tool for assessing the ability of countries to prevent, detect and respond to epidemic outbreaks. The GHS Index was built on the WHO’s Joint External Evaluation (JEE) foundational assessment tool of prevention, detection and response by adding an assessment of health systems, compliance to international norms and the risk environment. Thus, it does not only assess the preparedness of health systems to mitigate disease outbreaks, but also the socioeconomic and political factors aggravating the vulnerability of countries to epidemic outbreaks (Ravi et al. 2020). These aggravators of systemic risk are enhanced by the rapid pace of global interconnectivity, climate change, increasing political instability, urbanisation and rapid technological advancements that make it faster, easier and cheaper to create and engineer pathogens (Ravi et al. 2020). In this regard, the GHS Index serves as an appropriate framework that provides a universally acceptable basis for comparing health systems and their underlying systemic drivers of resilience or vulnerabilities to pandemics in countries and regions. This chapter first presents an exposition of the conceptual framework, being the GHS Index, with aspects of it and level of granularity in its application to the countries in focus. Then, using the GHS, a comparison between the resilience of health systems in South Africa and other BRICS countries is made. Using COVID19 as the test case for the comparison, the chapter explores the implications for the control of disease outbreaks and the development of resilient health systems going forward. The chapter concludes with policy recommendations.

19.2 Conceptual framework: The GHS Index and the One Health concept 19.2.1 GHS Index The GHS Index was designed by the Nuclear Threat Initiative and the John Hopkins University Centre for Health Security. Additional methodological, research and analytical expertise was provided by the Economics Intelligence Unit. The GHS framework is designed across six categories.

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Figure 19.1 Categories of the GHS Index Prevention

Risk environment

Detection and reporting

Compliance and international norms

Risk environment

Health system

Source: AfDB (2019); Ravi et al. (2020)

Prevention. This category focuses on the prevention of the emergence of pathogens, especially those that could lead to significant public-health risk consistent with the criteria for a public-health emergency of international concern. Such risk includes antimicrobial resistance, zoonotic diseases, biosecurity, biosafety, dual-use research, and a culture of responsible science and immunisation. Detection and reporting. The capacity of the health system of countries to detect and report epidemics of international concern is captured by this category. This includes access to and quality of laboratory systems in countries; surveillance and reporting in real time; epidemiology workforce; and the integration of data between animal, human and environmental health dimensions. Rapid response. Indicators in this category relate to countries’ ability to respond rapidly to pandemic outbreaks. This refers to how prepared a country’s systems are for emergencies, the capacity and quality of response planning, operation and implementation, the quality and efficacy of communications between health workers, and the infrastructure between relevant authorities and key stakeholders. Health system. This category assesses the capacity of the health infrastructure in countries, such as clinics, hospitals, community health centres, access to health facilities, communication network with health workers during an emergency, infection and medical emergency control practices.

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Compliance with international norms. This category relates to international health regulation standards, reporting, compliance and disaster risk reduction requirements. These include several cross-border agreements on public-health emergency response to epidemic outbreaks. Risk environment. Risks covered in this category include political and security risk; socioeconomic resilience; infrastructure adequacy; environmental risks; and publichealth vulnerabilities affecting a country’s ability to prevent, detect and respond to an epidemic outbreak to constrain regional spillover effects. These 6 categories are broken down into 34 indicators, 85 subindicators and 140 research survey questions. A country’s overall GHS Index score is the weighted sum of these six categories. The GHS Index is scored between 0 and 100, with 100 representing the most favourable conditions and 0 the least. Scores from 0 to 33.3 are interpreted as low, from 33.4 to 66.7 as moderate, and above 66.7 as high. Each category is normalised and weighted. The weights used in the GHS Index were determined by an international panel of experts, and reflect the relative importance of each indicator and category. These are, however, subjective and can be altered as deemed necessary by users.

