SUNDAY TIMES - Brics has no remedy for SA's economic ills
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Sunday Times Opinion By Ron Derby, 2017-04-16 00:00:00.0

Brics has no remedy for SA's economic ills

There must be a bonus system in banking institutions to reward analysts for the best acronyms they can package into products to sell to investors. They've certainly been in vogue since the turn of the century.

But none has managed to inspire a global political movement such as Brics - Brazil, Russia, India and China with South Africa squeezing its way in.

The Zuma administration has come to cling to Brics as the country's salvation from what it calls "white monopoly capital".

A quick read through the last budget speech delivered by former finance minister Pravin Gordhan shows that there wasn't a single mention of the grouping. There was just one shout-out to Russia, two on India, Brazil and China - and only as passing comments on the state of emerging markets.

There was nothing that connected with any future economic promise to help boost SA's prospects and get the country growing at rates close to those envisaged by the National Development Plan. In hindsight, that speech was probably the last nail in the coffin for Gordhan.

No wonder then that in the countless press conferences hosted by his replacement, Malusi Gigaba, the grouping has once again come to centre stage along with the still rather unclear path towards "radical economic development".

I've never been a strong believer in the promise of this grouping of nations,inspired by a research note written 16 years ago by Goldman Sachs banker Jim O'Neill.

If you consider just how difficult it has been for the European Union to stay together as a political project since its establishment, can you imagine how much more difficult it is to keep nations from four different continents singing from the same song sheet?

Except for a shared suspicion of Western powers, which is understandable given how their histories have played out, what else binds these powers?

As it is, domestic issues weigh heavily in all of these countries. I doubt a speech about a partnership opportunity with a South African economy with zero growth would inspire much confidence if it were delivered in New Delhi or Brasília today.

And it should be vice versa, seeing that the Brazilian economy has contracted over the past two years and is in the throes of its deepest recession in more than a hundred years.

The switch to a consumption-led economy in China hasn't been beneficial to raw-materials exporting, on which South Africa, Russia and Brazil all depend.

And while the world's second-biggest economy has cooled its export focus, because of the sheer size of its population it has had to keep its labour-intensive steel mills operating at full steam .

This has been the ruin of South Africa's steel-mining towns such as Vanderbijlpark. There's seemingly not too much co-operation with Beijing.

Russia remains as vulnerable as ever to the shape of commodity markets and, in particular, oil.

Given their domestic agendas, I doubt SA's peers are paying as much attention to the Brics alliance as we definitely are.

Spooked by downgrades, the Zuma administration seems even more beholden to its promises.

A finance minister who tries to sell this as a remedy for our growth woes is going to struggle to convince anyone.

I'm never one to be a proponent of navel gazing, but I think South Africa's focus should be on dealing with structural faultlines in the economy and also soon addressing a highly apparent leadership vacuum.

derbyr@sundaytimes.co.za or follow Ron on twitter @ronderby