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In gatekeeping the continent for Brics, SA is losing economically

2018-07-31 22:29

South Africa hosted the 10th Brics (Brazil, Russia, India, China and South Africa) summit in Johannesburg last week, as part of ongoing efforts to create a Southern alternative to development support.

These efforts are inscribed in five pillars, two of which focus on the coordination of multilateral fora, in support of economic and political governance; and; cooperation between members. In both indicators, much has taken place since the inception of Bric in 2006, with South Africa joining in 2010, to form Brics.

In 2014, member countries established a Development Bank with initial subscription capital of $50 billion (about R655 billion). The five members consist of 40% of the world’s population, with India and China dominating the Brics population (86%) while Russia and Brazil combined take 11% share. I would like to focus on the uneven geo-politics and consequences of South Africa’s inclusion.

South Africa is the only African member. It shares 1.8% of the total Brics population of which analysts have suggested this is a disadvantage.

In terms of GDP, of the five countries, South Africa’s GDP is $371 million – Russia’s is $1.72 trillion.

Also, South Africa’s unemployment rate (26.7%) is the highest of all member countries two times higher than its closest Brics counterpart, Brazil (11.8%).

It is not all negative for South Africa. When GDP per capita is considered, India ranks the worst at $2130, South Africa occupying the fourth position at $6460. Of all Brics countries, South Africans are paid the highest salaries ($18030 annual average) followed by China ($13580), Russia ($9252), Brazil ($6974) and then India ($1434).

Let now put the above in context. One of the important selling points of South Africa’s inclusion in the club was (and is) that it is a gateway to Africa. This mantra has been repeated as a positive for the country. It however seems to me that this original objective is highly problematic.

It partly suggests that South Africa is in the club as a gatekeeper to where the real economic transactions are taking place. In this way, South Africa plays the role of a security guard whose duty is to vet permit holders to a soccer game-except that the guard is not necessarily involved in watching the game. By this I mean the following.

Africa is an emerging economic opportunity for Africans and the world alike. The expanding African middle class requires ready supply of manufactured goods, IT services, agricultural technology, electricity and transport. In the age of middle-class expansion, Africans are a ready market for gas.

And African states have always purchasing arms especially given the recurrent conflicts. This is a ready market for South Africa’s goods and services in many accounts. But India and China are supplying most manufactured goods in the continent, from fridges to stoves; to cars.

India also supplies refined petroleum products. South Africa is well able to supply what India and China are supplying to the continent. The Chinese are also building rail lines, ports and roads in Africa – also services South Africa can offer.

The Russians have made fortunes out of arms sales, in building of nuclear power plants and in bringing in extraction technologies. And Brazil has made significant inroads in the continent, on bio-ethanol and agricultural technologies.

So much for South Africa as a gate keeper. In fact, among South Africa’s top 10 export markets, China (9.6%) US (7.5%) and Germany (7.1%) top the list, with Botswana, Namibia and Mozambique trailing at position 6, 7 and 9 respectively. In other words, the African market is negligible for South Africa’s exports currently.

South Africa is not only poorly competitive among Brics, it is also looking to a different place for economic opportunities while the rest of Brics look simply beyond South Africa’s gates.

The wages in all Brics countries are significantly lower than South Africa, which makes it harder for South African workers to move to these countries. In other words, the grass is greener on the South African side for those who are able to get jobs.

While regional integration is an important agenda for South Africa, it will take time, efforts and political will. Unlike South Africa, none of the Brics members are as integrated culturally, linguistically, racially or even geographically.

Perhaps it is important to re-visit the wage question, in our efforts to complete the debate on whether we want high wages and high unemployment, or lows of both.

Even more importantly, India and China’s export expansion into Africa has been guided by entrepreneurs with their governments negotiating geo-political pathways. This pre-supposes reasonably developed human capital. These are both internal issues which require a more responsible policy, one that responds to local, regional and global dynamics.

Dr Jason Musyoka is a post-doctoral fellow (development economist) at the Centre for the Advancement of Scholarship, Human Economy Programme, University of Pretoria.

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November 18 2018