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BUSINESS & ECONOMY

The New Development Bank: BRICS and the New International Economic Geopolitics

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By  Charles Pennaforte

The decline of the old order led by North Americans and Europeans is an increasingly concrete fact. We are living in new times. There are countless examples: the loss of geopolitical, economic and ideological influence. Let us analyze the case of the New Development Bank (NBD), the “BRICS Bank,” to answer the following question: Can the NBD function as an alternative to Western financial centralization? More specifically: will the IMF and the World Bank maintain control and the imposition of neoliberal prescriptions in the supply of international credits?

We would like to draw your attention to a detail about most of the reviews on the NBD to date. Most mention almost exclusively the bank’s economic impacts on the world’s financial architecture, leaving aside the geopolitical aspects that the institution will provoke on the international scene. The economic and financial impacts are undoubtedly important. The geopolitical are even larger.

The 21st century brought a series of transformations to the international economy and relations. The People’s Republic of China has consolidated itself as a major world player because of its economic growth since the 1980s. At the end of the Cold War, the capitalist economy experienced a great expansion, and at the same time, the USA and Europe began to gradually decline in the current Systemic Cycle of Accumulation, commanded by Washington (Arrighi 1996). This context provides a “window of opportunity” for anti-systemic action by several countries such as China, Russia, India and Brazil (Pennaforte 2021). Each has political, economic and strategic objectives but has a multipolar and multilateral world as its horizon.

The creation of the NBD in 2015 constituted the first financial (institutional) initiative outside the Euro-Atlantic axis since 1945. Since the end of World War II, North Americans and Europeans have commanded the international financial system which, over time, imposed a series of economic measures for the supply of credit by the International Monetary Fund (IMF) to developing countries that sought industrialization. Such economic measures greatly impacted society by imposing spending cuts that always impacted social areas, promoted a backflow in investments, and provoked recession, mainly in Latin America.

The conception of the NBD took place in 2014 at the BRICS Summit in Fortaleza, with its entry into operation in Shanghai (China) in 2015, with an authorized capital of 100 billion dollars. For the first time in history, “emerging” or Global South countries began creating a financial body with possibilities to offer credit to the international community. With the help of the NBD, numerous countries interested in financing are able to advance their development projects under better conditions.

The NBD places the BRICS as a possible global player in the dispute for areas of influence in the international system. The NBD could become an important geopolitical and economic mechanism in the current moment of systemic transition to a scenario where the Washington-Brussels axis will lose its influence.

A new center for offering credit will bring new perspectives to countless countries that will no longer necessarily depend on the IMF or the World Bank to start or continue their development processes.

Prof. Dr Charles Pennaforte -director of the laboratory of geopolitics, international relations and anti-systemic movements (LAbgrima) at the UFPEL university (Brazil).
Courtesy: Modern Diplomacy


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BUSINESS & ECONOMY

Pakistan-Saudi Business Ties Grow at Jeddah Chamber

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From shared history and deep-rooted cultural ties to a powerful new economic alliance – the Pakistan-Saudi Arabia relationship is transforming. Think of growing trade, exciting investment opportunities, and a future built on collaboration. Recent high-level talks, like the meeting between Federal Minister for Commerce Jam Kamal Khan and the Jeddah Chamber of Commerce and Industry, make it clear: Pakistan-Saudi Business is entering a dynamic new era. Ready to explore what this means for you?

These discussions are not merely ceremonial; they represent a focused drive to translate shared goodwill into concrete actions, enhancing bilateral trade, attracting substantial Saudi investment, and forging long-term economic alliances that benefit both nations. This renewed emphasis on economic cooperation comes at a critical juncture, as both countries actively pursue economic diversification, sustainable growth, and greater resilience in the face of global economic challenges.

A Foundation of Shared Values and Aspirations

The bedrock of Pakistan-Saudi Business collaboration is built upon a solid foundation of shared history, cultural affinities, and brotherly relations. As Minister Kamal emphasized, these enduring ties are rooted in shared values, mutual trust, and strong socio-economic cooperation. This shared heritage provides a fertile ground for cultivating deeper and more meaningful economic partnerships. Jeddah, as a major commercial, industrial, and logistical hub, plays a pivotal role in facilitating these connections, serving as a vital link between Pakistani and Saudi businesses.

