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South Africa as Cooperative Partner in BRICs: The Emerging Market's Gateway to Africa

Abstract

The inclusion of South Africa as a member of the Brazil, Russia, India and China emerging economy (Bric)

club is greeted with optimism by political leaders and business elite. The paper attempts to look at the

circumstances that favor South Africa’s membership in Brics. What are the benefits of joining the elite club of

emerging economies in the world, what is the advantages for the rest of Africa, how do South Africa promote

its image and market itself? The Brics summit in 2011 in China is taken as point of departure to elaborate on

South Africa’s role in the Brics grouping. Mutually beneficial courses of action and effective strategies are

crucial for South Africa to foster the emergence of cooperation. One of the positive aspects of joining the group

is the many cooperation mechanisms put into place which will benefit Africa in broad areas, such as the

economic level, the sports level and the academic level. The argument is that a convergence of expectations

between the countries exists, especially in the fields of trade, human rights and security. On the other side, the

dominance of regional hegemons in this pentagon might have a detrimental effect on South Africa’s ability to

exert power in its own backyard. Critique against South Africa’s entry is that it is too small to make an

economic contribution, but as a regional player it can open up opportunities for the bigger countries and through

that can complete economic integration on the continent. The finding is that through South Africa’s

diversification and advancement such a venture is indeed a promising deal.

Fanie Herman

Paper prepared for the ISA Annual Convention San Diego, California, April 1-4, 2012

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Introduction

With the inclusion of South Africa as one of the new Bric members, now consisting of Brazil, Russia, India,

China and South Africa a new chapter has opened for the country in its desire to be recognized as an economic

factor on the continent and worldwide. A new world economic order is increasingly being shaped by the rise of

emerging economies, which before the turn of the century played a limited role in the delivery of services,

goods and products in global economic interaction. These emerging powers are finding markets for products on

a scale, unequaled by their competitors in the first world or western countries. Since the start of the twenty first

century the members of Bric has started to expand their economic influence to regions of the world that before

the turn of the century was less accessible due to a variety of factors. One of the biggest factors is that consumer

spending in these areas are minimal because of the poor purchasing power of consumers and the unavailability

of products. Coupled with the low salaries or wages people in emerging economies, the per capita spending

power is unlikely to reach identical levels with western countries. However, it is certain that the Brics countries

are opening up markets in previously weak accessible areas and increasing the spending power of consumers

because of the availability of previously unattainable products.

What is South Africa’s role in Brics, what does the country want to achieve in terms of the goals set out and can

a noteworthy contribution to the success of Brics be made? The inclusion of South Africa into this emerging

market club holds tremendous benefits for Africa as a whole. Membership should be seen in a manner that

encompasses individual African states and how they also can benefit from South Africa’s disposition as

Africa’s representative. The important factor is that South Africa joined the Brics economic block, not by its

own accord, but through the invitation of the People’s Republic of China (PRC). By giving South Africa the

opportunity to carry the economic interests of Africa at heart, is a commendable step that can enhance

cooperation and put the continent on the world map. Without looking down on any African state as inferior in

comparison to the economic status of South Africa, the viewpoint is that the inclusion of South Africa into Brics

can have reciprocal value for all African states that desire to promote their economic interests. With the world’s

four biggest emerging economies, namely China, India, Russia and Brazil flexing their economic muscles and

showing political clout, South Africa’s cooperation with these four giants, in absolute terms, spell-out economic

prosperity and the possibility of increasing its influence on the African continent. However, the last point cannot

be taken for granted, as recent developments in Africa’s attitude toward South Africa show. Here, one can take

note of Francophone Africa’s recent attitude toward South Africa in regional organizations, such as the voting

down of its representative to take up the chair position in the African Union (AU). In any case, it is not the

intention of South Africa to play a dominating role in the region in its quest for economic liberalization. To take

advantage of its African fiends for the sake of strengthening its own economic power will make the playing

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fields uneven. The feeling should rather be; what can Africans get out of the Brics partnership and not what

South Africa can gain at the expensive of others. Of significance is strong leadership that can facilitate

economic integration and the will to make Africans pride of their own achievements. The potential to develop

as an economic bloc in its own right cannot be excluded from such a proposition. Economic strength is on the

drawing board, if all the African states can unite and deliver the goods. In the end, it means that a win-win

situation carries economic prosperity, while a win-lose situation will have a detrimental effect on Africa’s

attempt to earn the respect of the other Brics countries. South Africa is still in the economic driving seat to lead

the way for Africa’s integration in the global economy. States do realize common goals through cooperation

under anarchy and despite the absence of any ultimate international authority, governments bind themselves to

mutually advantageous courses of action. And, though no international sovereign stands ready to enforce the

terms of agreement, states can realize common interests through tacit cooperation, formal bilateral and

multilateral negotiation, and the creation of international regimes. Given the lack of a central authority to

guarantee adherence to agreements between Brics members, the research question focuses on the specific

interactions and organizing structures that permit the Brics countries to bind themselves to mutually beneficial

courses of action.

