SA’s recovery plan takes shape at Brics
The impact of the country’s new economic reconstruction and recovery plan became tangible as South African business leaders met their counterparts in the Brics countries at the Brics Business Forum chaired by Russia this week.
The Brics Business Forum began on Tuesday and will conclude this Wednesday. The Brics Summit takes place on November 17.
The clear path to economic recovery sketched out by President Cyril Ramaphosa will not only transform the local economy but also fundamentally change the way we trade, invest and export to our primary partners in Brazil, Russia, India and China.
When the Brics Business Forum last met a year ago in Brazil, the Covid-19 pandemic was not on the radar screens of even the most pessimistic scenario planners.
The most vexing issues on the agenda related to smoothing barriers to entry for trade and the opening of more market opportunities for South African exports.
Realistic optimism
All this has changed inexorably over the past nine months. But as the Brics Business Forum convened again in virtual space this week there was also a realistic optimism that prospects for a return to “normal business activity” might be on an upward trajectory.
What is certain is that the planning and implementation of strategies cannot wait until Covid-19 has run its course. There must be concurrent action on trade and investment while authorities are implementing public health measures and finding scientific answers to stop the spread of the pandemic.
This is also the message at the core of SA’s economic reconstruction and recovery plan — EcoRRP. We cannot further delay the much-needed action to reindustrialise the economy, unlock investment and growth, and strengthen the capabilities of the state.
Key focus areas of the EcoRRP are of particular importance for our relationships within the Brics alliance.
First, infrastructure is prioritised as the area to stimulate investment, catalyse the growth of new economic sectors and create sustainable employment.
Much of this will take place in network infrastructure such as roads, rail and ports, which are prerequisites for the drive to improve competitiveness and create a modern and forward-looking economy.
Second, there are interventions to arrest the debilitating decline in the country’s manufacturing base and usher in a new era of industrialisation. Already on the drawing board are industrial master plans to kick-start critical sectors such as automotive, clothing and textile, agriculture, renewable energy and the digital economy.
To support these pillars the government is fully committed to improving the capability of the state and removing the debilitating barriers that hampered economic activity and drove up the costs of doing business and attracting investments to the country.
These steps will clearly have an impact on our international trade relations — and especially our business relationships with our fellow Brics countries.
What is quite clear is that the diversification of our economic base will also shift the focus from SA being perceived as primarily an exporter of commodities towards being a more assertive partner in value-added trade.
Opportunities for trade and investment abound within this strategic alliance despite the global economic downturn of the past decade and despite the ravaging impact of the pandemic. There can be no better time for local companies to identify the rich opportunities and strike up partnerships with counterparts in the Brics countries.
These external markets hold huge potential for South African manufacturers and companies. Many local enterprises have already taken bold steps. As President Ramaphosa said at the end of last year’s summit: “Each of the Brics has South African fruit and vegetables on their table, buildings constructed from our metals and factories fitted with South African machinery and electronics.”
The size and scope of the opportunities cannot be underestimated. Together we form a marketwith access to 40% of the world’s population. In economic terms we account for 30% of the global GDP. And by 2050 the combined reach and size of Brics will surpass that of the G-7 economies.
At the Brics Business Council Forum we will continue to identify opportunities for investments flowing towards SA and find openings for the exporting of local goods, products and services to these countries.
We sell less than 15% of our exports to other Brics nations. Clearly there are vast opportunities to expand intra-Brics trading and smooth out current trade imbalances.
From our perspective the focus is on investment-led trade from our partner countries to bolster the plans for infrastructure growth and industrialisation. We continue to emphasise the need for sustainable partnerships with local companies, including small and medium enterprises and companies owned by women and the youth.
Through our leadership role in the African Continental Free Trade Area we already offer Brics companies access to new market opportunities and partnerships with local entrepreneurs. At the department of trade, industry & competition we are taking initiatives to strengthen SA’s export competitiveness and develop a long-term marketing positioning and trade profile for SA.
Protectionism on the wane
The prognosis in a pandemic-affected global economy may look dire but there are also points of light that are becoming visible and will become brighter in the months to come.
The global trends towards narrow economic nationalism and protectionism appear to be on the wane. There is an encouraging rediscovery of the values of bilateralism and trade. The experience we have gained while working with key economic powers since the formation of Brics a decade ago will enable SA to be a more assertive player in a future global economy.
The role of the Brics Business Council will thus become stronger and more relevant as we continue to be the vital platform through which enterprises on four continents can engage and find partners.