Leveraging South Africa's chairship of BRICS to fuel growth

South Africa’s membership of BRICS presents economic opportunities for our development, as well as the rest of the African continent. Join Busi Mabuza, chairperson – South Africa Chapter of the BRICS Business Council, Isaah Mhlanga, Alexander Forbes chief economist, Willem Van Der Spuy – chief director, Trade and Investment South Africa and Pranjal Sharma, geo-economic analyst and author based in New Delhi, India, in conversation with Bronwyn Nielsen. This offers exclusive insights into leveraging South Africa’s chairship of BRICS to fuel growth, as well as the 10-year celebration of the BRICS Business Council and South Africa’s role going forward.

Find timestamps below:

On South Africa gaining chairship of BRICS and what that means – 02:49
On opportunities to spur SA’s growth – 06:57
On a sense of the practicalities and engagements of what 2023 means for South Africa – 09:21
Willem Van Der Spuy on African countries that need to be represented at the forum – 33:38
Willem Van Der Spuy on whether infrastructure should be prioritised – 46:57
Busi Mabuza on small businesses and entrepreneurship – 52:35

Busi Mabuza on SA gaining chairship of BRICS and what that means

Very exciting time for South Africans to be taking over as chair of such an important and such a formidable global structure. It’s no secret that in addition to the five countries Brazil, Russia, India, China and South Africa, there are quite a few other countries that have already indicated a keen interest in joining the BRICS formation. We have clear evidence of free and global economic realignment of epic proportions. I think it’s going to be totally defining and I think over the next few weeks, we as South Africa will have to start defining the agenda of the BRICS nations politically, but most importantly, economically and that is fantastic.

Pranjal Sharma on what the chairship means for any country given the title at a given time

I think the most important thing you have to realise is that emerging markets, developing economies have to set the agenda for growth and the next phase of globalisation of the world. In the last 45 to 50 years, I think the agenda, the standards and the framework has been set by Western countries, which have in many ways benefited them, in some ways benefited the rest of the world. But if I were to look at the ratio, I think that most of the benefits went to them because it was their set of rules that decided everything. Today, if you look at the centre of gravity of the economy, the global economy has shifted very clearly to emerging economies. This is where the consumption is. This is where the growing populations are. This is where innovation is, and this is where there is most need for development and growth is. This is where we need to bring most people out of absolute poverty to improve the quality of life. And therefore, I think it’s important that we take the world stage in terms of driving the agenda. I think BRICS is a very important element of that agenda. And therefore, South Africa taking over in 2023 should bring the perspective of a continent which has a certain number of countries with such diversity. There is a lot of responsibility for South Africa on this front, because we’ve often seen that the developed world has tended to ignore what has happened on the continent. South Africa has grown despite the odds. And therefore, I think it’s time for South Africa to be the pivot in BRICS as leading the charge for developmental economics and growth oriented agenda.

Willem Van Der Spuy on the opportune time for Africa

I think it is also very opportune for South Africa to be chairing in 2023, particularly as we see that we are getting a lot of implementation and development with regard to the African Continental Free Trade Agreement, which, as you know, also started operating on 1st of January this year. And there are more and more elements of it which I think it is also very opportune for South Africa to be chairing in 2023, particularly as we see that we are getting a lot of implementation and development with regard to the African Continental Free Trade Agreement, which, as you know, also started operating on 1st of January this year. And there are more and more elements of it which are being implemented as the negotiations are finalised and the huge opportunities that present in linking that with the more geopolitical elements of it becomes, I think, very important for us. I think it’s also important to remember the key deliverables we found in previous years: that when South Africa chaired, if you look at our first chairing at the 2013, that conference where the new development bank feasibility was launched, has become a reality, as we know. It was also the declaration for the BRICS Business Council to be established during that time. Also, we agreed on the contingent reserve arrangement where we look at liquidity issues and I think through the subsequent chairing of the BRICS events and the summits, for example, we really started implementing those elements and these are the reality now. So again, it’s an inflexion point in terms of what we can do in terms of the broader BRICS framework. If at the time when there’s these two political dynamics, but also now bringing in the AFCFTA and linking that with BRICS, I think it’s a very opportune time for us to really start looking at some of the practical issues and opportunities that can drive the agenda.