Table 1: Comparative figures of the Brics members

Member Leader Finance

Minister

Central Bank

Governor

2011 GDP

(nominal-

PPP)

$Million

USD

2011 GDP

per capita

(nominal-

PPP)

$USD

2011

HDI

2010

Population

India Prime

Minister

Manmohan

Singh

Pranab

Mukherjee

Duvvuri

Subbarao

1,843,382

4,469,763

1,527 3,703 0,547 1,210,193,422

Russia President

Dmitry

Medvedev

Anton

Liluanov

Sergey

Mikhaylovich

Ignatyev

1,884,903

2,376,470

13,235

16,687

0.755 141,927,297

Brazil President

Dilma

Rousseff

Guido

Mantega

Alexandre

Tombini

2,517,927

2,309,138

12,916

11,845

0,718 193,088,765

China President Hu

Jintao

Xie Xuren Zhou

Xiao Chuan

6,988,470

11,316,224

5,183

8,394

0,687 1,33,612,968

South

Africa

President

Jacob Zuma

Pravin

Gordhan

Gill Marcus 422,037

555,340

8,342

10,977

0,619 49,320,500

Source: (United Nations Human Development Report, 2011: 11-45).

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Quick facts on South Africa’s Brics membership

The Global Economic Environment

The changing global environment has seen a greater political and economic role for the BRICS and other

emerging powers. By 2020, the BRICS countries are expected to contribute nearly half of all global gross

domestic product (GDP) growth.

BRIC is a powerful bloc of emerging economies which recorded a combined GDP of R18 trillion late in

December 2010. According to the International Monetary Fund (IMF), BRIC will account for 61% of

global growth in three years’ time (Schwab, 2011: 73-80).

The 2010 – 2011 Global Competitiveness Report of the World Economic Forum ranks South Africa

favorably in relation to the other BRICS countries (Schwab, 2011: 73-80).

The 2010 United Nations (UN) Conference on Trade and Development World Investment Report puts

South Africa in the top 20 of priority economies for foreign direct investment in the world (United

Nations Conference on Trade and Development, 2010: 40-45).

The structure of BRICS trade (i.e. value-added exports supporting the National Industrial Policy

Framework and the Industrial Policy Action Plan is more important than nominal volumes of trade

(South African Department of Trade and Industry, 2011: 50).

South Africa and other BRICS member states will continue existing collaboration in various

international organisations and formations such as the UN, the Group of 20 (G20) and the IBSA (India,

Brazil, South Africa) Dialogue Forum. South Africa also views the Non-Aligned Movement and the

Group of 77 as important for South-South interaction, especially within the framework of the UN.

South Africa can benefit from the concrete projects of BRICS in areas such as agriculture, science,

statistics, development finance institutions, security and justice. BRIC agriculture ministers have agreed

to cooperate in agricultural technology development and exchange.

African Agenda

South Africa remains committed to the consolidation of the African Agenda and will use its BRICS

membership to increase strategic cooperation among emerging market economies of the South in support of this

agenda.

South Africa is dedicated to African unity and integration within the framework of the Constitutive Act

of the African Union (AU). This includes the strengthening of continental institutions, which are critical

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in responding to the challenges of poverty, underdevelopment, peace, security and stability on the

continent (African Union, The Constitutive Act, 2010).

South Africa will ensure that the rest of the African continent is advantaged by its BRICS membership

and continues to benefit from the BRICS countries in the priority areas identified by the AU such as

energy, information and communications technology, rail and road infrastructure, agriculture and food

security (African Union, The Constitutive Act, 2010).

South Africa took up its two-year non-permanent seat to the UN Peace and Security Council (UNSC)

from January 2011 and will continue to make a significant contribution to deepening the relationship

and cooperation between the UNSC and the AU (United Nations, Security Council, 2010).

