SOUTH AFRICA: THE BABY BRICS ECONOMY

The South African government led by President Jacob Zuma lobbied diligently and robustly to join the BRIC economic alliance composed of Brazil, Russia, India, and China.  By December 2010, President Hu Jintao of China had announced to President Zuma that South Africa was invited to join the BRIC alliance.  It was particularly noteworthy because the richest and most powerful BRIC economy, China had invited South Africa in.  China is also the BRIC economy that wields the most veto power in the alliance.

In April 2011, President Zuma was waving his hand in a photo op along with the other leaders as South Africa had officially joined the BRICS alliance.  Before officially joining, many questions had been raised why South  Africa, a population of 50 million with 25% of its population suffering from the HIV/AIDS epidemic was invited to join the alliance. Comparable to the other BRICS economy, South Africa’s GDP is relatively small.   Between South Africa and Turkey, Turkey should have been invited to join not South Africa given its strong economic growth rate of 11.8% in April 2011.  Nevertheless, South Africa makes up for its smaller population and GDP through its enormous strategic resources – including a rare earth metal called vanadium as well as a strong currency called the RAND which is backed up by its gold.

However, there are several causal factors why South Africa was given the green light to join.  Nevertheless, China, Russia, and India would have been a bit uncomfortable with an Islamic country in the alliance as all three BRICS economies have had political turmoil with their Islamic minorities. Firstly, South is conceived by other BRICS member countries to be the gateway to Africa – the second largest continent consisting of 1 trillion people which is perceived by Beijing a fresh, new, and large  global market. Given the fact China has invested in 50 of the 55 African nations and South Africa has always been Africa’s economic success story, it makes perfect sense for the alliance to invite South Africa in.   Also, South Africa’s economy consists of one-third of the African continent’s GDP.  Thirdly, South had already been a member of the IBSA(India, Brazil, and South Africa) forum.   This has been a trading and investment forum between the three countries for several years.  Fourthly, China has a large stake and investment in Standard Bank, South Africa’s largest bank.  Fifthly, the sheer size of South Africa’s strategic resources from gold, diamonds, and  platinum to a rare earth metal called vanadium, a hard gray metal of the transition series, used to make alloy steels prompts China to buy these resources in large volumes.  With South Africa as a BRICS alliance member, this ensures and guarantees China easy access before the US as South Africa will sell and give preference to another BRICS economy over the US. The US and China need South Africa’s resources.

Of the five BRICS economies, South Africa boasts the best governance.  Along with Brazil, South Africa is an energy efficient economy as it does not import a large amount of energy.  It is an efficiently run fiscally conservative economy and its finance minister is of Indian descent.  The Indian-South African trade is increasing more and more.   Currently, China is South Africa’s largest trading partner.  China and India comprise together over one-third of the world’s population.  These two factors along give reason for South Africa lobbying for BRICS membership.

 

 

 

 

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