This week a handful of the most powerful people on the planet will tread the pavement in Africa’s richest square mile to plot the way forward for the emerging economies of the southern hemisphere.
Russia’s Vladimir Putin, India’s Narendra Modi, Brazil’s Michel Temer and China’s Xi Jinping lead a group of presidents to the BRICS conference at the Sandton Convention Centre in Johannesburg on July 25,26 and 27. These are the strident leaders of the emerging economies armed with aggressive, long term, foreign economic policy, rich in resources and determined to see a shift of world power south from the northern hemisphere.
South Africa, which joined the south-to-south political and economic cooperation group in 2011, is chairing the group this year and has high hopes for it.
South Africa is very much the junior partner in the BRICS group that did R462 billion ($34 billion) in trade among themselves, in 2017, and garnered more than R554 trillion in foreign direct investments. In 2015, India gathered 38.9% of world foreign direct investment, Russia 26.1% while South Africa managed a mere 0.8%.
Yet South Africa will be hoping to use the gravitas of the organisation to help funnel investment in from Russia to Saudi Arabia and Qatar in search of fulfilling President Cyril Ramaphosa’s pledge of $100 billion in foreign investment.
South Africa plans to lead the way in talks over manufacturing, minerals process, science and technology. Tourism is also likely to be a topic for South African government officials with the country hosting around 200,000 tourists a year from BRICS countries, as will the fourth industrial revolution and peacekeeping.
“I think we may see a few infrastructure deals and trade agreements, especially with Russia, as South Africa tries to achieve Cyril Ramaphosa’s $100 billion foreign investment pledge,” says George Glynos, of ETM analysts.
“There will be a good deal of sharing of ideas and technology transfer, but I don’t think we will see too much concrete emerging from this conference,” says Azar Jammine, of Econometrix.
On the political front the big expected meeting will be between Putin and Xi Jinping to discuss the fall out of US President Donald Trump’s trade war.
President Modi plans to make a dash across the African continent to arrive in time for proceedings on Wednesday. At 9 am CAT the Indian premier will address the Parliament of Uganda, in Kampala, an address that will be carried live across the continent by CNBC Africa.

BRICS in Africa, what you need to know

The <a href="http://www.brics2018.org.za/">10th BRICS summit</a> to be hosted by South Africa is going to be closely watched. It comes at a time when extraordinary global political and economic challenges are facing the world.
The BRICS bloc is made up of 5 of the leading countries in the global South — Brazil, Russia, India, China and South Africa.
The challenges facing the world range from country specific problems relating to domestic poverty, inequality and unemployment to climate change and a global economic system that is biased in favour of corporate interests, particularly in finance and technology.
One of the most immediate political challenges relate to the changing dynamics in global economic governance. The current global powerhouse, the US, appears intent on starting trade wars with both China and the European Union. Africa can’t avoid being adversely affected by a trade war between these three economic powers, which are its three largest trading partners.
The US is also pulling back from multilateral governance arrangements that it created. For example, it withdrew from the upcoming United Nations (UN) <a href="https://www.theguardian.com/world/2017/dec/03/donald-trump-pulls-us-out-of-un-global-compact-on-migration">conference on migration</a> and from the <a href="https://www.aljazeera.com/news/2018/06/withdraws-human-rights-council-180619173311272.html">UN Human Rights Council</a>. And Washington is effectively paralysing the World Trade Organisation (WTO) by refusing to agree to the <a href="https://economictimes.indiatimes.com/news/economy/foreign-trade/trade-wars-us-blocking-appointment-of-members-of-wtos-appellate-body/articleshow/63177200.cms">appointment</a> of new judges at the WTO Appellate Body.
These developments are creating a volatile and unpredictable situation for all countries. Small players on the global stage, like South Africa and other countries on the continent, face the prospect of becoming collateral damage in the destruction of the current global governance arrangements.
Given all these complex challenges, how should we judge the success of the BRICS Summit?
We can use three tests: is BRICS being strengthened? What benefits will accrue to Africa? And how is the bloc planning to influence global economic governance reform?
<h2>BRICS strengthening</h2>
One goal of the upcoming summit should be to strengthen the relationship between the BRICS partners.
A concrete way of measuring this will be to look at the number and quality of agreements to emerge out of the summit. A successful summit will result in a range of substantial agreements being reached. The world will be able to scrutinise the outcome in the communique released at the end of the meeting.
It is important to note that the summit is the apex event in a year-long process. During the year various groups of BRICS government officials, civil society groups and technical experts meet to discuss issues of common interest. They have included technical groups such as the BRICS water forum and a committee looking at customs cooperation. Others have involved political matters, such as meetings of foreign affairs ministers and government officials who help guide their leaders to the summit (known as Sherpas).
The participants in these meetings try to reach agreements on issues of mutual interest – such as establishing a BRICS vaccine research centre – or finding ways to collaborate in sectors like tourism. Their job is also to try and resolve differences.
These efforts feed into the work of the summit as the Sherpas prepare the statement of what has been agreed. Details of the agreements that have been struck will be released in a statement at the end of the summit.
<h2>BRICS in Africa</h2>
Given that the theme for this year’s summit is: “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution”, it’s reasonable to expect the BRICS summit to produce benefits for Africa.
One area that would be beneficial for the continent would be a signal from the leaders that the BRICS members are willing to commit to funding infrastructure projects on the continent. This is important because Africa is in the process of putting in place an ambitious new <a href="https://www.iol.co.za/capetimes/news/continents-free-trade-deal-a-game-changer-for-africa-15795779">Continental Free Trade Agreement</a>. Successful implementation will require constructing infrastructure that can link the continent both internally and with other parts of the world.
BRICS could position itself for a critical role in the funding of these infrastructure projects.
Two obvious vehicles for such funds are the BRICS’s New Development Bank and the funds that China has created to support its <a href="https://qz.com/983460/obor-an-extremely-simple-guide-to-understanding-chinas-one-belt-one-road-forum-for-its-new-silk-road/">One Belt One Road Initiative</a>.
Thus a test for summit success will be whether it generates new financing for sustainable infrastructure in Africa, and the nature of the financing.
<h2>Global governance reform</h2>
One goal shared by all the BRICS states is reforming global economic governance structures like the World Bank and International Monetary Fund (IMF). The bloc hasn’t been particularly successful in this mission. But this year may be an opportune time to promote reform.
Actions by the US have undermined its leadership position in the world and may have made other countries more open to governance reforms in key international economic organisations. This is particularly relevant for the IMF which is reviewing its quota allocations. A shift would lead to the world body being more responsive to the concerns of its poorer member countries.
There is a longstanding call for the inclusion of a third African chair on the IMF board. It is unconscionable that the 46 sub-Saharan African countries have the lowest level of representation of any region on the IMF board. South Africa should push BRICS to stand behind this call.
The BRICS should also support making the IMF more <a href="https://theconversation.com/top-job-for-south-african-gives-african-countries-sway-at-the-imf-90700">accountable</a> to countries affected by its operations. This could be done by demanding that the IMF create an independent accountability mechanism. It is currently the only multilateral financial institution without one.
<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/99526/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" />A key benefit of the BRICS is its potential to lead efforts to meaningfully reform the global economic system. It therefore behoves the citizens of BRICS countries to hold their governments accountable for fulfilling this potential.
<a href="https://theconversation.com/profiles/danny-bradlow-168878">Danny Bradlow</a>, SARCHI Professor of International Development Law and African Economic Relations, <a href="http://theconversation.com/institutions/university-of-pretoria-1645">University of Pretoria</a>
This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/how-to-judge-the-success-of-the-brics-summit-three-questions-will-do-the-trick-99526">original article</a>