19.2.2 One Health concept The dynamics between the six categories of the GHS Index are further underlined by the One Health concept, which guided the weights attached to each indicator in each category by the international panel of experts. The One Health concept highlights that human, animal and environmental health is intricately interrelated and therefore should be addressed together to prevent the spread of infectious diseases. This is because research has shown that 67% of known pathogens and 75% of newly emerging pathogens are zoonotic in nature – transferred from animals to humans. The use of common land and natural resources by both humans and animals, the human–wildlife–livestock interface, serves as sources and channels of zoonotic pathogenic infections. This also calls for transnational linkages between the health systems of countries because animals and pathogens are transnational in nature and movement.

19.3 Comparative analysis of health security in South Africa and other BRICS countries The level of health security in South Africa is compared with other BRICS countries using the criteria of the GHS Index and its categories. Table 19.1 details the GHS Index score of each country and its rank out of 195 countries.

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Table 19.1 BRICS scores and ranking (2019) Country

Score out of 100

Rank out of 195 countries

Brazil

59.7

22

South Africa

54.8

34

China

48.2

51

India

46.5

57

Russia

44.3

63

Source: AfDB (2019)

Table 19.1 shows that Brazil had the highest GHS Index score and global score among the BRICS countries, followed by South Africa, China, India and Russia – in that order. This outcome is further explained in the scores of the six categories and their respective weights, as illustrated in Table 19.2.

19.3.1 Prevention Brazil’s superior health system resilience, compared to its BRICS partners, is driven by several factors. In the prevention category, Brazil registers a score of 83.3 with respect to resistance against microbial infections. This score is matched by China and represents the highest score for this indicator among the BRICS countries. This is followed by South Africa, India and Russia – in that order. In the case of the transfer of pathogens from animals to humans (zoonotic diseases), Brazil has the most prevention mechanisms in place, followed by South Africa. This reflects a lower level of common use of land and natural resources such as water bodies, as well as lower levels of human–wildlife–livestock interactions. Russia has the lowest level of prevention of zoonotic diseases, followed by India and China. Wuhan in China is argued to be the source and epicentre of the COVID-19 pandemic, believed to have emanated from zoonotic sources. Among the BRICS countries, Brazil also has the highest level of biosecurity, dual use of research and culture of responsible science, and significantly high level of immunisation (second only to Russia). However, Brazil ranks second-lowest, after India, in biosafety. This is an area for redress by policy-makers in Brazil to further strengthen the health system’s resilience to pandemic outbreaks. Although Russia has the highest immunisation coverage against diseases, moderate levels of resilience against microbial infection and acceptable levels of ensuring biosecurity and biosafety, an area in which it is highly vulnerable is the transmission of pathogens from animals to humans.

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Table 19.2 GHS comparison between South Africa and other BRICS countries (2019) Country

