Brics: How seriously should we take it?

4th April 2013 By: Denis Worrall

The last fortnight in South Africa has been dominated by the BRICS Forum in Durban and the killing of 13 South Africans soldiers in a clearly botched military exercise in the Central African Republic. And overhanging these events has been a profound sense of national gloom as Nelson Mandela continues in hospital.

But to focus on BRICS. Seriously, how important is it?  Was it enhanced by the Durban Forum? And how does South Africa benefit?

Until the Durban meeting BRICS was really no more than a political construct. In fact, it seems to follow the growth pattern of the EU which similarly started as a political grouping in 1957 when six countries signed the Treaty of Rome. The 60s were difficult years, with France resisting supra - national growth. Further developments took place in the 70s and 80s and today we have - notwithstanding its present difficulties – a genuine and unique economic community of nations. The Durban Form put economic flesh to the BRICS bones – a development for which South Africa can take credit. Obviously, what was important in making the growth of the EU possible is geographic contiguity, and whether BRICS can achieve the same level of economic unity and cooperation without this is questionable. But what is clear is that at the end of this conference the prime movers - meaning the original four members - made it very clear they did not believe that competition between BRICS and EU is inevitable or even desirable. This, quite frankly, was deemed necessary to stress in the light of South Africa's attitude.

Throughout the build-up to the Durban Forum - and it has been intense - South African government spokespersons have insinuated that BRICS represents a significant and distinctive move away from Europe and the US and the international financial institutions associated with them (the World Bank and the IMF etc). President Zuma himself led this chorus. He spoke disparagingly of Africa "always have been regarded as former subjects" by its traditional trading and investment partners. "China does not come with this background or psychology", he declared. In fact, the dominant view within the ANC was probably expressed by Pallo Jordan, an ANC intellectual heavyweight, in an article last week in Business Day, the main theme of which is that with BRICS we are seeing “the start of a new world order" This is the background against which the Indian Finance Minister, Mr P Chidambaram as recently as yesterday, stated that BRICS "was no threat to the World Bank."  Instead, he said that if the BRICS bank was established "it intended to compliment, rather than compete, with Western-dominated institutions on the world stage." South Africa should take the point, given that it is already an integral part of the Western institutions, and is being offered part of both spheres of influence. While this is a very fortunate position to be in, it is going to require imagination and commitment to realise it.

To be specific, most of South Africa’s trade is with Europe and the US, and Africa. We are not here talking about the big conglomerates in mining and state enterprises with a focus on infrastructure. We are talking about mid-cap companies who generate jobs and are the main employers and who are responsible for most of our exports and imports, and their counterparts who have long-term established relations with South Africa and the rest of Africa, often through South Africa. They form the backbone and the guts of our economy but don't benefit from BRICS and in particular Chinese participation. BRICS offers greater Chinese access to Africa’s resources and commodities and – without spelling it out – access to Africa’s consumer markets for relatively low-cost Chinese goods. There is hardly an item in any hardware store or item of clothing, for example, in Woolworths, that is not "China made". Kobus van der Wath of Beijing Axis an established expert on China, urges South Africans to create an improved mix of exports by getting manufacturers and services with value-added products and services into China. While this may be the correct prescription, it surely will be extremely hard to achieve - given the size of those markets and our competitive capability.

What disappointed me about the BRICS Forum was the failure to highlight agriculture. More than 70% of Africans are employed in some way or the other in agriculture.  And while food, its production and distribution, is a cause of concern all over the world, in Africa it is a "life and death" issue. The challenges to African agriculture are enormous. By contrast, the four original BRICS members are major food producers. The Economist Intelligence Unit calls these four countries "the locomotives of global agriculture". They have lessons for Africa.  In fact, they are already involved in African agriculture.

Agriculture, of course, is not a sector which rates highly as far as the ANC and the government are concerned -something deeply regrettable because farming in South Africa is in deep trouble. In  a short couple of years we have gone from being a food exporter to a food importer. Here there is a role for BRICS, and Ambassador Anil Sooklal of the South African Department of International Relations and Cooperation  gave us the good news  that  The Department of Agriculture, Forestry and Fisheries will host the next BRICS ministerial meeting in October, obviously on agriculture. This, clearly, is an encouraging development.