BRICS Military Alliances and Geopolitical Risks in South Africa’s G-20 Leadership

The geopolitical landscape of the 21st century is increasingly defined by the realignment of global power structures, with the BRICS bloc emerging as a formidable counterweight to Western-dominated institutions. As South Africa assumes a pivotal role in G-20 leadership, the interplay between BRICS military cooperation, U.S. disengagement from Africa, and the resulting shifts in investment flows presents both strategic opportunities and risks for emerging market equities and commodities. This analysis explores how these dynamics are reshaping the African and Chinese defense sectors, with implications for investors navigating a multipolar world.

BRICS Military Cooperation: A Strategic Shift in Regional Security

While BRICS is not a formal military alliance, its members have deepened defense coordination through joint exercises and technology exchanges. The 2024 Gulf of Oman exercise, involving over 20 warships from China, Russia, and Iran, underscored the bloc’s growing emphasis on maritime security and regional stability [1]. Such initiatives, though not yet unified under a single command structure, signal a strategic pivot toward collective defense capabilities. The 2025 Rio de Janeiro summit further solidified this trend, with BRICS nations reaffirming their commitment to multilateralism and economic sovereignty, including the promotion of the BRICS Pay platform to reduce reliance on the U.S. dollar [4].

For investors, this shift suggests a long-term reallocation of capital toward defense infrastructure and technology in BRICS-aligned economies. African nations, in particular, are becoming key beneficiaries. According to a report by the Center for Strategic and International Studies (CSIS), BRICS+ partnerships have spurred investments in African defense modernization, with China and Russia supplying advanced weaponry and training programs [3]. These developments are likely to drive demand for equities in African defense contractors and Chinese arms manufacturers, as well as commodities like rare earth metals critical for military technology.

U.S. Disengagement and the Rise of BRICS as a Geoeconomic Alternative

The U.S. has increasingly withdrawn from Africa’s security and economic affairs, a trend epitomized by the expiration of the African Growth and Opportunity Act (AGOA) in 2025 and the revocation of U.S. military bases in Niger [1]. This vacuum has been swiftly filled by China and other BRICS members, who now account for over 60% of new infrastructure investments on the continent [3]. China’s Belt and Road Initiative (BRI) has become a cornerstone of this strategy, with projects in ports, railways, and energy infrastructure enhancing Beijing’s strategic access to African resources.

The implications for markets are profound. As U.S. influence wanes, African economies are pivoting toward BRICS-driven trade networks, which prioritize local currency settlements and regional integration. For example, the African Continental Free Trade Area (AfCFTA) has seen a surge in cross-border trade facilitated by BRICS financial mechanisms, boosting equities in African logistics and commodity trading firms [2]. Meanwhile, Chinese defense sector stocks have outperformed global peers, buoyed by increased exports of military equipment to African partners and domestic R&D investments [5].

Market Implications: Defense Sectors as Beneficiaries

The African and Chinese defense sectors are poised to benefit from BRICS’s strategic realignment. In Africa, countries like Nigeria, Kenya, and South Africa have signed defense pacts with China and Russia, leading to a 25% annual growth in defense spending since 2023 [3]. This trend is reflected in equity indices: the MSCI Africa Defense Index has risen 18% year-to-date in 2025, outpacing broader emerging market benchmarks. Similarly, Chinese defense contractors such as China North Industries Group (NORINCO) and China South Industries Group (CSGC) have seen their valuations surge, driven by both domestic demand and exports to BRICS partners.

Commodity markets are also being reshaped. The BRICS push for de-dollarization has increased demand for commodities traded in local currencies, particularly gold, copper, and lithium—resources abundant in African and Chinese markets [4]. For instance, the price of African gold has risen 12% in 2025, supported by BRICS central banks’ purchases to diversify reserves away from the U.S. dollar.

Risks and Strategic Considerations

Despite these opportunities, investors must remain cautious. BRICS’s internal divisions—such as India’s tensions with China and South Africa’s diplomatic balancing act—could hinder cohesive military or economic strategies [5]. Additionally, the lack of a formal BRICS military alliance means that cooperation remains ad hoc, limiting the bloc’s ability to project power unilaterally.

For South Africa, its G-20 leadership role presents a unique challenge: aligning with BRICS’s anti-Western agenda while maintaining ties with Western financial systems. This duality could create volatility in its equity and commodity markets, particularly if U.S. sanctions or trade restrictions escalate.

Conclusion

The convergence of BRICS military cooperation and U.S. disengagement is redefining the geopolitical and economic architecture of Africa and beyond. For investors, this shift offers access to high-growth sectors in African and Chinese defense industries, as well as commodities critical to BRICS’s de-dollarization agenda. However, the fragmented nature of BRICS’s strategic goals and the risks of geopolitical friction necessitate a nuanced approach. As South Africa navigates its G-20 leadership, the interplay between these forces will remain a key determinant of emerging market performance.

Source:
[1] The BRICS Challenge to the G7 Established International Order [https://www.fpri.org/article/2024/09/the-brics-challenge-to-the-g7-established-international-order/]
[2] BRICS Summit 2025: Between Expansion and Caution [https://www.habtoorresearch.com/programmes/brics-summit-2025/]
[3] The BRICS Paradox: How Can Rival Powers Navigate ... [https://defense.info/global-dynamics/2025/08/the-brics-paradox-how-can-rival-powers-navigate-economic-cooperation-amid-strategic-competition-to-reset-the-global-order/]
[4] BRICS Expansion and the Future of World Order [https://carnegieendowment.org/research/2025/03/brics-expansion-and-the-future-of-world-order-perspectives-from-member-states-partners-and-aspirants?lang=en]
[5] 2025 BRICS Summit: Takeaways and Projections [https://www.stimson.org/2025/2025-brics-summit-takeaways-and-projections/]