Its strategic position as a gateway for trade between East and West, coupled with its modern infrastructure and business-friendly environment, further amplifies its importance in this burgeoning economic relationship. Existing economic ties are already demonstrating positive momentum. Pakistan’s exports to Saudi Arabia have witnessed a notable increase, reflecting the growing economic engagement between the two nations. + Add New Category

This upward trend highlights the significant potential for further expansion and diversification of trade, moving beyond traditional commodities to encompass value-added products and services. However, both sides recognize the imperative to further enhance bilateral trade and work towards a more balanced trade relationship, focusing on mutual benefit and sustainable growth. This involves proactively identifying and capitalizing on opportunities in high-potential sectors and addressing existing trade imbalances through strategic partnerships and targeted initiatives.

Key Sectors Driving Pakistan-Saudi Business Growth

Several key sectors have been identified as holding immense potential for Pakistan-Saudi Business growth, offering opportunities for collaboration, investment, and joint ventures. These include:

  • Textiles: Pakistan’s robust textile industry, with its skilled workforce, established infrastructure, and growing focus on sustainable practices, can effectively cater to the Saudi market’s demand for high-quality fabrics, garments, and home textiles. Value addition, branding, and adherence to international quality standards can further enhance competitiveness and export potential.
  • Halal Food: With Saudi Arabia’s increasing emphasis on halal products and its position as a global hub for halal industries, Pakistan’s burgeoning halal food sector, with its diverse agricultural base, modern processing capabilities, and strict adherence to Islamic dietary guidelines, can find a ready and expanding market. Collaboration in developing robust halal supply chains, standardized certification processes, and joint marketing initiatives can significantly boost exports.
  • Agriculture and Food Security: Collaboration in agriculture can address food security concerns in both countries, with Pakistan potentially exporting a wide range of agricultural produce, including fruits, vegetables, grains, and livestock products, to Saudi Arabia. Sharing expertise in modern farming techniques, water management, and agricultural technology can further enhance agricultural productivity and promote sustainable farming practices.
  • Information Technology (IT): Pakistan’s rapidly growing IT sector, with its young, talented, and cost-effective workforce, offers a wealth of innovative solutions, software development expertise, and IT-enabled services that can benefit Saudi businesses across various sectors. Joint ventures, technology transfer, and partnerships in the IT sector can foster knowledge sharing, create new opportunities, and drive digital transformation in both countries.
  • Pharmaceuticals and Healthcare: Pakistan’s pharmaceutical industry, with its capacity to produce a wide range of generic medicines, pharmaceuticals, and healthcare products, can contribute to meeting Saudi Arabia’s healthcare needs. Collaboration in research and development, technology transfer, and joint manufacturing ventures can further enhance the pharmaceutical sector and improve access to affordable healthcare.
  • Infrastructure Development: The ongoing mega-development projects in Saudi Arabia, including smart cities, infrastructure development, and real estate projects, create a sustained demand for high-quality construction materials, skilled labor, and engineering expertise, which Pakistan, with its growing manufacturing capacity and construction industry, can supply. Focus on sustainable and cost-effective building materials, innovative construction technologies, and joint ventures can be a key differentiator.
  • Engineering Goods: Pakistan’s engineering sector, with its expertise in manufacturing various types of machinery, equipment, and engineering products, can provide Saudi Arabia with a range of high-quality engineering goods needed for its industrial and infrastructure development. Joint ventures, technology transfer, and skills development programs can further enhance the engineering sector’s capabilities and promote industrial cooperation.

Attracting Saudi Investment

Pakistan is actively seeking to attract substantial Saudi investment, recognizing its crucial role in driving economic growth, creating employment opportunities, and fostering technological advancement. Priority sectors for investment include renewable and conventional energy, infrastructure development (roads, railways, ports, and airports), agriculture and food processing, mining and mineral exploration, and industrial manufacturing (including textiles, pharmaceuticals, and engineering goods).

The government has implemented a series of investor-friendly policies, including tax incentives, simplified regulatory procedures, streamlined approvals, and protection of foreign investment, to create a more welcoming and attractive environment for foreign businesses, particularly those from Saudi Arabia. A key initiative in this regard is the revised visa policy, which now allows GCC citizens, including Saudi nationals, to enter Pakistan without a visa and stay for an extended period, significantly facilitating business travel, investment exploration, and people-to-people exchanges.

