Roundtable Discussion by Deputy Minister Marius Fransman at the University of Stellenbosch on the theme “South Africa: A strong African Brick in BRICS”, on 21 November 2012
Members of the University Management; Staff and Students;
Community Leaders here with us today;
Members of the Media;
Ladies and Gentlemen;
“We will continue ensuring that Africa continues to have a strong voice in international forums such as the G20, World Economic Forum and many others” so said President Jacob Zuma in his address during the recent Thabo Mbeki Centenary Lecture.
These words are always our guide and an inspiration in the conduct of our foreign policy, in particular our participation in the global system of governance. I urge you to keep them in mind in the course of this lecture.
Programme Director, our theme for today is titled “South Africa: A strong African Brick in BRICS”. This is a golden opportunity to share with you our thoughts on the present and future of our role in BRICS and its implication for development and growth for South Africa and its mother continent, Africa.
I am thankful to the University of Stellenbosch for agreeing to host me in this magnificent centre of learning. Stellenbosch is one of South Africa’s leading institutions in the field of economy and international relations.
It is therefore appropriate that this lecture take place here as it addresses how South Africa’s BRICS membership will benefit our economy and that of Africa, as well as promoting healthy international relations between Africa and BRICS countries.
Writing in January 2011 in a paper entitled “South Africa and BRICS: Africa moves to centre stage” in February 2011, Yingni Lu, a London-based business development professional, had the following to say about South Africa’s position in the global systems of governance:
“South Africa's position as voice and advocate of the African cause in the shifting sands of global economic power and institutional reform now becomes even more critical as it takes its place both in the BRICS and the UN Security Council. The invitation of South Africa to become the fifth member of the BRICS - Brazil, Russia, India, China and South Africa - and the South African seat on the United Nations Security Council will ensure that Africa has a voice in all key global fora and will accelerate reform of the UN and global financial, developmental and trade architecture”.
The rationale for South Africa’s involvement in BRICS
There is no doubt that the 21st century is characterized by an increasingly globalised and interdependent world, which is overturning previously held convictions regarding the international system’s prevailing power balances and the emergence of new political and economic powers. Scholars such as Keohane; Nye and Stiglitz have written extensively on globalism/globalization. They have defined globalism as a state of the world involving networks of complex-interdependence at multi-continental distances and the linkages are described as flows and influences of capital and goods, information and ideas and people and forces as well as environmentally and biologically relevant substances. Mr Stiglitz wrote in 2002 that;
“in the current process of globalization we have a system of what I call global governance without global government. International institutions like the World Trade Organization, the IMF, the World Bank, and others provide an ad hoc system of global governance, but it is a far cry from global government and lacks democratic accountability”.
In an academic address Minister Maite Nkoana-Mashabane delivered on 1 November 2010, prior to South Africa being invited to join BRICS on the topic “The relationship between South Africa and the Emerging Global Powers”, she contextualised the complex character of the world we live in today. She explained that the historic context of South Africa’s foreign policy derived from the Freedom Charter and that it focused on peace and friendship, collaboration and building partnerships and was not about confrontation and thriving in competition and rivalry.
Our foreign policy further encapsulates this approach and calls for “an African Continent, which is prosperous, peaceful, democratic, non-racial, non-sexist and united, and which contributes to a world that is just and equitable”. This is what informs our approach to the world, but also to opportunities provided to us and the world by the rise of countries we call “emerging powers”. In the tradition of Robert Axelrod’s “The Evolution of Cooperation”, Minister Nkoana-Mashabane cited that “friendship is hardly necessary for cooperation... Under suitable circumstances, cooperation can develop even between antagonists”. In this complex and fluid global system we live in today, nurturing conditions for cooperation is crucial if we are to construct a different global order where power is more diffused and responsibilities are appropriately shared. As was the case with the advent of the democratic South Africa where we wished to do away with apartheid’s legacy , the emerging new world order is also not to be reconstituted in the previous order’s zero sum terms and world view.
