A letter from Tswhane
Pretoria News 26/02/2013
BRICS – Why South Africa’s Citizens Should Care
By Millar Matola
When South Africa plays host to the prestigious 5th BRICS Summit from 26 to 27 March in Durban, this will be a historic moment in the grouping’s history. It will represent the first full cycle of global gatherings since the formation of this powerful grouping of leading emerging economies in the world, namely Brazil, Russia, India, China and South Africa. Once again, the BRICS Summit will seek to explore areas of common ground for each of these major economies, providing an opportunity to identify new business and economic cooperation opportunities, whilst at the same creating a platform to work together to achieve peace, security, development and cooperation for a more equitable and fair world. But, in the current challenging economic environment when ordinary South African citizens are finding the going tough, why should they care about this global gathering here in our country, or indeed feel it has any actual relevance to their lives? The bottom line is that everyone should care, that is if they have an interest in South Africa’s future and its cementing of an increasingly more important strategic role on the global economic stage.
Simply put, BRICS is a highly influential and powerful club that South Africa should not only want to belong to, but which also provides an unprecedented opportunity for the country to maximize the vast potential benefits that come from being a member. It is an enviable position to be in from a nation brand building perspective, but for ordinary citizens it means the potential for exponential growth if the examples of the other BRICS member countries are to be followed. South Africa has the opportunity to learn valuable lessons from the successful examples of nation building on the part of Brazil, India, Russia and China. Each of these countries had been a member of the BRIC grouping for ten years prior to South Africa joining in 2011 and expanding the group to BRICS as it is known today, and each country has reaped considerable rewards in terms of economic growth and prosperity. South Africa can look to replicate what has worked for its fellow BRICS members in terms of positioning the country to potential global investors, strategic partners and visitors – all of which means new business opportunities, new foreign investment, much needed new jobs, and ultimately economic growth.
There are definite parallels between South Africa and the other BRICS countries in terms of its economic growth potential – it simply has to be harnessed, something these other countries have managed to achieve. If one looks at the example of Brazil, its economy only really started to flourish with the growth of the private sector and the creation of a genuine entrepreneurial culture in the country. As a result, the middle class expanded and their powerful purchasing potential was harnessed for the benefit of all sectors of society, creating jobs, stimulating new businesses and opening up new investment opportunities. Global investors began to look at Brazil with new eyes as they saw the opportunity to pursue viable new business ventures relating to infrastructure development, retail, and other key business sectors. The country’s marketplace opened up for the supply of new global products and services, not just creating new and much needed investor interest, but also stimulating new jobs and business opportunities for ordinary citizens. Brazil’s subsequent meteoric rise on the global economic stage was stimulated by this economic growth strategy.
Similarly in India, the country is currently experiencing a period of unprecedented economic growth with foreign investment and joint venture partnerships in such fields as telecommunications and IT helping to position the country at the forefront of technology hubs around the world. Such positioning and investor confidence is attracting continuing business and financial support into the country, together with major global retail and business brands, all looking to be part of this economic success story. Both Brazil and India’s citizens recognize that belonging to the BRICS grouping of emerging market economies is critical to their countries’ economic success and reputation in the global marketplace. They recognize that it helps to stimulate investment, create new business opportunities and valuable jobs, all of which contribute to a better quality of life for ordinary citizens. They care about their countries’ membership of BRICS because they can see it ultimately and tangibly benefits their lives and the lives of their children in the future.
So, what in real terms does membership of BRICS mean to South Africa and its citizens and how can the country reap similar tangible benefits in the short to medium term? Our country’s key advantage within the BRICS grouping relates to our mineral wealth – we are the largest producer in the world of platinum, chrome, vanadium and manganese. We are the third largest gold mining country in the world, and we have a wealth of mining and mining-related industry professional services expertise, all of which is needed to support the BRICS resource pool in the global marketplace. The insatiable demand for such commodities from the BRICS countries themselves provides a critical source of economic growth for South Africa in the future. As a result, South Africa is investing in a major infrastructure development programme to improve its railways, ports and fuel pipelines, recognizing that such investment is critical to unlocking the future business potential of its vast mineral wealth. This in turn means jobs for ordinary South Africans and the opportunity for a better quality of life overall.
But it is not just in the field of minerals, natural resources and infrastructure development that membership of the BRICS grouping brings new economic development opportunities for the country. South Africa’s reputation for the sophistication of its financial market development and the depth of its financial and professional services expertise make it a preferred business partner for other BRICS country members. This competitive edge in the global marketplace was recently recognized by the prestigious World Economic Forum’s Global Competitive Index survey for 2011/12. It ranked South Africa number one in the world for the strength of its auditing and reporting standards, number one in the world for the regulation of the Johannesburg Stock Exchange, second in the world for the soundness of our banks and the efficacy of our corporate boards, and number four in the world in our financial market development. Such ratings are key to stimulating the necessary global investor confidence that is critical to South Africa’s future economic growth and sends a positive signal to our critically important fellow BRICS members that we are open for business. This provides another tangible example of why South Africans should care about our membership of BRICS. Prior to our membership, South Africa’s export trade with BRICS countries represented just 6.2% of total exports – in 2011, the year of South Africa’s BRICS membership entry, this figure grew to 16.8%. In 2011 alone, South Africa’s trade with BRICS countries grew by a staggering 29% – it continues to grow today and will be at the forefront of our economic growth into the future.
South African citizens need to recognize and appreciate that if the country is to enter a new era of positive economic growth and pursue a path that allows it to fulfill its undoubted potential, ultimately creating much needed jobs and the opportunity for a better life for all citizens, membership of BRICS is key. This grouping represents the most powerful emerging economies in the world and provides unprecedented opportunities for South Africa to maximise new business, trade and political links in its capacity as the newest member of this club. South Africa’s citizens need to genuinely care that we are being embraced by BRICS as it represents a powerful new pathway to stimulating the economic growth that we so badly need if we are to fulfill the aspirations and dreams of our citizens for a better life for all.
- Matola is CEO of Brand South Africa