SA is small fry alongside Brics giants, but we have much to gain from the bloc
Russian President Vladimir Putin has urged his counterparts in the Brics group to surpass the $102-billion (about R1.3-trillion) worth of trade among the five member countries. That would be good news indeed, and as the leaders of Brazil, Russia, India and China jet off to their respective homes, it is important to reflect on what this summit meant for South Africa and Africa.
Some have argued that South Africa should not be part of this prestigious grouping, judging by the size of our economy and population. In many respects they are correct because South Africa is dwarfed by the other four. While there are many arguments about why we should not be part of Brics, there is an even stronger argument why we should be. We are better inside than we are outside.
South Africa is the smallest country of the Bricsin terms of size of territory and it has the lowest population, at 56million, compared to China and India, which have a combined 2.6billion people. Our GDP is also the lowest at $300-billion compared to China at $11-trillion, the second-biggest economy in the world. Brazil, India and Russia have all surpassed the trillion-dollar GDP mark.Even more worrying is our unemployment figure compared to our Brics partners. South Africa's unemployment rate stands at a staggering 26% while the other four countries are under 10%, with China at a low 2.2%. That is why it is important that we use our membership of Brics to straighten the skewed trading patterns and, most importantly, bring in direct foreign investment that is crucial for job creation.
Our investment imbalance with Brics, as Trade and Industry Minister Rob Davies has pointed out, results in outflows of $60-billion to purchase goods and services from our partners while the inflow into South Africa is only $18-billion.
China is playing its part. It has committed to investing $14.7-billion in South Africa, another shot in the arm for President Cyril Ramaphosa's drive to raise $100-billion in investments into the country over the next five years.
State lender the China Development Bank has agreed to grant Eskom a R30-billion loan to complete the Kusile power station and extend another R4-billion to Transnet.
But should we be looking these gift horses in the mouth? What are the conditions that come with these loans, the repayment terms? China is known to shun local labour, skills transfer and localisation in projects it invests in. But South Africa already has safeguards in place against investment terms that do not favour us in the long run. Hopefully we insisted on these during negotiations with the Chinese.Xi Jinping, the all-powerful Chinese leader, is a master at realpolitik. He knows that he will need the shield provided by Brics if he is to successfully wrestle the Americans who have declared a trade war on his country. If China can redirect some of the goods and services it sends to the US, which are incurring Donald Trump's tariffs upon entry, to its Brics partners and convince them to implement a free-trade agreement within the bloc, it would have won half the battle.
For South Africa, it is important that we remain in this powerful group, even though it may seem as if we don't belong.
It gives us clout on global affairs and we need the New Development Bank to fund some of our infrastructure needs. The bank is also good news for Africa, with experts pointing out that its loans have less onerous conditions than those of the World Bank and the IMF, and that it even offers them in local currencies.
The summit in Sandton might have had the feel and sound of a talk shop, but it was not. It might also have felt more of a China summit than a meeting of five member states, but it is much more important than that.