Africa is at the centre of our foreign policy. This administration has continued to play a crucial role, both bilaterally and multilaterally through the African Union, in promoting peace, good governance, integration and other public goods that are prerequisites for development of the African continent. We do this with a true spirit of Ubuntu, which implies that you are because of me. Allow me the opportunity to elaborate on the important strides Africa has achieved, at close to six per cent, Africa’s economies are consistently growing faster than almost any other region. The Africa Progress Panel, chaired by Kofi Annan, had noted that
“For the first time in a generation, the number of people living in poverty has actually fallen – and many countries have witnessed strong progress towards the MDGs.”
As President Zuma pointed out in a speech recently, over the past decade, Africa has gone from being the ‘Hopeless Continent’ to being a ‘Rising Star,’ the next major growth pole in the world economy.
Ladies and gentlemen,
South Africa’s accession to BRICS in January 2011 was the culmination of broad-based thinking and joint efforts. Drawing from the important history of the origins of South-South co-operation laid down in 1955 at the Bandung Conference, as well as with the creation of the Non-Aligned Movement in 1961, the Government of South Africa recognized that we have to be part of the forward march of history. Our accession into BRICS is also an acknowledgement of the fact that the age of globalization requires us to elevate mutual partnerships to a different level. We enter into these alliances, taking advantage of the wells of goodwill and solidarity at our disposal, with a view to leveraging these beneficial political and economic relations.
South Africa’s South-South cooperation strategy is anchored on the BRICS partnership mechanism with China, India, Brazil and Russia. Our membership of BRICS has three objectives: to boost job creation and the domestic economy; to support African infrastructure development and industrialization for the realization of the African Renaissance; and to partner with key players of the South on issues related to global governance and its reform. As the host of the next BRICS Summit in early 2013, we have a contribution to make to the realisation of the objective of establishing the BRICS Development Bank.
Our participation in BRICS is focused on the three levels of international engagement.
Firstly, on a national level, we aim strengthen our economic relations with BRICS partners and overall intra-BRICS trade, which is mutually beneficial. One of the concrete outcomes of the Fourth BRICS Summit included the conclusion of the Master Agreement on Extending Credit Facility in Local Currency under BRICS Interbank Cooperation Mechanism and the Multilateral Letter of Credit Confirmation Facility Agreement between our EXIM/Development Banks. The Development Bank of Southern Africa (DBSA) is the South African party to the BRICS Interbank Cooperation Mechanism. We believe that these Agreements will serve as useful enabling instruments for enhancing intra-BRICS trade in coming years.
South Africa’s overall trade with BRICS has grown steadily from US $9.2 billion in 2005 to US$20.4 billion by 2010. The priority is now to ensure that further trade increases is concentrated in value-added products in support of our industrial policy framework. I am of the view that mutually beneficial trade could be further enhanced through the identification and removal of non-tariff barriers that currently impede intra-BRICS trade.
Our focus is logically centred on advancing domestic priorities, notably under auspices of the New Growth Path, Industrial Policy Action Plan (IPAP2 and IPAP3) and the Presidential Infrastructure Coordinating Commission (PICC). South Africa’s considerable non-energy in situ mineral wealth (estimated at $ 2.5 trillion) being the world's largest producer of platinum, chrome, vanadium and manganese, and the third-largest gold miner, as well as offering highly sophisticated mining related professional services, contributes significantly to the BRICS resource pool. South Africa is a source of exceptionally sophisticated professional services and financial expertise and it was ranked 4th globally in the 2011/12 World Economic Forum's Global Competitiveness Index’s financial market development ranking. The regulation of the Johannesburg Securities Exchange (JSE) was ranked number one in the world, as was the strength of South Africa's auditing and reporting standards. Additionally South Africa is ranked 2nd for both the soundness of banks and the efficacy of corporate boards. With direct access to the rest of the continent and situated between the East, the Americas, Europe and the Middle East, South Africa has many structural advantages which make it an excellent investment destination and ideal partner in the African growth story.
