China-south Africa bond a genuinely warm affair
Glenn Silverman, chief investment officer of Investment Solutions, recently visited Brazil, India and China as part of the company’s Brics programme. He spoke to René Vollgraaff about some of the lessons he learnt
Is South Africa a big ’S’ or a small ’s’ in the Brics grouping?
When we started the programme, we started with a small “s”. The definition that Jim O’Neill, who coined the phrase, gave of a Bric country was a very large country with a very large population, and he himself said that South Africa did not meet that criteria. Some people have said if the “S” refers to sub-Sahara Africa and not just South Africa, then it meets the criteria. If the little “s” wants to become a big “S”, if South Africa really wants to stand out, we are going to have to make some statement about what we intend to be on the world stage and what it is that people should come to South Africa for. Why is South Africa included in this grouping and not a bigger African country?
We have asked the question in Brazil, India and China: Why South Africa and not a country like Nigeria, which has a much bigger population and is growing much faster than us? But many said that South Africa was the thought leader of Africa and deserved the mantel of leader of Africa, even if it’s not the largest country. What’s in it for a country such as China?
There is a special bond that seems to exist between the Chinese and African people, and South Africa in particular. There seems to be a cultural bond, our businesses seem to work together well, the ANC government and the Chinese Communist Party have had close links over time and that kind of remains and has clearly grown. China is moving into Africa, so it wanted an African representative and decided to choose South Africa. Is it not because the South African government lets the Chinese do what they want to, whereas some other African governments are not so keen to welcome the Chinese?
That may well be true. Africa does need to stand up a lot stronger and negotiate and say what it wants to get out of the deal. But I get a sense it was much more than that. One really did sense a strong warmth towards Africa, a strong warmth towards South Africa. Chinese companies in South Africa do well and South African companies in China do well. I do not think it’s just that we “rolled over”. Is the Chinese influx not a new form of colonisation?
The Western narrative [ on this] has to be questioned. The US comes in here and it must have self-interest, such as business and profits. The Chinese too have self-interest. I do not think it’s so dramatically dif- ferent. But [Africa] also has to stand up and say: “What do we want out of this deal?” Do we really need a Brics bank?
If Brics is only going to be a political alliance, it is not going to survive. I think a development bank is an important element. First, we are developing countries and a development bank would provide cheaper and better finance for infrastructure. Second, most of the [financing] institutions in the world, such as the International Monetary Fund and the World Bank, are controlled by the West. So, if you do want to break with that idea, I think we do need those institutions [like a Brics development bank].
But will it work?
The rules will be important, but I think where there is a will, there is a way. I think there is a real intention to sort it out, so I think they will progress. Will there be challenges? Of course. Will there be problems? Of course. Are they going make some bad loans? Of course. But that is true of everything else.