Opinion
What BRICS can do for South Africa and Africa
Manufactured goods, an added value category that South Africa can look to grow, accounted for 14.3 percent, while capital and transport equipment accounted for 2.2 percent and other manufactured goods made up only 0.2 percent.
Chemicals and related products, another value added category, accounted for 4.5 percent; beverages and tobacco, another processed goods category, took up only 0.1 percent while food and live animals, which are primary goods since they are not processed, accounted for 1 percent.
Minerals, lubricants and related materials accounted for 17.6 percent, a decent figure but what one that has room to be grown further.
The process of re-orientating South African exports to value added goods starts at this week’s drafting of negotiation position before devolving to the trade negotiation level. Countries rarely open up their markets for high value, processed goods as many want to protect domestic industries, but in countries like China an undertaking to open up markets is not enough as bureaucracy at its ports, language barriers and regulations make exporting into China difficult. Other countries use measures like import restrictions, again to protect domestic industries. Breaking down such barriers requires tough negotiations that casts diplomacy aside.
Beneficiation is another area that South Africa needs to improve on given its mineral endowment. But beneficiation is skills and capital intensive and it is a fight for global market share which means that a smelter opening in one part of the globe, somewhere in Africa, means a closure of another smelter, usually somewhere in the developing world but possibly in a BRICS country, with its attendant problem of job losses and social consequences that such closures can cause. There is no country that will let African countries take away their lunch while they sit idly.
Beneficiation has to be fought for and sometimes pursued at an initial high cost for Africa to win its right to add value to most of its minerals. A study by Deloitte found that South Africa produces 90 percent of the world’s platinum but only 24 percent of catalytic converters, one of key uses of platinum. It is such patterns of production that need to change.
Finally, the summit will officially inaugurate the BRICS Bank, a remarkable feat when one considers that the idea was formally mooted at the 4th Summit in India in 2012, and formalized in Durban the next year. But the institution’s architects will find that their decision to give each country an equal vote irrespective of contribution, while egalitarian and noble, has its limitations. The decision is meant to be anathema to the Breton Woods institutions (i.e. the World Bank and International Monetary Fund) that the BRICS bank is designed to counter.
But what they will find is that the country that contributes the most – likely to be China given the size of its reserves – will demand a bigger say in how money is spent. So while the greatest area of need for infrastructure funding among BRICS countries is in Africa, the continent may not get as much as it needs unless its needs are aligned to China and the continent furiously lobbies Shanghai, where the bank will be headquartered.
South Africa must use this opportunity to raise Africa’s voice.
Source: Africa News Agency