Secondly, on a regional level, South Africa is promoting the infrastructure development programmes which the President as the African Champion has to promote under the auspices of the Presidential Infrastructure Champion Initiative (PICI) and the Programme for Infrastructure Development in Africa (PIDA). A recent exciting initiative in the BRICS context is that of a new Development Bank which South Africa strongly supports. It is intended to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, to supplement the existing efforts of multilateral and regional financial institutions for global growth and development. The Leaders directed the BRICS Finance Ministers to examine the feasibility and viability of such an initiative, set up a joint working group for further study, and report back by the next Summit which South Africa will host in 2013.
I am encouraged by the BRICS investment portfolio in Africa. As you aware South Africa is one of the leading investors among developing countries in the continent. I wish to encourage BRICS companies to take advantage of this unique position and partner with South African companies to explore commercial opportunities in Africa.
I wish to emphasise the comparative strength of the BRICS formation in supporting Africa’s repositioning in the global economy. While I am deeply cognisant of the continuing importance of traditional partners for Africa, it is the exponential growth potential that engagement with BRICS can realise that I wish to highlight in this article. An IMF study on the linkage between BRICS and Low Income Countries asserted that the relatively mild deceleration of Low Income Countries’ economic growth during the global financial crisis points to the potential benefits of their growing ties with BRICS. Most of these countries were hit hard by the crisis, but growth often slowed less and recovered faster than anticipated. They argued that Sub-Saharan Africa, for instance, would be more resilient to the global financial crisis than conventional wisdom would suggest because of the region’s strong trade ties with BRICS, particularly China.
Thirdly, BRICS is a platform for dialogue and cooperation amongst countries that represent 43% of the world’s population. The Standard Bank economists have predicted that BRICS share of global output will increase from 15% currently to around 20-25% in 2015, i.e. a fifth if not a quarter of global output. BRICS-Africa trade is projected to increase threefold from $150bn in 2010 to $ 530bn in 2015. BRICS share of Africa’s total trade will increase from one fifth in 2010 to one third by 2015. FDI from BRICS countries is projected to increase from $60bn in 2009 to more than $150bn by 2015, i.e. threefold. BRICS foreign reserves are estimated at $4, 5 trillion, which is a major reservoir of capital.
Ladies and Gentlemen;
Many of you may want to know what our membership of BRICS has in store for them. The BRICS countries are working towards a vision of creating a prosperous world for all its citizens.
Our accession to the BRICS placed South Africa in the company of the world's fastest growing and potentially most influential nations. BRICS formation is the model of future international relations for equal partners on equal footing and not the animal farm kind of international relations, which is not sustainable as you see with collapse of economies of the north. If you remember well, recently those countries were bailed out by BRICS. BRICS approach is that of building sustainable international relations for global peace and stability. We would like to see this influence work to South Africa’s and Africa’s benefit, that of the developing world as well as for every global citizen - that is our hope and vision for the next Summit that President Zuma will host in South Africa and beyond.
Allow me to reflect a bit more in depth on Government’s strategic intent when we strive to bring together the triple helix of government, academia and industry, to support Government’s growth and development strategies.
UNESCO published a study in 2011 that found that university-industry partnerships have moved high onto the policy agendas of many governments worldwide in recent decades and become a new and expanded phenomenon. The university-industry partnership is conceptualised as a means to bridge the perceived gap between the science base and the productive sector which would allow new knowledge to be transformed rapidly into innovation.
Former Science and Technology Minister Pandor also stated at one of her last engagements as follows: “The nexus of university and industry holds potential for economic development, entrepreneurship and job creation. We are not taking the opportunities presented to us as vigorously as we should,” and she further emphasised the need for stronger focus on university, industry and public partnerships. Minister Pandor also reflected that South Africa has made strides in developing its human resources, which is a key focus of the government, but is not seeing an increase in the 1% of GDP currently invested in basic research. Minister Pandor also commented that the government aimed to strengthen international partnerships in the pursuit of new knowledge and innovation for technology transfer opportunities. She cited the Square Kilometre Array (SKA) radio telescope project which entailed significant collaboration between South Africa and international partners, which notably also included our BRICS partners.