On getting a sense of the practicalities and engagements of what 2023 means for South Africa

If I can start with the country theme, which was announced by Minister Pandor some few weeks ago, I think there was a point a couple of months ago, and this is BRICS and Africa – Partnership for Mutually Accelerated Growth, Development and Inclusive Multilateralism. It talks to exactly what every one of my colleagues has already If I can start with the country theme, which was announced by Minister Pandor some few weeks ago, I think there was a point a couple of months ago, and this is BRICS and Africa – Partnership for Mutually Accelerated Growth, Development and Inclusive Multilateralism. It talks to exactly what every one of my colleagues has already pointed to as an absolute opportunity. We in business see this as an ideal opportunity to reignite the economic recovery, not just of South Africa post Covid but of the African continent post-Covid. Our work is going to start almost immediately, probably at the end of January, early February, because we have to accommodate agendas such as Davos and others. We are going to see a BRICS economic indaba. We are going to see sector focus engagements. Green economy features high on that list and therefore energy will fall under that green economy agenda. We have sectors that have an interest such as manufacturing and agriculture, where we have some inroads into the BRICS countries, but not nearly enough. As you know, the African continent still exports quite a lot of raw material from the continent to other countries, and increasingly the BRICS countries have become a major partaker of these economies. There are major developments that we’ve seen from the BRICS countries in terms of electrical vehicles and other new energy technologies. We believe this is an opportune time for us to say, please come to our respective countries. We’ve got the raw materials, come and place yourselves here in order to beneficiate and then export together with us. Finally, tourism, a sector that is so important for job creation, but also because the continent is just so rich in terms of cultural and natural beauty. This will be the first time since 2019 that the BRICS partners will be meeting in person. We are going to leave no stone unturned in terms of preparing and making sure that the partner countries spend as much time here as possible leading up to the summit, which is probably going to occur in early August. Thereafter, cementing the deals that will have been signed during that time. So it is going to be an investment trade opportunity showcase of note.

Isaah Mhlanga on creating a reality for freedom of goods and services

I think the economic relevance of BRICS has not yet been reflected in the political power to change global institutions. And that’s the one aspect where we might need effort put in. For instance, the EU is the representative, the G20. The African Union is not yet – it has 1.4 billion people. I think it is a shame for the global community to actually not recognise that fact and to leave 1.4 billion people not represented in a global forum that determines how the future is going to look. Unfortunately, in South Africa, alongside, you know, all the other members of the BRICS are part of the G20. And in the bloc that can lobby, make sure that Africa as a continent through the African Union is included in the G20, make sure that Africa contributes as a bloc to how global multilateral institutions get policy in the future of the world. Particularly as we move into all this, you know, greening of the global economy, which will come with carbon taxes and which we know most African countries, where they still depend on sectors that are heavy polluters, means they will be on the receiving end of carbon taxes in terms of exports. So it’s quite key for BRICS to lobby to make sure that that trade policy is implemented in a way that does not disadvantage poorer countries.

Willem Van Der Spuy on African countries that need to be represented at the forum

If you look at each one of the sessions where South Africa chaired, the African agenda was critical for us. So, for example, if you look at the theme for the first 2013 summit that was called BRICS in Africa Partnership for Development, Integration and Industrialisation. The second summit, which was the 10th BRICS summit that we chaired in 2018, there was again peace in Africa, collaboration for inclusive growth and shared prosperity in the Fourth Industrial Revolution. And what is very important is not just the agenda that we had at that time, but for example, South Africa had a very strong outreach programme to participation, include with the BRICS leaders, the chair of the AU, AU Commission Chair, the Chair of NEPAD, heads of State and Government Implementation Committee, the heads of State or government chairing of the regional economic groupings with all SADC members present. For example, the president of the African Development Bank and the Chief Executive Officer of the NEPAD Planning Coordinating Agency. And I think again, as we raised the element of the AFCFTA is a very critical component. And I think to also touch on the issue around infrastructure: I think our view is to really implement AFCFTA. You need three legs which need to be implemented. One is increased trade – that deals with tariffs and non-tariff barriers. The second element is, for example, industrial value chains. And then the third element is the issue around infrastructure. These are all critical components. We’ve also been talking to them about them in isolation. But the element as well is to say that for the AFCFTA to be implemented and for the BRICS benefits to be really felt amongst BRICS members and on the African continent, it needs to be a partnership between business and government. The issue on infrastructure is yes, it is a strong component in which the government must play a role. But it’s also what role does the private sector play in the infrastructure itself? But also, if you bring these three components together, if you build infrastructure around the industrial value chain, link that to trade, then the sustainability of it becomes much stronger, as opposed to just randomly building infrastructure for the sake of infrastructure required. Obviously we know we are aware of the challenges in the country, but it’s about linking these three around tangible economic opportunities. And I think the benefits of the continent for our BRICS partners and also the benefits within BRICS itself for South Africa is really about the practical implementation. And I think that’s again to reemphasize our close partnership with the South African BRICS Business Council is really to say at the end of the day, how do we work with business, really implement and take advantage of those opportunities? As a government, we create the framework – we can facilitate it but at the end of the day, BRICS must make sense for the BRICS partners. It must make sense for the African continent, but ultimately it must make sense for business, because that’s where the implementation takes place to a large degree.

