I was delighted to be invited to write ACCA SA’s inaugural blog. Having attended a recent World Bank event, where we discussed the aftermath of the recent BRICS Summit, like many fellow South Africans, I find myself asking: “What does BRICS membership mean for South Africa?”
Since South Africa’s invitation to join BRICS in 2011, BRICS has been on South Africa’s radar and Africa’s radar as a whole. My interest was also piqued by the fact that the summit was themed: “BRICS and Africa: Partnership for Development, Integration and Industrialisation.”
Globally, people are looking for opportunities for economic growth. The global financial crisis has made it clear: the traditional powerhouses of the West lack resilience. People, worldwide are looking increasingly at the so-called ‘new world order,’ of which South Africa is now part.
This begs the question: how important is BRICS really? A Report from Standard Bank analysts entitled: “BRICS trade is flourishing, and Africa remains a pivot,” indicates that BRICS-world trade accounted for 16% of global trade in 2012. Expressed in dollar terms, this is estimated as a sizeable, US$5.6 trillion.
What does the future look like for BRICS? Statistics and projections from the IMF’s Monetary Fund’s World Economic Outlook database of April 2013, indicates that BRICS countries will account for 23% (2013: 22%) of the world’s GDP by 2015. If we look back 10 years, these countries only accounted for 9% of the world’s GDP.
Standard Bank analysts estimate that in 2012 intra-BRICS trade amounted to US$310 billion and expect this amount to increase to US$500 billion by 2015. PWC’s Report: “World in 2050, The BRICs and beyond: prospects, challenges and opportunities, makes the claim that China, India, Brazil and other emerging markets will not just be low-cost production locations in future, they will also be large consumer markets. They suggest that companies looking for growth should turn to these emerging markets as they present better growth prospects than developed countries.
What does this mean for South Africans? Think global with a local feel. South Africa is widely regarded as a gateway into the rest of Africa. Intra-Africa trade has increased five-fold from 2001 to 2011 to US$90 billion. At this rate, intra-Africa trade should be part of everyone’s strategy. Is intra-African trade part of your business strategy?
BRICS represents a door of opportunity, which has been opened by the five heads of states for business to be conducted intra-BRICS. So, take your business further than South Africa, or Africa into Brazil, Russia, India or China. However, bear in mind that with high returns comes high risks, so do your homework before taking your business offshore.
International Workers’ Day reminds us that while we hope that intra-BRICS trade translates into thousands of new, sustainable jobs, as members of BRICS we need to ensure that whenever new jobs are created, these are decent jobs, jobs, which ensure that workers rights are firmly entrenched.
We would love to hear your views.
Thuli Ntshele, Technical Manager, ACCA SA.