The good news is that, according to the World Economic Forum’s (WEF’s) latest global competitiveness report, South Africa remains the most competitive economy in sub-Saharan Africa. South Africa performed reasonably well in more complex areas such as business sophistication, 38th position; innovation, 42nd position; benefiting from good scientific research institutions, 34th position; and strong collaboration between universities and the business sector in innovation places us in 30th position.
Complementary to these arguments is the fact that the BRICS Summits are always preceded by meetings of both the Academic and Business Forums of BRICS which already provide for various synergies in this regard. DIRCO is partnering through the Department of Higher Education and Training with Higher Education South Africa (HESA) to host the Fifth BRICS Academic Forum a few weeks prior to the Summit. We are currently focusing on developing the themes for this august gathering of some of the world’s most prominent academics with exactly the same intent as I just described, i.e. to expand our basic and applied scientific research and development collaborations, as well as to also provide BRICS Leaders with more concrete policy options for our respective societies’ developmental challenges. BRICS Leaders pertinently tasked officials at the previous Summit to provide for “a general academic evaluation and future long-term strategy for BRICS”. Considering that our BRICS partners all have created dedicated BRICS Think Tanks, our BRICS Sherpa, Ambassador Matjila, met with relevant South African stakeholders to discuss how South Africa could also create its own dedicated BRICS Think Tank. We will provide more information in this regard in the near future following consultations with relevant parties.
I wish to invite all the academics and students present here today, to become part, as appropriate, of these new and exciting opportunities that BRICS academic collaboration will offer us in future.
BRICS Strategic Partnership and the African Renaissance
Distinguished guests, Ladies and gentlemen;
As part of its foreign policy, South Africa promotes the African development agenda, and therefore will also in the BRICS context further build on the support solicited at the Third and Fourth BRICS Summits by its partners in support of the African development agenda. Our membership of BRICS underlines our country’s growing international role, including its future significance for potential investors in the expanding African market. As the only African country in BRICS, we are expected to push for Africa’s integration in trade and policies with the other four BRICS members.
In order to further strengthen the work it does, the Third BRICS Summit produced the most comprehensive Declaration to date and a detailed Action Plan. This Action Plan pronounced on future areas of cooperation, spanning the fields of Science and Technology, Agriculture, Statistics, Banking Cooperation, Competition Commission, Justice, Think Tanks, Health, Education and Cooperatives. We believe that the afore-mentioned areas are not only of importance to the South African economy but also to the African continent in general.
At the Fourth BRICS Summit in Delhi, India, South Africa utilised its participation in the BRICS Summit to advance the African Agenda, to seek support from BRICS partners for NEPAD infrastructure development and industrialisation initiatives and advocated for reform of global governance institutions. We shall utilise the next Summit, which we are hosting next year to further consolidate the African agenda for the renaissance of our continent.
Our involvement in BRICS includes our efforts to accurately reflect the changing and dynamic global political and economic architecture from a position where economic growth points were primarily located in the industrialized countries of the North, bypassing Africa. Our entry into BRICS is indicative that Africa is going to be a part of the changing world. Our presence in BRICS would necessitate us to push for Africa’s integration into world trade.
Furthermore, the AU has set up the Presidential Infrastructure Championship Initiative, a committee of eight NEPAD Heads of State and President Zuma had been given a clear mandate by the leadership of the AU to chair the NEPAD High Level Sub-Committee on Infrastructure. As a result, the President utilized our presence at the third BRICS Summit to highlight Africa’s need for infrastructure and industrialization. In the Sanya Declaration, the BRICS countries expressed support for this.
