PRETORIA (Reuters) &#8211; China would invest $14.7 billion in South Africa President Cyril Ramaphosa said on Tuesday after talks between the two countries, news that sent the rand one percent firmer.
Speaking at the same event, Chinese President Xi Jinping said the world’s second-biggest economy would take active measures to expand imports from South Africa to support development in Africa’s most industrialised economy.
Ramaphosa, who has promised to revive the economy since becoming president in February and after winning the leadership of the ruling African National Congress last year, said “Xi has indicated that China is ready to invest and work with South Africa in various sectors.”
The rand firmed after Ramaphosa’s announcement, spurred by offshore demand for the currency, traders said.
South Africa’s struggling state-run power firm Eskom, which swung to a full year loss on Monday, received a $2.5 billion loan from the China Development Bank.
Ramaphosa has focused on revitalising Eskom, Africa’s largest public utility, which was embroiled in corruption scandals under former president Jacob Zuma and narrowly avoided a liquidity crunch early this year after banks halted lending. Zuma has denied wrongdoing.
South Africa’s logistics utility Transnet also received a cash injection, as well as other sectors of the economy, officials said.
Xi said China and South Africa were important emerging economies with similar perspectives on many global issues.
“Hence the need to strengthen cooperation,” Xi said.
Reporting by Alexander Winning; Editing by James Macharia

China plans to invest $14.7 billion in South Africa, what you need to know

JOHANNESBURG (Reuters) &#8211; The New Development Bank, set up by the BRICS group of emerging economies, has approved loans of $300 million for energy projects in South Africa and $300 million for a transportation project in China.
South Africa, which will host a BRICS summit later this week in Johannesburg, is trying to diversify its energy mix to reduce its reliance on heavily polluting coal-fired power plants.
It has launched several bidding rounds for billions of dollars of renewable energy deals in recent years, with the latest expected to open later this year.
The BRICS development bank said in a statement that its $300 million loan to South Africa would be channelled via the Development Bank of Southern Africa and would focus on projects which reduce carbon dioxide emissions and boost energy efficiency.
Its $300 million loan to China is for a new metro line in the city of Luoyang. With the two projects, the bank’s portfolio of loans stands at more than $5.7 billion.
The BRICS grouping comprises Brazil, Russia, India, China and South Africa.
Russia said this month that it was in talks with the New Development Bank about borrowing more than $1 billion for infrastructure projects.
Reporting by Alexander Winning; Editing by Alison Williams

Why BRICS bank is loaning South Africa and China $300 million each

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

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Has the election of Donald Trump as United States president and his decision to withdraw the US from the Paris Agreement on climate change created an opportunity for BRICS to lead a more nuanced and balanced geo-political conversation.

BRICS opportunity for global leadership

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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CNBC Africa is joined by Cyril Prinsloo, Researcher, Economic Diplomacy Programme at SAIIA to talk about BRICS, how relevant is it and what progress has it made for emerging markets.

How relevant is BRICS today?

A New Development Bank (NDB) set up by the &#8220;BRICS&#8221; group of emerging economies plans to lend $1.5 billion to South Africa for infrastructure projects over the next eighteen months.
The BRICS &#8211; Brazil, Russia, India, China and South Africa &#8211; agreed to create the infrastructure-focussed lender in July 2014 as an alternative to the World Bank, launching it a year later.
The bank, headquartered in Shanghai, officially opened its African regional centre in Johannesburg on Thursday which will . identify projects that it can fund.
&#8220;We have an appetite to do about $1.5 billion of lending to South Africa for the next 18 months and the task before the members of the Africa regional centre is to make sure that this pipeline is rectified into actual lending projects,&#8221; the bank&#8217;s president Kundapur Kamath said at the launch.
The NDB was created to address a massive infrastructure funding gap in the member countries, which account for almost half the world&#8217;s population and about one-fifth of global economic output.
It was founded with an initial authorised capital of $100 billion and started lending last year, funding seven projects worth $1.5 billion.
&#8220;Our target is to end 2018 with a total loan book of about $8 billion for approximately 35 projects,&#8221; Kamath said, referring to the loan book of the bank as a whole.
South African President Jacob Zuma said the regional office was expected to ease funding access hurdles for African countries, as the bank was working on expanding its membership to other countries outside the BRICS.
&#8220;We expect that the bank through the Africa Regional Centre will contribute to accelerating infrastructure investment in energy, transport, water and other productive sectors,&#8221; Zuma said.
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Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia
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New BRICS bank plans $1.5BN lending for South African projects