All BRICS countries will serve on the UNSC in 2011 as permanent (China and the Russian Federation)

or non-permanent members (Brazil, India and South Africa), which augurs positively for enhanced

cooperation efforts. The fact that three of the Group of Four (G4) nations – Germany, India and Brazil –

are also on the council at the same time means there will be some aggressive proposals supporting the

expansion of the UNSC with both permanent and non-permanent seats this year (United Nations, 2010).

Africa's trade with BRIC grew from 4, 6% of its total external trade in 1993 to just more than 19% in

2009, which produced a US$-20, 2 billion (R147-billion) trade surplus for Africa (The Third Brics

Summit, 2011).

South Africa’s Brics membership

As a BRICS member, South Africa’s advocacy to prioritize the role of emerging economies will be

strengthened in the international developmental agenda.

South Africa’s BRICS membership will enhance its reputation as one of the leading campaigners for the

reform of multilateral institutions, including the World Trade Organisation, the World Bank, the

International Monetary Fund and the UNSC.

At its first Summit in Russia in 2009, BRIC heads of state called for emerging economies to have a

greater voice in international financial institutions and for a more diversified global monetary system

(Russia hosts first Bric summit, 2009).

As part of the G20 and the Group of 5 (G5 – the five emerging nations), South Africa will use its BRICS

membership to push for a developmental position on multilateral forums, including on contentious

issues such as climate change and agricultural trade. South Africa is the only Africa nation represented

in the G20 (The Third Brics Summit, 2011).

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The UN Conference on Climate Change, hosted by Durban, will strive towards a common

developmental position to reduce gas emissions. BRICS members have all signed the Kyoto Protocol, a

blueprint to reduce carbon emissions (BRICS & COP17, 2011).

South Africa is seized with ensuring a legally binding climate-change agreement that will govern the

world’s response to the increasingly visible effects of climate change and reiterates that any final

agreement must support the developmental agenda of the South (BRICS & COP17, 2011).

South Africa’s diversified foreign policy objectives and interests allow for both groupings, The India-Brazil-

South Africa Dialogue Forum (IBSA) and BRICS to co-exist as they are highly complementary (The India-

Brazil-South Africa Dialogue Forum, 2009).

South Africa’s BRICS membership and future engagements will build on existing bilateral relations and

IBSA.

South Africa will leverage both formations to promote the African Agenda and create new trade

opportunities for value-added exports and investment. IBSA aims to increase trade volumes between the

three countries to US$ 25 billion by 2015.

South Africa believes that IBSA remains extremely relevant for political dialogue and South-South

relations. South Africa will host the fifth IBSA Summit this year aimed at addressing global issues of

common interest; advance national priorities through the sharing of best experiences; and further

facilitate and monitor the implementation of IBSA decisions, agreements and action plans (India-Brazil-

South Africa (IBSA) Dialogue Forum Fifth Summit of Heads of State and Government Tshwane

Declaration, 2011).

Any demise of IBSA would negatively affect attempts at the harmonization in preferential trade

agreements between the Southern African Customs Union (Sacu), the Southern Common Market

(Mercosur) and the Latin American Trade bloc to culminate into an India-Mercosur and Sacu Trilateral

trade arrangement (India-Brazil-South Africa (IBSA) Dialogue Forum Fifth Summit of Heads of State

and Government Tshwane Declaration, 2011).

South Africa’s Participation in BRIC

South Africa was included into the BRIC group in 2010, resulting in the name change to BRICS, which is an

international political organization of leading emerging economies. As of 2012, its five members are Brazil,

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Russia, India, China and South Africa (New era as South Africa joins BRICS, 2011). The BRICS members are

all developing countries, distinguished by their large economies and significant influence on regional and global

affairs. The exception is Russia, which at the current level of global economic interaction, is not such a big role-

player as the other members, for instance, Brazil, China and India. These countries are changing the shape and

course of economic growth in their respective countries. South Africa, not in the same league as the other

members with regards to economic indicators, however, is a force to be reckoned with in its regional domain. In

the beginning of 2012, the five BRICS countries represent roughly one-third of the world's total population,

with a combined nominal GDP of US$13.6 trillion, and an estimated US$4 trillion in combined foreign reserves

(International Monetary Fund, 2011).