Brazil

Russia

India

China

South Africa

Prevention

59.2

42.9

34.9

45.0

44.8

Antimicrobial resistance

83.3

41.7

50.0

83.3

58.3

Zoonotic disease

56.3

15.3

27.8

26.7

53.9

Biosecurity

48.0

37.3

24.0

56.0

8.0

Biosafety

25.0

50.0

0

50.0

50.0

Dual use of research and culture of responsible science

33.3

0

0

0

0

Immunisation

98.2

99.1

92.1

50.0

84.2

Detection and reporting

82.4

34.1

47.4

48.5

81.5

100.0

58.3

83.3

66.7

100.0

Real time surveillance and reporting

81.7

46.7

48.3

68.3

78.3

Epidemiology workforce

50.0

25.0

50.0

50.0

50.0

100.0

0

0

0

100

Rapid response

67.1

50.1

52.4

48.6

57.7

Emergency preparedness and response planning

87.5

25.0

12.5

25.0

0

0

50.0

100.0

0

0

Laboratory systems

Data integration between human/animal/ environmental health sectors

Exercising response plans Emergency response operation

33.3

0

33.3

33.3

33.3

100.0

100.0

0

0

100.0

Risk communications

75.0

25.0

75.0

100.0

100.0

Access to communications infrastructure

87.0

90.2

54.3

83.5

86.0

100.0

100.0

100.0

100.0

100.0

Health systems

45.0

37.6

42.7

45.7

33.0

Health capacity in clinics, hospitals, and community care centres

55.6

47.3

29.4

38.3

52.6

Medical countermeasures and personnel deployment

33.3

33.3

0

33.3

33.3

Healthcare access

44.3

46.1

29.6

31.4

48.8

0

0

100.0

0

0

50.0

50.0

50.0

100.0

0

100.0

50.0

50.0

75.0

75.0

Linking public health and security authorities

Trade and travel restrictions

Communications network and healthcare workers during a health emergency Infection control practices and availability of equipment Capacity to test and approve new medical countermeasures

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Country

Brazil

Russia

India

China

South Africa

Compliance with international norms

41.9

52.6

47.7

40.3

46.3

IHR reporting compliance and disaster risk management

50.0

50.0

50.0

50.0

50.0

Cross-border agreements on public and animal health emergency

50.0

100.0

0

100.0

50.0

International commitments

46.9

50.0

100

50.0

50.0

JEE and performance of veterinary services pathway

250

0

25.0

0

50.0

Financing

16.7

50.0

50.0

16.7

16.7

Commitment to sharing genetic and biological data and specimens

66.7

66.7

66.7

33.3

66.7

Risk environment

56.2

51.4

54.4

64.4

61.8

Political and security risk

71.4

35.7

67.9

57.1

78.6

Socioeconomic resilience

68.1

64.4

77.7

75.8

76.6

Infrastructure adequacy

33.3

58.3

33.3

75.0

58.3

Environment risks

54.8

45.9

62.5

62.8

56.9

Public health vulnerability

52.7

54.2

32.5

53.0

38.3

Source: AfDB (2019)

This is as a weak spot in the resilience of Russia’s health system to pandemic outbreaks, considering the frequency of outbreaks with global repercussions emanating from zoonotic sources such as Ebola in East Africa and the ongoing COVID-19 pandemic. Similarly, India and China register low indicators with respect to the transmission of zoonotic diseases. With the COVID-19 pandemic purportedly emanating from China, it implies that Russia and India serve as potential weak spots in global attempts to strengthen the resilience of health systems against public-health emergencies of international concern. Among the BRICS countries, China also registers the lowest level of immunisation coverage. The main weakness in South Africa’s health system is its extremely low levels of biosecurity. This aligns with the absence of dual-use research and a culture of responsible science. This makes South Africa highly vulnerable to deliberate or accidental outbreaks of pandemics of biological sources. However, the experience with COVID-19 began to show a reversal of this, as the Ministerial Technical Team on COVID-19 demonstrated how research evidence was driving decision-making. For example, the AstraZeneca vaccine was put on hold given its inability to deal with the new COVID-19 variant as informed by scientific research.

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19.3.2 Detection and reporting Brazil and South Africa register high levels of real-time surveillance and reporting of disease outbreaks, and excellent integration of data between humans, animals and environmental health sectors. This explains their relatively stronger preventive mechanisms against zoonotic diseases compared to their BRICS counterparts. All the BRICS countries, apart from Russia, have moderate levels of epidemiological expertise and adequate laboratory systems for scientific enquiry to detect and report disease outbreaks.

19.3.3 Rapid response All the BRICS countries impose trade and travel restrictions effectively in response to disease outbreaks as and when required. There is a high level of access to communications infrastructure in all the BRICS countries, which ensures that the level of risk is transparently and clearly communicated to the general public, except in the case of Russia where transparency is a systemic challenge in governance in general and not only in the area of health. This is reflected in the high indicators registered by BRICS countries in travel and trade restrictions, access to communications infrastructure and risk communications categories. However, Russia, Brazil and South Africa have strong links between the public-health and security authorities, while India and China have none. Russia, India and China have low levels of emergency preparedness and response planning. Brazil, China and South Africa have no emergency response plans for pandemics of global proportions, while Russia has no emergency response operations for tackling such outbreaks. Brazil, however, leads with a high indicator for emergency preparedness and response planning, and a moderate indicator for emergency response operations.

