The new cooperative alliance that includes Brazil, Russia, India, China and South Africa is set to become an economic and political power broker in global markets.
One of the most significant economic and
political courtships over the past two years has
been South Africa’s coming together with Brazil,
Russia, India and China in a cooperative alliance,
now known as BRICS.
This alliance, given the very nature of the
world economy, is going to play a huge role in
influencing events in world markets.
One only has to look at the numbers involved in
the markets that Brazil, Russia, India and China
(BRIC) embraces, to realise the real possibility
of this - they are huge markets by any standard.
These four countries have a combined
population of around 2.85 billion - around 43%
of the present global total - with a combined
labour force of 1.5 billion and an average age
across the four countries of only 29.
Furthermore, Africa, as many economists
have pointed out, is one of the most profitable
areas in which to do business. South Africa,
as an established economy within Africa, and
the only African representative within the
BRICS alliance, will be in a position to lend its
political, economic and other expertise to its
partners.
A gateway into Africa
Membership of this body will open doors for
the other BRICS nations to use South Africa as
a transit route to the rest of the continent.
To its partners South Africa can thus be a portal
into the rest of Africa.
The “gateway” concept is nothing new.
But South Africa is not only a strategic entry
point for other BRICS nations to move goods,
commodities and resources into the rest of the
continent. As an established economy within
Africa, South Africa - as a BRICS nation - can
also lend its political and economic clout, and
its streetwise experience of doing business in
Africa, to the mix.
However, there are other gateways available
for BRICS nations - or other nations for that
matter - to enter Africa for trade purposes.
For this reason, South Africa must not become
complacent. It must capitalise on its good
standing within this body by spelling out the
advantages that other BRICS countries stand
to accrue by choosing South Africa as a point
of entry to the rest of Africa.
africa LegaL Brief series | may 2012
new-look africa set to reap benefits of brics By Greg Nott, Director
This is all the more reason why the South
African government needs to work harder to
remove some of the frustrating bureaucratic
pinpricks that undo much of the good
emanating from behind-the-scenes African
initiatives undertaken at diplomatic and
business levels.
For example one of the issues raised by a
number of presidents at the African economic
forum held in Tanzania last year, was the
negative effect that delays in issuing visas
can have on trade within Africa. It hampers
and impedes logistical transport, trade and
movement of goods and people.
African nations must recognise this, understand
the impediments and move swiftly and
decisively to ease and eliminate these kinds of
bureaucratic burdens.
South Africa’s role in tapping the new-look Africa’s potential
The good news is that Africa’s growth has
shown an upward trend over the past decade,
gaining exceptional momentum recently,
albeit coming off a low base. There is a new
shift in strategy in redefining business on the
continent. It still has its challenges in regard
to poverty, governance and some of the other
age-old concerns, but this is without doubt a
new-look Africa.
Africa, as some economists have pointed out,
is now poised to become an engine of world
growth. The continent has come of age over
the past two years and, in every sense, the
period from 2009 to 2011 has been this new
Africa’s coming out party.
On the wider world stage, it is South Africa’s
policy to be a cooperative member of the
African Union. Certainly at a political level it
projects the impression that it wants to stand
together at international level with the rest of
the continent. Its participation in BRICS will
allow South Africa to project not only its own
standing, but that of its African neighbours and
African union members.
South Africa, of course, is often cast in the role
of “kingmaker” in Africa - witness its success
in conflict resolution, for instance. But one of
the realities of the BRICS alliance is that China
and South Africa stand shoulder to shoulder as
equal partners.
China is South Africa’s largest trading
partner and with that comes a whole host
of advantages, challenges and diplomatic
conundrums. But at the moment, the situation
is one which South Africa is well placed to take
advantage of. Each country has a fine regard
for diplomacy and a recognition that working
together can engender great benefits to both.
Obviously there are concerns about
unemployment among South Africa’s
impoverished population. Hopefully these
concerns will be taken into account when
agreements are crafted. This is certainly
something that must be hammered out by
politicians on both sides.