Why did South Africa feel confident that it could become the newest member of BRIC? The answer lies in the

statement by International Relations Minister Maite Nkoana-Mashabane, after she returned from her visit to

China in 2010. "We think we have done our best to and we think we have made a positive impression on all the

BRIC members. We believe they will take a favorable decision," (South African Department of Government

Communication and Information System, 2010). The invitation indicated the high regard with which the

country was viewed internationally. After interaction with the heads of states of the BRIC countries, they all

have shown interest in including South Africa. South Africa was looking to expanded trade with the world,

which will help meet its development needs, especially improving infrastructure and livelihoods. The BRIC

nations offered a comprehensive and defined platform for such cooperation and with the prospects of signing

strategic partnerships, agreement was further ratified. Such strategic partnerships would be in the benefit of all

players and focus on growth and development, adding of value to resources, infrastructure, market access and

trade in the Southern African Development Community region and on the continent (South African Department

of Government Communication and Information System, 2010). The Strategic Partnership signed between

China and South Africa in 2010, is an outflow of negotiations and dialogues held since 2000. The importance of

the strategic partnership is found in mutual understanding and support of each other’s positions and interest and

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that China was convinced South Africa could play a meaningful role in the BRIC economic club (China, South

Africa ink ‘strategic partnership’, 2010).

There are diverse views on South Africa’s inclusion as a member of Brics. While elated, the government is

aware of the opportunities and responsibilities that come with the Brics membership, but also if there are

challenges, the South African government is prepared to tackle the issues within the grouping (SA ready to

tackle Brics challenges, 2011). The government, is of the opinion that joining the Brics bloc will propel the

country to new heights and as a positive sign, the world will take notice of the contribution Africa can make in

delivering goods, services and products to the global economy. An aspect that needs to be strengthened, to

dismiss undesirable attitudes and negative perceptions of the outside world toward Africa, is the desire for

economic aggrandizement. Africa indeed is a continent with vast resources and should take its rightful place on

the world stage. And as the argument progresses, South Africa is the country that has the skills, infrastructure

and leeway to incorporate the rest of Africa as a single unit, with a sustainable economic output as a means to

this end. The fact that South Africa has the opportunity to be affiliated to this group of powerful emerging

economies underlines two main points. The country is recognized as a developing economy of significance in

its own right, but also that it is the gateway to the continent of Africa, the next growth superstar (Matola, 2011).

South Africa can expect an increase in investment and trade opportunities, as it has done for the other four states

comprising the informal grouping (Matola, 2011). Private companies may also find market access into the

BRIC countries easier and partnerships with companies from this grouping might evolve. This might become

particularly important as South Africa is already the biggest emerging economy investor in the continent and its

companies are active in at least half of all African countries. Joining BRICS will also mean that South Africa

must use these new opportunities to increase its competitive edge. This is a good step for South Africa, not only

economically but also politically. By joining BRIC, combined with its renewed membership of the Security

Council, the country’s influence in this regard will be enhanced too (Matola, 2011). The president of South

Africa, Jacob Zuma, asserted that South African companies must be “aggressive” in taking on new

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opportunities in the BRIC countries. Zuma, encouraged businessmen to offer the South African government

feedback on what hurdles companies faced, so that the government could help make it easier to do business in

the Brics nations (Seize Brics opportunities, 2011). The president hailed China’s invitation to South Africa to

become a member of Brics and described it as one of the most important achievements in South Africa’s recent

history (Seize Brics opportunities, 2011). In recent history economic growth had all too often bypassed Africa,

but today the continent was growing faster than ever before.

The Contribution of BRICS to Global Economic Growth

BRIC will account for 61 percent of global growth in three years’ time, according to the International Monetary

Fund (International Monetary Fund, 2011). South Africa, at the end of December 2011 had a combined GDP of

R18 trillion. In 2010, the country's ranking in the Global Competitiveness Index (GCI) of the World Economic

Forum (WEF) dropped, but its performance has in fact remained stable. Rather, the decline reflects

improvements from other countries and their ability to spur growth. South Africa will play in a different league

To draw South Africa into this powerful club underlines the country's growing international role and its future

significance for those who want to make use of the expanding African opportunities (Matola, 2011).

A new world order is unfolding where economic clout and therefore political power is shifting from West to

East, with the BRIC countries as the visible face of this movement (Matola, 2011). Global institutions needed to

change because many of those countries dominating world bodies are no longer holding power in the world. Old

economies are no longer developing like they used to, and if they are developing, it’s minimal. Emerging

economies are developing at an increased pace and becoming bigger in size. The coming into Brics of South

Africa represents an important element that Africa is part of the changing world, is part of the alternative voice,

therefore it is important that South Africa was part of the changing economic order (Seize Brics opportunities,

2011). South Africa’s membership did not necessarily signal the ascendancy to a future global power, as it was

not for the country to judge. However, the country would continue to further peace in Africa and the world,

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tackle poverty in South Africa and globally, which not only represented the interests of the emerging nations,

but also will help to create a more equitable world (SA ready to tackle Brics challenges, 2011).