National Treasury
The BRICS New Development Bank (NDB) has confirmed that Mr Dondo Mogajane, Director-General of the National Treasury has been appointed as the new Director representing South Africa. This follows the expiration of Mr Tito Mboweni’s term of service as Director of the NDB in early July. Mr Tito Mboweni commenced his term as South Africa’s Director at the NDB on 03 July 2015, for a 2-year term, which ended on 02 July 2017.
The nomination of Mr Mogajane by the Minister of Finance Malusi Gigaba and subsequent appointment will ensure that no additional costs are incurred further by government in remunerating an appointment from outside of public service while also enhancing strategic alignment and collaboration between the government of South Africa and the Bank.
In a letter formally informing Mr Mboweni of the decision, Minister Gigaba has thanked Mr Mboweni for his excellent representation of the government of South Africa as a member of the Board and Chair of the Audit, Risk and Budget Compliance Committee with commendable professionalism and dedication.
In accordance to Articles 11(a), 12(b) and (c) of the NDB Articles of Agreement, the NDB has also confirmed the following appointments:
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<ul>
<li>Mr Sfiso Buthelezi, Deputy Minister of Finance has been appointed as the Alternate Governor of the NDB for South Africa;</li>
<li>Mr Monale Ratsoma, Deputy Director-General for Economic Policy at the National Treasury, in his capacity as Acting Deputy Director-General for International and Regional Economic Policy will continue to serve as alternate Director of the NDB for South Africa.</li>
</ul>
These appointments are also in line with the practice from the other founding members of the Bank whose representatives are from their countries’ Ministries of Finance and Treasury departments.

BRICS New Development Bank confirms appointment of South Africa’s representatives