A Vital Link Between Two Nations and Economies

The substantial Pakistani diaspora in Saudi Arabia plays a crucial and multifaceted role in strengthening Pakistan-Saudi Business ties, acting as a vital link between the two nations and their economies. Many Pakistani entrepreneurs and professionals have established successful businesses in the Kingdom over decades, contributing significantly to the Saudi economy, creating employment opportunities, and serving as a bridge between the two cultures and business environments. Their deep understanding of both cultures, business practices, and languages makes them invaluable in facilitating business interactions, fostering trust, and promoting cross-cultural understanding.

The large number of Pakistanis traveling to Saudi Arabia for business and employment, coupled with substantial remittances flowing back to Pakistan, underscores the strong economic and people-to-people connection between the two countries. Recognizing the critical importance of institutional support and structured mechanisms for fostering business collaboration, several initiatives are being implemented to further strengthen Pakistan-Saudi business linkages. The successful visit of a large Saudi business delegation to Islamabad, resulting in the signing of numerous Memorandums of Understanding (MOUs) across multiple sectors, demonstrates the strong commitment from both sides to translate intentions into concrete actions.

The proposed establishment of a “Pakistan-Saudi Business Facilitation Desk” at the Jeddah Chamber of Commerce and Industry will provide crucial support services, including information dissemination, business matching, assistance with regulatory procedures, and guidance on investment opportunities, to businesses from both countries, streamlining trade and investment processes. The introduction of the Pakistan Investor Forum will further empower Pakistani entrepreneurs, connect them with potential Saudi partners, facilitate joint ventures, and strengthen their business networks in Saudi Arabia.

Discussions between Pakistani and Saudi officials also focus on streamlining trade and removing barriers by improving customs procedures, simplifying certification processes, ensuring compliance with international trade standards, and enhancing logistical connectivity. These joint efforts aim to facilitate smoother and more efficient trade operations, reducing bureaucratic hurdles, minimizing delays, and promoting greater ease of doing business. Expanding trade in key Pakistani exports, particularly value-added products like halal meat, dairy products, IT services, and pharmaceuticals, is a priority for both nations, requiring close collaboration on quality control, packaging, branding, and marketing. Improving transportation links, including air and sea connectivity, and establishing efficient logistics networks are also crucial for facilitating trade and reducing transaction costs.

Mutually Beneficial Economic Prosperity

The ongoing dialogue, collaborative efforts, and high-level engagements between Pakistan and Saudi Arabia reflect a shared vision for mutually beneficial economic prosperity and a strong strategic partnership. Both countries are committed to deepening their economic ties, strengthening institutional partnerships, diversifying their economies, promoting sustainable development, and exploring new avenues for mutually beneficial trade and investment growth. The Jeddah Chamber of Commerce and Industry, along with other relevant chambers and business organizations, plays a vital role in fostering this economic cooperation, serving as a dynamic platform for businesses from both nations to connect, collaborate, explore opportunities, build lasting partnerships, and share best practices.

The future of Pakistan-Saudi Business relations looks exceptionally promising, with both sides actively working towards building a stronger, more diversified, resilient, and mutually beneficial economic partnership. This partnership is not just about economic gains; it’s about building a long-term strategic alliance that benefits both nations, contributes to regional stability and prosperity, strengthens the bonds of friendship between the two peoples, and promotes shared values.

The commitment to regular dialogue, the implementation of concrete initiatives, the shared vision for the future, and the active participation of the private sector suggest that the Pakistan-Saudi Business relationship is poised for significant growth, transformation, and enduring success in the years to come. This growth will not only benefit businesses in both countries but also create jobs, stimulate economic development, enhance technological collaboration, promote innovation, and strengthen the bonds of brotherhood between the two nations. The focus on diversifying trade, attracting foreign direct investment, fostering innovation, promoting sustainable practices, and encouraging collaboration in key sectors will ensure a resilient and mutually beneficial partnership that contributes to the long-term economic prosperity, shared future, and strategic stability of both Pakistan and Saudi Arabia.

The ongoing engagement between government officials, business leaders, industry representatives, and the active participation of the private sector, along with the strong support from the leadership of both nations, demonstrates a deep and unwavering commitment to making this shared vision a tangible reality. The future of Pakistan-Saudi Business is one of collaboration, innovation, shared success, enduring partnership, and a shared commitment to building a brighter future for the peoples of both nations.