The questions to ask when measuring the success of the BRICS summit

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Brazil is the world’s 9th largest economy with more than 8.5 million km² of land and a population of over 200 million people. South Africa on the other hand is the 39th largest economy in the world with a population of around 56 million.

Brazil looks to strengthen trade ties with SA

Danny Bradlow | University of Pretoria
The formation of the BRICS – the bloc made of Brazil, Russia, India, China and South Africa – was supposed to be the harbinger for a new approach to global economic governance. The leading emerging markets and developing countries were becoming major players in the global economy. And they expected to play a commensurate governance role.
BRICS leaders have now been meeting annually for nine years. They recently met for the ninth BRICS Summit in Xiamen, China. They have positioned themselves as a force for transforming global economic governance so that it’s more responsive to the concerns of developing economies. They are seeking a more just and equitable global economy.
The question is: how effective have they been in reforming global economic governance and the fairness of the global economy?
The honest answer is that as a group, BRICS hasn’t been an effective force at all. This is for a number of reasons.
<h2>What’s not happened</h2>
The following examples illustrate the point.
At least formally the G20, which consists of 20 major economies including the five in BRICs, has supplanted the G7, made up of Canada, France, Germany, Italy, Japan, the UK and the US, as the premier forum for global economic governance. But the agenda in these meetings is still largely set by the most powerful countries which now include China but not the other BRICS.
The IMF and World Bank have both changed their voting arrangements to give a louder voice to developing economies and emerging economies. This has particularly benefited China, India and Brazil. But BRICS hasn’t supported South Africa’s call for a third African seat on the board of the IMF. This has left Africa as the most underrepresented region on the board.
BRICS countries, together with other G20 developing countries, have become more active participants in organisations responsible for developing international financial regulatory standards. This means that they now can participate in the writing of standards that guide the international financial system. But the system continues to be more responsive to the interests of the rich and powerful than those of the developing world.
New international financial institutions have been created, including the BRICS’ New Development Bank and the Contingent Reserve Arrangement, which provides financial support for BRICS countries experiencing balance of payments problems. Unfortunately, the New Development Bank operates in a less transparent and less accountable way than other multilateral development banks. For example, it’s harder for outsiders to access information on the operational policies and practices of the bank than those of the World Bank or the African Development Bank. Unlike those other banks, there isn’t yet a mechanism to hold the New Development Bank accountable if it causes harm.
The New Development Bank also risks repeating the tragic mistakes of these other institutions, which for many years concentrated only on economic issues in their operational decision making. Following a number of scandals they began to pay more attention to the social, human rights and environmental impact of their operations.
Members of the New Development Bank seem to share this concern. The BRICS leaders have reiterated their commitment to achieving
<blockquote>sustainable development in its three dimensions &#8211; economic, social and environmental- in a balanced and integrated manner.</blockquote>
But it’s hard to see how they expect the bank to meet this commitment if it continues to place more emphasis on speed in project implementation than on identifying and managing the adverse environmental, human rights and social effects of its projects. To fulfil their commitment to promote a more just and equitable global economy the BRICS will need to up their game.
<h2>How to fix the problem</h2>
Achieving a just and equitable international economic order requires governments to take seriously their commitment to protect and promote human rights as set out in the UN Charter and other human rights treaties.
The starting point is a commitment to respect and promote the rights of each individual affected by each project, programme or policy that governments undertake or support. This requires developing a good system to forecast the impact of a project on the environment, society as well as human rights. And to have a plan to manage them.
Another element is accountability. Any person adversely affected by a project should have access to a mechanism that can provide them with an effective remedy.
Finally, the relevant decision makers must be able to show how their proposed activity is using the maximum available human and financial resources to fulfil the human rights of all the people affected by their decisions. This suggests that the relevant decision makers bear the burden of explaining why the proposed allocations are the most feasible. This includes governments, international organisations as well as private parties.
There are reasons to think the BRICS leaders could be persuaded to adopt a human rights based approach to making global economic governance more democratic and responsive to the needs of developing countries and for a more just, equitable and sustainable global economy. They, and their colleagues in other developing countries, are governing societies with continuing, and some cases worsening poverty, inequality, unemployment and environmental degradation levels. And they don’t seem to have an effective strategy for meeting this challenge.
&nbsp;
This article was first published in The Conversation.