Misheck Mutize | University of Cape Town
The view that South Africa should look towards the International Monetary Fund (IMF) to be rescued from the unfolding economic meltdown seems to be growing by the day. It has been touted in the most unlikeliest of places. Even the new Finance Minister Malusi Gigaba, a proponent of the so-called radical economic transformation, has expressed willingness to engage the IMF.
There is no doubt about the seriousness of South Africa’s economic crisis. The country entered a technical recession after the economy contracted in the fourth quarter of last year and first quarter of this year. Unemployment seems to be rising towards the 30% mark.
And global credit rating agencies are uneasy about South Africa’s economic prospects. After a spate of downgrades early this year, they have threatened further downgrades which will take the country deeper into junk status.
While the South African situation is getting more desperate, which calls for desperate measures, the idea to turn to the IMF is a bad idea and must be dismissed. There are a number of reasons why I think this is the case.
First, historical evidence suggests that IMF administered rescue programmes are actually a recipe for disaster. They worsen rather than rescue the situation.
Second, to suggest that South Africa’s problems are financial in nature is a dangerous misdiagnosis. It will distract the government from the critical issues it needs to address which have little to do with the finances.
Third, one of the main driving factors of the current economic predicament is a loss of investor confidence. This is linked to other factors like policy uncertainty, political instability within the ruling party and mismanagement of public resources mixed with corruption. An IMF bailout won’t address these problems.
And lastly, hopping onto the IMF programme would disturb the country’s commitment to reforming the global multilateral financial world. South Africa is part of the BRICS bloc which is grooming a new and perhaps alternative multilateral development finance institution called New Development Bank. If anything, South Africa must look to BRICS if it needs financial rescue.
I believe that the solutions to the country’s economic crisis are within. It needs internal discipline to address them – not an external force.
<h2>Bad record</h2>
The IMF does not have a good historical record. A view of the many countries which have subjected themselves to the IMF doesn’t inspire confidence. Instead of bailing out countries, it has created a list of countries suffering from debt dependency.
Of all the countries across the world that have been bailed out by the IMF:
<ul>
<li>11 have gone on to rely on IMF aid for at least 30 years</li>
<li>32 countries had been borrowers for between 20 and 29 years, and</li>
<li>41 countries have been using IMF credit for between 10 and 19 years.</li>
</ul>
This shows that it’s nearly impossible to wean an economy from the IMF debt programmes. Debt dependency undermines a country’s sovereignty and integrity of domestic policy formulation. The debt conditions usually restrict pro-growth economic policies making it difficult for countries to come out of recession.
IMF’s poor record is partly influenced by the policy choices that it imposes on countries it funds. The IMF policy choices for developing countries, known as a structural adjustment programme, have been widely condemned. The main reason is that they insist on austerity measures which include; cutting government borrowing and spending, lowering taxes and import tariffs, raising interest rates and allowing failing firms to go bankrupt. These are normally accompanied by a call to privatise state owned enterprises and to deregulate key industries.
These austerity measures would cause great suffering, poorer standards of living, higher unemployment as well as corporate failures. The current technical recession would be magnified into a full-blown crisis, leading to even greater shrinking of investment.
<h2>South Africa and the IMF</h2>
South Africa has always been aware of the dangers of taking IMF money. In December 1993, five months before the country became a democracy, the National Party government, under the guise of transitional executive committee, signed an IMF loan agreement.
When the African National Congress (ANC) came to power after the elections in April 1994 it walked away from the IMF offer. Its concern was mainly that the IMF would undermine the sovereignty of the newly established democracy by imposing inappropriate, policy choices that would have further harmed poor people.
Over the past 23 years South Africa has stayed away from the IMF. There is no reason to change this. In fact there are more reasons today for South Africa to maintain its position.
<h2>The BRICS factor</h2>
South Africa is set to assume the rotational chair of the BRICS bloc in 2018. The BRICS bloc was formed, in part, to challenge, the dominance of western Bretton Woods institutions – the IMF and the World Bank.
It would be politically naive and economically counterproductive for South Africa to give itself to the IMF. It would undermine South Africa’s integrity and tarnish its place within the BRICS bloc. And it would undermine the idea that the BRICS’ New Development Bank can offer an alternative to the Bretton Woods institutions.
BRICS promises to yield real economic benefits to South Africa because it can leverage trade between the member countries as well as public and private investment from within the bloc.
<h2>A better way to deal with the crisis</h2>
Advancing any financial assistance to South Africa without addressing the current bad policies would not address the current economic turmoil. Rather, it would result in the country sliding deeper into debt.
And any assistance would be entrusted to a government that has created the crisis because of imprudent policies. The result would be an extension of the crisis because the pressure would have been taken off the government leaving the architecture of the meltdown intact.
What needs to happen is that policymakers need to turn their minds to the real problems. This can simply be done without a bailout.

Op-Ed: Why South African shouldn’t turn to the IMF for help

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The Brics countries have adopted a seven point Action Plan on Deepening Industrial Cooperation within the trading bloc. The member countries are currently meeting in China.