As we enter the BRICS space, our African counterparts will expect South Africa to craft more vigorous trade and investment programmes that ensure that the voice of the continent is heard in the broader international platforms. We believe BRICS presents South Africa and Africa the opportunity to work closely together on issues pertaining to peace and security, including future coordination on issues for deliberation before the UN Security Council. BRICS countries are increasingly assuming an influential role through pronouncement on important issues of global political and economic security evidenced by the common stance adopted by all BRICS countries, ranging from deeming foreign intervention in Syria unacceptable and the statement pronounced by BRICS countries at the New Delhi Summit in March 2012 on Iran, to the effects of monetary policy implementation by Western countries. Russia had further expressed support for the enlargement of the United Nations Security Council and for the candidacies of Brazil, India and South Africa.
Important for us to note, is also that as a group of emerging markets, we share convergent concerns and interests with regard to reform of the global governance mechanism, aspects of under-development, illiteracy, poverty, disease and access to markets, just to mention a few. Collaboration and cooperation are therefore central to this evolving BRICS Mechanism.
Our foreign policy implores us not to solely concentrate on our national interests only, but to share with our region and our Continent. It is for this reason that South Africa is pursuing regional integration with renewed vigour with the objective of linking SADC, EAC and COMESA into a sizeable and integrated Free Trade Agreement (FTA).
We believe this will provide economies of scale, larger markets and position us to better compete in the global economy. The BRICS economies, which already constitute approximately 40% of global GDP, will link a large part of Africa with the fastest growing economies in the world.
Ladies and gentlemen
Being part of BRICS, South Africa will not only contribute considerably to the evolution of BRICS but our presence also bolsters the legitimacy of the BRICS Forum. As the biggest economy in Africa, of one of the fastest growing regions on the globe, South Africa also presents a gateway for investment on the continent, and over the next 10 years the African continent will need $480 billion for infrastructure development.
Africa is also starting to trade more with emerging economies. Between 1993 to 2009 Africa’s trade with emerging economies grew from 4,6% of its overall trade to 19%. Enhanced south-south cooperation is crucial for the acceleration of African regional integration and the strengthening of continental institutions which are critical in responding to challenges of poverty, underdevelopment, peace, security and justice.
Over the past decade we have seen a seismic acceleration of commercial and strategic engagements between the BRICS and Africa. The BRICS have nourished Africa’s economic emergence and elevated the continent’s contemporary global relevance. The recession and recovery period has enhanced this shift. In 2010 Standard Bank economists predicted BRICS-Africa trade will “see an additional increase in the velocity of BRIC-Africa engagements, with trade and investment spearheading the commercial charge. According to Standard Bank BRICS-Africa trade will increase threefold, from USD150 billion in 2010 to USD530 billion in 2015. Between 2010-2015, BRICS share of Africa’s total trade will increase from one-fifth to one-third and BRICS foreign direct investment (FDI) stock in Africa will swell from around USD60 billion in 2009 to more than USD150 billion by 2015. Today the BRICS countries are the largest investors on the continent.
A detailed look at trade between the BRICS countries and Africa clearly demonstrates the increasing strategic importance of BRICS for Africa. Sino-African trade will elevate from USD93 billion in 2009 to USD350 billion in 2015. Africa’s trade with India will accelerate most rapidly amongst the BRICs, growing from USD34 billion in 2009 to USD120 billion by 2015. Brazil’s trade with Africa recovered to USD28 billion in 2011 after the financial crisis and is estimated to reach USD55 billion by 2015. Russia’s trade with Africa will more than triple over the next five years, increasing from USD5 billion in 2009 (having fallen from highs of USD8.5 billion in 2008) to USD17 billion in 2015.
Ladies and gentlemen
In conclusion, South Africa’s BRICS membership has a lot to offer. It is in our national interests as it has positive spin-offs to our economy and job creation drive as well as to our foreign policy on Africa – Consolidation of the African Agenda towards regeneration of the African continent, as was foreseen by our forebears such Pixley Isaka ka Seme, OR Tambo, Kwame Nkrumah, Julius Nyerere, Samora Machel, Frans Fanon, Amilcar Cabral and Patrice Lumumba amongst others. It is therefore, imperative for actualization of the African Renaissance which is our national and continental vision. When the sun sets on Western economies, it shines bright on BRICS countries. It is the dawn of a bright new BRICS formation.
I thank you all.
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