BRICS needs a new approach if it’s going to foster a more equitable global order

Patrick Bond |University of the Witwatersrand
At the BRICS summit in Russia two years ago, Chinese Premier Xi Jinping invoked physics when asking fellow leaders “to boost the centripetal (unifying) force of BRICS nations through cooperation in innovation and production capacity to boost competitiveness.”
That was the theory, but the economic reality of the once-feted Brazil-Russia-India-China-South Africa alliance is contradictory.
Instead of centripetal strengthening, the world is witnessing much more powerful centrifugal dividing forces, including overproduction, over-indebtedness and deglobalisation of capital. These elements have been spinning out of control even before the chaotic era of US President Donald Trump began.
Over production is mostly found in the coal, steel, non-ferrous metals, cement and chemicals industries. It’s largely driven from China where over-capacity is more than 30%, according to a new International Monetary Fund report that also raised worries about the country’s vast debt.
Over borrowing by companies, states and households represents a global crisis in the making. The Institute of International Finance has just reported that world debt is now USD$217 trillion (327% of world GDP), up from USD$149 billion (276%) in 2007.
Deglobalisation is simply the reversal &#8211; mostly since 2008 &#8211; of prior rapid growth in cross-border trade, investment and finance. Should that be viewed as a bad thing? Rather than fear globalisation’s unravelling, leading scholar-activists including Samir Amin in Africa, the late Ruy Mauro Marini in Latin America, Walden Bello in Asia and the 20th century’s most important economist, John Maynard Keynes, have all advocated national economic sovereignty. If pursued cleverly, deglobalisation could be the basis for restoring links between once vibrant sectors subsequently destroyed by imports.
Could BRICS leaders evolve in this direction? Their summit next week will be distracted by geopolitical tensions. Although a welcome deal on Monday prevents the feared Sino-Indian border war, a much more durable geo-economic battle is unfolding in the China-Pakistan Economic Corridor, which in May left Prime Minister Narendra Modi boycotting China’s Belt and Road mega-conference three months ago.
Beijing’s BRICS logo designers, perhaps being unconsciously subversive, have illustrated how the once overlapping, interlocking BRICS are now being wedged apart as paper thin subjects of centrifugal forces. For Africa, fewer illusions in these economies would be welcome, given how exploitative the BRICS and their firms have become against societies, democratic movements and environments.
<h2>A counter-summit challenges the BRICS</h2>
This argument is made by the Hong Kong People’s Forum, initiated by the city’s progressive labour, intellectual and faith leaders to question the BRICS. Their meeting this weekend follows in the counter summit traditions of the 2013 brics-from-below in Durban, the 2014 Dialogue on Development in Fortaleza, and the 2016 Goa People’s Forum on BRICS.
According to the Hong Kong People’s Forum:
<blockquote>Instead of offering an alternative, the BRICS actually offer a continuation of neo-liberalism. On top of BRICS there is also China’s new mega project, the Belt and Road initiative whose main purpose is to export China’s surplus capital.</blockquote>
These surpluses are vast, as witnessed in China’s foreign reserves which recently topped USD$4 trillion, though then fell 20% due to bouts of capital flight and two stock market crashes in 2015-16.
<h2>Deglobalisation</h2>
Global trade, finance and investment were meant to be the motors for the advancement of BRICS. But according to the World Bank, global trade peaked at 61% of world gross domestic product (GDP) in 2008 but retreated to 58% in 2015.
During the 1990s each BRICS country raised its trade to GDP ratio by at least 10 points. But trade has receded in importance in each of the BRICS. Russia peaked first at a 69% trade/GDP ratio in 1999, and then fell steadily to 45% today. Brazil rose to 30% in 2004 and fell to 25%. China soared to 66% in 2006 and has since plummeted to 36%. South Africa’s 2008 ratio was 73% but is now back to 60% and India peaked last, in 2012 with 56%, and is now at 40%.
On top of this, the ratio of world financial assets that are held overseas compared to GDP fell from 58% in 2008 to 38% in 2016, even as overall financial assets increased in line with soaring debt.
Finally, another deglobalisation symptom is the halving of relative global foreign direct investment: from 3.7% of world GDP in 2008 to 1.7% in 2016.
Leading financiers now talk of an imminent world recession, given over priced stock markets and corporate debt. This is not just due to wild New York share speculation, as also occurred before the crashes of 1987, 2000 and 2008. Three BRICS stock markets are also bubbling: South Africa’s stock market is 90% higher than in 2010, India’s market is up 70% and Russia has risen by 50%.
<h2>Centrifugal realities crowd out centripetal fantasies</h2>
These dangerous centrifugal forces cannot be easily regulated or reversed. The only recent relief came from the Chinese state’s massive urban construction investments (albeit leaving scores of near-empty cities) and the Indian service sector boom. But since 2015 the other three BRICS have suffered recessions as the crash in commodity prices hit home.
As the Hong Kong People’s Forum statement explained:
<blockquote>China has now evolved into a global engine promoting a neo-liberal agenda from free trade agreements to corporate led integration across borders.</blockquote>
The BRICS had promised to challenge an unfair global economic system. But in December 2015 their main multilateral reform strategies failed:
<ul>
<li>the Paris Climate Accord was non-binding, unambitious and outlaws climate-debt lawsuits by victims of Western and BRICS emissions;</li>
<li>the World Trade Organisation phased out any semblance of food sovereignty; and</li>
<li>IMF voting shares were shifted to favour BRICS at the expense of poorer countries.</li>
</ul>
Adds the Hong Kong People’s Forum: “The 2017 World Economic Forum in Davos was one site where Xi clearly took the lead in promoting world corporate power, as Trump leads the US-UK retreat into crony-capitalist protectionism.”
South African President Jacob Zuma pronounced last month at his party’s policy congress, “The ANC is part of the global anti-imperialist movement. We are historically connected with the countries of the South and therefore South-South cooperation such as BRICS is primary for our movement.”
If centrifugal economic forces now pressuring the bloc overwhelm Xi’s desired centripetal capitalism, then we can expect yet more talk-left walk-right politics, as the BRICS sub-imperialists desperately try to pretend they’re anti-imperialists.
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This article was first published in The Conversation.

BRICS is being battered by global crises: why this might not be a bad thing

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This year in November, Sao Paulo- Brazil will host the 5th Brazil Africa forum- which is a platform for exchange of business ideas and how best to harness world best practices. The forum also hosts a youth technical training programme.

