Brics – a saviour to employment woes
IN 2011, THEN World Bank president Robert Zoellick took on the idea that China is restructuring, and that some of the lower-end manufacturing jobs must go abroad. “Why not to Africa?
“Apparently the Chinese have been thinking about this at least since 1984, and have put a number of tools in place to help make this happen.”
Bai Ming, the Deputy Director of the International Market Research Institute of the Chinese Academy of International Trade and Economic Co-operation, echoes Zoellick in an article in last week’s Beijing Review magazine when he said that “the steep fluctuation of bulk commodity prices in recent years hurt raw material-exporting countries in Brics as well as importing countries like China.
“A long-term, more stable relationship between exporting and importing countries is needed to achieve more balanced development for everyone in the group. Brics members need to do more to complement each other’s weaknesses.”
For instance, Bai continued, “China is a manufacturing powerhouse. If Chinese businesses carry out capacity co-operation with other Brics countries to create local jobs and increase the added value of raw materials from those countries, we can establish an industrial chain in Brics.
“When we participate in global distribution of labour, we can stop relying only on developed countries. With our own distribution of labour and our own industrial chain, we can reduce reliance on developed countries and increase economic security.”
This Wednesday Hong Xiao wrote in the China Daily that China’s leading maker of ball bearings has opened a facility near the centre of the US automotive industry in Northville Township, Michigan. CW Bearing USA is a subsidiary of China’s Cixing Group and exports some of its products to Africa from China.
According to the report, the $25.9 million (R336.87m) plant is expected to create 125 jobs and is supported by a $550 000 performance-based grant from the state of Michigan and a property-tax abatement from Northville township. This happened partly because of President Trump’s relentless effort of “bringing manufacturing jobs back to America.”
Recognition The Food Security Working Group (FSWG) has adopted the theme “South Africa’s employment rate must be at par with Brics average employment rate.” This was adopted with the painful recognition that South Africa is experiencing its highest unemployment levels in history, this problem is driven by jobless growth, no growth and now a recession. This level of unemployment is creating a social unrest risk which would materialise when least expected, and destabilise the country.
However, South Africa has the capacity to generate employment to deal with its level of unemployment. If South Africa were to create 5 million jobs it would have the kind of momentum that would propel the country forward.
The Brics countries must commit to a developing programme that will result in the creation of 5 million jobs in South Africa over the next 5 years but in less than 10 years to avert a crises.
China and India with their size could donate output equivalent to 5 million South African jobs. Russia could deliberately divert orders of what it would get in continental Europe out of South Africa.
The Brics Business Council was established during the 5th Brics Summit held in March 2013 in Durban.
The object of creating the council was to constitute a platform which will promote and strengthen business, trade and investment ties among the business communities of the five Brics countries, ensure that there is regular dialogue between the business communities of the Brics nations and the governments of the Brics countries; and identify problems and bottlenecks to ensure greater economic, trade and investment ties amongst the Brics countries and recommend solutions accordingly.
The council executes its mandate through working groups. Seven working groups have been established in the areas of infrastructure, manufacturing, financial services, energy and green economy, skills development, agribusiness and deregulation.
The main objective of these working groups are to facilitate interaction and co-operation among the business communities with a view to better understand the market opportunities, build synergies and promote industrial development and job creation.
Priorities The work of the South African FSWG is guided by the work of the Chinese FSWG, as they hold the 2017 presidency of Brics and have prioritised the following:
Signing of a memorandum of understanding between the New Development Bank (NDB) and the Brics Business Council on Strategic Co-operation on development of policy proposals; financing projects in Brics local currencies.
NDB funding in Brics local market and currencies; strategic dialogues.
Information exchange; human resources development; and financial institutions co-operation.
Brics Insurance Support System to investigate the feasibility of setting up an information sharing platform for insurance companies, associated financial institutions, and regulators of the Brics countries; and the information sharing platform will allow members to exchange information on relevant laws and regulations, industry development, business co-operation, research and technical training, product innovation, etc.
Research on a “Long-term Mechanism of Macro-economic Study” of Brics countries and establish a research platform of Brics’s financial institutions and set up a cross-region and cross-industry research system to focus on global hotspot economic problems, policies, and business demands in Brics countries; provide financial service suggestions to support co-operation between each country; and regularly publish research results.
South Africa has the capacity to generate employment to deal with its level of joblessness.
Building a platform for Small and Medium-sized Enterprises (SME’s) communication.
Global SME cross-border matchmaking services provided by the Bank of China, and Brics SME Cross-border Investment and Trade Co-operation Fairs.
Green Finance. The main goal of this project is to support the green project of Brics through finance, promoting the sustainable development. First, it starts from a deep analysis in the green finance. Then, it would do a feasibility study in green credit, green bond, green stock index, green fund, green insurance and etc.
Finally, through the information sharing and co-operation among the financial institution, the social capital and co-operation with New Development Bank, it would provide financial support for the sustainable development project.
Financial support, such as to underwrite the bond or provide loan, for the green projects of the NDB or other institution held by Brics shall be provided.
Brics Credit Rating Agency (CRA); and draft a preliminary Brics Credit Rating Agency Project Business Plan and further deliberate the organisational structure, business model of the CRA and make clear its shareholding structure.
Lay great emphasis on how the CRA will be established, operated and managed, to keep its sustainable subsistence and development.
Maintain the CRA’s unique features in international credit rating industry, representing the core interests of Brics countries. Besides, a systematic set of rating methodologies will also be proposed for CRA.
A Brics International Payment Card System (NIPCS) shall be established through an integrated and co-ordinated technical standard and business principle based on the card systems pre-established in Brics. The NIPCS would be an important measure of developing national/international financial payment system, promoting national economic growth and guaranteeing national financial information security in Brics.
At the same time, other international organisations (eg Shanghai Co-operation Organisation) besides Brics, might have similar demand for establishing an independent cross-border payment card system which would enable every party to enjoy an efficient and cost favourable payment services.
In a 2011 lecture, Justin Yifu Lin, titled “From Flying Geese to Leading Dragons: New Opportunities and Strategies for Structural Transformation in Developing Countries” held in Maputo, Mozambique, the then World Bank Economist said that “the key lesson, from the new structural economics is that for an industrial policy to be successful, it should target sectors that conform to a country economy’s latent comparative advantage.”
South Africa has done this through its various programmes at the Department of Trade and Industry. All we need to do as a country is to take advantage of our membership in Brics by lobbying for the moving of 5 million jobs from India and China, not tomorrow, but today.
Brics has evolved over the past ten years from an investment concept to a model of co-operation among developing countries. Its share in global trade has climbed from 11 to 16 percent. Global outbound investment has risen from 7 to 12 percent. Brics has contributed 50 percent to global growth last year.
The 7th Meeting of the Brics Trade Ministers, held last month in Shanghai, reached broad consensus on the ways to further enhance Brics co-operation depicted below.
The FSWG noted that Brics nations must acknowledge the unique history of colonisation and racial oppression suffered by black and African people in South Africa.
This system created racebased socio-economic inequality where the majority is excluded from ownership and control of the economy. South Africa has introduced several measures which include Employment Equity and Black Economic Empowerment legislation in an attempt to bring about economic justice in the country.
The Brics programme in South Africa runs the risk of entrenching these inequalities unless in its resolutions and treaties it recognises that the radical economic transformation agenda is a reality and must be incorporated into Brics programmes.
Against the backdrop of rising protectionism, strengthening co-operation will help further increase Brics member nations’ voice in the global economy, Bai said. “They should aim to raise a collective voice in economic globalisation and global governance on behalf of developing countries.”