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BRICS Business Council aims to better balance SA’s trade patterns
DIEKETSENG MALEKE & KUBEN CHETTY
THE BRICS Business Council would like to even out some of the uneven trade patterns that currently exist, according to Stavros Nicolaou, the head of the council.
South Africa holds the chairmanship in South Africa.
Nicolaou was speaking to Business Report ahead of the 15th BRICS Summit in Johannesburg.
The council’s mandate is to promote and enhance economic growth across the five BRICS countries, and to improve trade and investment between the five countries.
The business council AGM preceded today’s summit, with the “African economic agenda for mutually accelerated growth” one of the key issues discussed.
Elaborating on focus areas for South Africa, Nicolaou said that the country exported more raw materials and imported more finished manufactured goods.
“That is even with the BRICS countries. We would like to see more of our finished products being exported and less of the finished products being imported. We need to even out the trade imbalances that exist,” he said.
“In the period 2017 to 2021, there has been a 44% growth in trade across the five BRICS countries.
“There is no doubt that trade has grown within BRICS, but we have noticed that South Africa’s exports have grown within the bloc.
“The analysis we have done is to look at the type of exports - and we are still top heavy in exporting raw material and importing the finished value-added or manufactured products from the other partner countries,” Nicolaou added.
Nicolaou said the country needed to become more focused on what products, outside of raw materials, could be exported to the four BRICS markets.
“BRICS as a bloc represents 31.5% of globalised GDP. It has eclipsed the G7 in terms of global GDP size, so it is a significant opportunity, but we need to get the right products there.” he said exports had grown, but there was an opportunity to look at how to open up routes to market for some of the manufactured goods that were produced in the country and exported.
“Agribusiness is a big opportunity for us. If I have a look at the trade patterns on agriculture, they vary among the four BRICS countries and that in itself presents an opportunity.
South Africa’s overall trade with its BRICS partners has increased by an average growth of 10% between 2017 and 2021. BRICS accounted for 21% of South Africa’s global trade in 2022, with trade with China accounting for about 15% of South Africa’s global trade, with a total trade of R556 billion. India now accounts for 6% of the total trade, increasing from R140bn in 2021 to R225bn in 2022.
Nicolaou said that the theme of the conference was Africa and BRICS promoting multilateralism.
“I think what we would like to see is a more integrated approach; meaning Africa, particularly through the African Continental Free trade Area, pulling Africa into BRICS. there has been considerable discussion about a new BRICS currency that could challenge the US dollar as the world’s reserve currency, or at the very least, provide an alternative. however, Nicolaou said this was one of many discussions that were taking place in the financial services working group. this comes as the ANC recently confirmed that the upcoming summit would discuss the proposal of a common currency between the global south countries as part of “de-dollarisation” and strengthening trade. the official announcement about the new currency is expected to be made during the 15th BRICS Summit, but its development could be years in the making.
“South Africa is the conduit to the rest of Africa in this instance, in the BRICS instance, so we do have the mandate to leverage the African Continental Free trade Area to enhance not only South Africa’s trade and investment, but that more broadly of the continent,” he said.
According to Nicolaou, the third objective was to use the summit as an opportunity to showcase South Africa as an investment destination of relevance.
“As a council, we look at where are the best business investment prospects for South Africa, and that could be east or west, north or south. We don’t favour one particular region or one geopolitical sort of set-up. We will look at where are the best opportunities for South Africa,” he said.
Meanwhile, he said the discussion on a BRICS currency was still at its infancy stage.
“We haven’t formed an opinion as yet. It’s very early. there’s a lot more work and discussion that needs to take place before we have some palpable sense of what this must look like. Regardless, it is a conversation that needs to be held - and if it does go ahead it is something that would be some way off. We are monitoring the conversations, we will contribute our input,” he said.
The official announcement about the new currency is expected to be made during the 15th BRICS Summit, but its development could be years in the making.