South Africa joining the Brics coalition will impact positively on the local tourism industry (Govender, 2011).

The potential of the BRICS coalition to drive foreign direct investment and infrastructural development are key

benefits that will undoubtedly have a positive impact on the tourism industry locally, as will the increase in

awareness of the growing global importance of South Africa. The BRIC countries show great potential to drive

growth in arrivals to the country. The number of outbound tourists from BRIC markets in 2010 was more than

5.4 million from Brazil (5 497 000), more than 35 million from Russia (35 513 000), more than 12 million from

India (12 497 000) and more than 31 million from China (31 664 000). China, India and Brazil have been on the

South Africa tourism market list for some time now, and their growing importance in terms of arrivals growth

has been clearly demonstrated throughout 2010 (Govender, 2011). Anita Soni, chairperson of the Brand SA

board, explains that with South Africa’s entry into Brics economic development of South Africa’s economy has

taken the country across the border to partner countries where economic diplomacy has taken root (Gauteng

Tourism, 2012). Since South Africa joined the Brics family in 2012, the country’s exports has grown four-fold

into those countries and imports from the same countries doubled. It therefore makes business sense to play

with the largest growing economies in the world (Gauteng Tourism, 2012). South Africa has been identified as

a key emerging market for global investors, moving up to fourth from eighth position in a survey conducted by

the Economist Intelligence Unit for UK Trade and Investment, the British government’s international business

development agency. South Africa was ranked eighth in a top 10 list of "new wave" investment markets

(Pilgrim, 2011). Another important area of consideration is South Africa’s commitment to international

financial stability through the G20 and the work of the Financial Services Board (FSB). This is strengthened by

its role in seeking greater democracy in and the reform of the Global Financial Architecture. The country’s

foreign policy agenda mirrors much of the focus of the other BRIC members. The unity of purpose amongst

BRICS members in calling for the reform of the global governance system, international trade and climate

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change to name a few, undoubtedly lends to a natural partnership. A Russian Foreign Ministry statement, which

was echoed in similar statements by other BRIC members, celebrated the invitation of South Africa to join the

partnership. It stated that “South Africa’s inclusion is in line with sustainable trends of global development,

including the emergence of a polycentric international system” (Pheko, 2011). Now that South Africa is part of

the BRIC, the nation solidifies its reputation as an emerging real estate market to watch and increases its allure

to overseas investors. Developers are catering to buyers seeking strong, stable returns on prime property and are

eager to dispel doubts about the rand as a sound currency. South Africa’s inclusion into the circle of BRIC

countries is only going to strengthen the attraction for investors. Concerns about the volatility of the Rand

should also be dismissed. The Rand has been one of the best performing currencies in the past three or four

years and it has been pretty stable (Nuwire investor, 2011).

The Sanya Brics Summit

Trade ministers at the ‘Brics Economic and Trade Ministers' meeting in Sanya City in China’s Hainan Province

have agreed to expand business links between the four countries (People’s Daily, 2011: 2). During the meeting

the ministers agreed to further strengthen cooperation by expanding mutual trade and investment, while

committing to oppose trade protectionism in all its forms. It was agreed upon that a contact group be established

, entrusted with the task of proposing an institutional framework and concrete measures to expand economic

cooperation among the Brics countries, and also with other developing countries within a South-South

perspective. The South African delegation, led by president Zuma, concurred with his counterparts that all the

Brics members should continue contributing to global economic growth (Brics trade ministers to bolster

business ties, 2011). Although, South Africa stands small in comparison to its Brics partners, the country had

unique attributes which will help boost its fellow Brics members (SA's unique values, economy will boost

Brics, 2011). What are the unique values president Zuma refers too? First, the country’s position as Africa’s

strongest economy places it in a leading role. It should be natural that the Brics countries will look at South

Africa as a springboard into the region and consult the government and private companies for guidance and

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economic development opportunities (SA's unique values, economy will boost Brics, 2011). Secondly, at a

political level, South Africa presents a unique value system from its history and particular experience and

fellow Brics countries valued the “independent outlook” South Africa contributed to issues related to

international peace, security and development. Thirdly, as a major player in Africa’s financial markets,

minerals, industry’s, services, infrastructure and electricity generation, the country has much to offer. South

Africa’s Brics partners are now the largest trading partners of both Africa and South Africa. There were also

further opportunities with the setting up in a few months’ time of the Free Trade Agreement between the

Southern African Customs Union (Sacu), the Common Market of East and Southern Africa (Comesa) and the

East African Community (Zuma to attend Third BRICS Summit, 2011). Fourthly, critical for enhanced

cooperation was that Brics members served on the UN Security-Council, either as non-permanent members or

permanent members and that Brics members could continue to collaborate through the UN, G20 and IBSA

forum. The non-aligned movement and Group of 77 could add value in furthering South-South relations.