Brics countries adopt action plan to deepen industrial cooperation

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

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

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South Africa&#8217;s recently installed finance minister vehemently pushed back against assertions that he is a puppet of scandal-wracked President Jacob Zuma.
Malusi Gigaba told CNBC on Friday that his loyalty lies with South African constitution, &#8220;regardless of who is president.&#8221;
&#8220;I think that these attempts to castigate me, to frame me, paint me in a particular way are quite malicious,&#8221; Gigaba said. &#8220;They&#8217;ve got absolutely nothing to do with the work that I do.&#8221;
<div id="inline_movable_ad"> <a class="inline_quotes" href="http://data.cnbc.com/quotes/ZAR%3D" target="_self" data-gdsid="610789" data-inline-quote-symbol="ZAR=">South Africa&#8217;s currency</a> sold off and its cost of borrowing spiked about three weeks ago after the country&#8217;s president shocked markets by <a href="http://cnbc.africa/reshuffle/">firing previous Finance Minister Pravin Gordhan</a>, a well-respected, stable official within an administration engulfed by allegations of corruption. Zuma has been embroiled in repeated scandals almost from the time he took office in 2009.</div>
Zuma put loyalist Gigaba in Gordhan&#8217;s place. When asked if he thinks something underhanded is going on in the government that led to his appointment, Gigaba said he doesn&#8217;t know.
&#8220;I don&#8217;t know. I&#8217;m not a fortune teller. I cannot go into conspiracy theories, that&#8217;s not my responsibility. I&#8217;ve got a job to do and my job is not to look for bogeymen, for conspiracies,&#8221; Gigaba said, adding that engaging in hearsay would be a &#8220;waste of time.&#8221;
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<h4 class="subtitle">Credit downgrades, street protests</h4>
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<a href="http://cnbc.africa/trending/cabinet-reshuffle-17/2017/04/03/moodys-places-s-rating-review-downgrade/">Moody&#8217;s placed South Africa&#8217;s credit rating on review</a> for a downgrade this month, after two other major agencies already cut the country&#8217;s rating. The top order of business for new Finance Minister Gigaba has been to reassure the ratings firms, which are concerned about South Africa&#8217;s political stability and fiscal discipline.
Gigaba said, however, that he would not set a timeline on when he expects the country to see its investment grade rating restored.
&#8220;I&#8217;m just going to do what I need to do as the minister of finance to strengthen the South African economy, provide prudent fiscal management and show that investments grow in the country, that our economy grows and we&#8217;re able to address issues of inclusive growth and bring our economy bac
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Zuma and his surprise termination of Gordhan have sharply divided the governing ANC party, of which Zuma is a long-standing member. Widespread, multi-racial protests have called for Zuma&#8217;s resignation in recent months.
South Africa was once heralded as a leader among developing countries — in 2010, the year after Zuma took office, it became the &#8220;S&#8221; in &#8220;BRICS,&#8221; joining Brazil, Russia, India and China in the elite acronym of emerging-market superstars. But in 2017, South Africa is saddled with 25 percent unemployment and is forecast to grow by less than 1 percent for the second consecutive year, according to the World Bank.
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SA’s Finance Minister Gigaba: I’m no puppet of Zuma

