When the Ebola epidemic hit West Africa last year, Cuba, the tiny Caribbean island nation, outpaced global heavyweights by dispatching 165 medical workers to combat the disease in Sierra Leone. Cuban doctors stood at the forefront of Ebola battle and fought it vehemently. That was not the first time Cuba had done so. It has sent tens of thousands of health professionals to other developing nations in the past. Cuba sent 2,500 health workers to Pakistan after its 2005 earthquake, and another 1,500 to Haiti after its 2010 earthquake. In addition, every year Cuba trains hundreds of foreign medical students for free so that they can serve their country when they return.
While Cuban doctors were fighting Ebola in West African hinterlands, there was another remarkable scene in the Ethiopian capital Addis Ababa. A group of IGAD envoys struggled to strike a deal between two warring factions from South Sudan so that a transitional government of national unity could be formed and peace restored in the war trodden, newly independent East African nation. IGAD- Inter-governmental Authority for Development- is a consortium of 8 developing countries from East Africa- Djibouti, Eritrea, Ethiopia, Kenya, Somalia, Uganda, Sudan, South Sudan- and works for trade, development and peace in the region.
These are just two examples out of many such activities that are practiced in the global South today.
From G77 to BRICS Bank
While the term South-South cooperation is relatively a recent invention, practice itself is not very new. Countries in the South have been cooperating for centuries in one form or the other. For instance, China-Africa trade is believed to be started as before as 200 BC.
Cooperation among neighboring countries in the South is historically not uncommon, but it was the creation of the G77 group in 1964 that brought developing countries together in a more organized way and paved the way for cooperation that expanded beyond their immediate neighborhoods. The 2002 Johannesburg summit on Sustainable Development emphasized on South-South Cooperation and adopted a Declaration and an Implementation Plan.
Rapid change in the global order has also resulted in an increased intensity of South-South cooperation. We have seen that the world has undergone a major political and economic transformation in recent decades. The dynamics of traditional North-South relations have tremendously transformed, and many issues such as global poverty, environment, energy and climate change are global issues instead of merely Southern or Northern.
More recent developments have been rather rapid. South-South trade and investment have been massive and to fund mega infrastructure projects in developing countries, the emerging economies of BRICS have established a new bank which has been named the New Development Bank.
Some commentators argue that the changed relations are not replacing the already existing North-South relations, but just supplementing them. Whatever the case, the dynamics of global order has come to a different mode and traditional dependency theories might need a thorough update in the near future.
Trade & Investment: No Strings Attached
“Thanks to the Chinese we also rediscovered that Africa is not a continent of crises and misery but one of 800 million consumers,” once a French diplomat jokingly said.
A recent report by the United Nations estimates that South-South trade is now nearly equal to North-North trade as a proportion of world trade. India’s trade with Africa alone has jumped to $40bn in the past few years.
The United Nations Conference on Trade and Development (UNCTAD) estimated that, between 1996 and 2006, developing economies provided more than $17bn of foreign investment in Africa and $27bn of investment in Asia. According to the International Monetary Fund (IMF), South-South trade today accounts for almost half of the total trade of China, and almost 60% of the total trade of India and Brazil. In addition, the south-south trade of each of these countries will continue to outstrip their trade with the rest of the world all the way through to 2050, according to IMF forecasts.
Emerging economies, primarily China, India and Brazil have substantially increased their investment in developing countries in Africa, Asia and Latin America. China alone provides 20% of private foreign direct investment in developing countries. As of 2013, China’s foreign direct investment to Africa was more than USD 12 billion.
As a result of increased trade, investment and technology transfers, it has been estimated that South-South cooperation amounts more than USD 20 billion. Foreign direct investment among countries in the South grew by 20 per cent each year 1996–2009. India, for example, invested about 65 per cent of its outward foreign direct investment in developing countries. When living standards are improving and income levels are rising, many developing countries are seeking to build massive infrastructure projects. While they might lack capacity and the expertise to do the job themselves, they turn into other developing countries who have come through similar experiences and are capable of building big infrastructure projects or making a multi-billion dollar investment. For instance, China has been investing to build several new roads, railways and telecommunication networks in other developing countries. A recent example includes a massive East African railway line that would connect Kenya with Uganda, Rwanda and South Sudan. In 2007 China initiated the China-Africa Development Fund that stimulates and facilitates Chinese investments in Africa.
For many developing countries, rising economies across their borders are sources of inspiration. “We view China’s success as a source of hope and inspiration,” said Jacob Zuma, South Africa’s President, while welcoming Chinese President Xi Jinping to South Africa last year.
“China will continue to offer, as always, necessary assistance to Africa with no political strings attached,” declared the Chinese President.
Chinese loans and investments are so popular in Africa probably because, like the Chinese president said, they do not have any political strings attached. China doesn’t seem to care whether the receiving country has transparency, democracy or good governance practices in place. Though free of political strings, Chinese offers in some cases seem to be lurking with a plenty of economic strings.
A New Development Bank Opened
On 15 July 2014, the first day of the 6th BRICS summit held in Fortaleza, Brazil, the group of emerging economies signed the long-anticipated document to create the $100 billion BRICS Development Bank, named the New Development Bank, and a reserve currency pool worth over another $100 billion. Unlike the World Bank, which assigns votes based on capital share, in the New Development Bank each participant country is assigned one vote, and no countries will have veto power.
