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.
Brics summits usually come and go without much anticipation, but in this case the summit was preceded by several diplomatic missteps that have now put the focus on it.
Allegations that South Africa supplied weapons to Russia, as well as the country’s relations with Russia and speculation about whether president Vladimir Putin would be attending the summit in person amid a warrant for his arrest, has already had diplomatic and economic consequences. The South African government’s refusal to condemn Russia’s invasion of Ukraine has also brought it much criticism.
South Africa has been part of Brics for 13 years and although this has resulted in new trade opportunities and access to new markets for the country, most of its biggest trading partners are 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. 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. South Africa should learn from some of its fellow Brics partners such as India and Brazil to maintain a more nuanced diplomatic stance,” says Thys van Zyl, head of product development at Everest Wealth.
Last year, South Africa recorded a trade deficit of $14.9 billion with its Brics partners, which is four times larger than the deficit recorded in 2010 when it joined Brics.
“Meanwhile, South Africa’s preferential treatment in terms of the Agoa agreement is in jeopardy due to its relationship with Russia. Brics is being confused with a trade block while it is starting to look more like an alliance against the West.
“Pres. Cyril Ramaphosa believes that South Africa’s foreign policy is based on the promotion of human rights, peace and stability, but at the same time South Africa does not speak out against alleged abuses in other Brics countries. So, it appears to be a situation where South Africa is a fence sitter and tries to see where it can grab the most.”
It however is of no use that South Africa can obtain the loans but still cannot manage to fix the country’s decaying transport network and Eskom in order to stimulate economic growth.
“Corruption and misappropriation make investors reluctant to invest in South Africa while political instability hurts consumer and business confidence. If the government doesn’t get its own house in order and start speaking with one mouth, it will continue to scare off investors.”