15 April 2011
South Africa and Africa’s future prosperity is increasingly linked to the BRICS economies of Brazil, Russia, India and China, and the grouping is well placed to “decisively assist in tackling our development deficits,” says President Jacob Zuma.
Addressing the third BRICS Leaders Meeting in Sanya, China on Thursday, Zuma said that South Africa’s four BRICS partners had a large savings pool, “whereas the African continent is ready for large-scale investments, particularly in infrastructure and manufacturing.
“Over the next 10 years, Africa will need US$480-billion [around R3.3-trillion] for infrastructure development, which should interest the BRICS business communities,” Zuma said.
According to Business Day, World Bank data showed that China had the second-highest gross national savings rate relative to gross domestic product (GDP) out of 118 countries surveyed in 2009, at 54%, while India’s savings rate was 35% and Russia’s 23%. Brazil’s was 15%, as was South Africa’s.
“Already, Africa is projected as the third-fastest growing economy in the world, while the BRICS countries now constitute the largest trading partners of Africa and largest new investors,” Zuma said.
“This economic relationship will be further strengthened as Africa forges ahead towards regional economic integration. This move will open up opportunities for more foreign direct investment and expanding trade relations with BRICS countries.”
Zuma’s call for BRICS investment in Africa came on the same day that the five partner countries signed an in-principle agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other.
The interbank co-operation agreement was signed by the heads of Brazil’s development bank BNDES, India’s Exim bank, Russia’s Vnesheconombank, the China Development Bank, and the Development Bank of Southern Africa.
News agency Reuters reported on Thursday that the China Development Bank was ready to grant up to 10-billion yuan of loans to Brazil, Russia, India and South Africa this year.
According to Business Day, the bank had lent $141.3-billion in overseas markets as of the end of last year, of which $38-billion had gone to BRICS countries.
Zuma emphasised in his address, however, that South Africa’s new BRICS membership did not mean that relations with countries such as the US and the “broader North” had become less important.
“The European Union and Europe also remain South Africa’s most important economic trading partners, accounting for approximately 40% of its exports, as well as 70% of foreign direct investment,” Zuma said.
South Africa valued its relationships with the “developed North”, and recognised its continued dominance, “but it is important to also acknowledge the rising importance of the giants of the South and the value thereof, for a developing economy like ours.”