Publications
Partners
Cape Town – President Jacob Zuma asked countries that are members of the Brics grouping to partner with South Africa in an attempt to decrease the reliance on raw material exports.
Speaking at the ninth Brics Summit held in Xiamen China on Sunday, Zuma lauded the fact that South Africa’s trade with its Brics (Brazil, Russia, India and China) counterparts has increased from $15bn in 2010 to $31.2bn in 2016, but noted despite this increase the character of this trade has been "highly inequitable".
“Exports from South Africa have been driven particularly by raw materials. This dominance of raw material exports has adversely impacted South Africa,” Zuma said.
“In as much as South Africa is endowed with natural resources, it is critical that we have in place beneficiation programmes that support our industrialisation policy.”
READ: Beneficiation the future of SA's diamond industry
He called on the fellow-Brics countries to collaborate with South Africa in the areas of skills development, technology transfer and by getting involved in projects that would support inclusive development and equal partnerships.
Zuma said the summit was taking place against the backdrop of a “downturn in the global economic order”.
His utterances however run counter to sentiments expressed by South African Reserve Bank (SARB) governor Lesetja Kganyago who recently told Parliament that South Africa has not followed the renewed growth trajectory in the global economic sphere.
In August, Kganyago said that global growth is recovering yet South Africa has fallen into a recession.
“That is an anomaly and it suggests that the problems are idiosyncratic and not because of weak global growth. At the moment, South Africa and Venezuela are the only sizeable economies that are in a recession, Kganyago said.
Zuma at the summit attributes South Africa’s difficulties to its status as a commodity exporter.
“We are thus affected by the decline in the demand for our raw materials and negative resultant price decreases. Hence our own domestic growth patterns have displayed growth that unfortunately does not accurately reflect our true growth potential.”
Brics bank
The recent launch of the Africa Regional Centre in Johannesburg, which would serve as a "branch" of the New Development Bank, also called the Brics bank, is a welcome step towards increased collaboration, the President said.
The Brics Bank with its headquarters is in Shanghai, China was opened in February 2016 and provides among other things funding for infrastructure projects in member nations.
“We reiterate our view that the New Development Bank must be more welcoming to emerging and developing markets and to Africa in particular, and assist us in taking forward our developmental agenda,” Zuma said.
READ: Zuma applauds Brics bank local currency loans
"We look forward to seeing progress in the funding of infrastructure investment in energy, transport, water and other productive sectors which currently impedes our competitiveness in the broader global landscape."
Zuma also said discussions around the establishment of a BRICS rating agency, e-commerce collaboration and the issuance of an Investment Guide, amongst others were heartening.
In June 2016, the idea of a Brics-specific ratings agency was mooted in an effort to break the dominance of the big three developed-nation firms.
The Brics countries were critical of the “excessively high borrowing costs” due to the assessments of S&P Global Ratings, Fitch Ratings and Moody’s Investors Service, and encouraged the establishment of a competitor ratings agency with a different fee structure.
Zuma previously said in Parliament that he was in favour of plans to set up a credit rating agency which would be more sympathetic to the needs of Brics nations.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