5th Brazil Africa forum to focus on youth work

BEIJING (Reuters) &#8211; Foreign ministers from BRICS nations called for the use of &#8220;preventative diplomacy&#8221; to tackle the situation on the Korean Peninsula, according to a communique on Monday.
The ministers from Brazil, Russia, India, China and South Africa met in Beijing for a two-day conference that ended on Monday. BRICS leaders will meet in the southern Chinese city of Xiamen in September.
&#8220;The foreign ministers support the use of political and diplomatic means to resolve disputes in Libya and on the Korean Peninsula, and the promotion of preventative diplomacy built on common consensus,&#8221; the communique said, according to a version posted on the Chinese foreign ministry website.
The document also condemned unilateral military interventions and economic sanctions that violate international law or internationally accepted norms.
Addressing the ministers after the meeting, Chinese President Xi Jinping said that BRICS cooperation was entering a &#8220;golden decade&#8221;.
&#8220;At present the international situation has complexities and also factors of instability and it is right for the BRICS to speak their voice,&#8221; he said.
Tensions on the Korean peninsula have escalated over North Korea&#8217;s nuclear and missile tests and its vow to develop a nuclear-tipped weapon capable of hitting the U.S. mainland. The United States has called for greater action from China to pressure Pyongyang into abandoning its weapons programmes.
China has said repeatedly that it adheres to United Nations Security Council sanctions against North Korea but does not support unilateral sanctions, instead calling for restraint and diplomacy.
China&#8217;s top diplomat Yang Jiechi is due to meet with U.S. Secretary of State Rex Tillerson in Washington on Wednesday in talks that the United States says will focus on curbing North Korea&#8217;s nuclear and missile programmes.
Last week, Tillerson said Washington was considering imposing &#8220;secondary sanctions&#8221; on foreign firms doing business with North Korea and had been in discussions with Beijing about the activities of entities inside China.
Libya fell into turmoil following the overthrow of Muammar Gaddafi in 2011 and now an array of armed groups and competing governments are vying for control.
(Reporting by Christian Shepherd: Editing by Neil Fullick)

BRICS foreign ministers call for diplomacy to tackle Korean tensions

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<a class="inline_quotes" href="http://data.cnbc.com/quotes/.BVSP" target="_self" data-gdsid="570637" data-inline-quote-symbol=".BVSP">Brazilian stocks</a> fell more than 10 percent in opening trade Thursday on an emerging scandal involving the country&#8217;s recently installed president.
Trading of some shares was delayed, Dow Jones reported.
The <a class="inline_quotes" href="http://data.cnbc.com/quotes/EWZ" target="_self" data-gdsid="103548" data-inline-quote-symbol="EWZ">iShares MSCI Brazil Capped ETF (EWZ)</a>, a heavily-traded U.S. ETF that tracks Brazilian stocks, briefly dropped more than 17 percent in opening U.S. trade.
<div id="inline_movable_ad"> Less than 10 months into the new administration, Brazilian newspaper O Globo reported late Wednesday that Brazilian President Michel Temer gave his blessing to an attempt to pay a potential witness to remain silent in the country&#8217;s biggest-ever graft probe.</div>
Temer told lawmakers Thursday that his government would not be toppled by allegations he was caught on tape trying to buy the silence of a potential witness in a sprawling graft investigation, a senator who was at the meeting told Reuters.
EWZ 5-day performance (extended hours)
<img decoding="async" class="inlineChart" src="http://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/charts/2017/05/1495111691_ewzextended5day170518.jpg" />
Source: FactSet
Temer&#8217;s office on Wednesday acknowledged he had met in March with the businessman, Chairman Joesley Batista of meat giant JBS SA, but denied any part in alleged efforts to keep jailed former House Speaker Eduardo Cunha from testifying.
O Globo&#8217;s report, which they say three sources familiar with the matter said was accurate, threatened to pull Temer into a corruption scandal that has already entangled several of his closest allies and advisors.
&#8220;We believe the administration&#8217;s economic team is highly concerned the crisis will impact their reform agenda,&#8221; Larry McDonald wrote Thursday in &#8220;The Bear Traps Report&#8221; newsletter. &#8220;Equity prices / valuations are very dependent on completion / passage of these reforms.&#8221;
U.S.-listed shares of major Brazilian stocks plunged in morning trade:
<ul>
<li>State-run <a class="inline_asset" href="http://data.cnbc.com/quotes/PETR'-BR" target="_self">Petrobras</a> dropped more than 14.5 percent.</li>
<li><a class="inline_quotes" href="http://data.cnbc.com/quotes/BBDC%27-BR" target="_self" data-gdsid="66854" data-inline-quote-symbol="BBDC'-BR">Banco Bradesco</a> fell more than 18 percent.</li>
<li><a class="inline_quotes" href="http://data.cnbc.com/quotes/VALE%27A-BR" target="_self" data-gdsid="35798" data-inline-quote-symbol="VALE'A-BR">Vale SA</a> down nearly 8 percent.</li>
<li><a class="inline_quotes" href="http://data.cnbc.com/quotes/ITUB%27-BR" target="_self" data-gdsid="21767" data-inline-quote-symbol="ITUB'-BR">Itau Unibanco</a> fell 14.5 percent.</li>
</ul>
The <a class="inline_quotes" href="http://data.cnbc.com/quotes/EEM" target="_self" data-gdsid="96178" data-inline-quote-symbol="EEM">iShares MSCI Emerging Markets ETF (EEM)</a> fell more than 2 percent.
<a href="http://www.cnbc.com/brazil/" target="_self">Brazil</a> makes up 7.43 percent of the MSCI Emerging Markets Index, <a class="inline_asset" title="https://www.msci.com/documents/10199/c0db0a48-01f2-4ba9-ad01-226fd5678111" href="https://www.msci.com/documents/10199/c0db0a48-01f2-4ba9-ad01-226fd5678111" target="_self">as of April 28.</a> <a href="http://www.cnbc.com/china/" target="_self">China</a> is the country with the greatest weighting, at 27.05 percent.
The <a class="inline_quotes" href="http://data.cnbc.com/quotes/BRLUSD%3D" target="_self" data-gdsid="41566742" data-inline-quote-symbol="BRLUSD=">Brazilian real</a> fell more than 6 percent against the U.S. dollar Thursday morning.
<img decoding="async" class="inlineChart" src="http://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/charts/2017/05/1495113394_usbrl.jpg" />
The opening drop in the Brazilian stock market triggered a circuit breaker on the Bovespa exchange, Bloomberg reported.
Brazilian equities have surged over the past year, with the EWZ rising more than 45 percent in the period, as investors cheered Temer&#8217;s proposed economic policies. The fund is one of the 20 most actively-traded ETFs in the U.S. market on a daily basis, on average.
&#8220;Brazil blows up every couple years,&#8221; Tim Seymour managing partner of Triogem Asset Management, said in an email. It &#8220;got overcrowded for regional dedicated players.&#8221;
The country&#8217;s stocks are about &#8220;8 percent of the EM index and taking EM down today more than it might,&#8221; Seymour said. &#8220;That creates an opportunity but think about the politics across EM right now.&#8221;
The new president and his promised reforms were supposed to turn the page on Brazil&#8217;s rocky political climate. Temer became leader of the country after President Dilma Rousseff was removed Aug. 31 amid a massive corruption scandal and an economic crisis that crippled Latin America&#8217;s largest country.
&#8220;Now the fear is that Temer might have to leave office like his predecessor, Dilma Rousseff,&#8221; said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. &#8220;But it&#8217;s too early to panic because there are a lot of steps to removing a president in Brazil.&#8221;
<a href="http://www.cnbc.com/brazil/" target="_self">Brazil</a> had been an economic stalwart in the region just a few years before Rousseff&#8217;s impeachment, buoyed by surging oil prices. But the collapse in the crude market, coupled with a corruption scandal at Petrobras, led to millions of Brazilians flooding the streets in protest of Rousseff&#8217;s presidency.
—Reporting by <a href="http://www.cnbc.com/fred-imbert/" rel="author">Fred Imbert</a> | <a href="http://www.cnbc.com/evelyn-cheng/" rel="author">Evelyn Cheng</a> and Reuters 
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Brazil stocks plunge on emerging political scandal

