CAPE TOWN - South Africa might be a small country relative to its BRICS partners, Russia, China, Brazil and India, but it punches well above its weight - and can do so much better if it channels more of its focus to collaborating with other emerging economies.
It’s a no-brainer, believes Dr Iqbal Survé, the chairman of Sekunjalo Investment Holdings and current chair of the South African chapter of the BRICS Business Council.
With access to a market of more than 3 billion people and a combined gross domestic product (GDP) of around R19trillion - or 23percent of the gross world product - South Africa’s engaged membership of BRICS is central to its ability to meet President Cyril Ramaphosa’s plan to raise R1.2trillion in new investment.
Weeks before the annual BRICS Summit, which will be held in Joburg from July 25 to 27, Dr Survé said the BRICS Business Council was on track to receive more than 750 delegates in Durban, including 100 dollar billionaires, business leaders, and the heads of state of five neighbouring countries, on July 22 and 23.
It’s the second summit in South Africa: the first rotational summit was held in 2013, three years after the country was admitted to the association of major emerging economies.
The councils comprise five prominent people in business: the chairperson is appointed by the cabinet.
“The way we’ve structured our council, in consultation with the ministers of finance and of trade and industry, is to include a representative of Business Unity SA, the Black Business Council, a state-owned enterprise, and two business leaders or entrepreneurs,” he said.
“The council has 25 members, but in each country there are working groups. There are currently nine working groups: on financial services; agriculture; the green economy; infrastructure; manufacturing; the digital economy; deregulation; and skills development.”
The working groups essentially carve policy direction for their governments, aligning the positions of business to the government on things like deregulation.
“We are not there to execute those things; business people, working with the government, do that. We are there to facilitate and set policy.
“So, if someone says we want to do business between India and South Africa, or Brazil and South Africa, but it’s impossible to get visas or it’s difficult to get registration about businesses, or we want verification that the people we will be doing business with are legitimate and we’re not dealing with any nonsense, our role is to create platforms for people to be able to do all of that. It’s about transfers of technology, sharing of knowledge.”
BRICS isn’t only an economic partnership; during the summit, in parallel to the business and politicos meetings, there are think-tank meetings, in which academic institutions discuss collaborations; as well as meetings of labour and youth groupings.
At the Durban meeting, which the South African chapter is hosting in partnership with the KwaZulu-Natal provincial government, the council is pulling out all stops. Not only is it responsible for the full organisation, including logistics, security and hotel accommodation, it has also set aside a session to attract investment.
“The president has asked for a R1trilllion investment into the country, so we’ve set aside a special session presented by Mcebisi Jonas and Trevor Manuel. The president might come on the second day of the summit, subject to his availability, because there’s a state visit from China.”
The council meeting is very important, because it’s an opportunity to showcase our excellence.
Dr Survé said the Chinese government spent $100 million (R1.37billion) on their business council meeting, which was “world class, fantastic”, but this meeting was mostly funded by South African business and the KwaZulu-Natal government.
“We’re not spending a fraction of what the Chinese did, but I think we’ve done well, with less. Our attendance for this meeting has already exceeded China’s, which was held last year. With less than two weeks to the meeting, Durban already has 450 confirmed attendants. We were actually quite surprised that we have such a huge number of people coming. I believe we’ll punch above our weight and give the meeting a Southern African flavour.
“This is our opportunity to host 500 of the wealthiest people from BRICS, showcasing our country and telling them what a great place it is to invest in. But sometimes we don’t think that way.”
As the longest-serving member of the council, Dr Survé said he was proud of his contribution over the past eight years.
“Are we equal partners in BRICS? Absolutely - but we never acted like that until I took over. We hadn’t seen real exports from South Africa to BRICS countries. We started engaging in meetings on more of an equal footing. We sort of woke up, started giving the other countries a hard time and not giving them their way all the time. Instead, we put forward our position as South Africa and Africa.”
The point of BRICS was not to oppose the West, he said, but was to promote multilateralism.
“We live in a multipolar world, which is very healthy. It’s not about us not using the World Bank and using the New Development Bank; it’s about having access to all of them. In any case, the biggest creditor for the US government is the Chinese government. So why are people complaining about us getting funds from China, because if China had to sell its US bonds, the US would be in huge trouble, to the value of $3 trillion.”
Joining BRICS was a significant achievement, Dr Survé said. “Whatever anyone says about former president Jacob Zuma and his foreign minister, Maite Nkoana-Mashabane, we shouldn’t squander this opportunity because it was a Zuma project: that would be a terrible mistake.
“I think it’s a gift that we got to participate in BRICS. We need to get rid of any notion that BRICS is from the Zuma era, that it’s being anti-West: it’s a fantastic opportunity to actually get foreign investment into our country.”
“We have too much debt, reaching 70percent of our GDP, which means you have to service debt with no money for schools, health, housing. We’re spending $80bn just in interest on debt.
"The government isn’t going to be able to create jobs; the private sector has to create the jobs, start investing in job creation projects, or if foreign investors start investing in projects that create jobs.”
Citing the example of China’s transformation into a superpower, Dr Survé said that 35 years ago, the country was one of the poorest in the world, with mass starvation. In 1978, Deng Xiaoping was appointed leader and instituted far-reaching market reforms.
“He came in and basically said that if he doesn’t open up the economy, Chinese will starve. Money started pouring in, and even today, China still receives huge amounts of foreign direct investment.
“In just over a generation, China was able to move from an extremely poor country to almost a middle-income country.”
With 66percent of South Africa’s population aged below 35 and about 70percent of them unemployed, Dr Survé said we needed to create opportunities for the youth on the continent by partnering with other emerging economies.
“This opportunity for us to be part of a much bigger economy (through BRICS), to engage with other investors to attract capital in order to create jobs, is vital.
“It’s difficult for us to export to the US, because they’ve got so many tariffs; the EU is also difficult. But by creating this wider market for your goods and services and products, we can access the Chinese and Indian markets with more than 3billion people.”
It was about having the vision as entrepreneurs to think differently about other countries and to get out of traditional comfort zones and not targeting “safe” markets, because the youth were the engine for growth.
- BUSINESS REPORT