19.3.4 Health system China leads overall in this category, driven by excellent infection control practices and availability of equipment, and strong capacity to test and approve new medical countermeasures. Brazil follows closely with a higher level of health capacity in clinics, hospitals and community care centres, coupled with excellent capacity to test and approve new medical countermeasures. South Africa leads its BRICS counterparts in terms of access to health and has strong capacity equal to China when it comes to testing and approving new medical countermeasures. However, South Africa has no infection control practices or available required equipment to control the spread of infections.

19.3.5 Compliance with international norms All the BRICS countries are signatory to, and committed to complying with, international health regulations reporting and disaster risk management standards. They are equally committed to sharing genetic and biological data and specimens; 392

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however, China falls short of this latter indicator compared to its BRICS counterparts, as indicated by its lower score. Although a global phenomenon among the BRICS countries, financing to ensure health security is a stronger challenge for Brazil, China and South Africa. India has the highest level of international commitment in relation to health security, emanating from the fact that India manufactures approximately 60% of the world’s vaccines. India and China have both committed to export COVID-19 vaccines to other nations, sometimes donating these vaccines and, on occasion, in return for payment to local manufacturers. Russia and China lead their BRICS counterparts in terms of cross-border agreements on public and animal health emergency.

19.3.6 Risk environment The risk environment category illustrates whether a country’s broader environment makes it more vulnerable or more resilient to pandemic outbreaks. With political and security risk, South Africa, Brazil and India score much higher than Russia and China, whose governance systems are not exactly participatory, with several restrictions on civil liberties and freedom of rights. Countries with higher levels of political and security risks register lower scores. India emerges as more socioeconomically resilient than its BRICS counterparts. This can be attributed to the close coordination maintained through regular interaction between relevant government departments and vaccine manufacturers to ensure adequate availability of COVID-19 vaccines for national vaccination programmes. South Africa comes second, explained by its extensive social protection schemes, which have the potential to cushion households from the adverse socioeconomic impact of pandemic outbreaks. China emerges third on socioeconomic resilience, attributable to its socialist policy positioning in which the state provides. China’s infrastructure is the most adequate among the BRICS countries, followed by South Africa and Russia. Russia poses the highest environmental risk among the BRICS countries and consequently scores lowest on this indicator. India and South Africa’s public-health systems are the most vulnerable to pandemic outbreaks among the BRICS countries and therefore register the lowest scores on this indicator.

19.4 Case study 1: Resilience of health systems during the COVID19 pandemic in BRICS countries The 2019 GHS Index reported that none of the 195 countries covered were fully or adequately prepared for a global disease outbreak. However, capabilities varied between countries. The average overall score for all 195 countries covered by the GHS Index was 40.2 out of a maximum score of 100. For high-income countries, which were 61 in number, the average was 51.9. In addition, 116 high- to middleincome countries covered by the GHS Index scored 50 or less. In the case of Africa, only 21 out of 54 nations were capable to some extent of handling pandemic outbreaks of global proportion such as COVID-19. The 33 countries left were found 393

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to have health systems that were totally incapable of handling a pandemic. Areas for redress in BRICS countries differ and require different policy responses. Table 19.3 details some of these issues per country. These vulnerabilities of the health systems of BRICS countries affected their ability to manage the COVID-19 pandemic. Table 19.3 Summary of issues for policy redress in BRICS countries Country

Health security areas for policy redress

Brazil

Biosafety, epidemiology workforce, exercising response plans, community and healthcare workers during pandemic, financing for health security, poor infrastructure

Russia

Data integration between human, animals and environment health sectors; zoonotic diseases transmission; epidemiology workforce; emergency preparedness and response planning and operations; risk communications; access to healthcare; compliance with JEE/VSP standards; political and security risk

