• Home
• | Terms & conditions
• | Contact us
• | RSS

SA looks to build with better BRICs

27 August 2010

President Jacob Zuma has now visited all of the so-called BRIC countries – Brazil, Russia, India and China – in little over a year, signaling a move to reposition South Africa's economy to take advantage of new trade and investment opportunities with the world's fastest-growing emerging economies.

BRIC and the shift in global economic power

The acronym "BRIC", according to Wikipedia, was coined by academic Jim O'Neill in a 2001 paper entitled "The World Needs Better Economic BRICs", and has since become widely used to symbolise a shift in global economic power away from the developed G7 economies toward the developing world.

Some experts have predicted that the combined wealth of the BRIC economies could eclipse the world's current richest nations by 2050. And there are signs that the BRIC countries have been seeking to form an alliance in order to convert their economic power into greater negotiating power on the global stage.

Zuma's three-day state visit to China, which ended on Thursday, came a week after the Asian nation officially became the world's second-largest economy.

What South Africa can offer BRIC

Sanne Mars-van der Lugt, a research analyst with the Centre for Chinese Studies in Cape Town, said Zuma's itinerary showed that the South African government viewed the BRIC countries as an important strategic grouping.

However, she told BuaNews, it was unlikely that South Africa would become a "member" of the BRIC economies any time soon. Instead, Van der Lugt said, South Africa could be consulted by BRIC countries on challenges it shared with them, such as poverty and inequality.

"It is therefore up to South Africa to show its regional and international leverage to the other emerging countries in order to be invited for these discussions."

Van der Lugt noted that even though South Africa did not share certain BRIC characteristics, such as close-to-double digit growth numbers and extremely large populations, the country still had a great deal to offer emerging economies.

South Africa had a great abundance of natural resources, paired with talented human resources and intellectual capital. "South Africa is seen as a country with an abundance of resources, like many other African countries, however, with lower risks to investment."

By engaging with the BRIC countries, South Africa could also learn a great deal about alleviating social ills such as high unemployment.

China's role in Africa

Van der Lugt hoped that Zuma and his delegation would use this week's visit to secure greater political and corporate alignment between South Africa and China with respect to both countries' interests in Africa.

"China and South Africa are now in the position that they can be donors of support for the development of other countries ... They have money to invest in the development of Africa and they have the will to do so, to boost their image as responsible global powers, as well as for ... creating markets for their products."

There has been growing debate over China's role in Africa, with critics raising concerns over China's support for countries like Sudan and Zimbabwe, as well as its questionable worker safety rules.

However, Zuma has defended China's surging investment in Africa, telling an audience at Beijing's Renmin University on Wednesday that China was making an important contribution to the development of the continent.

According to Van der Lugt, the truth of the matter "lies somewhere in between. China is not purely in Africa to either do good or to plunder the resources. Sino-African relations should be perceived from a global market system perspective."

A report by business consultancy McKinsey has labelled China's role in Africa as "dynamic", a view that Zuma himself shares.

New ways of promoting development

"We are still at an early stage of what will be an exciting journey, a journey out of poverty, a journey to sustainable improvements in the lives of our people, here in China, and on the African continent," he said this week.

In the report, McKinsey said that China's willingness to undertake additional strategic development projects in Africa should be supported, and that collaboration between Chinese institutions working in Africa and other donors or partners ought to be developed and encouraged.

By pursuing these opportunities, it said, Africa and China could uncover new ways of promoting economic development and the reduction of poverty on the continent.

Van der Lugt echoed this view, saying South Africa should aim to establish untapped international trade ties to help the country's economic growth.

China, she said, was an interesting trading partner and market for South Africa with potential to grow.

"The hope for South Africa is that it can diversify its export to China from mainly raw materials to a better mix of raw materials and manufactured goods," she added.

Source: BuaNews