SA has much to offer Brics despite size - analysts
Cape Town — South Africa may be the new kid on the block when it arrives at next week's Bric summit in China, but the country has much to offer as a gateway to Africa with one of the strongest financial sectors in the world, and with its tradition of independent decision making it's not likely to be swept aside by the summit's bigger members, say analysts.
President Jacob Zuma jets off to the Chinese resort of Sanya on the tropical island of Hainan to attend the country's first Brics summit which will commence on April 14.
Emerging markets expert and chief executive of Frontier Advisory, Martyn Davies, says being part of the African continent is one of South Africa's biggest bargaining chips.
South Africa should therefore promote itself to its fellow Bric partners as the continent's "services hub" he says, adding that the country also has strong corporates that "punch above their weight".
A McKinsey report released last year titled "Lions on the Move" touts Africa as the next economic growth story, while the Economist earlier this year reported that African countries would make up seven of the 10 fastest-growing economies in the world between 2011 and 2015.
Added to this, a tripartite free trade agreement between the Southern African Customs Union (Sacu), the Common Market for Eastern and Southern Africa (Comesa) and East African Community (EAC) would create a market of over 500 million people once concluded, trade and industry minister Rob Davies said earlier this year.
But Matlotleng Matlou, chief executive of the Africa Institute says South Africa has to be cautious not to presume that it is representing Africa as a continent or gateway, when it appears at the summit, as it does have the necessary mandate from other African nations.
He says South Africa should also take more advantage of scholarships on offer in its fellow Bric nations, to develop learnings from them.
Standard Bank economist Jeremy Stevens also cautioned South Africa's approach at the summit.
Stevens says though South Africa's ascendancy to Bric status might be a "massive move forward for the country" and that South Africa has one of the world's top banking systems, it has to be careful not to give away one of the only regions in the world where it had a trade surplus.
He says South Africa should also be careful not to place all its eggs in one basket in terms of investments and linkages in fellow Bric nations, as Europe and the US still made up a large bulk of its trade.
However Peter Draper, senior fellow at the South African Institute of International Affairs (Saiia) believes that one of South Africa's strengths lay in its reputation in independent decision-making.
Draper disagrees with some critics that believe that because South Africa pushed to get into the Brics grouping and that it could be seen as being weak and added that it was not in South Africa's political tradition to "roll over" and submit to other nations.
The Brics club is primarily a geopolitical grouping, believes Draper, who added that foreign direct investment and trade were just after effects, and were more suited to bilateral trade missions.
South Africa however will go into summit as being the smallest of the Bric nations - by population, gross domestic product (GDP) and trade share.
China's economy, for example, is about 16 times that of South Africa's with a population 268 times that of South Africa.
Although China is less urbanised than South Africa (47 percent versus 57 percent respectively), it has 70 cities with over a million inhabitants, while South Africa has just six such cities.
Added to this, China grew at a massive 12.37 percent between 1990 and 2007, according to the UN, while South Africa grew at 5.6 percent during the same period.
Notable is that while Brazil, China, Russia and India have all substantially grown their share in world trade in the last decade, South Africa's share of international trade has remained stagnant.
According to the International Monetary Fund (IMF) China almost trebled their share of world trade - from 3.9 percent in 2000 to 9.7 percent in 2009 - while India's moved from 0.7 percent to 1.2 percent, Russia from 1.7 percent to 2.5 percent and Brazil's from 0.9 percent to 1.2 percent, in the same period.
South Africa's share of international trade has however remained stuck on 0.5 percent since 2000.
But while South Africa may have the smallest economy and population among the Bric members, it can boast the third highest GDP per capita, second only to Russia and Brazil, respectively.
Of the Brics, South Africa is the easiest place to open a business, requiring on average the least number of steps and days to open a business, according to the 2010-11 Global Competitiveness Report.
South Africa is also the world's biggest platinum producer and second biggest gold producer after China, while the African country is the sixth biggest producer of coal.
Of the Brics countries, China is South Africa's top export destination, with India ranked sixth, Brazil 24 and Russia 41, according to South Africa's Department of Trade and Industry.
China tops the list of countries South Africa imports from, while India is ranked eighth, Brazil 17 and Russia a distant 54.
South Africa is not the only Brics member to have experienced concern over its membership from its own citizens.
Brazil's inclusion as one of the Brics, in 2003, was also initially greeted with some scepticism when Goldman Sachs coined the Bric term at the time, as it came just months after the IMF provided a large loan to stablise the South American country's economy.
Lael Brainard and Leonardo Martinez-Diaz in a 2009 article "Brazil: The "B" belongs in the Brics" said the country is now growing because of sound macro-economic policies, strong organisations and effective policies on agriculture and alternative energy.
"Brazil sees itself as having long been unjustly depreciated or disparaged, and Brazilians sometimes perceive slights where none are intended or take affront where none is meant," says New York Times correspondent Larry Rohter in "Brazil on the Rise" (2010).
The summit will take place on Thursday and Friday on Hainan Island (which literally means "South of the Sea").
The tropical island, rich in iron and fruit, is China's smallest province and was transformed from a backwater to one of the regions with the highest per capita incomes in China, after the island was made a special economic zone (SEZ) in 1988.
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