India

Biosafety; culture of responsible science; zoonotic disease transmissions; data integration between humans, animals and environment health sectors; linking public health and security authorities; medical countermeasures and personal deployment; public-health vulnerability

China

Culture of responsible science; data integration between human, animals and environment health sectors; zoonotic disease transmission; exercising response plans; linking public health and security authorities, communication network and healthcare workers during pandemic; financing for health security; compliance with JEE/VSP standards

South Africa

Biosecurity, culture of responsible science, emergency preparedness and response planning, exercising response plans, infection control practices and availability of equipment

Source: AfDB (2019)

Other issues that present as shortfalls within the BRICS countries relate to enhancing resilience; disaster preparedness for effective response; and building back better in recovery, rehabilitation and reconstruction. According to the Sendai Framework, ‘[d]isasters have demonstrated that the recovery, rehabilitation and reconstruction phase needs to be prepared ahead of a disaster such as the COVID-19 pandemic’ (UNDRR 2015). As for Brazil and South Africa in particular, it is unclear whether they started planning for post-pandemic actions before the outbreak of COVID-19. There is no announcement of a business continuity plan and budget for sustainable development or for enhancing resilience against public-health or environmental hazards. Early warning is key to responding to any type of hazard, and biological hazards are no exception. A proper early warning system for biological hazards is not in place. There was also lack of a robust public-health system in place to plan for sufficient personal protective equipment, diagnostics and therapeutic equipment. These resources were required when the healthcare system was overwhelmed at the peak of the curve. Governments turned stadiums and open spaces into field hospitals as a desperate measure. Misinformation about the pandemic was pervasive on most social platforms, and this created unnecessary fear and panic. The enforcement of the lockdowns was also marred by the use of excessive force by security agents charged with enforcing the lockdown regulations.

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Measures put in place to limit the spread of COVID-19 had a considerable impact on other disease areas, including both infectious and non-infectious diseases. There were limited clinical trials in Brazil and South Africa compared with higherincome countries. Healthcare concerns are presented in Box 19.1. Box 19.1 • Elective surgeries were stopped, with hospitals typically only dealing with emergencies. • Overall, hospitals and clinics appeared to be functioning, although support staff, such as human resources, finance, and some other allied staff, had been sent home for lockdown to avoid transmission. • Access to health facilities was a major challenge due to the lack of public transportation during lockdowns. • The decrease in HIV testing as well as collection of antiretroviral drugs due to fears of contracting COVID-19 were of concern.

19.5 Comparative analysis of health resilience in South Africa versus other African countries The GHS Index indicates that only 21 out of 54 African nations are capable to some extent of handling pandemic outbreaks of global proportion such as COVID-19. The 33 countries left were found to have health systems that were totally incapable of handling a pandemic. Table 19.4 shows the scores and rank of the African countries in the index. Table 19.4 African countries' scores and ranking in the GHS Index (2019) Score

Rank out of 195 countries

Rank among African countries

Algeria

23.6

173

35

Angola

25.2

170

34

Benin

28.8

150

26

Botswana

31.1

139

21

Burkina Faso

30.1

145

24

Burundi

22.8

177

36

Cape Verde

29.3

146

25

Cameroun

34.4

115

15

Central African Republic

27.3

159

31

Chad

28.8

150

26

Congo Brazzaville

23.6

173

35

Country

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Country Democratic Republic of the Congo Cote D’Ivoire Egypt Equatorial Guinea Eritrea Eswatini Ethiopia Gabon The Gambia Ghana Guinea Guinea Bissau Kenya Lesotho Liberia Libya Madagascar Malawi Mali Mauritania Morocco Mozambique Namibia Niger Nigeria Rwanda Senegal Seychelles Sierra Leone Somalia South Africa South Sudan Sudan Tanzania Togo Tunisia Uganda Zambia Zimbabwe Source: AfDB (2019)

