The recent Brics Summit (Brazil, Russia, India, China and South Africa) held in Durban has been hailed as a potentially game-changer with focus on discussions in relation to ways that will give developing countries a bigger voice in world politics and improve their economies. Considering that you had the heads of state of four of the largest economies in the world – collectively representing a fifth of global gross domestic product (GDP) present, the interest in this event is understandable.
The Brics Summit resulted in several positive spinoffs:
This included a signed agreement between a Chinese institution, Sinopec and PetroSA that boosted the possibility of building a crude oil refinery at Coega in the Eastern Cape.
Transnet and China Development Bank agreed to co-operate to help the logistics company diversify funding sources for its capital investment programme. This is especially good news considering Transnet plans to invest up to R300 billion over seven years to expand railways, ports and pipelines in South Africa.
The Brics partnerships gives South Africa an opportunity to increase it’s growth potential. South Africa is able to offer logistical access to the SADC market, as well as legal, financial and management support to firms looking to grow their African presence.
Although sceptics consider the Brics summit just another meaningless diplomatic rhetoric, South Africa’s benefits from Brics engagement to date are large. Last year, South Africa’s exports to emerging markets grew by almost 50%. In addition, South Africa’s trade with the Brics economies rose from a mere 5% of our total trade with the world a decade ago to almost 20% now.
Brics offers many economic opportunities, however the continuous challenge for the Brics is to agree on what kind of mutually beneficial policies should be made a priority, how to strike mutually beneficial agreements on these and how to pursue investment and trade with partner countries.
At a time when the country is grappling with a widening budget and current account deficits, stunted economic growth, high unemployment, stubborn poverty and rising inequality the Brics Summit highlights the importance of creating strategic partnerships that will open up new economic opportunities for all.
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