Apr 20, 2011
Business and govt alignment key to reaping benefits of BricsBack
Goldman Sachs|Africa|Europe|Brazil|China|Germany|India|Russia|South Africa|United States|South African Institute|Infrastructure|Elizabeth Sidiropoulos|Mark Casey|Martyn Davies|Peter Leon
© Reuse this
South African Institute for International Affairs (Saiia) CEO Elizabeth Sidiropoulos said that South African business and government needed to start working as a united force, much like the other Brics members, to position itself as a competitive, but also a cooperative, force in the global market, especially in the growing African market.
“We need to really work on developing SA Inc, to increase our competitiveness and improve productivity. Only then can we achieve objectives set out by the South African government to reduce unemployment in the country.”
Almost a decade after Goldman Sachs economist Jim O'Neil coined the term Bric, based on the size, population and current and forecast economic growth of these countries, South Africa was invited to join this exclusive club, or as Frontier Advisory CEO Dr Martyn Davies now refers to them, the E5 (emerging five).
Many commentators, including O’Neil, did not agree with South Africa’s inclusion in this grouping, but Webber Wentzel partner Peter Leon believed that South Africa’s invitation was “all about the minerals”.
“South Africa is sitting on the world’s biggest set of mineral resource with reserves worth $2,3-trillion. Further, in the context of the rest of mineral-rich Africa, South Africa has the most developed infrastructure and the deepest capital markets.
“As far as an appropriate springboard into Africa goes, South Africa is the only game in town,” said Leon.
However, he emphasised that if the country really wanted to leverage its position as a gateway to the rest of the continent, it seriously needed to consider eliminating exchange and capital controls.
“Issues such as trade liberalisation, and even free trade agreements, between other members of the Brics, as well as other African countries need to come to fruition.”
Davies said that while South Africa, and the rest of Africa, would greatly benefit from additional investment and trade from the other Brics members, African countries also needed to start trading in and among themselves.
“Trade between African countries is currently at an average of about 15%, and often only in the single digits, whereas trade between Asian countries stands at around 60%, while Europe also intra-trades at a rate of about 60%.”
He added that the ‘s’ in Brics, should not just be allocated to South Africa alone, but should really be seen as the whole Southern African Development Community, which boasts a population of half-a-billion people. Even beyond that, Davies said that South Africa should be the voice of Africa as far as the Brics grouping and other economic groupings went.
From 2001 to 2010, trade among the Brics member countries grew at a yearly rate of 28% to reach nearly $230-billion.
The five economies also performed outstandingly during the global financial crisis with their combined gross domestic product (GDP) growth accounting for 18% of the global GDP in 2010.
Deloitte director Mark Casey said that these economies would be the engine rooms for growth going into the future. It was predicted that Brazil, China, India, Russia, Germany and the US would form the top six economies by 2050.
“This presents a great opportunity for South Africa, as part of the four strongest growing economies in the world, to take advantage of this opportunity through cooperation and collaboration with the other Brics members.”
Edited by: Mariaan Webb© Reuse this Comment Guidelines
Updated 7 hours ago On the back of its first load-shedding event in over six years, Eskom has warned the system will remain constrained, saying on Friday that that the risk of “emergency conditions” developing would remain well into April, owing to high levels of planned maintenance...
Updated 7 hours ago Transnet National Ports Authority (TNPA) and the US Port of Miami are to collaborate on vital skills and training after signing a memorandum of understanding (MoU) in Cape Town. Delegations from the US and South Africa agreed that there were numerous opportunities to...
Recent Research Reports
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
This Week's Magazine
A structured approach, wherein managers personally engage at each level of the project, is necessary to mitigate delays to the workflow on mega construction projects, says State-owned Eskom Kusile power station projects GM Abram Masango. The 4 800 MW Kusile power...
Construction of transmission lines to evacuate power from a regional hydroelectric project in East Africa, which was hanging on the balance following the withdrawal of financing by key partners, is now back on track. After six months of uncertainty, the African...
Three Memorandums of Understanding (MoUs) were signed between South African and Malaysian companies at the Malaysian High Commission in Pretoria on Friday. These MoUs are part of the indirect offsets programme South Africa is providing in return for Malaysia’s...
The South African new vehicle market may well dip to 640 000 units in 2014, says Toyota South Africa Motors (TSAM) sales and marketing senior VP Calvyn Hamman. This is the first prediction that anticipates a drop in the market. To date economists and industry bodies...
Nissan will re-enter the South African minibus taxi industry in March, when the new NV350 Impendulo goes on sale. The 16-seater has been specifically tailored to meet the terms of government’s Taxi Recapitalisation Programme, which aims to replace South Africa’s...