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Business Unity South Africa (BUSA), under the leadership of BUSA President Mrs Futhi Mtoba and its CEO Nomaxabiso Majokweni, will be taking a business delegation of over 50 companies to South Africa's 2nd BRICS Business Forum in New Delhi, India from March 28th to 29th. The theme for this year's BRICS Business Forum is “Partnership for Stability, Security and Growth.”
Majokweni: “The April 2011 inaugural BRICS Business Forum in Hainan, China established a solid foundation for enhanced business ties amongst the biggest and fastest growing economies in the world. South African business needs to leverage on the commercial opportunities offered by Brazil, Russia, India and China for the mutual benefit of the grouping, South Africa and the African continent.”
Africa’s economic expansion of plus 5 percent over the past decade has been a direct product of its strategic ties to the emerging world, where BRIC (excluding SA) countries serve as the growth engine. South Africa’s trade with BRIC economies from 2007 to 2011 has increased by 108 percent. This is in stark contrast to South Africa’s trade relationship with the EU, which saw growth of 12 percent in the same period. The comparison is not to diminish South Africa’s commercial relationship with Europe, but to emphasise where the next global growth is emanating.
Business expects further positive outcomes at the upcoming BRICS Summit particularly in the areas of agriculture and food security, information communication technology, energy and finance. In that regard, South African business is also open to discussion on the merits of a BRICS development bank, which could positively impact the financing of infrastructure as well as facilitate trade within the BRICS bloc. Discussions on mechanisms for currency convertibility among the BRICS are also welcomed, but with a caution on pegging the rand to any other currency.
Already, the South African private sector has made inroads into the BRICS markets. There already are a number of high profile investments from South Africa into BRICS member countries including Sasol’s coal-to-liquids plants in China and India; SAB Miller’s investments in the Chinese beverage sector; and Naspers’ investment into the Russian ICT sector. Similarly, South Africa has welcomed foreign investments from companies such as Tata, the Industrial and Commercial Bank of China, and Brazilian multinational company, Vale. Such high-profile transactions are facilitated and maintained through the trust established through this forum.
Despite these recent successes, there are challenges to South Africa’s entry to the BRIC market. South Africa continues to post a trade deficit with all the BRIC countries. As business and representatives of business, we have to do better in marketing ourselves and leveraging our government support. On the other hand, a number of the BRICS markets have proved difficult for South African exporters and investors to penetrate due to non-tariff barriers as some of our BRICS partners remain closed in certain industries.
In conclusion, South Africa will realize the potential benefits of BRICS as business becomes increasingly more proactive in leveraging this new platform. South Africa might currently be the smallest economy in the BRICS bloc, both in size and growth forecasts, but this could work in South Africa (and Africa’s) favour in attracting the much needed investments from fellow BRIC giant growth economies.
As the 2011 Sanya Declaration stated; “We share the view that the world is undergoing far-reaching, complex and profound changes, marked by the strengthening of multipolarity, economic globalization and increasing interdependence”. The BRICS formulation is a response to this reality.