The idea of establishing an alternative credit rating agency led by the BRICS bloc of countries is <a style="font-family: Roboto, Arial, sans-serif; font-size: 15px; font-weight: 400;" href="http://www.fin24.com/Economy/brics-to-fast-track-new-credit-rating-agency-20161016">gaining momentum</a>. But there are questions as to whether it will prosper given the major challenges it’s bound to face.
Leaders from the bloc made of Brazil, Russia, India, China and South Africa are championing the idea. The idea formerly emerged during the 2015 BRICS summit in <a href="http://www.fin24.com/Economy/brics-to-fast-track-new-credit-rating-agency-20161016">Ufa</a> and was affirmed by the Goa Declaration at the <a href="http://timesofindia.indiatimes.com/business/india-business/BRICS-countries-agree-to-set-up-credit-rating-agency/articleshow/54881697.cms">8th BRICS Summit</a>. Most recently South Africa’s President <a href="http://city-press.news24.com/News/zuma-bashes-rating-agencies-that-dont-seem-to-be-well-balanced-to-brics-20161026">Jacob Zuma said</a> BRICS countries had taken the decision that they could rate themselves, and perhaps others too. The aim would be to ensure a more “balanced view” when ratings are made.
Both <a href="http://www.reuters.com/article/us-brazil-ratings-s-p-idUSKCN0RA06120150910">Brazil</a> and <a href="https://www.wsj.com/articles/moodys-downgrades-russia-to-junk-status-1424469136">Russia</a> have recently been downgraded by Moody’s. And for over a year South Africa has lived with a <a href="https://theconversation.com/south-africa-is-skating-on-thin-ice-as-rating-agencies-weigh-their-options-69243">possible downgrade</a> by the “big three” Western credit rating agencies, Standard &amp; Poor’s, Moody’s and Fitch.
The big three have faced increasing criticism. <a href="https://www.businesslive.co.za/bd/economy/2017-01-10-moodys-sees-more-downgrade-misery-for-sub-saharan-africa/">Critics claim</a> that the frequent downgrades of developing countries are unjust and serve Western political interests.
BRICS has started engaging financial experts on a business model for the new rating agency as well as what <a href="http://in.rbth.com/economics/finance/2016/10/18/brics-in-search-of-business-model-for-new-rating-agency_639889">methodology it would adopt</a>.
This isn’t the first time there’s been an attempt to challenge the big three. China, Russia, India and Brazil have all established their <a href="https://www.rt.com/business/326232-dagong-russia-rating-agency/">own credit rating agencies</a>. But none has ever come close to establishing itself as <a href="https://www.rt.com/business/158856-russia-raitings-agency-ministry/">an alternative</a>.
Will the BRICS initiative be the exception?
<h2>Alternative view</h2>
Critics of the big three were emboldened after the 2008 financial crisis. The rating agencies were forced to pay over $2.2 billion in fines relating to their complicity in the <a href="https://www.theguardian.com/business/2017/jan/14/moodys-864m-penalty-for-ratings-in-run-up-to-2008-financial-crisis">credit crisis</a>. This further damaged their credibility and heightened accusations, particularly in emerging countries.
Critics have also attacked the rating agencies’ <a href="http://blogs.reuters.com/alison-frankel/2013/02/05/can-we-now-admit-its-time-to-end-issuer-pays-credit-rating-model/">issuer pay model</a>. Under this system credit rating agencies are paid by the institutions being rated (debt issuers) and not by the investors who use the information, creating a conflict of interest. Critics also argue that this entrenches geopolitical biases.
The hope is that a new agency would compensate for the perceived bias in the global financial architecture. It would also <a href="https://www.bloomberg.com/news/articles/2016-06-26/brics-eye-a-new-rating-company-to-reduce-established-firms-grip">create competition</a> and offer investors, issuers and other stakeholders a wider choice and a more diverse view on creditworthiness.
<h2>Weakness in the BRICS muscle</h2>
Given that BRICS is home to <a href="http://globalsherpa.org/bric-countries-brics/">half the world’s population</a>, accounts for more than a quarter of the <a href="https://www.weforum.org/agenda/2016/04/what-is-the-state-of-the-brics-economies/">world’s economic output</a> and has recently set up a nascent New Development Bank, the countries under its banner have, between them, the capacity to establish an influential credit rating institution.
But questions have been raised about whether the new rating agency satisfies a financial need or is <a href="http://www.fin24.com/Economy/brics-ratings-agency-is-politically-motivated-20161018">politically motivated</a>. And if it will be <a href="http://www.fin24.com/Economy/brics-ratings-agency-is-politically-motivated-20161018">competent to provide an independent</a>, objective and credible credit rating service based on sound methodology.
