[BLOG] VOICE OF BUSINESS: Brics a strong economic wind for SA's trade growth
Aircraft from some of the world’s fastest-growing markets crowded Durban’s airspace this week for the 5th Brics Summit. They were all from countries with a youthful population, strong middle class, rising spending power and sparkling economic growth.
Watching the Chinese, Russian, Indian, Brazilian and South African delegates in saris, jeans, kaftans, turbans and business suits, I was struck by how much the 5th Brics Summit was a physical manifestation of what is now fast being accepted as a new world order.
And as summit host and the biggest economy in Africa, South Africa finds itself at the centre of this power nexus.
Since 2001, a third of the world’s economic growth has come from Brics countries. South Africa’s trade with its Brics partners increased by 108% between 2007 and 2011 while our trade with the European Union (EU), although off a larger base, only grew by 12% during that same period. While EU trade will remain important, South Africa can double intra-Brics trade to $500bn (R4.6-trillion) by 2015.
If we think of South Africa’s National Development Plan (NDP) as the sail that has been hoisted to propel this country forward, our membership of Brics is a powerful trading wind that will fill those sails. This could help us to reach our partners’ sailing speed, boosting South Africa’s economic growth of 2.5% closer to levels of 7%-8%.
The South African business strategy is to leverage Brics in a way that will have a real and lasting benefit for our economy. For example, 10 South African value-added product categories with unique selling points have been identified as export opportunities to China.
One such instance is exporting wine to China. South Africa has a long-standing and highly regarded wine reputation that suddenly finds itself in high demand by Chinese consumers.
In a joint venture with China’s Yangzhou Perfect, Leopard’s Leap Wines in Franschoek have branded a premium wine for the Chinese market called L’Huguenot. In 2012 they exported 5.2-million litres of wine to China, a 19% increase from the year before. Although this is still a small share of South Africa’s total bottled wine market of 160-million litres, the growth opportunity is obvious.
South Africa’s agricultural sector has earmarked more such opportunities with all our Brics partners. Some of these include using our expertise in processing fresh produce, supplying counter-seasonal fresh produce, technology transfers in ecological innovation and cross-border agricultural expansion in Africa.
A Russian-South African joint venture will see the development of table grape production in the Krasnodar region, using South African expertise on growing and processing grape by-products. The JV includes an agro-distribution centre in Moscow with cold stores and facilities for clearing and inspecting cargo.
An important element of South Africa’s Brics business strategy is leveraging the massive potential of infrastructure investment. Construction spending numbers in 2011 were huge, from China’s $950bn (R8.7-trillion) to Brazil’s $160bn (R1.4-trillion), India’s $150bn (R1.3-trillion) and Russia’s $100bn (R923bn) - dwarfing South Africa’s $30bn (R276.9bn) construction spending.
Our construction industry can play in this much bigger league as we have construction and engineering expertise that will enable us to punch above our weight and capitalise on those specific competencies.
A recent success story is Airports Company South Africa’s joint venture with its Brazilian partner Invepar. The JV won a R70bn concession to overhaul and operate Guarulhos International Airport in Sao Paulo, Brazil’s busiest and most valuable airport.
We can also leverage our presence in other African markets by actively managing and showing the benefits of a “South Africa in first” approach. As we strengthen our existing skills base we can offer our Brics partners engineering skills, project management, quality control and compliance in Africa.
Which brings me to the third pillar of our Brics business strategy: optimising South Africa’s strategic role in Africa.
We can add strategic value with our business and financial infrastructure. Our leading role in the Brics-led development bank is testimony to this.
However, there are still barriers to trade. Business and government need to work urgently and wisely together to overcome these. We should do everything we can to bring down the cost and complexity of doing business in the Brics countries. The summit this week has done a lot of this groundwork.
All we need now is to believe that it is possible. This week in Durban made that easy.
Nomaxabiso Majokweni is the CEO of Business Unity South Africa
Become a Member of our Linkedin Group