Headquartered in Shanghai, China, the bank’s primary focus of lending will be infrastructure projects with authorized lending of up to $34 billion annually. Brazil, Russia, India, China and South Africa will initially contribute $10 billion each to bring the total to $50 billion. The bank will allow new members to join but the BRICS capital share cannot fall below 55%.
Development Aid & Humanitarian Assistance
Developing countries such as China, India and Brazil that provide development assistance to other developing countries today used to be recipients of development assistance from OECD countries.
According to a new report by a non-governmental organisation called Global Humanitarian Assistance, aid (conservatively defined) from non-DAC countries rose by 143% in 2005-08, to $11.2 billion, before falling during the financial crisis. Aid from the BRICs (Brazil, Russia, India and China) more than doubled. Between 1951 and 1992 India received about $55 billion in foreign aid, making it the largest recipient in history. Since 2013, India has introduced its own international development agencythe Development Partnership Administration (DPA)- that provides grants to development projects in other developing countries.
India’s strategic cooperation with its neighboring countries is nothing new. It has provided massive support to countries such as Bhutan, Bangladesh, Afghanistan, Sri Lanka and Nepal for years.
“We do not like to call ourselves a donor,” says Syed Akbaruddin, joint secretary with India’s Ministry of External Affairs. “We call it development partnership because it is in the framework of sharing development experiences. It follows a model different from that followed in the conventional North-South economic cooperation patterns, hence the designation of Development Partnership Administration, it is administering our development partnership projects.”
According to a report published by the Economist, Brazil’s foreign aid budget has increased fivefold since 2005. Turkey gives more of its national income in aid than the average Organisation for Economic Co-operation and Development (OECD) country, while the United Arab Emirates is the most generous of today’s donors, handing over 1.25% of its national income for development assistance. Brazil, which is also thinking about setting up its own aid agency, gives up to $4 billion a year of assistance, broadly defined.
China is equally influential when it comes to south-south development aid. The country itself received foreign assistance for years, but since 2005 the continuum has taken a different turn.
A database updated by AidData reveals that China has committed $75bn in aid to Africa between 2000 and 2011, financing at least 1,700 development projects in the region.
- Some commentators argue that the changed relations are not replacing the already existing North-South relations, but supplementing them. Whatever the case, the dynamics of global order has come to a different mode and traditional dependency theories might need a thorough update in the near future.
- China has been investing to build several new roads, railways and telecommunication networks in other developing countries. A recent example includes a massive East African railway line that would connect Kenya with Uganda, Rwanda and South Sudan. In 2007 China initiated the China-Africa Development Fund that stimulates and facilitates Chinese investments in Africa.
Capacity Building & Knowledge Sharing
It’s not all about trade, investment and infrastructures. South-South cooperation in capacity building and knowledge sharing is equally expanding.
“The emerging powers can offer alternative models of conflict management and development, shaped by their recent transition experiences that could be more easily replicated and adapted to the local contexts of other developing countries,” says Dr Anita Mathur of the UN Department of Political Affairs.
One remarkable example is of BRAC Bangladesh. The organization has branched out from Bangladesh to other parts of Asia and Africa. Its seed testing and multiplication farm has produced high quality rice seeds in Liberia. In Uganda, BRAC trains women farmers as community agriculture promoters that help grow seeds for nutrient-rich food crops.
The Brazilian Bolsha Familia Programme, a cash transfer model, has helped improve childhood nutrition and education in Brazil, and the system has been successfully replicated to different parts of Africa.
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In the mid-1990s Nepal initiated a domestically financed noncontributory pension system and since then cash transfers have been provided to the elderly, disabled and widowed, and were delivered even during the Maoist conflict. The practice was adopted by other developing countries such as Lesotho, Kenya and Ethiopia.
Knowledge and experience sharing is promoted through different scholarships and scholar exchange programs operated between developing countries. Countries like China, India and Cuba provide numerous scholarships annually to students from other developing countries so that they can learn and contribute to their own society once they return.
Still a Long Way to Go
Recent statistics do show that south-south cooperation has reeved up, but there is still a long way to go. Statistics also show that the 29 member countries of the OECD’s development assistance committee account for 90% of global development aid and have decades of experience behind them; and south-south cooperation is certainly not going to replace these figures soon. For many, south-south cooperation is an ideological boost rather than something concrete in practice.
Despite ample willingness, ambitious mandates and an unprecedented passion, some southsouth cooperation projects suffer from insufficient funding and are dependent on Northern donors for their action.
There have been concerns that powerful countries in the South like China and India might use the term south-south cooperation just to fulfill their vested interests. Some critics have labeled some of China’s actions in Africa as neo-colonialist.
These accusations do not seem to be totally baseless either. Just see the Ebola case. Countries like China, India and Brazil have done plenty of business in Africa, but when West Africa is suffering with the worst public health crisis in decades, these giants have shown little or no interest.
In addition, there appears to be a danger that south-south cooperation might become an exclusive club of rich and middle-income countries in the South, while least developed countries (LDCs) might be forgotten, isolated and in worst cases indebted to their powerful Southern counterparts. Some argue that southsouth cooperation is a success story of Asia and doesn’t have much to offer for Africa. Criticisms regarding transparency, human rights issues and labor conditions are also common.
South-South cooperation certainly offers a promising chance to countries in the South to cooperate, assist each other, share, learn and grow together; but if countries focus merely on trade, investment, profit and their own exclusive benefits, the practice no longer becomes a cooperation.
(This article first appeared in Global South Development Magazine’s October 2014 edition)