The New Development Bank recently held its <a href="http://pib.nic.in/newsite/PrintRelease.aspx?relid=160274">second annual meeting</a> in the Indian capital of New Delhi to discuss the sustainability of financing development projects in its member states.
The multilateral bank was established by the BRICS states of Brazil, Russia, India, China and South Africa. With headquarters in Shanghai, China, it was created to support emerging economies and provide an <a href="http://uk.businessinsider.com/the-brics-countries-just-launched-a-rival-to-the-imf-and-world-bank-2015-7">alternative to the domination</a> of the World Bank and the International Monetary Fund.
But the new bank is already proving to be a replication of the Bretton Woods institutions. This can be seen through the <a href="http://www.business-standard.com/article/economy-policy/european-development-bank-strikes-pact-with-new-development-bank-117040300784_1.html">partnerships</a> the new bank is forming as well as its operating posture.
It’s also showing bias towards the development of Asian countries. This is evident from its funding patterns and the recent proposed <a href="https://sputniknews.com/politics/201703221051849196-brics-enlargement-plan/">enlargement of the BRICS bloc</a>. The list of proposed additions includes Pakistan, Bangladesh, Iran, Nigeria, South Korea, Mexico, Turkey, Indonesia, the Philippines and Vietnam. All except three are Asian.
The proposed expansion of the BRICS countries has been justified as a move to <a href="http://www.iol.co.za/business-report/economy/brics-plus-can-be-new-model-of-integration-8700388">strengthen the bloc</a> and fill the void created by rising protectionism in the US. But it has been met with mixed reactions even among member countries. India, for example has expressed its disapproval that BRICS “plus” is China’s ploy to <a href="https://timesofislamabad.com/china-to-include-pakistan-in-brics-plus-ignoring-indian-concerns/2017/03/13/">cut New Delhi’s influence</a> in the group by roping in more pro-China countries.
The New Development Bank’s business as usual and its bias towards Asia suggests that it will not become an alternative source of finance. It will not address the key areas of needs for emerging economies like human capital development, poverty alleviation and basic healthcare.
<h2>More of the same</h2>
The New Development Bank was set up as an <a href="http://www.paragkhanna.com/home/new-brics-bank-building-block-alternative-world-order">alternative</a> to the World Bank and IMF which are viewed to be <a href="http://thoughtleader.co.za/sentletsediakanyo/2008/07/09/can-we-trust-the-west-imf-world-bank-etc/">pushing western agendas</a>. It was to provide a development model that would be sensitive and beneficial to emerging economies. But it’s quickly abandoning this mandate and falling into the trap of operating like the institutions it was created to replace.
In September 2016 the New Development Bank <a href="https://www.businesslive.co.za/bd/companies/2016-09-09-world-bank-and-new-development-bank-sign-mou-to-boost-partnership/">signed partnership deals</a> with the World Bank to co-finance projects. The agreement also aims to facilitate knowledge and staff exchanges. This puts the bank in bed with the institutions it was established to counter.
The bank has also signed memorandums of understanding with the <a href="http://www.ebrd.com/news/2017/new-development-bank-ebrd-affirm-mutual-goals-agree-cooperation.html">European Investment Bank</a>, <a href="http://www.ndb.int/borrowings/memorandum-understanding-new-development-bank-european-bank-reconstruction-development/">European Bank for Reconstruction and Development</a>, <a href="https://www.aiib.org/en/news-events/news/2017/20170401_001.html">the Asian Infrastructure Investment Bank</a> and <a href="http://www.ndb.int/press_release/new-development-bank-international-investment-bank-sign-memorandum-understanding-develop-cooperation/">the Eurasian Development Bank and the International Investment Bank (IIB)</a>. The agreements cover co-financing of infrastructure projects, the bulk of which are in Asia.
Perhaps the foundations of the bank were faulty from the start. Its <a href="https://mg.co.za/article/2017-03-31-00-brics-joins-the-reigning-world-order">original designers</a> were two former World Bank chief economists, Joe Stiglitz and Nick Stern. Given this history, it’s possibly never going to challenge the world financial order.
Today, the New Development Bank is pushing the <a href="http://www.business-standard.com/article/news-ians/brics-bank-should-focus-on-small-scale-investments-117033001495_1.html">corporate-led development model</a> just like the World Bank, the IMF and other Bretton Woods institutions. Their investments are profit-oriented which tends to undermine social justice. Thus similar to the World Bank and IMF, the New Development Bank seems more focused on protecting its investments at the expense of saving the interests of the BRICS citizens.
Over the past decade, the corporate led model has impoverished many people in emerging economies, particularly in Asia. It has led to <a href="http://www.globalresearch.ca/the-seeds-of-suicide-how-monsanto-destroys-farming/5329947">farmer suicides</a>, <a href="http://www.herinst.org/BusinessManagedDemocracy/government/privatisation/banks.html">large-scale privatization</a>, <a href="https://www.globalpolicy.org/social-and-economic-policy/the-three-sisters-and-other-institutions/the-world-bank/49476-dodging-world-bank-schizophrenia-the-looting-on-africa-continues.html">natural resource looting</a> and <a href="http://projects.huffingtonpost.com/worldbank-evicted-abandoned/how-worldbank-finances-environmental-destruction-peru">environmental degradation</a>.
<h2>Funding so far</h2>
The New Development Bank has so far made loans of <a href="http://www.ndb.int/projects/list-of-all-projects/">$811 million to entities</a> in four BRICS countries towards energy infrastructure. Of this $300 million went to Brazil, $81 million to China, $250 million to India, and <a href="http://thebricspost.com/brics-bank-announces-first-set-of-loans/#.WQN5ePmGPIU">$180 million to South Africa</a>.
For South Africa, the bank has so far not provided any meaningful opportunity to obtain additional finance. The loan of $180 million (R2.6 billion) was given to South Africa’s power utility Eskom to develop 670 MW of power generation and 500 MW worth of renewable energy projects involving <a href="http://www.sabc.co.za/news/a/a239fb804c72c32d96d9df3b0fa74342/EskomundefinedgetsundefinedR2.6blnundefinedNDBundefinedloanundefinedforundefinedrenewableundefinedenergy-20161804">independent power producers</a>. This <a href="https://www.businesslive.co.za/bd/companies/energy/2017-01-16-eskom-distorts-facts-about-renewable-energy-group-claims/">unnecessary loan</a> to an inefficient state owned entity has only contributed to BRICS’s power over South Africa by adding onto the current contingents <a href="https://www.businesslive.co.za/bd/opinion/2017-03-31-the-brics-bank-green-energy-gordhan-and-the-guptas/">liabilities</a> dollar-based loans that the government has guaranteed for the next 12 to 20 years.
<h2>Weaknesses</h2>
There are weaknesses in the way in which the New Development Bank works that also raises questions about its intent.
First, the bank’s activities are often shrouded in secrecy. There are no clear official records available to the public about the bank’s activities, decisions and operational guidelines. Analysts have to rely on secondary and tertiary information sources.
Second, the bank is yet to present any socio-economic redress and environmental operational guidelines for communities. This would ensure that its funding does not lead to displacement, evictions, ecological destruction, loss of livelihoods and threats to the basic right to life. These issues have recurred for decades due to <a href="http://projects.huffingtonpost.com/worldbank-evicted-abandoned/how-worldbank-finances-environmental-destruction-peru">projects funded</a> by other multilateral development banks.
Lastly, as a co-financier with development institutions like the World Bank, the bank’s seriousness about promoting transparency, accountability and probity remains questionable.
To strengthen its relevance to emerging economies, the New Development Bank must review the much criticised, inequitable representation of developing countries, especially from Africa. It must also focus more on small-scale investments rather than large-scale infrastructure projects. These often lead to exclusion of people and communities, and aggravate existing vulnerabilities rather than bringing about development.

