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South Africa in the BRICS - The North-South Institute

South Africa in the BRICS . Opportunities, Challenges and Prospects1. This study investigates the participation Introduction of South Africa in the BRICS group from an analytical perspective. It is argued South Africa was granted an invitation to that South Africa 's membership to this join the Brazil, Russia, India and China (BRIC). group entails both opportunities and grouping2 on 23 December 2010 by the Minister challenges for South Africa , the continent of Foreign Affairs of the People's Republic of and the system of global governance.

4 AFRIC A INSIGHT Vol 2(4 March 013 Africa Institute of South Africa South Africa in the BRICS | h any Besada, evren tok and Kristen winters Implications of South Africa’s Membership of the BRICS Group Benefits and risks of South Africa’s inclusion Much has been made of the potential economic

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Transcription of South Africa in the BRICS - The North-South Institute

1 South Africa in the BRICS . Opportunities, Challenges and Prospects1. This study investigates the participation Introduction of South Africa in the BRICS group from an analytical perspective. It is argued South Africa was granted an invitation to that South Africa 's membership to this join the Brazil, Russia, India and China (BRIC). group entails both opportunities and grouping2 on 23 December 2010 by the Minister challenges for South Africa , the continent of Foreign Affairs of the People's Republic of and the system of global governance.

2 We China, Yang Jiechi. The announcement was seek to flesh out the potential medium- made by South Africa 's Minister of International and long-term implications as well as Relations and Cooperation, Maite Nkoana- the benefits and risks of South Africa 's Mshabane, after months of lobbying by South membership in the areas pertaining to African President Jacob Zuma, who marketed trade, foreign policy and development. the country as the gateway to Africa . Zuma has maintained that this is an important group to be part of, given that the emerging economies have a significant role to play in restructur- ing political, economic and financial institu- tions to become more equitable and Hany Besada, Evren Tok Participation in the group provides, according to the South African government, economic ben- and Kristen Winters efits such as increased trade and investment op- Hany Besada is Research Specialist.

3 United Nations High portunities as well as political benefits, such as Level Panel Secretariat, Post-2015 Development Agenda &. increasing its voice in the international sphere. Theme Leader and Senior Researcher: Governance of Natural Resources at the North-South Institute (NSI) in Ottawa, Canada. The third BRIC summit, held on 14 and 15. He is currently pursuing a PhD in Politics and International April 2011 and attended by President Zuma, Studies at the University of Warwick in the United Kingdom. heralded the transformation of BRIC to BRICS .

4 Dr Evren Tok is Assistant Professor for Public Policy in the Islam Programme at the Hamad Bin Khalifa (Brazil, Russia, India, China and South Africa ). University, Faculty of Islamic Studies, Doha/Qatar. The countries called for reforms in international Kristen Winters is a Research Assistant, North South Institute . financial mechanisms, and greater cooperation Africa Institute of South Africa Africa Insight Vol 42(4) March 2013 1. South Africa in the BRICS | Hany Besada, Evren Tok and Kristen Winters in fields ranging from finance and business to Reducing distortion and further regulating science and technology.

5 South African Trade the financial market and Industry Minister, Rob Davies, indicated Expanding and deepening economic, trade that the BRICS countries would benefit from di- and investment cooperation among the rect trade in their own currencies, which would BRICS protect them from volatile international con- vertible currencies, for example the US The development banks of the five nations also South Africa 's Contribution signed a framework agreement on cooperation to the BRICS . among their national financial development institutions to establish mutual credit lines to There is little consensus not only on the im- be denominated in local currencies.

6 The China plications of South Africa 's admittance to the Development Bank was the first institution to group, but on precisely what the grouping is respond to the new measures, outlining its in- and its potential effect on international affairs. tention to lend 10 billion yuan to Brazil, Russia, The invitation was met with surprise and in- India and South Africa . There is no information comprehension by many analysts puzzled by yet forthcoming on the precise terms of the loan the admittance of such a smaller economy, con- or exactly how the money will be allocated and sidering there were stronger contenders than on which projects, but such loans are likely to South Africa as the newest member; for exam- focus on large oil and natural gas ple Mexico, South Korea and Turkey.

7 There has The BRICS meeting concluded with the sign- been widespread speculation about the nature ing of the Sanya Declaration, outlining the major of the association; the motivations for the in- commitments and areas of agreement discussed vitation, be they financial or political; what at the summit, among which were the following: it will mean; and what effect it will have on A broad-based reserve currency system South Africa and the continent as a whole. which provides stability and certainty Some observers contend that it is difficult Discussion about the global role of Special to immediately perceive how South Africa Drawing Rights (SDR), the accounting unit could easily fit into the BRIC The inclu- of the International Monetary Fund (IMF)

8 Sion of South Africa changes the dynamics of a and the SDR's basket of currencies (now group that has impacted global economic mar- comprising the US dollar, the euro, the yen kets over the last 10 years and estimated by and the pound sterling) Goldman Sachs to have contributed to over a Establishing mutual credit lines denominat- third of global growth in gross domestic prod- ed in their home currencies among the state uct (GDP) over the last With a GDP of development banks of the group approximately one-sixteenth of China's out- Reform of international institutions such put, an annual growth rate of 2,8 per cent in as the IMF, with the UN Security Council re- 2010 (compared to 10,3 per cent for China, 9,7.)

9 Flecting the interests of emerging and devel- per cent for India and 7,5 per cent for Brazil). oping countries and a population of 50 million (compared to The importance of renewable energy and China's 1,3 billion and India's 1,2 billion), atomic energy technologies as a key element South Africa has significantly less economic of development power than the other South Africa 2 Africa Insight Vol 42(4) March 2013 Africa Institute of South Africa South Africa in the BRICS | Hany Besada, Evren Tok and Kristen Winters has a nominal GDP of US$286 billion, far be- on services, mining and manufacturing, can ri- low that of the other members: Brazil (US$1 val the majority of Organisation for Economic trillion), India (US$2 trillion), Russia (US$1,6 Co-operation and Development (OECD) states.

10 Trillion) and China (US$5,5 trillion).10 China As a middle-income country with a per capita and India are ranked as the top two in The gross national income (GNI) of US$6 100,19 its Economist's ranking of the 10 fastest-growing largely affluent white population have long economies from 2011 to 2015, seven of which reaped the benefits from the control of a com- are located in Sub-Saharan Africa , but South petitive and robust economy, characterised by Africa is not even The country also an abundant supply of mineral resources.


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