{"id":789881,"date":"2024-09-06T15:40:43","date_gmt":"2024-09-06T13:40:43","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=789881"},"modified":"2024-09-09T09:19:45","modified_gmt":"2024-09-09T07:19:45","slug":"south-africas-big-brics-trade-problem","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/789881\/south-africas-big-brics-trade-problem\/","title":{"rendered":"South Africa&#8217;s big BRICS trade problem"},"content":{"rendered":"\n<p>While South Africa continues its attempts at consolidating its position as a dominant player within the BRICS+ grouping, the country is still playing catch-up with its partners in trade, importing way more than it exports.<\/p>\n\n\n\n<p>The term &#8220;BRIC,&#8221; coined by economist Jim O&#8217;Neill in 2001, refers to Brazil, Russia, India, and China&#8217;s strong economic growth.<\/p>\n\n\n\n<p>A forum with these four nations began in 2009, and South Africa joined in 2010, focused on enhancing economic cooperation and challenging Western dominance in global affairs.<\/p>\n\n\n\n<p>In early 2024, Iran, the UAE, Ethiopia, and Egypt were added\u2014and Saudi Arabia was invited but is still considering joining.<\/p>\n\n\n\n<p>Together, these nations account for around 40% of both crude oil production and exports, one-quarter of global GDP, two-fifths of global trade in goods, and nearly half of the world\u2019s population.<\/p>\n\n\n\n<p>&#8220;Trade in goods among BRICS economies has considerably outpaced trade between the BRICS and G7 nations, leading to greater intra-BRICS trade intensity [and] decades of rapid growth have also given many of these economies far more weight in the global economy,&#8221;  explained analysts at the Boston Consulting Group.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/web-assets.bcg.com\/dims4\/default\/e0a2260\/2147483647\/strip\/true\/crop\/2480x1622+0+0\/resize\/728x476!\/format\/webp\/quality\/90\/?url=http%3A%2F%2Fboston-consulting-group-brightspot.s3.amazonaws.com%2F4e%2F4b%2F1a31ce9143ae819a933cab22aad8%2Fbrics-expansion-and-the-shifting-global-order-ex02-nxpowerlite-copy.png\" alt=\"\" style=\"width:875px;height:auto\"\/><figcaption class=\"wp-element-caption\">Graphic: Boston Consulting Group<\/figcaption><\/figure><\/div>\n\n\n<p>President Cyril Ramaphosa has touted the grouping as key to South Africa&#8217;s development.<\/p>\n\n\n\n<p>\u201cSouth Africa has experienced significant benefits through its membership as well as its association with the BRICS grouping of countries. South Africa uses its BRICS membership to improve investment, trade, tourism, as well as capacity building,&#8221; said Ramaphosa.<\/p>\n\n\n\n<p>&#8220;It also flows into skills acquisition and technological capabilities that we see this relationship yielding for our country,&#8221; he added.<\/p>\n\n\n\n<p>A key part of the grouping has been the establishment of the New Development Bank to finance and largely support infrastructure and sustainable development projects.<\/p>\n\n\n\n<p>To date, South Africa has received well over R100 billion from the bank for various projects, including loan agreements to embattled state-owned entities.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-businesstech wp-block-embed-businesstech\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"HICK4tseeB\"><a href=\"https:\/\/businesstech.co.za\/news\/government\/788891\/brics-bank-gives-transnet-r5-billion-loan\/\">BRICS bank gives Transnet R5 billion loan<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;BRICS bank gives Transnet R5 billion loan&#8221; &#8212; BusinessTech\" src=\"https:\/\/businesstech.co.za\/news\/government\/788891\/brics-bank-gives-transnet-r5-billion-loan\/embed\/#?secret=PRgv210DpW#?secret=HICK4tseeB\" data-secret=\"HICK4tseeB\" width=\"500\" height=\"282\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>\u201cStrengthening economic as well as financial ties between BRICS member countries is one of the key pillars of this cooperation that we have forged with all these countries,\u201d said Ramaphosa.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Trade with BRICS<\/strong><\/p>\n\n\n\n<p>In 2022, over one-fifth of South Africa&#8217;s total trade was with BRICS nations. <\/p>\n\n\n\n<p>South African exports to other BRICS countries have recorded strong growth since 2016 (7.1% per annum on average), with the principal contributor to such growth being exports to China.<\/p>\n\n\n\n<p>Additionally, South African imports from other BRICS member states expanded by 7.2% per annum on average.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/image-22.png\"><img loading=\"lazy\" decoding=\"async\" width=\"909\" height=\"322\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/image-22.png\" alt=\"\" class=\"wp-image-789900\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/image-22.png 909w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/image-22-300x106.png 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/image-22-768x272.png 768w\" sizes=\"auto, (max-width: 909px) 100vw, 909px\" \/><\/a><\/figure>\n\n\n\n<p>&#8220;These countries are therefore significant trading partners, and the value of this trade is continuing to grow,&#8221; said Ramaphosa.<\/p>\n\n\n\n<p>While both exports and imports between these nations have increased quite substantially over the years, South Africa continuously sees trade deficits with these nations. <\/p>\n\n\n\n<p>Research from Jorge Maia, the Head of Research and Innovation at South Africa&#8217;s Industrial Development Corporation shows that South Africa &#8220;recorded deficits in its collective balance of trade with other BRICS economies since the group\u2019s establishment.&#8221;<\/p>\n\n\n\n<p>&#8220;The deficit amounted to USD14.8 billion in 2022- four times greater than the USD3.7 billion deficit reported in 2010,&#8221; explained Maia.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/South-Africa-trade-with-BRICS.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/South-Africa-trade-with-BRICS-1024x576.png\" alt=\"\" class=\"wp-image-789887\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/South-Africa-trade-with-BRICS-1024x576.png 1024w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/South-Africa-trade-with-BRICS-300x169.png 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/South-Africa-trade-with-BRICS-768x432.png 768w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/09\/South-Africa-trade-with-BRICS.