By Edson Baraukwa | Africa Guardian
The Free Market Foundation (FMF) argues that South Africa has little in common with its BRICS partners, deeming discussions of a unified currency impractical.
The idea of a “BRICS currency” has gained traction in recent years amid broader efforts to promote “de-dollarisation” and reduce dependence on the U.S. dollar. This push has been particularly vocal among Russia, which faces U.S. sanctions following its invasion of Ukraine. However, smaller economies like South Africa are wary of this shift, given their reliance on the U.S. economy.
While countries like Russia and China are already exploring trade agreements in local currencies, the prospect of a common BRICS currency remains contentious. Proposals have included a gold-backed currency and a digital alternative, the latter generating recent interest. At the New Development Bank’s annual general meeting in Cape Town, Finance Minister Enoch Godongwana described the currency discussion as “complex,” noting no consensus has emerged on a digital currency.
Godongwana has previously dismissed the notion of a physical BRICS currency, stating at the 2023 conference that no proposals were even informally suggested. He highlighted that establishing a common currency would require a central bank, which could compromise national monetary independence.
FMF analyst Nicholas Woode-Smith commended South Africa for not pursuing a unified BRICS currency, arguing it serves no practical purpose for the nation. He explained that shared currencies can facilitate international trade—citing the U.S. dollar and British pound as examples—but a BRICS currency would likely only serve its member states and wouldn’t gain traction with larger economies.
Woode-Smith contrasted the BRICS bloc’s lack of cohesion with the Eurozone, where a unified currency makes sense due to extensive internal trade and shared economic interests. He emphasized that South Africa, which consistently trades at a deficit with major BRICS members, would benefit more from closer ties with its neighbors in the Southern African Development Community (SADC), where many already use the Rand or peg their currencies to it.
Ultimately, he cautioned that adopting a BRICS currency would not be advantageous for South Africa and could isolate it from lucrative trade partnerships with the European Union, United Kingdom, and United States.
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