May 1,2012 / News / Legal Brief

The new cooperative alliance that includes Brazil, Russia, India, China and South Africa is set to become an economic and political power broker in global markets.

One of the most significant economic and political courtships over the past two years has been South Africa’s coming together with Brazil, Russia, India and China in a cooperative alliance, now known as BRICS.

This alliance, given the very nature of the world economy, is going to play a huge role in influencing events in world markets.

One only has to look at the numbers involved in the markets that Brazil, Russia, India and China (BRIC) embraces, to realise the real possibility of this – they are huge markets by any standard. These four countries have a combined population of around 2.85 billion – around 43% of the present global total – with a combined labour force of 1.5 billion and an average age across the four countries of only 29.

Furthermore, Africa, as many economists have pointed out, is one of the most profitable areas in which to do business. South Africa, as an established economy within Africa, and the only African representative within the BRICS alliance, will be in a position to lend its political, economic and other expertise to its partners.

A GATEWAY INTO AFRICA

Membership of this body will open doors for the other BRICS nations to use South Africa as a transit route to the rest of the continent. To its partners South Africa can thus be a portal into the rest of Africa.

The “gateway” concept is nothing new. But South Africa is not only a strategic entry point for other BRICS nations to move goods, commodities and resources into the rest of the continent. As an established economy within Africa, South Africa – as a BRICS nation – can also lend its political and economic clout, and its streetwise experience of doing business in Africa, to the mix.

However, there are other gateways available for BRICS nations – or other nations for that matter – to enter Africa for trade purposes. For this reason, South Africa must not become complacent. It must capitalise on its good standing within this body by spelling out the advantages that other BRICS countries stand to accrue by choosing South Africa as a point of entry to the rest of Africa.

This is all the more reason why the South African government needs to work harder to remove some of the frustrating bureaucratic pinpricks that undo much of the good emanating from behind-the-scenes African initiatives undertaken at diplomatic and business levels.

For example one of the issues raised by a number of presidents at the African economic forum held in Tanzania last year, was the negative effect that delays in issuing visas can have on trade within Africa. It hampers and impedes logistical transport, trade and movement of goods and people.

African nations must recognise this, understand the impediments and move swiftly and decisively to ease and eliminate these kinds of bureaucratic burdens.

SOUTH AFRICA’S ROLE IN TAPPING THE NEW-LOOK AFRICA’S POTENTIAL

The good news is that Africa’s growth has shown an upward trend over the past decade, gaining exceptional momentum recently, albeit coming off a low base. There is a new shift in strategy in redefining business on the continent. It still has its challenges in regard to poverty, governance and some of the other age-old concerns, but this is without doubt a new-look Africa.

Africa, as some economists have pointed out, is now poised to become an engine of world growth. The continent has come of age over the past two years and, in every sense, the period from 2009 to 2011 has been this new Africa’s coming out party.

On the wider world stage, it is South Africa’s policy to be a cooperative member of the African Union. Certainly at a political level it projects the impression that it wants to stand together at international level with the rest of the continent. Its participation in BRICS will allow South Africa to project not only its own standing, but that of its African neighbours and African union members.

South Africa, of course, is often cast in the role of “kingmaker” in Africa – witness its success in conflict resolution, for instance. But one of the realities of the BRICS alliance is that China
and South Africa stand shoulder to shoulder as equal partners.

China is South Africa’s largest trading partner and with that comes a whole host of advantages, challenges and diplomatic conundrums. But at the moment, the situation is one which South Africa is well placed to take advantage of. Each country has a fine regard for diplomacy and a recognition that working together can engender great benefits to both.

Obviously there are concerns about unemployment among South Africa’s impoverished population. Hopefully these concerns will be taken into account when agreements are crafted. This is certainly
something that must be hammered out by politicians on both sides.

Away from the political hustling, the telecoms revolution and the commissioning of the first undersea telecoms cables is a significant development in the growth of a new Africa, because it enables ease of communication. And with this comes the ability to profile African markets. The new communication technologies will open doors and provide access to new opportunities. It is a huge development that cannot be overestimated.

BRICS is well set to play the role of one of the major trading blocs in the world and could potentially dominate the world economy. Of course Africa cannot escape the repercussions of a world economic crisis. It does not stand in isolation. But it may be in a better position than most to steer itself to a middle ground.

There are enormous opportunities to be gained from the needs, commodities and resources that countries to the west and the east need to keep their engines alive.

Resources are but one part of Africa’s competitive advantage. The continent offers financial services; tourism; transport; communications; agriculture; construction and infrastructure; and utilities – particularly energy, given Africa’s enormous natural resources of solar energy, wind and hydro-electric power.

In the field of energy alone, for example, there are exciting exploration discoveries in gas and oil in Mozambique and off the Namibian coast. This itself creates greater cooperation between countries, from an economic as well as a political perspective. In turn, business people are assisted and emboldened by this process.

CONCLUSION

Today, there are a lot more people dancing to Africa’s beat and coming to its shores. And the more people that come, the more easily risk is mitigated as the bandwagon effect gains momentum.

The 2010 FIFA World Cup opened a window on Africa for the world. It was a joyous occasion, well run and organised, which brought great happiness. People love these kinds of stories – and there are plenty more of them around in Africa.

Afro-pessimism is hard to push back, but certainly much has been done to paint a different picture of Africa in the recent past – and it amounts to far more than mere air-brushing.