Reform of the UN Security Council was placed high on the agenda with the need to promote global financial

institutions for a “just economic world order”. Fifthly, Zuma stated South Africa’s position on climate-change

and advocated the need for a legally-binding agreement, which will govern the world to the increasingly visible

effects of climate change (SA's unique values, economy will boost Brics, 2011). The possibility of the five

countries using their own currencies to trade with each other formed part of a wide consultation agreed upon by

the Brics trade ministers. The ministers called for strong, open and rule-based multilateral trading systems

among their countries (Davies, 2011). The “excessive” volatility in commodity prices was denounced at the

meeting, particularly those of food and energy that pose a new risk for the ongoing recovery of the world

market. The international community should further strengthen cooperation to ensure strong development of

physical markets, increase production capacity and strengthen producer-consumer dialogue. Brics countries are

responsible for 20 percent of the global GDP and the group is significant as they are part of the G20, a grouping

of the 20 major economies in the world. Most importantly, all Brics members are in the UN Security Council.

The five countries see this as an opportunity to work closely together on issues pertaining to peace and security

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and future coordination on issues under the Security Council (Davies, 2011a). The South Africa viewpoint is

that the Brics will not compromise in their efforts to create fairer global trade conditions for developing nations

at the Doha round. South Africa remains committed to seeing an outcome of the Doha development round,

which pledges to help uplift developing countries with fairer trade tariffs and rules, particularly agriculture.

According to trade and industry minister, Rob Davies, there is no other kind of round other than Doha. The

Brics group should develop a series of agreements and relationships that promoted development among Brics

countries, particularly those that increase trade in value-added goods and investments. This cooperation could

help foster a “model for growth” for the rest of the world (Davies, 2011b).

Table 1: BRICS Summits

As of January 2012, there have been three BRICS summits, each hosted by a different member country. A

fourth summit is scheduled to take place in India in late March 2012 (Times of India, 2012: 2).

Summit Participants Date Host country Host leader Location

1st BRIC June 16, 2009 Russia Dmitry Medvedev Yekaterinburg

2nd BRIC April 16, 2010 Brazil Luiz Inácio Lula da Silva Brasília

3rd BRICS April 14, 2011 China Hu Jintao Sanya

4th BRICS March 2012 India Manmohan Singh New Delhi

Source: (The Economic Times, 2011: 4).

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The Significance of Brics for Africa

The South African Minister of Trade and Industry, Rob Davis stated that South Africa’s success as the new

member of Brics will be determined by how Pretoria relates to the rest of Africa and how it will use its

membership of the group to address critical issues facing the continent. South Africa’s membership of Brics is

therefore, an all-inclusive deal that concerns the whole continent and decisions regarding Africa made by

Pretoria single-handedly will not portray a favorable or positive image in the eyes of its fellow Africans

(Davies, 2011). As the only African country in Brics, South Africa is expected to push for Africa's integration in

trade and policies with the other four Brics members. Building a domestic market that cut across Africa will be

ideal for South Africa if it's to survive amongst these four powerful emerging economies with a combined

population of more than three billion. South Africa must use its position to craft a more vigorous trade and

investment program to ensure its voice and that of the continent is heard in the broader international platforms,

such as the G20 and the UN Security Council (Davies, 2011). The International Relations Minister of South

Africa, Nkoana-Mashabane, reiterated the fact that South Africa’s inclusion to Brics has added a new

geopolitical significance to the continent. Nkoana-Mashabane said that the powerful grouping of Brics means

that Africa is gaining muscle among global investors, especially in the fields of agriculture, infrastructure,

Information Technology (IT), sports, promotion of cooperation in scientific, technological and innovation

cooperation (Nkoana-Mashabane, 2011).

