South Africa's representatives do not seem to realise that the opportunities presented by the Brazil, Russia, India, China and South Africa (Brics) trade bloc must not be at the expense of other trade relationships and that South Africa's trading relationships with the West are essential to its economic well-being, said business organisation Business Leadership South Africa (Busa) CEO Busi Mavuso.
"The Brics bloc is a positive opportunity for South Africa and it is right for government to cultivate relationships with Brics. India and China, in particular, are massive and fast-growing markets that South African businesses can benefit from.
"However, our relationship with Brics must not come at the expense of our relationships with the West because, while the opportunities in the East are clear, our trading relationships with the West are essential to our economic well-being," Mavuso said in a July 24 newsletter.
For example, Minister in the Presidency for Women, Youth and Persons with Disabilities Nkosazana Dlamini-Zuma, during a presentation to the Brics Youth Summit, decried those countries that prefer South Africa to ship raw materials to them, rather than manufactured goods.
"However, she did not pause to consider that our relationships with India and China are overwhelmingly characterised by South Africa exporting raw materials and importing manufactured goods," illustrated Mavuso.
She states that Dlamini-Zuma ignored that Europe and the US import, by far, the majority of South Africa's manufactured goods, including vehicles and machinery, which are the kinds of goods that drive industrial activity and add more value to the economy.
"Rather than focusing on the opportunities that South Africa’s relationship with Brics present, [Dlamini-Zuma's] speech instead focused on Brics as a means to accelerate the downfall of an unjust imperialist world order. It was heavy on rhetoric that presented Brics as a competitive pole in the world against the West, rather than an alliance designed to enhance the development and cooperation of its members," highlighted Mavuso.
"As we head toward the Brics summit, in August, I implore those who will be representing our interests to do so strategically and with a clear view of what would benefit us. Harming relationships with the West by proclaiming that Brics exists to somehow counter the West would do us no good at all.
"Instead, we should look to work with Brics members to improve relations and opportunities for our economies to trade with each other," she said.
South Africa should focus on enabling greater export of its manufactured goods to the other Brics countries.
"We should present Brics as an opportunity to drive the economic development of its member nations, which is an outcome that the West and all friends of South Africa would see positively. Brics should be about creating South African opportunity, not risks of impoverishment," she emphasised.
Further, the pattern of low value-added exports to Asia is one South Africa should aim to change by shifting the trading mix over time to goods with more value added.
"However, I fail to see how this will be achieved by alienating Western markets. We should use the manufacturing base that is supported by Western trade to improve our scale and competitiveness so that we can gain a competitive foothold in Asian markets for our manufactured goods.
"Immense harm would be done to our industrial base if we collapsed the trade relationships that currently sustain it without any competitive access to new trading markets. China, India and Brazil have huge populations that create potentially massive demand for goods we could potentially provide," she noted.
However, South Africa needs to be realistic about its approach to those opportunities, particularly with China, which has a substantial appetite for mineral resources, but has a highly competitive manufacturing capability that would be difficult for South Africa to compete with.
"China is interested in maintaining access to our raw materials, but our focus should be on creating opportunity for value-added goods and services exports," Mavuso said.
Meanwhile, Russia represents unique risks given its war with Ukraine and South Africa must be careful not to suggest that its relationship with Brics implies an endorsement of Russia.
"To that end, it is positive that Russia President Vladimir Putin is not going to attend the summit in person, as his presence would have dominated the agenda and limited the chance of positive outcomes," she said.