396

Score

Rank out of 195 countries

Rank among African countries

26.5

161

30

35.5 39.9 16.2 22.4 31.1 40.6 20.0 34.2 35.5 32.7 20.0 47.1 30.2 35.1 25.7 40.1 28.0 29.0 27.5 43.7 28.1 35.6 32.2 37.8 34.2 37.9 31.9 38.2 16.6 54.8 21.7 26.2 36.4 32.5 33.7 44.3 28.7 38.2

105 87 195 178 139 84 186 117 105 125 186 55 144 111 168 86 154 147 157 68 153 104 132 96 117 95 133 92 195 34 180 163 101 129 122 63 152 92

13 7 40 37 22 5 39 16 13 18 39 2 23 14 33 6 29 26 30 4 28 12 20 10 16 9 21 8 40 1 38 32 11 19 17 3 27 8

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The five highest ranked countries in Africa in the GHS Index are South Africa, Kenya, Uganda, Morocco and Ethiopia – in that order. Figure 19.2 shows how they fare in terms of the categories of the GHS Index. Although these are the highest ranked African countries in the GHS Index, their health systems still have big challenges to address. In the prevention category, all five countries rank from moderate to low, indicating weak resilience of health systems to pandemics. Apart from Ethiopia, the rest of the five countries rank from moderate to high in their ability to detect and report pandemic outbreaks. This is because real-time surveillance and reporting are a challenge in Ethiopia, neither are there systems that integrate data between humans, animals and the environment. All five countries, except Kenya, can respond to pandemic outbreaks with moderate levels of urgency. The quality of health systems in all five countries is low, especially Uganda. Among these five countries, Morocco is the least compliant with international health-related norms. South Africa and Morocco have less risky environments. driven by relatively better political stability, socioeconomic resilience, infrastructure and lower environmental risks. All five countries perform quite poorly on publichealth vulnerabilities in the environmental risk category. Figure 19.2 Five highest ranked African countries in the GHS Index (2019) 90 80 70 60 45.9 50 44.8 42.7 36.8 40 34.6 30 20 10 0 Prevention

South Africa

81.5 68.6

56.8 50.3 33.7

57.7 56.5 51.5 44.7 37.1

Detection and reporting Kenya

Uganda

Rapid response

Morroco

67.1 65.4 65.8 46.3 33

29.5 29 20.7 11.6

Health systems

32.7

61.8

55.9 40.7 35.5 33.6

Compliance with Risk environment international norms

Ethiopia

Source: AfDB (2019)

South Africa’s superiority compared to the other five African countries in the GHS Index is driven by the fact that the country can detect and report new outbreaks faster than other African countries and has better systems in place to respond faster to outbreaks. This is because South Africa fares better than its counterparts in terms of access to modern laboratory systems; real-time surveillance and reporting; and the integration of data between humans, animals and the environment. South Africa also has a useful level of capacity in epidemiology compared to its counterparts (UNDRR 2015). South Africa’s health systems are relatively more superior to its African counterparts, driven by a superior capacity to test and approve new medical countermeasures; good levels of capacity in clinics, hospitals and community health centres; and moderate access to health service delivery. South Africa’s level

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of compliance with international norms is, however, not on par with other African countries like Kenya, Uganda and Ethiopia. In addition to better compliance to international norms, Kenya (which comes next to South Africa) has significantly strong capabilities in detecting and reporting pandemic outbreaks and exceeds South Africa in its ability to prevent disease outbreaks. However, as indicated by the health system category, Kenya has less efficient health systems, which translates into a slower pace of response to pandemic outbreaks. Compared to its counterparts, the resilience of Uganda’s health systems lies in its ability to respond rapidly to pandemic outbreaks and compliance with international norms. Uganda’s rapid response is because public health is closely linked to security authorities, there is an effective communications infrastructure, and Uganda is quick to impose trade and travel restrictions as and when required. The resilience of Morocco’s health systems is driven by effective detection and reporting of pandemic outbreaks, rapid response system and a less risky environment. Ethiopia’s strength is complying with international norms and its rapid response to pandemic outbreaks. Thus, the five highest ranking African countries in the GHS Index still have significant flaws in their health systems. This explains why South Africa, the highestranking African country, has the highest COVID-19 infections in Africa despite its relatively superior health infrastructure and delivery systems. Figure 19.3 Five highest COVID-19 deaths in Africa (February 2021)