<a href="http://afkinsider.com/134083/brics-members-divided-on-creating-their-own-credit-rating-agency-worry-about-credibility/">China has already expressed concerns</a> about the <a href="http://www.sabc.co.za/news/a/c77c8e004e76d43c979fdf3de8e44b3d/Mixed-feeling-about-proposed-Brics-ratings-agency-20160310">credibility of a new agency</a>. <a href="http://www.cfr.org/financial-crises/credit-rating-controversy/p22328">Analysts</a> have also strongly criticised the probable adoption of the existing “issuer-pay” model. This would mean that the current model is simply replicated.
<h2>Tough market to crack</h2>
Considering that the three major rating agencies <a href="http://www.reuters.com/article/uscorpbonds-ratings-idUSL2N17U1L4">control more than 90%</a> of the world’s ratings business, establishing a new one wouldn’t be easy. It could take years, or even decades, to gel.
There have been previous attempts to launch new ratings agencies. All failed to take off. Examples include the Lisbon headquartered <a href="http://business.financialpost.com/investing/the-big-3-credit-ratings-agencies-have-a-new-competitor">ARC Ratings</a> which was launched in November 2013 as a consortium of five national ratings agencies from South Africa, Malaysia, India, Brazil and Portugal. It is yet to release its first sovereign rating.
The CARE Rating agency of India, started in April 1993, is still rating <a href="http://www.careratings.com/about-us.aspx">small to medium enterprises</a>.
The Global Credit Ratings (GCR) was established in South Africa in 1995. It is only <a href="http://www.sabc.co.za/news/a/9f1c57004ea230f196dddedd3b82934c/SA-rating-agency-to-start-offering-sovereign-credit-ratings-20161810">planning to start offering sovereign credit ratings from 2017</a>.
Others that have been launched include:
<ul>
<li>
<a href="https://www.marc.com.my">MARC of Malaysia</a> which has been operational since 1996, but still only covers corporate ratings;
</li>
<li>
The Hong Kong based <a href="http://www.ibtimes.co.uk/russia-china-setting-universal-credit-rating-group-rival-wests-big-three-credit-raters-1483341">Universal Credit Rating Group</a> which was launched in 2014l
</li>
<li>
Russia’s Analytical Credit Rating Agency (ACRA) which was established in 2015;
</li>
<li>
the Beijing based China Chengxin Credit Rating Group, established in 1992;
</li>
<li>
and Dagong Global Credit Rating established in 1994.
</li>
</ul>
None has established itself as an alternative credit rating agency of choice for emerging countries.
<h2>The task ahead</h2>
The biggest task for a new BRICS credit rating agency will be to convince investors, particularly those from the US and Europe, that the ratings assigned are politically impartial. One way of doing this would be to adopt the <a href="http://in.rbth.com/economics/finance/2016/10/18/brics-in-search-of-business-model-for-new-rating-agency_639889">“investor-pays” model</a> where investors subscribe to ratings released by the agencies, and the subscription revenues become its source of income. This would ensure transparency and credibility while avoiding conflicts of interests.
But adopting a new model might not fly given that main users of the credit rating information are global pension and mutual funds which currently use at least one of the “big three” rating agencies. They are therefore unlikely to trust any ratings from the new BRICS rating agency with a yet to be tested rating model.
Adopting a new model would also be tricky as the BRICS rating agency would need to wield enough influence to be able to attract sufficient subscriptions from international funds.
Finally, investors will be sceptical about the new BRICS rating agency’s ability to compensate for losses in the event that it issues false ratings as the “big three” <a href="https://www.theguardian.com/business/2017/jan/14/moodys-864m-penalty-for-ratings-in-run-up-to-2008-financial-crisis">did</a> in the US.
The BRICS agency is likely to be another failed rating agency project unless it can overcome these three hurdles.
<img loading="lazy" decoding="async" src="https://counter.theconversation.edu.au/content/72382/count.gif?distributor=republish-lightbox-basic" width="1" height="1" alt="The Conversation"/>
<a href="https://theconversation.com/profiles/misheck-mutize-331377">Misheck Mutize</a>, Lecturer of Finance and Doctor of Philosophy Candidate, specializing in Finance, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a> and <a href="https://theconversation.com/profiles/sean-gossel-229268">Sean Gossel</a>, Senior Lecturer, UCT Graduate School of Business, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a>
This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/brics-wants-to-set-up-an-alternative-rating-agency-why-it-may-not-work-72382">original article</a>.

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