BRIC will account for 61% of global growth in three years time, according to the International Monetary Fund.
“The fact that South Africa has the opportunity to be affiliated to this group of powerful emerging economies underlines two main points – the country is recognised as a developing economy of significance in its own right, but also that it is the gateway to the continent of Africa – the next growth superstar”, says Miller Matola, CEO of the International Marketing Council of South Africa, custodian of Brand South Africa.
And in broader political terms, the step is equally hugely significant. A new world order is unfolding where economic clout and thus political power is shifting from West to East, with the BRIC countries as the visible face of this movement.
South Africa, along with other emerging economies, has long been punting for a greater role in international organisations like the IMF and the World Bank. The invitation to join BRICS, combined with its renewed membership of the Security Council, will enhance its influence in this regard too.
“Huge new opportunities will open up for South Africa on the investment and trade front. Private companies may also find market access into the BRIC countries easier and partnerships with companies from this grouping might evolve. This might become particularly important as South Africa is already the biggest emerging economy investor in the continent and its companies are active in at least half of all African countries,” Matola stresses.
Joining BRICS will also mean that South Africa must use these new opportunities to increase its competitive edge. Last year, the country’s ranking in the Global Competitiveness Index (GCI) of the World Economic Forum (WEF) dropped, but its performance has in fact remained stable. Rather, the decline reflects improvements from other countries and their ability to spur growth.
On a positive note, the WEF GCI indicates that the macroeconomic environment improves from 68th to 43rd position. Other key advantage areas noted for South Africa include; market size (26th) which is considered a key factor when determining new investment potential, accountability of private institutions (3rd), intellectual property protection (27th), property rights (29th), strength of investor protection (10th) and goods market efficiency (40th).
“South Africa will play in a different league and as such, will have to improve its delivery and performance,” says Matola.
It is true that South Africa’s population and economic size is not in the same level as those of Brazil, Russia, India and China – but clearly, the advantages of being part of the exploding African economic growth outweigh this consideration.
“To draw South Africa into this powerful club underlines the country’s growing international role and its future significance for those who want to make use of the expanding African opportunities.
“It is, in fact, an association that does not only benefit the group, but the emerging world as a whole and Africa, in particular,” concludes Matola.