Africa is undeniably vital to the economic interests of the powerful emerging markets with a high growth

potential. The importance of Africa in South Africa’s trade profile is often ignored. South Africa has over the

past decade been able to prominently position itself on the continent and create a great deal of leverage through

its investment footprint. This brings to BRICS a new dimension that exposes new opportunities and creates an

avenue for greater economic and political interaction. This thinking is clearly highlighted in comments made by

the Minister of International Relations and Cooperation, Nkoana-Mashabane, when she emphasized that “we

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[South Africa] will be a good gateway for the BRIC countries” (Pheko, 2011). South Africa may have a small

population, we don’t just speak for South Africa, and we speak for Africa as a whole. We bring the most

diversified and most advanced economy on the continent. We may not be the same size, but we can open up

opportunities for them and through that, we can complete our economic integration on the continent” (Pheko,

2011). Brics countries should up their efforts to help Africa improve their food production capacity, enhance

agricultural cooperation among Brics countries, construct an agricultural information and digital agriculture

platform to provide more accurate long-term market forecast information for food producers and purchasers to

reduce excessive speculative activities that result in high food prices and establish the "BRICS Strategic

Alliance for Agricultural Research and Technology Cooperation", which will pool efforts to address the major

challenges the world faces with regards to agricultural technologies (Tina Joemat-Pieterson, 2011).

Africa’s Growing Potential as an Investment Destination

In the past few decades, Africa has taken significant strides towards more democratic governance, more

transparent economic systems and eliminating some of the more crippling bureaucratic barriers to trade

and investment. Although Africa still falls far short of constituting an integrated market, the trend

toward integration and more transparency is undeniable.

The invitation of South Africa to become the fifth member of the BRICS – Brazil, Russia, India, China

and South Africa – and the South African seat on the United Nations Security Council will ensure that

Africa has a voice in all key global fora and will accelerate reform of the UN and global financial,

developmental and trade architecture.

The credit crunch and global economic recession have created a fundamental crisis of confidence in the

international financial system, which has both removed any moral high ground that the Washington-

consensus institutions had and opened the way for an ongoing review of the current architecture.

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The potential of Africa as an investment destination has been long recognized and supported both in

terms of investment and soft loans by China – now the world's second-largest economy – and with

strategic investments from South Africa and rising economies such as India and Turkey.

There is ample evidence of Africa's potential to leap-frog constraints such as fixed-line telephones with

the revolution of mobile technology in Africa. The next breakthrough will need to come in the field of

energy and electricity provision. Africa's hydro-electric potential could play a key role here (Battersby.

In a world where there is growing consensus that future wars will be fought over food and water

resources – rather than territory or ideology – Africa is well-placed to play a key role with its huge water

reserves and vast tracts of arable land.

With a population approaching 1-billion, Africa represents the world's third-largest market after China

(1.3-billion) and India (1.1-billion) and is rich in largely unexploited mineral and natural resources.

South Africa played a key role in rescuing the 2009 climate change summit (COP15) in Copenhagen.

There was enough progress at Cancun in Mexico at the end of 2010 to ensure that the next critical

session of the COP17, in Durban in November 2011, could broker the breakthrough that world so badly

needs (Battersby & Lu, 2011).

Conclusion: The Pros and Cons of South Africa’s membership in Brics

The South African Institute of International Affairs (SAIIA), warns that it is important for the South African

government to devise an effective foreign affairs strategy if the country is to benefit from being a Bric member

(South African Department of Government Communication and Information System, 2011a). International

Relations Deputy Director-General for Public Diplomacy, Clayson Monyela, says the department has also

looked at how it will use its BRIC membership to forge a new foreign policy strategy. The department has also

studied a number of key areas that BRIC countries are involved in, including their respective development

banks, their role in bilateral meetings and G20 meetings, involvement of civil society and research institutions

17

(South African Department of Government Communication and Information System, 2011a). South Africa still

had historical and logistical advantages over Southern Africa when compared to other BRIC members and that

the proposed merger of the Common Market for Eastern and Southern Africa (Comesa), Southern African

Development Community (SADC) and East African Community (EAC) trading blocs, would support the

country's move to increase regional trade. Building on the benefits of regional integration would remain key to

South Africa exacting great benefit from being part of the BRIC club, says emerging markets expert Martyn

Davies. Davies, the chief executive of Frontier Advisory, argues that the "S" in "BRICS" should really represent

SADC, which had a market of over 250 million people, bigger than that of Russia and Brazil. He says one way

to speed up regional integration is to integrate capital markets by, for example, opening the Johannesburg Stock

Exchange (JSE) up to include companies in the entire SADC region (South African Department of Government

Communication and Information System, 2011a).

