Suggestions that Brics member states are ready to use an alternative payment system to the SWIFT international payment system in a bid to lessen their reliance on the dollar are premature, especially for SA whose trade is skewed towards the west, says finance minister Enoch Godongwana.
Godongwana, who chairs the Brics (Brazil, Russia, India, China and SA) work stream of finance ministers, says the matter of an alternative payment system away from the internationally recognised SWIFT payment system “has not been sufficiently canvassed as part of our meetings as finance ministers”.
“Because our trade as it is skewed in favour of West … 75% of our liabilities are in Europe and North America. So to come to say that we as SA [can move away from the dollar and SWIFT] is premature, he said on the sidelines of the state visit to SA by China’s president, Xi Jingping.
“It doesn’t mean that we as SA can’t participate in SWIFT or any other payment system. There is some discussions within the central bank stream about a payment system … it’s about how do we create a payment system among ourselves that is suitable to our needs.”
His comments follow Business Day’s report on how SA will use this week’s Brics summit to push for member countries to use their own currencies when trading with one another as a mechanism to push for the reform of global political and financial institutions.
After the invasion of Ukraine by Russia in 2022, western leaders imposed sanctions on Moscow in a bid to end the war and limit the latter’s access to money. This prompted Russia to spearhead the development of a new currency, possibly backed by gold.
Russian central bank governor Elvira Nabiullina has gone on record as saying a proposed Brics currency will be “quite difficult to implement”, while SA’s Leslie Maasdorp, vice-president of the New Development Bank, a Brics initiative, has called the project a medium- to longer-term aspiration.
The western sanctions imposed on Russia also affect the country’s ability to use the SWIFT payment system.
Russian agricultural bank Rosselkhozbank was cut off from the payment network by the EU in June 2022 over its invasion of Ukraine.
Meanwhile, during Tuesday’s bilateral discussions between SA and China ahead of the emerging markets group summit, Godongwana said talks on how to even out the trade deficit between the two countries were high on the agenda.
The Brics economies accounted for about 21.3% of SA’s total trade with the world in 2022, of which China accounted for 67.6%, India 26.5%, Brazil 4.2% and Russia 1.7%, according to data from the Industrial Development Corporation (IDC).
“In the resolution today, which is not part of the Brics summit … is to say how do we close that gap, Godongwana said
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