BRICS bank is offering more of the same rather than breaking the mould

Brazilian miner Vale SA said on Monday it has wrapped up the sale of a stake in Mozambique&#8217;s Moatize coal project to Japan&#8217;s Mitsui &amp; Co Ltd and received an initial payment of $733 million, the company said in a security filing.
The remainder of the $770 million transaction will be paid after the financing for the project is concluded, Vale said.
The Japanese company acquired 15 percent of Vale&#8217;s 95 percent share in the coal mine. It is also buying 50 percent of Vale&#8217;s 70 percent stake in the Nacala logistics corridor, a railway system connecting production at the mine to the Nacala port in Mozambique.
Vale said it expects to receive by the end of this month an initial payment of $733 million from Mitsui from the equity sale. The company said it would receive $2.7 billion more after the financing for the project of the mine and the transportation system is concluded.
Vale has been in talks with Mitsui over the Moatize mine for almost three years. The firms previously had said any payments or the conclusion of the deal would only take place once financing for the mine and the transportation system was sealed.
Mitsui will have an option to transfer back to Vale the stake in the project if financing is not completed by December.
(Reporting by Anthony Boadle; Editing by Diane Craft and Bill Trott)
&nbsp;

Brazil’s Vale sells stake in Moatize coal mine to Mitsui

South Africa has suspended some meat imports from Brazil citing a scandal in the South American country&#8217;s meat processing industry, the Department of Agriculture, Forestry and Fisheries said on Wednesday.
Police in Brazil have launched raids to investigate alleged bribes paid to conceal unsanitary conditions in Brazil&#8217;s meatpacking facilities.
China and Canada also suspended some meat imports from Brazil on Wednesday.
(Reporting by TJ Strydom; Editing by Joe Brock)
&nbsp;