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"table-responsive\"><table class=\"table\"><tbody><tr><td><strong>Country<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>2010 trade deficit\/surplus<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>2023 trade deficit<\/strong><\/td><\/tr><tr><td>Brazil<\/td><td class=\"has-text-align-center\" data-align=\"center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\">-R4.82 billion<\/mark><\/td><td class=\"has-text-align-center\" data-align=\"center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\">-R18.09 billion<\/mark><\/td><\/tr><tr><td>Russia<\/td><td class=\"has-text-align-center\" data-align=\"center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-green-cyan-color\">+R1.26 billion<\/mark><\/td><td class=\"has-text-align-center\" data-align=\"center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\">-R4.46 billion<\/mark><\/td><\/tr><tr><td>India<\/td><td class=\"has-text-align-center\" data-align=\"center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-green-cyan-color\">+R1.36 billion<\/mark><\/td><td class=\"has-text-align-center\" data-align=\"center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\">-R49.24 billion<\/mark><\/td><\/tr><tr><td>China<\/td><td class=\"has-text-align-center\" data-align=\"center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\">-R24.84 billion<\/mark><\/td><td class=\"has-text-align-center\" data-align=\"center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\">-R177.87 billion<\/mark><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<p>&#8220;This highlights the importance of enhancing export sales to other BRICS countries, for the balance of trade is skewed in their favour, especially where China is concerned,&#8221; said Maia.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>South Africa needs to export more manufactured goods<\/strong><\/p>\n\n\n\n<p>The composition of South Africa&#8217;s export basket to the BRICS collectively has not changed much over time (since 2009). <\/p>\n\n\n\n<p>In 2022, South Africa&#8217;s BRICS exports were mainly mineral products: coal (19.1%), iron ore (18.9%), manganese (12.2%), ferroalloys (7.6%), and chromium ores (6.7%), with significant agricultural but <strong>limited manufactured exports.<\/strong><\/p>\n\n\n\n<p>Meanwhile, manufactured imports made up a majority of products from the BRICS nations. <\/p>\n\n\n\n<p>Maia said that South African producers should leverage BRICS markets for export expansion but must diversify from their mineral-dominated exports to include more manufactured and agricultural goods.<\/p>\n\n\n\n<p>He added that despite potential barriers, businesses can use BRICS forums, the BRICS Business Council, and diplomatic channels to address challenges and forge new export opportunities. <\/p>\n\n\n\n<p>Additionally, utilising Department of Trade, Industry and Competition (DTIC) incentives and exploring trade in services are crucial for market penetration.<\/p>\n\n\n\n<p>The DTIC have said that their goals include spearheading the country\u2019s industrial policy which among other things, attempts to formalise South Africa as an export-oriented and manufacturing-led economy, ultimately closing South Africa&#8217;s trade deficit gaps.<\/p>\n\n\n\n<p>DTIC minister Parks Tau&nbsp;<a href=\"https:\/\/www.businesslive.co.za\/bd\/national\/2024-09-02-ramaphosa-calls-for-better-quality-of-trade-with-china\/\">told Business Day<\/a>&nbsp;that it is important for South Africa to pursue manufactured goods for export rather than primary goods, which make up the bulk of what South Africa trades with BRICS nations.<\/p>\n\n\n\n<p>Tau recently said that in meetings with his Chinese counterpart, stakeholders agreed to increase the range and volume of manufactured goods to be sent to China, a move set to bolster South Africa\u2019s exports and lessen the deficit gap.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-businesstech wp-block-embed-businesstech\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"9InWqop670\"><a href=\"https:\/\/businesstech.co.za\/news\/government\/789330\/ramaphosa-wants-to-level-the-playing-field-with-china\/\">Ramaphosa wants to level the playing field with China<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Ramaphosa wants to level the playing field with China&#8221; &#8212; BusinessTech\" src=\"https:\/\/businesstech.co.za\/news\/government\/789330\/ramaphosa-wants-to-level-the-playing-field-with-china\/embed\/#?secret=ttLJPFYrwk#?secret=9InWqop670\" data-secret=\"9InWqop670\" width=\"500\" height=\"282\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>During a debate in the National Council of Provinces (NCOP), DTIC Deputy Minister Andrew Whitfield said that \u201cit is essential that South Africa\u2019s economic growth is grounded in manufacturing-led growth.\u201d<\/p>\n\n\n\n<p>\u201cManufacturing is indeed less volatile and less vulnerable to economic downturns and will create real, sustainable and decent paying jobs for our people.&nbsp;<\/p>\n\n\n\n<p>\u201cSouth Africa must also create an export-oriented economy. A dedicated focus on manufacturing growth will also lead to export growth,\u201d he said.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/government\/789792\/imf-sends-a-warning-to-south-africa-3\/\">IMF sends a warning to South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>While bilateral trade between BRICS+ nations has significantly increased over the past several years, so has South Africa&#8217;s trade deficit.<\/p>\n","protected":false},"author":101,"featured_media":790109,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[2091,19817,853],"class_list":["post-789881","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-brics","tag-brics-2","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/789881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/101"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=789881"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/789881\/revisions"}],"predecessor-version":[{"id":790111,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/789881\/revisions\/790111"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/790109"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=789881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=789881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=789881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}