Thought Leadership

BLSA CEO Newsletter 24 July 2023

23/07/2023 | By Busiswe Mavuso

The BRICS bloc is a positive opportunity for South Africa. It is right for our government to cultivate relationships with BRICS. India and China in particular are massive and fast-growing markets that South African businesses can benefit from.

However, our relationship with BRICS must not come at the expense of our relationships with the West. This is surely obvious. While the opportunities in the East are clear, our trading relationships with the West are essential to our economic well-being.

Unfortunately, this does not seem to be clear to those representing us. Last week South Africa hosted the BRICS Youth Summit as a prelude to the main BRICS Summit we will be hosting in Sandton in late August. We got off on the wrong foot. I was taken aback at the address by Nkosazana Dlamini-Zuma, minister in the presidency for women, youth and persons with disabilities. Rather than focusing on the opportunities that South Africa’s relationship with BRICS present, her speech instead focused on BRICS as a means to “accelerate the downfall of an unjust imperialist world order”. The speech was heavy on rhetoric that presented BRICS as a competitive pole in the world against the West, rather than an alliance designed to enhance the development and cooperation of its members.

Ironically, in the same speech Dlamini-Zuma bemoaned those who prefer us shipping raw materials rather than manufactured goods to the world. She did not pause to consider that our relationships with India and China are overwhelmingly characterised by South Africa exporting raw materials and importing manufactured goods. She ignored that it is Europe and the United States that import by far the majority of our manufactured goods, including vehicles and machinery made here, the kinds of goods that drives industrial activity and add more value to our economy.

Of course, this pattern of low value-added exports to Asia is one we should aim to change, shifting the trading mix over time to goods with more value added. But I fail to see how this will be achieved by alienating Western markets. Indeed, we should use the manufacturing base that is supported by Western trade to improve our scale and competitiveness so that we can gain a competitive foothold in Asian markets for our manufactured goods.

Immense harm would be done to our industrial base if we collapsed the trade relationships that currently sustain it without any competitive access to new trading markets. China, India and Brazil have huge populations that create potentially massive demand for goods we could potentially provide. But we need to be realistic about our approach to those opportunities, particularly with China, which clearly has substantial appetite for mineral resources, but a highly competitive manufacturing capability that would be difficult for SA to compete with. China clearly is interested in maintaining access to our raw materials, but our focus should be on creating opportunity for value-added goods and services exports.

Russia, of course, represents quite unique risks given its war with Ukraine and we must be careful not to suggest that our relationship with BRICS implies an endorsement of Russia. To that end, it is positive that President Vladimir Putin is not going to attend the summit in person as his presence would have completely dominated the agenda and limited the chance of positive outcomes.

As we head toward the summit, I implore those who will be representing our interests to do so strategically and with a clear view of what would benefit us. Harming relationships with the West by proclaiming that BRICS exists to somehow counter the West would do us no good at all. Instead, we should look to work with BRICS members to improve relations and opportunities for our economies to trade with each other. In particular, South Africa should focus on enabling greater export of its manufactured goods to the other BRICS countries. We should present BRICS as an opportunity to drive the economic development of its member nations, an outcome that the West and all friends of South Africa would see positively. BRICS should be about creating South African opportunity, not risks of impoverishment.

BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.