South Africa suspends some meat imports from Brazil

A federal judge in Brazil ruled on Thursday that former President Luiz Inacio Lula da Silva will stand trial for an alleged bribery scheme related to work by construction giant Odebrecht in Angola.
It&#8217;s the second time in less than a month that a federal judge has ruled that Lula, a two-term president who left office in 2011 as Brazil&#8217;s most popular president with an 83-percent approval rating, must stand trial.  
Lula faces allegations of corruption, money laundering and obstruction of justice related to a sprawling kickback scheme at state-run oil company Petrobras, which prosecutors allege he orchestrated for more than a decade.
Thursday&#8217;s decision by Judge Vallisney Oliveira in Brasilia centers on allegations Lula and others took 30 million reais ($9.3 million) in bribes to help win low-interest financing from the BNDES development bank for Odebrecht projects in Angola. Lula&#8217;s lawyers denied the accusations. 
Last month, Judge Sergio Moro ruled that Lula would stand trial on charges he was a &#8220;direct beneficiary&#8221; of 3.7 million reais in bribes from OAS SA, one of the engineering and construction firms at the center of the graft scandal.
Separately, Moro decided on Thursday to try Eduardo Cunha, former speaker of the lower house of Congress, for his alleged role in the Petrobras corruption scandal. 
As speaker, Cunha led the successful drive to impeach former President Dilma Rousseff for breaking budgetary rules &#8211; a move Rousseff and her supporters call a &#8220;coup&#8221; in retaliation for her not trying to quash the aggressive Petrobras investigation.
Rousseff, who served as the chairwoman of the Petrobras board for several years as the kickback scheme played out, is being investigated for obstruction of justice in the graft probe, but has not been charged with any crimes.
($1 = 3.22 Brazilian reais)
 
(Reporting by Maria Carolina Marcello; Additional reporting by Brad Brooks and Tatiana Ramil in Sao Paulo; Editing by Sandra Maler)﻿

Brazil court to try Lula on Angola corruption charges

South Africa and Brazil have much in common, including volatile politics, corruption scandals, economic decline and ratings downgrades. What sets these two countries apart?
South Africa marked a historic haul of 10 medals at the 2016 Rio Olympic Games, equalling its best performance ever. Host country Brazil secured 19 medals, but its much larger population means that the country won 0.01 medals per million people, compared to 0.5 medals per million people for South Africa. For Brazilians, the Games were also mired in controversy over fears that venues would not be ready in time and would end up as white elephants, while the overall cost of the games was indefensible at a time when Brazil is suffering its worst recession in decades (never mind that the cost came in way over the initial budget).
Brazil is probably the country that resembles South Africa the most, given its extreme income inequality, resource dependence,  tendency to attract hot money capital flows, as well as its relatively sophisticated private sector. At the time of winning the bid for the Olympics, many South Africans were green with envy at the country’s progress in achieving rapid economic growth and eradicating poverty. It seemed as if Brazil had changed substantially for the better, recovering from the global recession relatively quickly, and was acknowledged as one of the most promising emerging markets. However, over the past few years, much like South Africa, Brazil was hit hard by the commodity price collapse. This also exposed how much of the country’s growth rate was inflated by a credit boom and overvalued currency.
Messy politics
The economic crisis in Brazil is to a great extent a political crisis. Deadlock in a fragmented Congress (with some two dozen parties), worsened by an epic corruption scandal involving nearly $3 billion in bribes and many lawmakers, prominent business people and the country’s largest company, Petrobras, all contributed to Brazil not being able to tackle the economic decline. It could not pass budget legislation to restrict spending and close the deficit, leading to a sharp rise in borrowing costs. Brazil’s government debt jumped from 53% of GDP in 2013 to 68% and is expected to reach 80% (South Africa’s debt to GDP ratio is expected to stabilise at around 50%). Although President Rousseff oversaw most of the Olympic preparations, she could not attend the ceremony because of an impeachment process against her.
South Africa’s politics are also quite messy with the rand, bonds and bank shares selling off after news that Finance Minister Pravin Gordhan may face criminal charges that could lead to his removal. Although Gordhan carries a lot of credibility among local and global investors, South Africa’s institutional strength is not centred only around our Finance Minister. While unnerving, the events of the past week also point to South Africa’s institutional strengths, including a vocal civil society, free press, independent courts and a central bank willing to stick to its mandate.
While Brazil’s budgeting process is in shambles, South Africa has ranked in the top three in the world for the transparency of its budget system. The Finance Minister presents a three-year budget to parliament in February each year with an update in October. There is no reason to expect this to change, irrespective of who the Minister is. Since 2012, Treasury has put in place an ‘expenditure ceiling’ which limits the rand amount of spending that can take place in a fiscal year (hence the talk around ‘reprioritising’ budget items in the aftermath of the ruling party’s local government election losses – the overall spending amount is fixed).
Downgrade risk remains
The risk of a credit rating downgrade for South Africa remains. Ratings agencies are interested in economic growth. There are signs of improvement in the data as the impact of economic shocks fade: electricity supply has stabilised, the drought should ease, and commodity prices are no longer declining. However, sustained growth requires policy reforms that do not appear to be forthcoming. Top of the list are more flexible labour markets and improvements in the performance and governance of state-owned enterprises.
Downgrades are unwelcome but not the end of the world. S&amp;P stripped Brazil of its foreign currency investment grade rating in September 2015, and cut its rating by another notch in February this year. However, at around 11%, Brazil’s 10-year government bond yield is lower now that it is a “junk status” economy than for most of last year when it was still considered investment grade. The main reason is that global ‘risk free’ rates have tumbled. The simplest way to gauge market view of political and currency risk is the higher yield that the Brazilian government pays to borrow in its own currency compared to what the US government pays. This spread over the equivalent US 10-year government bond yields remains elevated, even though it has receded. In the case of South Africa, it remains even well above the long-term average. Unlike December’s ‘Nenegate’ episode, which happened against the backdrop of an emerging market rout (Brazil’s jumped to 16% and South Africa’s10-year yield to 10.6%), the global environment remains much more favourable.
Chart 1: Spread of local currency 10-year government bond yields over US equivalent
<img loading="lazy" decoding="async" src="/media/19198562/chart_1_spread_of_local_currencies.png" width="482" height="290" alt="Chart 1 Spread Of Local Currencies"/>﻿
Source: Datastream
 Credit default swaps (CDS), instruments to insure against default, also reflect the downgrade risk (the higher the CDS, the greater the expected risk of a bond default). Although South Africa’s credit rating is higher, our CDS trade is in the same territory as Brazil’s (and fellow junk status economies Russia and Turkey).
Chart 2:Credit default swaps for key emerging market US dollar bonds
<img loading="lazy" decoding="async" src="/media/19198569/chart_2_credit_default_swaps.png" width="569" height="356" alt="Chart 2 Credit Default Swaps"/>﻿
Source: Datastream
Inflation receding
One area where South Africa has performed differently to Brazil is in terms of inflation. Despite also suffering a currency collapse from 2011 onwards, South African inflation did not move outside the 3-6% target range on a sustained basis.
Brazil’s inflation target is also 3-6% , but its inflation rate soared, forcing the country’s central bank to aggressively hike interest rates, despite the worsening recession. Consumer inflation hovered around 6% between 2010 and 2014, but jumped to 10% by the end of 2015. It has receded only somewhat to 8.7% most recently. Brazil has a history of hyperinflation. Consumer prices increased by over 6 000% in 1990. A second bout of hyperinflation peaked at 4 922% in 1994. Therefore, its central bank has to work hard to maintain credibility, with policy rates at 14.15% (compared to the South African repo rate at 7%).
The most recent data show consumer inflation in South Africa falling to 6% in July, from 6.3% in June. This was slightly lower than expected. Food inflation accelerated to 11.5%, but we are probably close to the peak of the food inflation cycle. Given that food prices rose sharply late last year, the base effect will become much more favourable as we head into 2017. However, the currency remains the main risk factor to the inflation outlook.
Interest rates remain elevated
While rates have fallen in almost every other major economy in the world, they remain elevated in both Brazil and South Africa. However, the South African Reserve Bank (SARB) most likely wants to see inflation and inflation expectations head towards the midpoint of the range, rather than sticking around 6%. In a speech last week, Reserve Bank Governor Kganyago voiced his concern that inflation remained too high, fuelled in part by high wage increases. He also pushed for labour market reforms aimed at increasing employment, saying &#8220;We’ve built an economy that produces much more inflation than growth and spits out unemployment as a by-product.&#8221; Although the SARB won’t mention it, it is probably also worried about local political and policy uncertainty against the backdrop of potential US interest rate increases. Maintaining relatively high real interest rates acts as an insurance policy during times of economic uncertainty.
The ‘hawks’ that matter most
Central bankers are traditionally categorised as ‘hawks’ or ‘doves’ depending on their eagerness to hike rates. Ultimately, for South African (and Brazilian) financial markets, the hawks that matter are not a police unit, but the members of the US Federal Open Markets Committee who favour higher rates. However, the Fed chair Janet Yellen remains a dove for now. During the global central bankers’ annual meeting at Jackson Hole, she noted that the case for another US interest rate increase has strengthened, but she still expects rate rises over time to be very gradual.﻿

