Finance Minister Enoch Godongwana has vowed that South Africa will champion the basic tenets of the African Continental Free Trade Area (AfCFTA) within the expanded BRICS group of emerging countries.
The AfCFTA is the world’s largest free trade area bringing together the 55 countries of the African Union and eight Regional Economic Communities to create a single continental market with a population of about 1.3 billion people and a combined gross domestic product of approximately $3.4 trillion (R64trl).
The AfCFTA Secretariat and the WEF yesterday unveiled the first-ever AfCFTA Private Sector Action Plan which brings together 12 industry giants, committing to transformative projects across automotive, agriculture and agro-processing, pharmaceuticals, and logistics and transport sectors.
AfCFTA secretary general Wamkele Mene said these commitments, with a combined value of $130 billion, marked a significant leap in realising the potential of intra-African trade and development.
Godongwana yesterday (Thursday) said AfCFTA and the expansion of the BRICS bloc were two important developments for the South African economy this year as they were both taking place at the same time.
Speaking at the World Economic Forum (WEF), he also announced that President Cyril Ramaphosa would be launching the AfCFTA from a South African perspective on 31 January.
“Our economies, particularly South Africa’s, have been heavily dependent on the West. So, a delinking for us is quite critical, in other words, changing the trading patterns,” Godongwana said.
“Our trade patterns have changed greatly with Africa. Africa has now become our second [largest] trading partner. That shift in trade is so important for us because it reduces that dependence [on the West].”
Godongwana was speaking on the panel about “BRICS in Expansion” and how it will forge consensus among its diverse members and contribute to the reshaping of the global geopolitical and economic landscape.
This comes as Saudi Arabia, Iran, Ethiopia, Egypt, and the United Arab Emirates (UAE) officially joined Brazil, Russia, India, China, and South Africa bloc (BRICS) from 1 January 2024, while Argentina’s newly-elected president declined to join.
In light of its expansion, BRICS will contain 46% of the world's population and 25% of global exports, and its gross domestic product (GDP) will exceed that of the G7 as it will account for 36% of global GDP.
Godongwana said the issue of BRICS expansion was not something that emerged during last year as it had been an ongoing debate for some time.
“The realist focus is really the key issue is how to mobilise savings of the South in order to ensure that we can have a better development agenda for the south,” he said.
“But of course, there's also a common agenda which we share. As you can see, most of these countries are not necessarily the same in a number of areas. But there's common minimum program where we would agree upon a common development agenda, a common view that there needs to be a reform of the multinational institutions.”
UAE Minister of Economy Abdulla Bin Touq said the South-South agenda was the most important consideration for their joining BRICS.
“We are in the middle of the world. A lot of businesses, a lot of trade, and a lot of ways that comes through the UAE and as well down to the South. And I think looking at the BRICS and being part of it will bring a lot of value. From not the geopolitical level, but from a geoeconomic level,” he said.
“And I think that's something where the UAE can play a pivotal role in the engagement on the global level when it comes to BRICS. The UAE has committed the sum of money into the BRICS Bank, the New Development Bank, and we're looking to work together, as well, on investment and infrastructure and aspects, as well, into the BRICS nations.”