Pranjal Sharma on enabling an environment for government and the private sector to coexist

The point is you have to have a goal. You have to say Dakar to Djibouti, it has to be connected. You have to say Cairo to Cape Town has to be connected and then figure out what to do. You’ll have to experiment. But because this is between countries, of course, there will be another layer of complications. But there is a wonderful body called the African Union, and the African Union is becoming stronger by the year. And I feel that if we can bring different and innovative models of public private participation, investors from across the world will come in because today the growth is on our continent of Asia, on the continent of Africa. The European continent, the Americas are completely saturated. This is where the growth is. And therefore, we have to bring in new ideas, new models to make sure that this investment in ports, airports, railways, roads make the ignition that Africa really needs.

Willem Van Der Spuy on whether infrastructure should be prioritised

I think some analyses have also shown that, as you said, $175 billion a year gap between that. And one should also remember that post Covid-19, many governments across the world have a very high debt burden because of the responses that were required. The point of the critical role that the government must play, yes, but this partnership with the private sector and private capital to build infrastructure is very important. The issue is to say that that’s a discussion that I think we will also have with the South African BRICS Business Council and also as part of their outreach to continue to say, do we frontload infrastructure or do we have a complementary approach between the three? It’s also important to always look at the three components, because if you’re going to bring in the private sector and you’ve got to bring in public private partnerships, as Pranjal indicated, what happened in India, that needs to be linked to some kind of industrial value chain somehow, because there needs to be a flow of goods and it needs to be linked to trade, to somehow also make the sustainability of those elements more practical to a large degree. Again, if we take that many governments globally and it’s not just in Africa, deals with these high debt burdens, the issue is to ask how you find the balance between all the players to do that? Infrastructure is a point of discussion. What is very important to also remember is that within BRICS we all have our industrial development agencies, we’ve got some of our infrastructure development agencies, we’ve got the new development bank; and we also have, for example, in South Africa, the Export Credit Insurance Corporation, which has this unique capacity that it’s taking political and commercial risk for projects globally, but they have a strong focus on the continent. Those are built around particular projects with its infrastructure projects, all trade projects are investment projects. If one can leverage the various BRICS countries, their agencies, it will also make it much more manageable for some of these projects, because you manage the risk around it and you also spread the risk amongst the different parties. So I think infrastructure is definitely a point, but I think we will have the discussion with the South African BRICS Business Council and also with our outreach programmes on the continent to say, do we focus on that, or do we focus on all three? And again, how do we link those topics today with the AFCFTA?

Busi on small businesses and entrepreneurship

Small businesses are very important in developing economies and they have a much higher job creation intensity than the large businesses. So this is an area that we are paying particular attention to. As the Business Council, we were told that we could have done better in including small and medium enterprises. That’s one of the opportunities that we see going forward. I personally am very excited by our counterparts at the BRICS Women’s Business Alliance. That particular structure has adopted the agenda of small and medium enterprises, and I’m excited because women bring a unique energy in terms of delivery. So I expect that we’ll be seeing fantastic delivery for small and medium enterprises as we go forward. But also on the African continent, a larger proportion of small and medium enterprises are owned by women eSmall businesses are very important in developing economies and they have a much higher job creation intensity than the large businesses. So this is an area that we are paying particular attention to. As the Business Council, we were told that we could have done better in including small and medium enterprises. That’s one of the opportunities that we see going forward. I personally am very excited by our counterparts at the BRICS Women’s Business Alliance. That particular structure has adopted the agenda of small and medium enterprises, and I’m excited because women bring a unique energy in terms of delivery. So I expect that we’ll be seeing fantastic delivery for small and medium enterprises as we go forward. But also on the African continent, a larger proportion of small and medium enterprises are owned by women entrepreneurs. So it makes absolute sense that our counterparts are going to be running with that hand-in-glove with ourselves as the BRICS Business Council. Where do the opportunities lie? I think that across the spectrum, if one looks at India as an example, be it in technology, be it in textiles, in manufacturing, you find small and medium enterprises are producing quite effectively. Tourism is well-positioned with small and medium enterprises. But I believe that as we look at the large projects, be it the logistics or the energy, we should carve out opportunities just as South Africa did in the renewable energy independent power producer procurement programme. There were opportunities that were carved out especially for small and medium enterprises, not just in terms of supplying or operating, but also in terms of implementing some of the smaller projects themselves. We have examples galore that we can use as templates going forward. If I may, as I conclude, remind us that in the Mumbai airport, three South African companies, Airports Company South Africa, Bidvest and Old Mutual partnered with the local promoter in delivering the new terminal.

Leveraging South Africa’s chairship of BRICS to fuel growth

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