To Brics or not, a cross-road for South Africa

The recent Brics Summit in Sandton has sparked many debates and questions. Political and economic commentators are divided on issues.

Is the Brics “bloc” a political grouping representing the global south, or does it also benefit member countries economically? The Brics “bloc” is a rather odd grouping of countries. The original countries consisted of Brazil, Russia, China and India.

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The first Bric summit was held in Yekaterinburg, Russia, on 16 June, 2009. South Africa was accepted as a full member at the Bric Foreign Ministers’ meeting in New York in September 2010.

The most significant achievement – and probably the only major achievement of Brics – is the establishment of the Brics New Development Bank. Trade and investment between Brics countries are surprisingly low at only six percent of the total trade of the five countries.

The Brics “bloc” plus the six new members (Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates) represents 29% of the global economy, 46% of the global population, 43% of global oil sales and 25% of all global trade.

Of the 11 members, only Brazil, India, SA, and Argentina are democratic countries with respect for human rights.

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However, the question is: How do SA and its citizens benefit from Brics? The answer can only be in potential benefits as current benefits are lacking.

Firstly, we are supposed to benefit through international trade with Brics members, but we have a trade deficit with all four of the current Brics countries, meaning we import more than we export to them. Only China and India are in SA’s top 25 export partners, but we have a combined trade deficit of $13.8 billion (about R264 billion) with these two countries.

In terms of our best trade partners, those countries where we export more than we import are Japan ($5.8 billion), the UK ($4.5 billion), the Netherlands ($4.5 billion) and, very surprisingly, Mozambique ($4.2 billion) and Botswana ($4.0 billion).

Seven Southern African countries are in the top 20 list of countries with which SA has a positive trade balance including Mozambique, Botswana, Namibia, Zimbabwe, Zambia, Eswatini, and Lesotho. These countries have a combined trade surplus of more than $18 billion.

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SA also has a negative trade balance with the six new Brics countries. Data for international trade 8 is used from TradeMap. We still export mostly raw minerals and products, with vehicles and machinery contributing only 14.4% of exports.

The potential for expansion of trade is there and the facilitation of trade agreements with Brics members to benefit exports and value-added manufacturing must be a priority.

Secondly, SA and Africa as a continent, require large-scale investment in infrastructure and manufacturing capacity. Thirdly, there are possible geopolitical benefits of being part of a global south “bloc”. These benefits should not affect our economic relationships with major Western economies.

Lastly, our extended Brics “bloc” membership must provide us with economic benefits supporting local growth and development. One good example is the tourism sector. The new Brics “bloc” provides for 46% of the global population.

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Our struggling tourism sector could benefit from promoting our country to the Brics members as a select destination with a focused marketing approach.

-Meyer is a professor at the school of public management, governance and public policy at the University of Johannesburg