The Industrial Development Corporation (IDC) and Bank of China (BoC) have signed a memorandum of understanding (MoU) to strengthen regional trade and investment as South Africa made a strong case for investing in the manufacturing of green energy components in the country.
As part of the MoU, the IDC and BOC are in the process of concluding a R10 billion funding package for tangible projects spread across energy, infrastructure, manufacturing, agriculture and mining sectors over five years.
The forum was focused on issues related to funding mechanisms to support industrial value chain, enabling greener manufacturing, building a resilient industrial value chain and regional manufacturing hub in South Africa, and green industrialisation
Speaking during the manufacturing forum at the BRICS Business Council yesterday, Trade, Industry and Competition Minister Ebrahim Patel encouraged BRICS members to enter into partnership and joint ventures with South Africa.
Patel said BRICS members had a key role to play in harnessing both green industrialisation, and digital industrialisation to transform economies, adding that Africa was poised to be a fast-growing continent in demographics, in economics, and in innovation.
“South Africa is ready to partner with all of the BRICS countries on the development of new energy vehicles and the sharing of technologies, of raw materials, of capital and market experiences in a mutually beneficial partnership,” Patel said.
The minister pointed to three initiatives on investment of new technologies and on green industrialisation as potential opportunities that can each benefit from BRICS partnerships.
“The first is to boost increased investment by encouraging your companies to open manufacturing operations in South Africa and on the African continent,” he said.
“The second is to work on incorporating the technologies of the new industrial revolution into the established industries and new industries. The new industrial revolution will have profoundly disruptive impacts on future employment and education.
“The third area is to partner on the green economy. Our particular interest to us is to increase energy security through partnerships on green energy generation, green hydrogen mobility, battery manufacturing, and production of green components,” he said.
These components in solar PV panels, in structures in wind towers, among others, were already being produced in South Africa and it was scaling up in new markets.
“South Africa is well positioned to direct access to critical minerals that we seek to transform into manufactured products. Here on the African continent, companies are utilising the green technologies in established industries,” Patel added.
Patel’s remarks also followed those of President Cyril Ramaphosa who, on Sunday night, said BRICS as a formation played an important role in the world due to its economic power, its market potential, its political influence and its development corporation.
Ramaphosa said the BRICS members together make up a quarter of the global economy, account for a fifth of global trade, and were home to more than 40% of the world’s population.
“We are working towards the full implementation of the African Continental Free Trade Area (AfCFTA), which is set to eliminate trade barriers, boost intra-African trade and achieve prosperity for all of Africa,” Ramaphosa said.
“It will also accelerate manufacturing and industrial capacity on our continent.”
Questions have been raised about how South Africa has benefited from BRICS membership beyond the prestige of belonging in a club of much bigger economies such as China and India.
Old Mutual Wealth investment strategist Izak Odendaal said from a trade point of view, the dollar value of exports to the other BRICS nations had barely grown since South Africa joined the group in 2011.
Odendaal said it was often forgotten that South Africa’s natural export market remained its neighbours and that the nascent AfCFTA held much promise, but substantial investment in institutions and infrastructure was needed to fulfil it.
“There is still a massive opportunity to grow and diversify exports to these countries, particularly India and China, and to attract tourists to our shores. But there is still no sign of a BRICS free trade agreement to facilitate this.
“Moreover, it would be unwise to seek growing trade with BRICS at the expense of existing relationships with Western democracies. The ongoing African Growth and Opportunity Act negotiations with the US will test our diplomatic nous in charting a course between East and West.”