This partnership holds immense potential to not only transform the economic landscapes of Pakistan and Saudi Arabia but also contribute to regional peace, stability, and prosperity. By leveraging their respective strengths, resources, and expertise, Pakistan and Saudi Arabia can create a powerful engine for economic growth, technological advancement, and social development. The focus on building human capital, promoting entrepreneurship, and fostering innovation will ensure that the benefits of this partnership are shared by all segments of society.

This showcased the evolving Pakistan-Saudi Business relationship, from cultural ties to a strategic economic alliance. We explored growing trade and investment, key sectors like textiles and IT, and initiatives facilitating collaboration. The Pakistani diaspora’s role, streamlined trade efforts, and sustainable development were also highlighted. This partnership is a strategic alliance built on trust and a shared vision for prosperity. Interested in the opportunities this creates? Explore the resources mentioned and stay informed.


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WEF 2025: Special Economic Zones can Drive Industry

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Denys Denya, senior executive vice president of the African Export-Import Bank (Afreximbank) said SEZs – areas within a country that have different business and trade laws – are a critical tool in overcoming some of the challenges in industrialisation, as they provide a controlled environment within which critical infrastructure can be concentrated to support industrial activity.

“Africa lacks infrastructure across the board, whether you’re talking about roads, ports, or energy,” he said, noting that SEZs provided an integrated solution.

Bhavin Vyas, chief sustainability officer at ARISE Integrated Industrial Platforms, a major SEZ investor on the continent, stressed that the zones enable value retention, job creation and sustainable economic growth across the African continent.

“One of the biggest aspects of industrialisation is to create jobs, which means retaining more value within the continent, reducing poverty, and providing trickle-down economic benefits across the value chain,” he argued.

Vyas explained that the firm’s strategy centres on transforming Africa’s raw materials – traditionally exported in raw form with minimal value retained – into finished goods within the continent. From sourcing and storing to processing and exporting, the company’s design-build-finance-operate model ensures value addition at every stage of the supply chain.

“Whether it’s a t-shirt, cocoa, or furniture from timber, we’re creating globally competitive brands that put Africa on the map,” he said.

This model also addresses global challenges, including supply chain inefficiencies and climate concerns, he said. By localising production in countries like Benin, Arise says it has drastically reduced the carbon footprint of exported goods.

“An average t-shirt used to travel 5,000km, but by sourcing and transforming within Africa, we save 70% in carbon emissions,” Vyas noted, emphasising the dual impact of industrialisation in reducing poverty and combating climate change.

‘Africa cannot be world’s sweatshop’

Amani Abou-Zeid, the African Union’s commissioner for infrastructure, energy and digitalisation, however cautions against Africa becoming a low-wage manufacturing hub or a ‘t-shirt factory’ for the world.

“The industrialisation we need is not based on residuals from China or low wages,” she said. “It must be value-addition industrialisation, built on quality, standards, and the use of technology, including AI and robotics. This approach will propel the continent to the developed stage we aspire to, ensuring the well-being of our people.”

“Africa is not and should not be a sweatshop for the world,” Abou-Zeid asserted.

“With our people, technology, and energy, we are capable of competing globally and diversifying value chains for the world.”

The Lobito Corridor, a US-backed major infrastructure scheme that embraces multiple countries in Central Africa, is expected to host SEZs in a bid to improve value addition around critical minerals.

Louis Watum Kabamba, minister of industry and development of SMEs, in the Democratic Republic of Congo, said the initiative will transform the region’s approach to resource utilisation. “We have come to realise, especially in the DRC, that the pit-to-port model inherited from colonial times is no longer viable,” he explained.

“This cannot continue and that’s one of the reasons why we’re thinking very seriously of adding value.” For example, rather than exporting raw materials, the DRC aims to start making and exporting, products that go into the fabrication of precursors for batteries. “Finally, we can start making these batteries,” Kabamba said.

Omar Ben Yeddar is Editor-in-Chief of African Business.

Courtesy: African Business


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Trump’s Tariff Battles: The Global Fallout

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Baba Yunus Muhammad

Tariffs are a form of taxation on goods crossing national borders. While proponents argue that they can protect local industries by making imports more expensive, most economists view them as a blunt instrument that can harm both the target country and the domestic economy while also escalating trade conflicts. Here’s an overview of Trump’s latest tariff threats and their potential impact worldwide.

