Remarks by International Relations and Cooperation Deputy Minister Ebrahim Ebrahim at the BRICS Provincial Road Show, Polokwane, Limpopo Province, 23 January 2013
Honourable Minister Chabane,
Honourable Premier Mathale,
Honourable Executive Mayor Greaver,
Ladies and gentlemen,
As you are aware, President Zuma will host the Fifth BRICS Summit from 26-27 March 2013 in Durban, eThekwini, KwaZulu-Natal.
I wish to briefly review how South Africa joined BRICS and outline the pertinent issues that led to our membership and which are still relevant as we will host the last Summit of the first cycle of BRICS Summits.
The incoming Administration of President Zuma in 2009 reviewed the global trends for economic growth and development and decided to pursue a closer relationship with the BRICS countries as the new growth poles for the global economy. This decision is justified when one considers the profile of BRICS today, i.e. constituting 25% of global GDP (in PPP terms); 30% of global land area; and 43% of global population. The contribution of BRICS to global economic growth has reached over 50% over the past decade, making it the principal driver of global economic development. Depending on whether you measure BRICS economies in dollar terms or in PPP terms, over the next decades, the BRICS share of world GDP will increase and by 2020, it will account for about 37%-38% and by 2030 this could increase to as much as 45%, that is, almost half of global GDP.
The first BRICS Summit took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture. Minister Nkoana-Mashabane also wrote at that time to her BRICS counterparts, to indicate South Africa’s desire to collaborate closer with these countries to pursue the restructuring of the global political and economic architecture into one that is more equitable, balanced and which rests on the important pillar of multilateralism. It was emphasised that Africa, as an important member of the global South and the global community had to take its rightful place in a new equitable world order. South Africa had already pursued this vision in the context of the UN as well as other structures such as the G8.
On 23 December 2010, Minister Nkoana-Mashabane was informed by her Chinese counterpart that the President of the People’s Republic of China as the Chairperson of BRICS, following consultation with the other BRICS Member States, wishes to invite South Africa to join BRICS and therefore invited President Zuma to attend the Third BRICS Summit which was hosted in Sanya in 2011. One might recall at our attendance of that Summit, the events that marked the global landscape entailed the global financial crisis as well as the situation in Libya. BRICS have served together on the UN Security Council in 2011 and collaborate closely on issues related to international peace and security such as Syria currently.
In respect of the global financial crisis, the support of BRICS countries through its trade and investment cooperation with notably Low Income Countries, of which most are in Africa, assisted these countries to weather the impact of the crisis. BRICS countries, including South Africa, have already collectively contributed to weathering the effects of the international financial crisis and worked for the common interests of the international community in the wake of this global crisis, such as committing US$75 bn to the IMF.
In the specific case of South Africa, our economic cooperation with BRICS countries has increasingly strengthened. Our trade figures have grown significantly and we have reduced our negative trade balance with these countries from R 57bn in 2008 to R 23 bn in 2011. We expect a further significant reduction once the final figures for 2012 are released. South African exports to China grew 46%, while exports to India grew by 20%, to Brazil by 14%, and to Russia by 7%.
Standard Bank has projected that BRICS-Africa trade will increase threefold from USD150 bn in 2010 to USD530 bn in 2015 and as a result, the BRICS share of Africa’s total trade will increase from one-fifth (2010) to one third over the next five years. Foreign Direct Investment from BRICS to African countries is projected to increase almost threefold from USD60 bn in 2009 to more than USD150 bn by 2015. Therefore the theme that was approved by Cabinet for the Summit, i.e. BRICS and Africa: Partnership for Development, Integration and Industrialisation acknowledges the various engagement activities of BRICS countries vis-à-vis the African continent providing economic cooperation as well as other opportunities for skills development, job creation and sustainable development best practices.
The eestimated financing requirement to close Africa’s infrastructure deficit, according to the African Development Bank, is around USD 93 bn annually until 2020. The Bank stated that in as much as this financing requirement is a challenge, African governments have a wide range of policy options that could open new sources of finance.
In this regard, I am pleased to inform that our BRICS leaders will receive the report from their Finance Ministers on the feasibility and viability of setting up a new BRICS-led Development Bank for mobilising 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. This Bank will inter alia utilise the surplus reserves of BRICS countries to support development initiatives among emerging markets and developing countries to support a new model of South-South cooperation and financing.
Other Summit outcomes will entail a first dialogue between BRICS Leaders and African Heads of State/Government from the eight Regional Economic Communities (RECs) and the NEPAD Presidential Infrastructure Championing Initiative (PICIs) as well as the incoming Chairperson of the African Union (AU) and the Chairperson of the AU Commission, Dr Dlamini Zuma to discuss the issue of infrastructure funding for which the African Union has tasked our President to play a leading role.
We will also strengthen the structures that facilitate the intra-BRICS collaboration between our Captains of Industry and Academics.