Away from the political hustling, the telecoms
revolution and the commissioning of the
first undersea telecoms cables is a significant
development in the growth of a new Africa,
because it enables ease of communication. And
with this comes the ability to profile African
markets. The new communication technologies
will open doors and provide access to new
opportunities. It is a huge development that
cannot be overestimated.
BRICS is well set to play the role of one of the
major trading blocs in the world and could
potentially dominate the world economy. Of
course Africa cannot escape the repercussions
of a world economic crisis. It does not stand
in isolation. But it may be in a better position
than most to steer itself to a middle ground.
There are enormous opportunities to be gained
from the needs, commodities and resources
that countries to the west and the east need
to keep their engines alive.
Resources are but one part of Africa’s
competitive advantage. The continent
offers financial services; tourism; transport;
communications; agriculture; construction and
infrastructure; and utilities - particularly energy,
given Africa’s enormous natural resources
of solar energy, wind and hydro-electric
power.
In the field of energy alone, for example, there
are exciting exploration discoveries in gas and
oil in Mozambique and off the Namibian coast.
This itself creates greater cooperation between
countries, from an economic as well as a
political perspective. In turn, business people
are assisted and emboldened by this process.
Conclusion
Today, there are a lot more people dancing to
Africa’s beat and coming to its shores. And
the more people that come, the more easily
risk is mitigated as the bandwagon effect gains
momentum.
The 2010 FIFA World Cup opened a window
on Africa for the world. It was a joyous
occasion, well run and organised, which
brought great happiness. People love these
kinds of stories - and there are plenty more
of them around in Africa.
Afro-pessimism is hard to push back, but
certainly much has been done to paint a
different picture of Africa in the recent
past - and it amounts to far more than mere
air-brushing.
About the Author
Greg Nott Title: Director Office: JohannesburgDirect line: +27 (0)11 535 8136Fax: +27 (0)11 535 8636Switchboard: +27 (0)11 535 8000Email: [email protected]
Greg is a director of Werksmans Attorneys. With a high profile in the legal fraternity - both local and international - Greg was instrumental in establishing and building the South African office of a New York based international law firm over a ten year period. During this time he was recipient of a number of awards including the prestigious 2010 International Lawyer of the Year Award from the UK-based Legal Business Magazine. Greg’s business savvy and commitment to pro bono as part of a commercial practice have been highlighted in a diversity of respected global directories. Under his leadership, the firm he headed was recognized as Africa Law Firm of the year by Chambers Global: The World’s Leading Lawyers for Business in 2005 and developed a reputation for excellence in projects and energy. He has a BA LLB from the University of the Witwatersrand.
Established in the early 1900s, Werksmans Attorneys is a leading South African corporate and commercial law firm serving multinationals, listed companies, financial institutions, entrepreneurs and government.
Werksmans operates in Gauteng and the Western Cape, and is connected to an extensive African network through Lex Africa*.
With a formidable track record in mergers and acquisitions, banking and finance, and commercial litigation and dispute resolution, the firm is distinguished by the people, clients and work that it attracts and retains.
Werksmans’ more than 190 lawyers are a powerful team of independent-minded individuals who share a common service ethos. The firm’s success is built on a solid foundation of insightful and innovative deal structuring and legal advice; a keen ability to understand business and economic imperatives; and a strong focus on achieving the best legal outcome for clients.
*In 1993, Werksmans co-founded the Lex Africa legal network, which now has member firms in 27 African countries.
About Werksmans Attorneys
Keep us close
ThE COrpOrATE & COmmErCiAl lAW Firm
JOHANNESBURG +27 (0)11 535 8000 CAPE TOWN +27 (0)21 405 5100www.werksmans.com
Nothing in this publication should be construed as legal advice from any lawyer or this firm. Werksmans’ legal briefs should be seen as general summaries of developments or principles of interest that may not apply directly to specific circumstances. Professional advice should therefore be sought before any action is taken. TL
G_JN4598
Top Related