BRIC WALL: Little SA is an economic minnow, notwithstanding its posturing on the world stage
It would appear the BRIC crowd are keen to
have SA as a member as political leverage for access into Africa as a whole rather than for what we can bring to the table in
terms of economic
SOME LIGHT NEEDS to be shed on South Africa’s proposed entry into the BRIC group of nations, currently comprising Brazil, Russia, India and China in a loose arrangement. Of course, there will be reputational and image advantages for the likes of Jacob Zuma. He clearly enjoys hobnobbing with world leaders and flitting around the globe in the height of luxury on the presidential jet to gatherings where he raises laughter by declaring he loves all his wives – and, presumably, his fiancée and girlfriends – equally.
And then, of course, there are the hordes of hangers-on all clamouring to climb aboard the gravy jet, their pockets stuffed with foreign exchange, courtesy of South Africa’s taxpayers. They have their snouts in the trough and they’re enjoying it deeply with no intention to ever give it up. Unless, of course, as Zuma has remarked, there’s a Second Coming. And perhaps a Third and a Fourth. And he should know.
The BRIC acronym arose from an analysis by Wall Street economist Jim O’Neill, of Goldman Sachs, in which he predicted in 2001 that by 2050 the countries he included would exceed in size the combined economies of the United States and Europe.
O’Neill has now updated his study to conclude that reversal of economic power will happen much faster than he originally estimated. Also, in his update, O’Neill links the BRIC crowd with the economies of Mexico, South Korea, Indonesia and Turkey under the title “Growth markets”.
O’Neill has been elevated to chairman of Goldman Sachs Asset Management (GSAM) following successful equity investing in BRIC countries on behalf of clients by the firm along his line of reasoning.
After the recent Wall Street disasters, banks in the US are now restricted in dealing as principals and can no longer make vast bets with depositors’ and shareholders’ money in the derivatives casino.
Thus the father of BRIC, whose American idea the member nations have eagerly latched on to, doesn’t believe little SA belongs in that league. From a strictly numerical view, he’s right. We are an economic minnow, notwithstanding our posturing on the world stage.
For example, according to a recent analysis by The Economist comparing countries with the states in the US, we’re ranked level with Maryland in gross domestic product terms at around US$300bn. Maryland has 5,8m residents; we have 50m. Maryland’s median income per capita is $71 000, while ours is $10 000.
I could go on, but it would appear the BRIC crowd – led by China – are keen to have SA as a member as political leverage for access into Africa as a whole rather than for what we can bring to the table in terms of economic muscle (very little).
O’Neill’s first choice for addition to BRIC is Mexico, with a GDP more than five times the size of ours, as is that of South Korea, a country with virtually no natural resources aside from their work ethic and entrepreneurial spirit.
South Korea is currently quite concerned about its unemployment rate, which has risen to 3,6%, whereas SA’s is more than seven times higher, while we’re introducing increasingly restrictive labour laws that effectively discourage business from employing staff. Further, we discourage risktaking by insisting all businesses be subjected to the demands of black economic empowerment, be graded by specialist agencies and be punished if they fail to achieve State-imposed demographics in their shareholders, directors, staff and so on.
Even Indonesia is more than three times SA’s size, while our growth prospects are hardly rosy with 26% unemployment, heavily burdened taxpayers, decaying infrastructure, uncertain power supply, too many civil servants and all the rest of the ANC plague that’s been visited upon us.
We can take comfort in the fact that we’ll be sitting at the table with some of the world’s growing economic giants – but keeping such close company with repressive regimes such as those of Russia and China won’t burnish our liberation credentials.