Algeria

2 967

Egypt

10 443

Morocco

8 574

South Africa

49 413

Tunisia

7 843 0

Source: Statista (2021)

398

10 000

20 000

30 000

40 000

50 000

60 000

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South Africa by far recorded the highest number of COVID-19 deaths in Africa. This makes it clear that there are other mitigating factors beside the sophistication of health systems or economic superiority.

19.6 Case study 2: Resilience of health systems in Africa during the COVID-19 pandemic Although the effects of the pandemic have been relatively low in Africa compared to other developing areas, Africa’s ability to fight the pandemic was severely constrained by a wide range of factors. These included financial constraints, poor health-sector capacity, poor service delivery, testing capabilities and slow rollout of vaccines. However, in Africa, the pandemic did not have the same severe effect in terms of infections and deaths as expected. This has been attributed to several factors that have not been scientifically proven such as the hot climate, herd immunity to malaria fever and the role of IKS and traditional medical remedies. However, it is also suspected that the absence of comprehensive mechanisms for testing and contact tracing due to poor physical and health infrastructure could be the reason for the low levels of known COVID-19 incidence, recoveries and deaths in Africa and other developing or less developed regions.

19.6.1 Inadequate financial resources Africa accounts for less than 3% of global financial resources (Dalal 2020). Consequently, most African countries have had to borrow to mitigate the adverse socioeconomic impact of the pandemic. Prior to the inception of COVID-19, African governments were already fiscally constrained, with an average debt to GDP ratio of 59% in 2018. COVID-19 has seen many African countries exceed the 60% debt to GDP threshold recommended by the African Monetary Cooperation Programme for developing countries (Accord 2020). The rising debt level is expected to deteriorate further considering the low growth projections for African economies, dwindling tax revenues due to rising unemployment, and business shutdowns and unfavourable external economic outcomes emanating from trade disruptions.

19.6.2 Insufficient health personnel The continent has a meagre 3% of the world’s healthcare labour force and there are less than 3 physicians per 10 000 people in most African countries (Accord 2020). This shows an acute shortage of critical health personnel in African countries. The 5 African countries with the most available physicians per 1 000 people are Libya, Algeria, Tunisia, the Comoros and the Seychelles.

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Table 19.5 Top 5 African countries with the highest number of physicians per 1 000 people and COVID-19 fatalities Country Libya Algeria Tunisia Comoros Seychelles

Physicians per 1 000 people 2.16 1.83 1.27 0.95 0.94

COVID-19 deaths 2 125 2 967 7 843 144 11

Source: Statista (2021); World Bank (2020)

However, the countries with the highest number of physicians per 1 000 people seem to have the highest COVID-19 deaths. This clearly indicates that there are other mitigating factors. Countries with unreliable health systems tend to depend on non-orthodox medical remedies in African countries that have been used over centuries and across many cultures. This calls for further research on the role of IKS and traditional medical remedies in combating COVID-19 in African countries.

19.6.3 Poor service delivery A key recommendation in preventing COVID-19 transmission is to wash hands for at least 20 seconds in addition to wearing masks and social distancing. Sanitation and hygienic conditions are critical to manage the rapid spread of the virus. Table 19.6 Service delivery in Africa compared to other developing regions Infrastructure

Type

Sub-Saharan Africa

Other regions

Telecommunication

Internet access Mobile technology Fixed line technology

17% 66% 3%

47% EAP 41% LAC 96% EAP 115% LAC 19% Latin America 16% Middle East and North Africa

Transportation

Road access Ports Railway network density

204 km per 1 000 km land area 3.6 km of road per 100 people