OPINION: Medals, spreads & hawks – a tale of two countries

Caster Semenya won the 800 metres final in a personal best time of 1:55.28 on Saturday, claiming her first Olympic gold medal and using her podium platform to call for unity in sport.
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Burundi&#8217;s Francine Niyonsaba finished in 1:56.49 to claim the silver, her country&#8217;s second medal in any sport at the Olympics. Kenya&#8217;s Margaret Wambui won bronze in 1:56.89.
Semenya has dominated the event this season, with three of the fastest four times, but has had to contend with renewed controversies about her gender.
After winning the 2009 world title as a 19-year-old, tests reportedly revealed that she is hyperandrogenous, resulting in her body producing an abnormally high amount of testosterone, which makes her more powerful than her rivals.
An International Association of Athletics Federations (IAAF) rule limiting the amount of naturally occurring functional testosterone for female athletes appeared to have restricted Semenya&#8217;s prospects but the rule was quashed by the Court of Arbitration for Sport last year.
In Rio, France&#8217;s Justine Fedronic, who failed to qualify for the 800 final, said she had sympathy for Semenya&#8217;s situation but did not consider competing against her a fair fight.
&#8220;I just want to be a better athlete. The main focus here was just to run a championship,&#8221; Semenya told reporters. &#8220;The coaches told me: just focus on running, nothing else.&#8221;
&#8220;Sport is meant to unite people,&#8221; she added. &#8220;I think that&#8217;s what we need to keep doing.&#8221;
The 25-year-old South African won the silver medal in London four years ago. Ahead of the 2016 Games, there was speculation she could break Czech Jarmila Kratochvilova&#8217;s world record of 1:53.28 set in 1983. It is the longest-standing athletics world record.
&#8220;To be honest, we&#8217;re really not focussed on breaking the world record,&#8221; she said. &#8220;We are focussed more on being the best we can be.&#8221;
Staying with the pack for the first lap, Semenya let Niyonsaba lead the race up to the 600-metre mark before pulling ahead with an injection of pace to take the gold.
&#8220;The race was really quick. The first 400 we were pushing ourselves, it was great,&#8221; Semenya told reporters.
&#8220;It was just about being patient &#8230; I have a very quick last 200, I just have to utilise it.&#8221;﻿

Brazil

BRICS in Africa, what you need to know

The questions to ask when measuring the success of the BRICS summit

Brazil looks to strengthen trade ties with SA

BRICS needs a new approach if it’s going to foster a more equitable global order

BRICS is being battered by global crises: why this might not be a bad thing

5th Brazil Africa forum to focus on youth work

BRICS foreign ministers call for diplomacy to tackle Korean tensions

Brazil stocks plunge on emerging political scandal

BRICS bank is offering more of the same rather than breaking the mould

Brazil’s Vale sells stake in Moatize coal mine to Mitsui

South Africa suspends some meat imports from Brazil

Brazil court to try Lula on Angola corruption charges

OPINION: Medals, spreads & hawks – a tale of two countries

Semenya wins second gold for South Africa

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Brazil

BRICS in Africa, what you need to know

The questions to ask when measuring the success of the BRICS summit

Brazil looks to strengthen trade ties with SA

BRICS needs a new approach if it’s going to foster a more equitable global order

BRICS is being battered by global crises: why this might not be a bad thing

5th Brazil Africa forum to focus on youth work

BRICS foreign ministers call for diplomacy to tackle Korean tensions

Brazil stocks plunge on emerging political scandal

BRICS bank is offering more of the same rather than breaking the mould

Brazil’s Vale sells stake in Moatize coal mine to Mitsui

South Africa suspends some meat imports from Brazil

Brazil court to try Lula on Angola corruption charges

OPINION: Medals, spreads & hawks – a tale of two countries

Semenya wins second gold for South Africa

News Tips

Advertise With Us

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