China: Retaliation and Countermeasures

During his campaign, Trump threatened a 60% tariff on Chinese goods, but the actual figure has been set at 10%. When combined with existing tariffs, this brings the average rate on Chinese imports to between 20% and 30%. Trump claims these measures are aimed at pressuring Beijing to crack down on the smuggling of fentanyl and its precursors into the US. However, analysts see broader economic motives at play.

With 14% of China’s exports directed to the US, the impact of Trump’s tariffs is somewhat limited. Many Chinese firms have already relocated parts of their supply chains to circumvent these barriers. Still, Beijing has responded forcefully by imposing 15% tariffs on US coal and liquefied natural gas, and 10% tariffs on crude oil, farm equipment, and large vehicles. Additionally, China has imposed export restrictions on critical materials such as tungsten and tellurium, which are vital for US industries.

Perhaps more consequentially, China has initiated an anti-trust investigation into Google, raising concerns that this could be the beginning of a broader crackdown on American tech firms operating in the country. The deepening divide between the world’s two largest economies could have long-term global repercussions.

Mexico: Short-Term Relief, Long-Term Uncertainty

With 83% of Mexico’s exports going to the US, the impact of tariffs would have been significant. However, a last-minute deal has paused the proposed tariffs for a month.

While the official justification for the tariffs was Mexico’s alleged cooperation with criminal organizations facilitating illegal immigration and fentanyl trafficking, critics argue that the real motivation is Trump’s opposition to trade deficits. Economist Paul Krugman has warned that measures designed to eliminate trade deficits could also deter foreign investment.

In response, Mexican President Claudia Sheinbaum dismissed Trump’s claims as baseless but agreed to deploy 10,000 troops to the border. The US, in turn, has pledged to curb the flow of high-powered weapons into Mexico. Despite this temporary resolution, business leaders worry about long-term instability, with Brian Winter, a Latin America expert, warning that companies may reassess Mexico’s role in North American supply chains.

Canada: Last-Minute Reprieve Amid Economic Anxiety

A temporary pause on tariffs against Canada was announced following urgent discussions between Trump and Prime Minister Justin Trudeau. Given that 77% of Canada’s exports go to the US, this was a crucial development.

The justification for targeting Canada—stemming the flow of fentanyl—was unconvincing, as only 19kg of the drug was seized at the US-Canada border last year compared to 9,600kg from Mexico. However, the vagueness of Trump’s objectives may actually work in his favor, allowing him to declare victory without a clear benchmark.

Canada had prepared retaliatory tariffs on $106 billion worth of US goods, primarily from Republican-leaning states. Meanwhile, a grassroots movement in Canada has emerged in response to Trump’s threats, with campaigns encouraging domestic purchases and branding pro-Trump figures as “Vichy Canadians.”

European Union: Preparing for Retaliation

Trump has vowed that new tariffs on the European Union will “definitely happen,” citing the US’s goods trade deficit with the bloc, which he claims exceeds $300 billion. However, official data from 2023 puts the deficit at approximately $160 billion. Furthermore, when services are included, the US actually runs a trade surplus of $107 billion with the EU.

In anticipation of Trump’s measures, the European Commission has devised a “carrot and stick” strategy—offering increased imports of US liquefied natural gas while preparing retaliatory tariffs on American goods. The outcome of these negotiations will be pivotal for transatlantic trade relations.

United Kingdom: A Balancing Act

While Trump has suggested that the UK might face tariffs, he also indicated that a resolution could be found, citing his positive relationship with Prime Minister Keir Starmer. For now, this uncertainty leaves Britain in a precarious position.

With 68% of the UK’s exports being services, which are not subject to tariffs, the immediate impact may be lower than for other countries. However, the UK’s trade relationship with the EU complicates matters. If Trump’s tariffs escalate into a full-scale trade war, Britain could be forced to choose between aligning with the US or the EU—its largest trading partner.

Conclusion: A Risky Game

Trump’s tariff threats have created economic uncertainty across multiple regions. While some countries have secured temporary relief, the long-term impact of these measures remains unclear. If trade tensions continue to escalate, the global economy could face significant disruptions, with repercussions extending far beyond the US and its trading partners.


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