BRICS nations have agreed to look into ways to deepen trade and investment among themselves as they continue to consolidate their dominance in emerging economic markets.
Busi Mabuza, the chairperson of the five BRICS Business Council chapters, yesterday vowed to increase their contribution to the global economy from the current 23% to a significant figure through a number of initiatives.
Mabuza said intra-BRICS trade had grown an average annual rate of 7% over the past 10 years.
“However, for me, the even more important success of the BRICS formation has been that we have now created a model for the world that moves us away from an extractive approach, in terms of economic engagement, towards a collaborative approach where we can all benefit,” Mabuza said.
“The next wave of global growth will, in my mind, come from this continent. And it is very important that we are sitting here today, inviting our partners because we see that they accept and understand the multilateral approach where there is mutual respect, where we’re all working towards a win-win outcome.”
Chairperson of the Brazil chapter José Serrador Neto concurred that the BRICS Business Council had done extensive work to identify intra-BRICS sector networks, including promoting trade missions, and showcasing investment projects.
Serrador Neto said they had adopted a trade and investment promotion statement, which was a plan of action for the next 10 years and included balance of trade through bilateral agreements to expiration of value-chains opportunities.
He mentioned the $38 billion (R721.4bn) investment in electricity transmission and generation made by China State Grid Corporation in Brazil in 2018 to use ultra-high voltage transmission technology to connect remote areas.
“I think that renewable energy is probably one of the most strategic sectors for Brazil since it is highly relevant for the global economy.
In Brazil’s energy metrics, roughly 48% participation of renewables as opposed to the world average of less than 15%,” he said.
“So this global scene directs investment to regions that can offer abundant renewable energy sources at competitive prices, which is the case for Brazil.”
However, South Africa last year recorded a trade deficit of $14.9bn with its BRICS partners, which was four times larger than the deficit recorded in 2010 when it joined BRICS.
Everest Wealth said South Africa can use the BRICS Summit to try to strengthen economic cooperation between the grouping, but must at the same time guard against doing so at the expense of other trade relations and partners.
Everest’s head of product development, Thys van Zyl, said although South Africa’s 13-year long membership of BRICS had resulted in new trade opportunities and access to new markets for the country, most of its biggest trading partners were still in the West.
“South Africa must therefore be very careful not to alienate its biggest trading partners in the West as these relationships are essential for the country’s economic well-being,” Van Zyl said.
“South Africa has a trade deficit with all the other BRICS members while the country’s biggest export destinations are dominated by non-BRICS countries.”
Chair of the Russia’s chapter, Sergei Katyrin said they hoped that BRICS countries reached 30% of global gross domestic product (GDP), become dominant and “create a different picture on the global scene” when they reached 50% of GDP.
“We have opportunities, not only to work with other countries with which BRICS is working, but we have a huge potential within BRICS,” Katyrin said.
“For example, agriculture is the most important sector in BRICS and our countries. We buy $315bn of agricultural products outside our countries, but only 23% of this $315bn we buy from each other within the BRICS countries.”
Chair of China’s chapter, Shaogang Zhang, said now was the right time to think about how to redirect the Council’s direction of future collaboration after the Covid-19 pandemic.
“The first issue is better policy coordination as emerging economies and representatives of the developing world so that they can make their voices wider and louder, and so we can always generate this synergy,” Shaogang said.
“Something like to keep our markets open, to support trade and investment liberalisation, and to support the multilateral trading system embodied by the Worl Trade Organisation, to fight against protectionism. Those are very important policy elements,” Shaogang said.
Chairperson of the India’s chapter, Onkar Kanwar, said BRICS countries needed to invest in the digital infrastructure to enable seamless trade among them, especially among small businesses, and had recently opened bank accounts for more than 19 000 people in rural villages.
“In India today, you can go to any small taxi or a two-wheeler rickshaw, everything is on digital.
“You can make any kind of payment on the digital platform, go to any shop,” Kanwar said.
“During the Covid-19 time, I think India took a really big stride and today we have more digitally connected than anything else because broadband has been provided in the villages.
“I think we can leverage that, because I think this is the need of all our BRICS countries because they also have a lot of rural areas, so they need to see how they can be connected.”