Similarly, Professor Steven Friedman, director of the Centre for the Study of Democracy, says he was not

convinced that China's invitation to South Africa to join the BRIC forum was based solely on an attempt by

members to take advantage of Africa. He points out that China and India have demonstrated that they are very

capable of forging business links on the continent without the help of South Africa. Added to this was the very

"ambivalent attitude" that the rest of the continent held towards South Africa. South Africa would gain more

from being in BRIC than BRIC members would gain from us. Despite this, Friedman says the other BRIC

members still saw a significant benefit in South Africa being a part of the exclusive club. Friedman points out

that while the continent has about five percent of the economy, it produced 26 percent of its output (South

African Department of Government Communication and Information System, 2011a). Membership of the group

was not “Africa tokenism”, rather the country’s close connections with the continent allow it to “punch above

its weight” by linking hundreds of millions of African consumers. South Africa occupies a pivotal position as an

emerging market. South Africa is the minnow compared with the rest of the BRIC countries and doesn't really

belong if you look at it from the point of view of head counts: South Africa has about 49 million people,

18

whereas Russia, the second smallest BRICS country, has 141 million, dwarfed in turn by Brazil's 193 million

and China and India with their 1.3 billion and 1.1 billion populations, respectively. However, the importance of

South Africa’s inclusion lies in the vast African market beyond its borders. Even though, South Africa’s

economy is small and the population does not come close to any of the other countries, the rates of growth not

yet at their level, the country is slowly recovering (SA to 'punch above its weight' in BRICS, 2011). If the Brics

club is any indicator of global economic growth in the next decade, the West is going to be left out from this

process. The growth of the BRICS markets is going to happen among themselves and without the West, unless

the West makes more of an effort to get involved, which is not on the table (Aris, 2011). In conclusion, South

Africa can make a noteworthy contribution to Brics and fulfill a role as springboard for the other members of

the economic bloc to penetrate the African market. The strategic position of South Africa and the impact of its

economy on the rest of the African continent cannot be left unnoticed. One factor that weighs heavily in the

country’s favor is its well-advanced infrastructure and communication-network, where it is not only the

technological and innovative leader in Africa, but also has close relations with the other big economies on the

continent, such as Nigeria and Egypt. And in both these countries, China and India are starting to play a

stronger role in pursuing closer economic ties.

With South Africa’s knowledge of Africa’s domestic politics, regional conflicts and developmental issues, it

can further act as facilitator in economic negotiations between members of Brics and companies that desire to

trade with the Brics bloc. As a matter of fact, most businessmen first travel to South Africa where they obtain

sound and useful knowledge of Africa’s business environment and then spread their wings to profitable or

beneficial markets on the rest of the continent. This still happens today, even with countries, such as Angola and

Mozambique receiving millions of dollars to upgrade their infrastructure for local business receptions of foreign

(Brics) dignitaries. It must however be said that the advantage South Africa enjoys in this regard, is slowly

diminishing and that businessmen of the Bric countries are making direct departures to African destinations in

increasing numbers. After one year of Brics membership the stake for South Africa is high to make its influence

19

count in the Brics economic pact. If the country can get its economic house in order and act more as a

consolidating regional and continental power, the future is promising. But in order to show its strength in this

regard, it has to put all its cards on the table and play the role of an honest and conciliatory broker to show the

other Brics members what the continent has to offer. One situation it wants to avoid is to be known as a free

rider, riding on the backs of the much bigger economies of its partners. This can happen at the expense of

domestic economic and political development and not promote nation-building in a country which is deeply

divided along ethnic and income lines. The people will simply ask, what do we get out of the Brics deal, how

does the economic pact benefit the average citizen and what can all and sundry do to make their voices heard in

the business circles of Brics countries. In other words, Brics negotiations should not only be executed on a

higher political level, but also include the inputs of the workers. These questions are quickly going to be raised,

if the strong domestic constituencies in South Africa by way of unions and business groups feel they are being

left out in the cold and cannot take part in the negotiation processes. Recall the textile dispute between China

and South Africa that was only resolved when all the domestic role-players had a say in the negotiation

outcome. But all in all, South Africa’s membership of Brics can do the country more good than harm and as a

final word, will expose the country to the global economy and very important, employment opportunities will

be created. An aspect that is a big source of concern in the country where unemployment is some of the highest

in the world.

20

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